11 April 2012 – China, one of 32 countries with an emissions trading scheme, is deploying renewable energy at an astonishing rate and had prioritised climate change in its latest five year plan, Parliamentary Secretary for Climate Change and Energy Efficiency, Mark Dreyfus, told the Australian Industry Group economic forum today (Wednesday). The country was also about to pilot its schemes in seven provinces covering 200 million people.

The 32 countries including the UK, New Zealand and all Europe, also had  their own carbon price or pollution tax, Mr Dreyfus said.  California, the world’s eighth largest economy, started its emissions trading scheme this year.

Although Australia is clearly in no danger of going it alone, he warned that if it failed to grasp business opportunities, and modernise its processes and products, it would not secure a share of the growing clean economy.

Mr Dreyfus said the clean energy and low pollution technology, goods and services market was estimated to be worth $US5 trillion dollars in 2009 and is growing rapidly.

“We cannot ignore or hide from the significant shift to cleaner energy sources and lower pollution industries by our global economic competitors. This shift is driving substantial investment in industrial innovation,” he said.

A strong reason for Australia to get moving was the agreement by all countries made at the UN climate change talks in Durban, South Africa last year on a framework for a legally binding global agreement to be reached by 2015 to reduce rising pollution levels. This was likely to mean a globally binding treaty by 2020, he said.

Mr Dreyfus said about $13 billion of revenue will develop renewable energy technologies, jobs and industries to complement the effect of the carbon price.

The Clean Energy Finance Corporation will invest $10 billion in businesses seeking funds for clean energy proposals and technologies. It will also invest in the transformation of existing manufacturing businesses to re-focus on meeting demand for inputs for these sectors such as manufacturing wind turbine blades and solar photovoltaic panels.

  • The Australian Renewable Energy Agency will administer $3.2 billion in existing government grants for research and development into renewable energy technologies and initiatives to bring them to market.
  • The work of these two agencies will be complemented by the renewable energy target introduced two years ago, which requires Australia to purchase 20 per cent of its electricity from renewable sources by 2020. Together the renewable energy target and the carbon price are expected to leverage around $100 billion in private sector investment over the next four decades.
  • The government has also established the $40 million energy efficiency information grants program to provide practical measures to small businesses and community organisations to reduce their energy costs.

In the longer term Australia was well positioned to manage its economy by continuing investments in skills, training and infrastructure, Mr Dreyfus said.

“In 2009, there were around half a billion middle class consumers in the Asia-Pacific region. By 2020, this is expected to rise to 1.7 billion people, as growth in economies like China and India lifts those populations out of poverty.

”So although the focus today is on Asian demand for Australia’s resource exports, these economies will also become major new markets for our agricultural, manufacturing and services exports,” he said.

Businesses cutting pollution

With the carbon price initially set at $23 per tonne of carbon pollution, it is designed to create an incentive to cut pollution at an industrial level on an industrial scale, he said. This had already begun to drive change among companies with and without a liability.

“A good example is major plastics manufacturer Qenos, in Altona which is building Australia’s largest co-generation plant in a decade to reduce its carbon pollution by 100,000 tonnes a year – the equivalent of 24,000 cars off the road.”

Victorian dairy processing company, Longwarry Food Park exports longlife milk and milk powder to 30 countries around the world. Ten years ago it had a turnover of $1 million, with high energy costs second only to the cost of raw materials, he said.

The company, with the support of government grants, decided to transform itself into a highly energy efficient operation and now makes a saving of 25 per cent in energy bills despite increasing electricity costs.

It has also reduced its carbon pollution by 25 per cent or 19,000 tonnes a year, and has increased production by 300 per cent since 2001. Last year, it had a turnover of $85 million. Payback time for the various upgrades to the plant range from six months to five years, Mr Dreyfus said.