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You are here: Home / Archives for Australian Government Climate

17 April 2019 By David McEwen

Sea Change by Regulators Spells Climate Risk but Potential Opportunity for Businesses

With major regulators making increasingly direct and clear statements about directors’ liability relating to the management of climate change risks, the “unforeseen” excuse is no longer going to cut it. In recent months major Australian regulators the RBA, APRA and ASIC have made it clear that the implications of climate change must be effectively considered in corporate decision-making.

The risks range from the obvious, such as increased physical asset exposure to the effects of extreme weather and the impacts of rising sea levels, to the more subtle, such as increased supply chain costs should material greenhouse emissions pricing be imposed or declining demand for an organisation’s products if low-carbon substitutes become cost effective (such as is starting to occur with renewable energy generation and electric vehicles).

For food producers, potentially declining agricultural yields in one location given changing temperature and precipitation patterns could potentially be offset by switching production to other geographies, though this approach carries other risks.

As evidence of the deleterious impacts impacts of climate change; its anthropogenic origins; and the liberal economic policies that have turbo charged it in recent decades permeates ever-more into the mainstream consciousness, another business risk is that left-leaning groups will gain more political control and may institute significant regulation to arrest further environmental degradation. This could adversely impact a wide range of businesses whose externalities are not priced into their products.

Even if this doesn’t occur at a political level, there are signs that communities have had enough, with dozens of grass roots campaigns to lobby change from organisations associated with various forms of pollution. Plastic waste is perhaps the most visible currently, with communities achieving single use bag bans in many jurisdictions and some announcing the phasing out of straws and single use containers. In terms of greenhouse emissions there are multiple community protest actions against specific coal, oil and gas projects, alongside a growing call for governments to ban new coal investment while accelerating moves to curb and reduce emissions.

And even if your business appears to have nothing to do with energy, transportation or agriculture it may not be immune from climate change. Coastal tourism, alpine sports and banks with exposed loan portfolios are three such examples, not to mention infrastructure managed by local and state governments. A few years ago there was even a backlash involving a million signature petition against beloved toy maker Lego for its co-branding deal with Shell, at a time when the oil major was planning to drill in newly accessible Arctic areas.

On the other hand, for some companies and industries, climate change also presents an opportunity. Adaptation to the many effects of a changing climate and rising sea levels; the decarbonisation of energy, transportation and industry; and measures to clean up the environment are likely to create value for many innovative organisations, particularly those who can demonstrate an authentic brand story.

Talk to Adaptive Capability today to understand the risks and opportunities of climate change to your business.

Filed Under: Australian Government Climate, Climate Change Adaptation, Ecological Footprint Measurement, Federal Budget

29 November 2015 By David McEwen

It’s time to talk resilience

Fig tree with large root system

This article first appeared in The Fifth Estate.

With the recent baton change in Canberra there’s a fresh opportunity to change the dialogue about climate change. 

While Prime Minister Turnbull has publicly affirmed his commitment to the Coalition’s established policies (the increasingly expensive Emissions Reduction Fund and relatively unambitious mitigation targets tabled ahead of this year’s UN climate talks in Paris), there’s a critical policy area that is currently receiving little attention: adaptation to the impacts of a changing climate.

While it may still be politically challenging to talk about climate change in Australia, there is a word, which fairly neatly encapsulates a response to the adaptation challenges we face: resilience.

Australia needs to develop a national resilience strategy

It’s important to recognise that adaptation and resilience are not strictly environmental concerns. They are far more broad-ranging, and cannot be managed with silo thinking by just one ministry or body.

An effective national resilience strategy would need to take a holistic approach to the challenge and develop policies to protect Australia’s assets (both natural and built), jobs and people while creating new opportunities for managed prosperity. In so doing it would recognise that effective adaptation starts with mitigation: a contribution to limiting the extent of climate change is still critically important.

The NRS would seek to align outcomes and contribute to strategy and policy setting within existing government departments and agencies ranging from Agriculture to the Attorney General’s Office, Industry, Health, Education, Employment, Infrastructure, Environment, Immigration, Trade and Defence. Its development would involve close liaison with states and territories. A potential mandate for an NRS would include:

  • Ensuring the stability and security of our:
    • Food and agricultural industries, considering likely impacts to local and global agricultural productivity (including climate, weather, water, pollinator and invasive pest impacts) and developing programs to ensure any short to medium-term regional benefits of a changing climate can be exploited, while capitalising on export opportunities and reducing reliance on imports for key crops
    • Fresh water supplies, covering irrigation, environmental and urban flows
    • Energy supply and distribution including infrastructure protection, fuel switching and exploring clean energy export opportunities
    • Transport networks, again covering infrastructure vulnerabilities and reduced carbon intensity
    • Cities, building on the work of municipal adaptation strategies that have already been developed in Australia and abroad
    • Natural environment and ecosystems (including interdependencies upon which agriculture and urban environments rely)
  • Encouraging industry transformation or transition to substitutes (for example through the provision of incentives or removal of subsidies) for other high emissions industries, such as concrete and steel, which are estimated to contribute (including associated energy emissions) around five per cent of global emissions each.
  • Boosting our health sector to better cope with heat wave emergencies, other weather related disasters and challenges such as the spread of insect borne diseases. An emphasis on prevention of potential health issues from such emergencies would also flow into related areas such as building design and biohazard reduction.
  • Guiding the transition or transformation of exposed industries such as the billions of tourism dollars reliant on the integrity of the Great Barrier Reef, the Snowy Mountains’ snow, our glorious beaches and other natural assets. Some work in this direction has already been started by Austrade’s Tourism Industry Resilience Working Group.
  • Policies for coastal exposed and flood prone infrastructure and property, including:
  • Harmonisation of state and local government policies to provide planning certainty to property owners and businesses
  • A clear framework to help guide local decisions around the level of sea level rise (or other exposure) at which “protect and defend” strategies would give way to “abandon and retreat”, and how such approaches would be funded as they pertain to property or infrastructure of private, local, state or national significance; and
  • A hazard assessment tool, coupled with development guidelines for new structures and alterations to existing buildings. This approach might be modelled on the concepts of the various bushfire threat levels and associated construction requirements.
  • The federal government may also be able to facilitate (with the states) the development of a legal framework that will help councils implement changes to local planning instruments while minimising the risk of costly legal action from disgruntled property owners who would oppose such changes due to their impact on values.
  • Strategic hazard reduction and emergency preparedness / coordination (for example covering extreme weather risk such as bushfire and flooding) and again harmonising planning considerations for future development. This would build on the work of the ANZEMC.
  • Development of national and regional population strategies.
  • Formulation of policy relating to climate migrants and their resettlement.
  • International aid, development assistance, defence and related programs to help vulnerable countries improve their own resilience.
  • Education, research and skills development, to ensure the country has the right capabilities to support the types of initiatives outlined above.
  • Systems to measure progress towards achievement of the strategy’s objectives.

By inference the strategy would also consider the means by which the country can achieve and ideally exceed its greenhouse emissions abatement targets.

Why this should be an urgent priority

We’re already starting to experience climate change and its manifold effects. Businesses that are canaries in the coal mine are to be found in sectors such as agriculture, insurance and emergency management. To the trend watchers in such fields it is increasingly clear that the climate is changing, and that the effects are likely to be generally negative and far reaching.

A changing climate (and the inference of human causes) may affect businesses and communities in several key ways:

  1. Increasing risk through the direct and secondary impacts of warming, extreme weather and rising sea levels. This will flow through to increased costs of insurance, asset protection and repair. Urban businesses and those dependent on coastal infrastructure or suppliers are not immune.
  2. Farmers, vintners, tourism operators, water utilities and others who depend on the continuing provenance of a natural asset such as a rice field, river, coral reef, snowfield or beach are increasingly exposed.
  3. The potential impost of carbon taxes/pricing, international trade sanctions and/or societal backlash on carbon-emissions intensive businesses. Even relatively environmentally benign industries may be affected by increasing costs if their supply chain includes emissions intensive processing or transportation.
  4. Some industries will actually benefit by providing goods and services that will be more sought after as climate change progresses. Coastal protection and storm water infrastructure are two amongst many examples.

In time the effects of climate change will dominate global and national economies. Countries that have realised and planned effectively for the challenge will thrive, perhaps like the Netherlands, which commits a material proportion of its GDP to an ambitious 200-year plan to defend its low lying nation against sea level rise and river flooding.

Even so it will be a fraught journey, with certain industries and low lying communities eventually needing to be abandoned. A country that plans ahead will reduce the chances of its citizens becoming climate or economic migrants, or of plunging its people into civil or regional conflict over increasingly scarce water and food resources in the second half of this century.

Filed Under: Australian Government Climate

12 March 2015 By David McEwen

An Intergenerational Moment

An Intergenerational Moment
The Australian Government’s latest Intergenerational Report was released last week but misses an opportunity to start a key conversation. Looking 40 years into the future – what used to be two generations but is now closer to one given that the average age of parents having their first child birth is now over 30 – it is updated every five years or so.

In this case the report predicts the Australian population will have grown to around 40 million (from just under 24) – not unlikely given the current net growth of 1 person every 90 seconds or so. The average person will be older, with relatively fewer of working age and many people living longer into retirement. We’ll need a lot more healthcare and pension costs will soar, which will need to be funded from a relatively smaller tax base due to the reduced overall labour participation rate.

Meanwhile, by 2055, atmospheric carbon dioxide concentrations are expected to be anywhere between 480 and 580 parts per million, up from around 400 today (a 20-45% increase) and from about 320 when formal records began around 60 years ago. Average global temperatures, in turn, are likely to rise by a further 1-1.5 degrees C over current levels. Mean sea level rise is likely to be between 5 and 30cm. In these projections, the lower level of each range assumes deep cuts are made urgently to global greenhouse gas emissions.* To borrow a cricketing term, the “required run rate” involves cuts of around 6% per year, versus actual performance last year of an estimated increase of about 2.5%**

While it does contain a brief section on climate change, the 2015 Intergenerational Report is largely silent on the effects of these impacts of climate change on Australia’s future population and economy. In terms of its use as a facilitator of hard conversations between governments and the people, it fails to ask critical questions such as:

How will we keep our elderly (and outdoor workers such as farmers and construction personnel) safe from searing heat waves, which are expected to increase in intensity and frequency and exacerbate our health spending crisis?

How will we ensure fresh water security for a population base nearly 70% greater than today’s, particularly with rainfall patterns becoming more erratic?

How will we maintain a productive agricultural sector to feed Australians (and our export partners) with alternately parched, drenched and warmer farmlands?

And how will we deal with exposed coastal property and critical infrastructure such as ports, key airports and roads from storm surges that will be significantly heightened by rising seas and cyclonic winds?

If our tax base is already weakened by changing demographics and private insurance may become unaffordable, how will we afford the level of investment necessary to adapt to climate change and the likelihood of more frequent and costly natural disasters?

Within these questions, however, lies significant opportunity for a range of industries to position both existing and new products and services to the next generation of government, consumer and private sector buyers.

Talk to Adaptive Capability today about safeguarding and enhancing your business’ future.

 

*Source: United Nations Intergovernmental Panel on Climate Change Assessment Report 5, released 2014; ranges are approximate and have been estimated from graphs appearing in the report.
**Source: CO2 Now

Filed Under: Australian Government Climate, Climate Change Adaptation, Federal Budget, Risk management, Stakeholder engagement

30 August 2014 By David McEwen

Reining in Runaway Software Inefficiency

Data Centre

Many organisations are investing in making their Internet and IT infrastructure more energy efficient. But in the search for sustainability, a hardware and data centre-centric approach may be missing the point.

Recently, Adaptive Capability was asked to comment on an Australian government initiative to improve the energy efficiency of data centres.  The discussion report proposes a number of sensible suggestions including applying energy efficiency ratings and/or minimum standards to data centre facilities and the IT equipment they house.  However, we wondered if these approaches obscured a much broader opportunity for transforming the IT industry to a more sustainable footing.

What we’re seeing in the data centre space is a run away freight train of more and more processing power and storage globally, supporting all the amazing web apps that people suddenly cannot live without, coupled with corporates collecting vast amounts of “big data” to try to get new insights about their customers and products.

Fundamentally, energy demand in data centres is a behavioural problem linked to our use of technology.  While we’re not going to be able to change that very easily, buying more energy efficient servers or improving the Power Usage Effectiveness (PUE) of our data centres seems to to be like putting a band aid on a cancer victim. We think, however, that without trying to tackle the apps/big data juggernaut, there is something that governments could do that might have a more sustained impact

As a long term representative of a technical working group for the Australian government’s NABERS (National Australian Built Environment Rating System) we note that the data centre rating tool released in 2013 made significant compromises in attempting to come up with a measure of the efficiency of “useful computing output”.  Measuring hardware efficiency improvements in metrics such as megaflops or disk I/O (input/output) per Watt (W) is relatively easy but the working group didn’t manage to figure out a way to build a viable, assessable metric that would serve as a proxy for, for example, “emails delivered per W” or, more usefully, “tax returns processed per W” or “Facebook posts per W”.

That’s where we think a lot more work is required: tackling the efficiency of computer software itself (as well as the way people use it).

The inefficiency of software is, we believe, directly linked to the continued realisation of Moore’s Law, which has effectively led to a doubling of compute power (typically for about the same or lower cost) every couple of years for the last 50 years.  This has created a software development culture that encourages “bloat-ware”: there is no need for coders to cut resource efficient code because a faster computer or device with more RAM (Random Access Memory) and storage is released every few months. Meanwhile there’s money to be made in adding new features (whether they’re needed or not) and churning out new versions of ever more resource hungry software every couple of years.

Inefficient code (and lazy operating systems that allow a build up of “system detritus” and memory leakage) benefits the hardware suppliers since it creates an impetus for people to upgrade their devices on a regular basis, cementing a mutually-beneficial relationship between the hardware and software worlds.

Many organisations typically figure on replacing compute equipment within three years (and many people replace their mobile devices more frequently in line with two year phone plans), creating a mountain of eWaste with huge ecological impacts in terms of embodied energy, CO2e emissions and resource depletion.  Whereas you’ll typically get at least 50 years of economic value out of a building, meaning the embodied energy is usually significantly lower than the energy in use, in the case of computing hardware the equation is probably a lot closer to parity or worse and the lifecycle operating energy costs of a server typically exceed the purchase price.

If we are serious about tackling ICT energy efficiency we need to start with the software industry.  Universities should be teaching resource-efficient software development.  There should be measures to encourage applications and operating systems that run comfortably on older hardware. Major software and hardware companies (which are typically US based, so international cooperation would be required) could be investigated to see whether there is any evidence of anti-consumer collusion in perpetuating the Moore’s Law-driven spiral of software upgrade necessitating hardware upgrade. Leaders in sustainable computing (i.e. maximising the longevity and efficient use of compute resources) should be identified and celebrated.

Consumer education is also important to help people understand how their use of technology is leading to inefficiency. Something analogous to the former Australian Labour Government’s “black balloons” campaign but associated with the energy costs of each photo they upload to Facebook; each Google search; even the extra bytes of storage associated with their email signature file and the near ubiquitous “Please consider the environment before printing this message” sign off.

We recommend the objective of government policy in this area should be, on the one hand, to minimise the amount of hardware and associated infrastructure required to perform a particular function, but also, critically, to prolong the economic life of that investment in hardware and infrastructure.

Talk to Adaptive Capability today about ways to safe guard your organisation’s future.

Filed Under: Australian Government Climate, Climate Change Mitigation, Ecological Footprint Measurement, Information Technology, Software, Strategic Adaptation

22 July 2014 By David McEwen

Climate change: the hefty price of business as usual

Confrontation

The debate is heating up, and yet Australia’s political leaders seem to be missing the real cost of climate change – a former Goldman Sachs heavyweight sheds insight into which parts of the economy will be hit by inaction the hardest.

Where do our major parties really stand?

The political world has become a bit topsy turvy lately. Countries like Canada, previously respected for their environmental leadership, have become international pariahs for promoting exploitation of their tar sands deposits.

And in Australia, as more than one commentator has observed, it’s become impossible to tell up from down as politicians backflip on major reforms.

The Liberals are dumping a free market solution for greenhouse emissions reduction (the carbon tax was legislated to transition to an Emissions Trading Scheme after the initial fixed price period); Labour is opposing a big government solution (the Coalition’s Direct Action scheme); and ironically the Greens are against a rise in the fuel excise tax (which might have sent a pricing signal discouraging the use of high emitting private vehicles).

What’s the cost of discord?

Just as Australia winds back its carbon scheme, a chorus of influential conservatives is dispelling arguments that reducing greenhouse emissions is taxing on the economy.

Hank Paulsen is a commentator to watch. He served as the US Treasury Secretary during the Bush administration and before that, was the head of one of the world’s most successful investment banks – Goldman Sachs. Having recently published a call to action on climate change in the New York Times, he’s teamed up with Republican former mayor of New York Michael Bloomberg and others to produce a report called Risky Business.

Risky Business focuses on the economic impacts of climate change in the US over the remainder of the century and identifies the worrying financial impacts of sticking to a business as usual scenario.

Here’s a quick summary of the Risky Business forecast:

  • Property damage from coastal inundation in the hundreds of billions of dollars
  • Decreased labour productivity for outdoor work due to the rise in extremely hot and/or humid days
  • Ballooning energy costs (partly due to soaring demand for air conditioning)
  • Stretched healthcare systems
  • Increased heat-related mortality
  • Reduced agricultural productivity

Acting now may leave Australia in a better financial position

 In fact, not only does a business as usual scenario turn out to have significant costs; a new economic study commissioned by the United Nations has found that a high emissions reduction scenario could transform major economies to zero net greenhouse emissions as soon as 2050 while still maintaining comfortable rates of growth. Australian National University economist Dr Frank Jotzo, a lead author of the forthcoming report, has noted (Sydney Morning Herald 9/7/14) findings that an annual Australian GDP growth rate of around 2.4% could be maintained while making massive emissions reductions to energy, agriculture and other sectors.

And this is where the rhetoric about the economy paying the price of slashing carbon emissions starts to sound more than a little hollow.

Of course studies and predictions come and go and political will is a huge obstacle to be overcome in many countries. However, with notable conservatives questioning the viability of business as usual and growing evidence that the move to a low emissions scenario may not be as economically difficult as it has been portrayed, the mood is beginning to shift.

This shift presents both risks and opportunities for many organisations. To find out how, talk to Adaptive Capability about safe guarding your organisation’s future.

Filed Under: Australian Government Climate, Climate Change Adaptation, Climate Change Mitigation, Strategic Adaptation, Uncategorized Tagged With: Climate change, Direct action scheme, Emissions Trading Scheme, Frank Jotzo, Hank Paulsen, Michael Bloomberg, Risky business

10 July 2014 By David McEwen

Grim times ahead for Australia’s largest industry

Coal Loader

Business has been booming in the mining sector – until now. Here’s why investing in all the wrong places is setting Australia on the economic back foot.

Australia’s economy has effectively ridden through the last six years of economic uncertainty on the back of the mining boom. But as the world moves towards cleaner energy sources, remaining ‘open for business’ as the world’s quarry is putting Australia on an unsustainable path at odds with the evolving demands of many developed and developing economies.

The fast facts

  • Mining is Australia’s largest industry by revenue – combining direct mining activities and the associated mining services industry, the sector accounts for nearly 20 per cent of Australia’s $1.5 trillion GDP.
  • Australia’s growth is too dependent on mining – the Australian Bureau of Statistics notes that 80 per cent of GDP growth in the March 2014 quarter was contributed by an 8.6 per cent surge in mining output, though this was in part due to a relatively benign storm season.
  • The sector is almost half dirty energy – Fossil fuel extraction accounts for around 45 per cent of the mining industry’s output, the remainder being comprised of iron ore, other metals and minerals. The majority of coal, oil and gas output is shipped abroad, accounting for about 20 per cent of Australia’s exports.
  • Mining creates fewer jobs than you think – while it’s one of the nation’s most lucrative industries, the fossil fuel mining sector only employs about 80,000 people, well under 1 per cent of the Australian labour force. Which perhaps is just as well.

Yes, there will continue to be a market for fossil fuels decades to come. But despite massive expansion of coal-based power generation in China and India, there are signs that the growth spurt is coming to an end and demand may quickly waver.

Busting some renewable energy misconceptions

Historically renewable energy sources have been significantly more costly to operate – but there have been a number of game changing developments in clean energy sources around the world that Australia will move too late to cash in on when demand for fossil fuels dries up.

Building a new wind farm recently reached life cycle cost parity with a coal fired power plant of equivalent output, and large-scale solar technology is expected to become just as cost effective in the next couple of years.

There is huge investment in battery storage technologies, meaning it will be increasingly feasible for wind and solar plants to continue supplying the grid when winds are light or the sun isn’t shining.

And growth in renewable energy investment continues to accelerate even as the world’s appetite for coal is waning, driven by the early warning signs of climate change.

A recent report from the Association for Sustainable and Responsible Investment in Asia predicts that Chinese thermal coal demand could peak by 2020 and then start to decline. Despite building hundreds of new coal fired power plants in the last decade, China is one of the world’s biggest investors in renewable energy and its people, who currently suffer from chronic air pollution, are clamoring for a move towards cleaner energy and industry.

Australia is set for a hard landing

Meanwhile, Australia is still investing massively in the very things its largest trading partner is actively seeking to rid itself of: fossil fuel extraction and the associated infrastructure, including the controversial expansion of the Abbot Point coal terminal in the middle of the world heritage-listed Great Barrier Reef. These are investments with a multi-decade economic life.

Australia’s government seems intent on ignoring the warning signs – both economic, social and climatic – and continuing to support a toxic and archaic industry. The recent Federal Budget affirmed that it is simultaneously hell bent on destroying Australia’s renewables sector, right at a time when investment and incentives should be switched out of fossil fuels and into clean energy.

Loss of the fossil fuel mining sector would be a drop in the ocean in terms of job losses though more significant in terms of company tax receipts. But rather than plan proactively for this inevitable and essential transition, Australia seems intent on setting itself up for a very hard landing.

Whether directly, indirectly or passively through misdirected government action, all sectors face a level of risk from climate change and other global environmental issues.

Talk to Adaptive Capability today about safe guarding your business’ future.

Filed Under: Australia Mining Sector, Australian Government Climate, China Sustainable Energy, Clean Energy, Climate Change Adaptation, Climate Change Mitigation, Coal Mining China, Federal Budget, Green Energy, Mining Boom

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