The Unavoidable Green Future

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Ben McNeil is a very well-spoken young man. The economist and climate scientist is a far cry from the stereotypical climate campaigner — whether that’s a Flannery-style Akubra-wearing bushie or an inner-city trendy "basket-weaver".

In fact, McNeil looks and speaks like the disarmingly normal and mainstream young professional he is. His message is equally mainstream: that climate change is as much about the bottom line of dollars and jobs as it is about rainforests and polar bears.

As a senior research fellow at the Climate Change Research Centre at the University of NSW, McNeil knows what he is talking about. "I’ve been doing climate change science for about 10 years since my doctorate, and over the past five years I’ve been putting my expertise into economics as well. I did a Masters of Economics as well … because we’re moving from the diagnosis of this problem to the cure."

The genesis of McNeil’s book lay in a meeting with former prime minister John Howard. "My scientific research has been about ocean acidification and greenhouse gases in the ocean, and also understanding the flow of net carbon in the natural and human-induced world," he explains, "and so I went and presented as a young scientist to the prime minister and cabinet."

McNeil couldn’t understand why central economic and national security policy makers weren’t also in attendance. "This is not a fringe issue. This is not a discretionary issue. This is an unbelievably core part of Australia’s future in terms of the economy and the environment. I thought, ‘This is insane.’"

After the meeting, McNeil had a short conversation with prime minister Howard. "He came up to me and said, ‘Great presentation,’ and we had a very nice chat. He sort of said to me something along the lines of, ‘It’s really great that you’re in climate change science, it must be really good for you considering how it’s such a big issue now.’"

"I understand where he was coming from — many people in society come from the individual perspective — he was trying to say that because climate change is such a big issue, it’s going to be good for me because I’m an expert." McNeil was staggered by the prime minster’s failure to grasp the importance of climate change as an issue.

"It was a bizarre thing," he says, which directly led to his decision to write The Clean Industrial Revolution.

"This book is actually saying there is a huge economic tsunami coming down on Australia if we don’t address these challenges."

"We’ve got industries that have grown their wealth by using a lot of oil and coal, and we’re now in a situation where that’s unsustainable in any shape or form — we have to decouple our economy from those resources. We have to de-coal, de-oil and de-carbonise our economy and that’s a big change, there’s no doubt about that. That is a change to the economy and I think that some sectors find that change in our society quite frightful. And in particular there’s a whole group who are going to have to change or they’re not going to be around in the next 10, 20 or 30 years."

There are no prizes for guessing which industries they are. "The coal industry, for example," McNeil continues. "One of the things about the coal industry is that for some reason they always seem to think that if we impose carbon cuts to the economy this is going to devastate their industry, and I actually think it’s the complete opposite of that. I think if we drive carbon cuts that make them put more R&D into innovation in low-emission coal, that could be a big first-mover advantage in a world that’s going to shift towards low carbon."

"Every single economic reform that’s happened in the country, whether it be occupational health and safety in the 80s or lowering tariffs, there was always this massive scare campaign from particular industry groups. But in the end it turned out that both those things were actually good things for Australia."

McNeil thinks Australia is now in a similar position to the now-bankrupt US car industry. "The US car makers went on a huge R&D spend to essentially develop gas guzzlers, and they did so because the government was weak. This was in the 1990s, oil was really cheap. The thinking was that oil is going to be around forever, people are going to want bigger cars, even though they don’t need them in the city, so they developed these Hummers and other massive gas guzzlers. Fuel economy didn’t change for 30 years in the US."

In contrast, Japanese car-makers developed fuel-efficient vehicles, spurred by Japan’s more stringent fuel efficiency regulations. "Japan is completely dependent on foreign oil and they actually have had a very enegy-efficient economy for a long time. So Toyota and Honda spent massive amounts on R&D on clean, fuel-efficient vehicles."

"Right now we’re in the same position in Australia as GM was in the 1990s. We’re protecting high-carbon assets. We’re protecting coal, we’re protecting oil and we are looking at carbon price, a carbon cost in the future. There is no doubt that the world is going to value carbon, and that means higher carbon costs. So how the hell is coal going to survive in a world moving to low carbon? It’s not going to."

McNeil points to research by Chris Reidy at the University of Technology Sydney which estimated a public subsidy of $9–10 billion on 2005–06 figures for the transport and electricity industries alone.

"When people say let’s do nothing, let’s just play that scenario out," McNeil continues, "if we do nothing in terms of emissions, it’s essentially saying let’s rely on these old relics for our future prosperity in terms of economic growth. But Japan and the EU, who buy most of our coal, are de-carbonising their economies. Why would they be buying coal? They’ll be getting gas, they’ll be getting renewables, they’ll be getting more nuclear, they’ll be doing other things. So someone who says this will be devastating to our economy — it doesn’t make sense."

But what about the argument, often voiced by the Opposition, that Australia should wait until the rest of the world puts a price on carbon before it acts?

"It’s funny. When someone says there is no current price for carbon they’re just living in la-la land. There’s a very strong shadow price for carbon right now, irrespective of the Government. Last year, 45 coal-fired power stations went off the books in terms of planning. They didn’t go off the books because of coal technology — we’ve had coal for a long time. They [were cancelled]because of the financiers, the Wall St bankers. They said ‘Actually, in a carbon constrained world, where you’ve got a 50-year asset, the carbon price could go from $20 a tonne to $200 a tonne within 10 or 20 years, so we’re talking about huge carbon liabilities here.’"

"These guys in the coal industry are just delusional, completely delusional."

McNeil is equally scathing about the carbon leakage argument. "An aluminium smelter is a 50-year investment. Maybe in the next 10 years these firms will get some gain from going to China, but in the long-term there’s a massive risk there, so they’re not going to go there. They’re actually going to places like Iceland. Iceland has geothermal and hydropower on their grid. Iceland is attracting Alcoa and Microsoft and IBM data centres because they have stable, secure carbon-neutral energy supplies, which completely eradicates all those potential carbon liabilities."

"Here’s another example which I quote in the book: Google, irrespective of the Government, are actually putting a price for carbon into their investment decision matrix. When they go out and build a big new data centre, they’re putting in a carbon price that essentially shuts out all high-carbon grids. They’re not going to come to Australia. There’s no new investment from these innovative firms here because we have a carbon-intensive economy."

Paradoxically, McNeil is something of an optimist about the future. "People somehow think that we’re going to go back to the dark ages if we do this and it’s quite the contrary. This [book]is trying to say this is actually in our economic best interests to do this, as well as our environmental interests."

"For me the biggest thing we can do is get away from this economy-environment crap. That will take the issue from discretionary, which it is now, to core. Actually, if you look at a world that is turning to low-carbon fuels, materials, buildings, designs, IT — if you’re looking at that world, we have to position ourselves for a world that is moving that way."

"I think we can lead it."

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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