We know the climate is changing, so too are global investments in energy and low-carbon solutions. In an otherwise gloomy year for the global economy, last year saw another record in clean energy investments. These investments rose to $US260 billion with the US jostling China off the top podium for the first time since 2008.
More countries are putting in carbon prices and limits and global carbon markets grew in value 10% last year even with depressed EU prices.
Countries and companies are focusing on carbon and resource constraints for a variety of reasons but are forcing new understandings of competitiveness, which require new measurements.
Today, The Climate Institute and GE released the Low-Carbon Competitiveness Index, a measure of how the G20 countries are coping in a carbon-constrained world. The index is part of the first of what will now be an annual Global Climate Leadership Review also being launched today.
The index integrates nearly 20 indicators in three areas.
First, the sectoral composition of an economy and how weighted it is to carbon intensive activities, including the proportion of high technology exports and the amount of clean energy. Secondly, the early preparedness of an economy with measures on steps taken, including recent investment in clean energy and growth in emissions. Thirdly, recognising the future prosperity of an economy reach beyond recent technology investments and historical composition, measures of broader elements such as investment in education and the cost of business start-ups.
When this work was first done in 2009, Australia was 16th, the last among developed nations. Three years later, it is still stalled at the back of the pack and is the only developed nation not to have moved forward.
Indeed when we back-cast the data to 1995, Australia is the only country — developed or developing — to have gone backwards.
What this means for us is that our high-carbon economy is becoming a high risk for our future prosperity. What we have seen as the economic blessings of the past — highly polluting cheap energy and abundant mineral resources — will shortly become the economic curses of our future.
It is clear that the countries that are best prepared for the low-carbon economy are those who have recognised the inextricable link between economic, resource security and climate change policies and are taking action accordingly.
France, Germany and closer to home, South Korea and China, are outpacing Australia in their economic transformation and ability to compete in a carbon constrained world. These countries have all invested in low-carbon solutions or have policies encouraging them. Each are active, or about to be active, in pricing and/or limiting carbon emissions trading.
What explains Australia’s standing?
Relative to other G20 countries, we have the lowest level of overall clean energy production, the second highest number of cars per capita, and relatively high deforestation and emissions per capita from the transport sector. Lower-than-average investments in infrastructure and declining expenditure on education also affect our ranking in the Low-Carbon Competitiveness Index.
The Clean Energy Future legislation, which puts a price and a limit on carbon from the first of July this year, is an important step forward in ensuring that Australia is not left behind in the emerging low-carbon global economy. Just as in other countries with carbon prices, other policies in energy efficiency, transport and clean energy will also be needed.
The race to a global low carbon economy has begun — far too slowly — but it is under way. Australia has started this race not only facing but walking backwards.