26 March 2013 – China has leapt to the front in preparing for a low carbon economy according to the  Climate Institute/GE Low-Carbon Competitiveness Index.

Australia has staged a “fragile reversal” in its previously declining low-carbon competitiveness, the report says.

But it’s Asia, especially China, is now taking centre stage. in preparedness for the low-carbon economy, the index concludes, as part of the  Institute’s Global Climate Leadership Review 2013 report.

The Climate Institute chief executive officer John Connor said the movements were against a backdrop of “delicate but important progress in UN climate negotiations, cuts in clean energy costs, growth in global carbon pricing and other policies and continuing strong investment in clean energy.”

“It’s clear that the centre of clean energy gravity is shifting to Asia, China in particular. China has improved its ability to compete in the global low-carbon economy significantly, boosted by high-tech exports and just under half of global public equity investment in clean energy.”

Other key findings from The Climate Institute/GE Low-Carbon Competitiveness Index include:

  • The top performers are France, Japan, China, South Korea and the UK. France and the UK rank similar as before. Three of the top five best placed countries are now in Asia.
  • China has leapt ahead of its previous score: it is now 3rd up from 7th. If China had not increased its clean energy investments, it would be in 8th place.
  • The most dramatic decline in performance relates to the United States, which is now 11th down from 8th. Its decline is mainly due to lower public equity investment in clean energy, shrinking high-tech exports and a surge in reliance on emission intensive air freight.
  • Australia is 17th but has slightly improved its low-carbon competitiveness due to a number of factors along with relative good economic health:
  • increased investment in infrastructure and to a lesser extent education
  • a slight increase in energy efficiency in the transport sector
  • an unusual but likely short lived drop in the value of natural resources as a proportion of national income.

Ben Waters GE director ecomagination, GE Australia and New Zealand said Australia could benefit from China’s rise in climate change action.

“Australia is in the right place at the right time to benefit from Asia’s continued growth. Securing our long-term productivity and prosperity – doing more with less – is critical to how we realise this opportunity,” Mr Waters said.

“While it’s promising to see improvements in Australia’s low-carbon competiveness, we have work to do to catch the pack. What has made us successful in the past may not keep us successful in the future. This report clearly shows that the countries best prepared for the low-carbon  economy are those that recognise the inextricable link between economics, resource security, policy and energy efficiency, and are taking action accordingly.”

Other highlights from a media statement by The Climate Institute include:

In January, OECD research showed that 29 of its 34 member countries have higher effective prices on carbon than Australia. Carbon pollution is priced – whether through a tax, market mechanism, or other policy – in every OECD country. Australia’s carbon price of $23 per tonne of CO2-equivalent, introduced in July 2012, comes in near the bottom of the list.

China, South Korea, South Africa and a number of other economies have also announced carbon pricing policies to come in effect in the next two years.

“We are on the path to improvement, with key elements of the Clean Energy Future package and the Renewable Energy Target providing a platform for Australia to benefit from the low-carbon transition that is underway around the world,” said Connor. “These actions are critical, as we have not been well prepared to compete in a world moving to limit carbon pollution.”

The Climate Institute/GE Low-Carbon Competitiveness Index uses about 20 indicators in three areas to measure carbon competitiveness: sectoral composition (historical snapshot of current economy – such as transport, trade emissions intensity); early preparedness (such as. investment in clean energy, growth in emissions); and future prosperity (such as investment in education and infrastructure).

This Index updates last year’s Index, which covered 1005 to 2008 by adding data to 2010. There is a time lag for all data for 19 indicators from all G20 nations to become public.

Supporting statements
Professor Ross Garnaut said: “The 2013 Global Review shows strong progress on reducing carbon emissions led by the East Asian economies. This is bringing within reach the possibility of avoiding dangerous climate change. Australia has much to gain from participating fully in this global tendency—because we are very vulnerable to climate change and because our resources and talents could make us a big winner in a global low-carbon economy. The Global Review is a reliable guide to where we stand in the global effort, and how fast we will have to run to avoid being left behind.”

Economist Lord Nicholas Stern said: “The key message from this review is important and clear: a great competitive margin in the world is going to be over carbon and energy productivity. Countries that slip behind … are going to damage themselves and their competitiveness and prosperity in the coming years.”

“We are currently, as a world, on a trajectory of emissions which looks as if it’s taking us over the next century or so to temperature increases of 3, 4 or even 5 degrees Celsius with quite a high probability. That is enormously dangerous. We haven’t been above 3 degrees for around 3 million years … when the sea levels were roughly 20 meters above what we see today.”

“This is an enormous opportunity, one that as well as reducing the risk of climate change will make us more energy secure, cleaner, quieter, safer, more biodiverse and so on. It’s a very attractive path but it does involve investment and it does involve change.”

“Although the world is moving much too slowly and needs to accelerate, this story of competition and change has already begun. And the updating of the Low-Carbon Competitiveness Index associated with this new report is very revealing. You see that China, through its reorientation and its new strategic priorities and their implementation, is already jumping up this index. The centre of gravity of this story is moving away from Europe.”

“Australia is currently ranked quite low – 17 out of the G20. But Australia’s new clean growth initiatives are likely to take it up that index, likely to make it more competitive on this vital dimension on carbon and energy productivity. That will be good news for Australia and good news for the world.”