South Australia has been hammered by “green envy” or something equally weird since it leapt to the forefront of renewable energy generation in the country and a promise to outperform on sustainability. But this week, after experiencing a blackout from storms that hit the power grid with more than 80,000 lightning strikes and brought down 21 transmission towers, it’s been hammered by the latest political phenomenon to hit our shores, the Donald Trump model.
Nick Xenophon, a South Australian senator who should know better, joined with the rabbit hole dwellers such as Barnaby Joyce (yes, out DepPM) to somehow blame renewables for the failure of the power lines to stand upright during the storm.
This despite Energy Minister himself, Josh Frydenberg, and the chair of the Australian Energy Market Operator, Dr Tony Marxsen, saying firmly the blackout was a “weather event” not a wind power event. Frydenberg sadly then joined with the anti renewable lobby.
Of course Xenophon rode into parliament on an anti gambling agenda and managed to shore up a heap of votes in the recent federal election from people thinking that kind of social sustainability must flow to other others areas of sustainability. He disappointed when he supported the axing of the carbon price and he disappointed this week.
As SA premier Jay Weatherill patiently explained on national radio on Thursday morning there was nothing wrong with the base load power. The grid did what it was meant to do and switched itself off. Just like your power does at home when there is a dangerous event: it trips.
Worse than the Xenophon outburst though, was that our PM, these days more chicken than lame duck, sided with the rabbit holers and jumped in to also attack renewables.
So these days, it seems, the naysayers on climate don’t bother following the tobacco lobby tactics, which were founded on creating false research and seeding doubt the genuine science. Instead they’ve embraced the Donald Trump model. This means you can spray anything that comes into your head, with no reference to evidence true or false, and wait for headlines to become the only thing people remember.
Key is to look sincere, angry or passionate. In a screen-based world, it’s the visuals that count and headlines are the only intelligence you need.
Well, it’s working for Trump.
Have we reached peak truth? Maybe.
Chatting about news sites that publish paid advertorial but don’t declare it, one senior property person last week said, “does anyone care?”
But that’s just one side of a growing divide in our nation. On the other side there is a flight to quality. The kids are going off facebook, books are making a comeback and the crappy fake stories on the internet will only fool you once.
We’re actually winning
On sustainability the South Australian model is winning. Renewable energy is top of mind with growing numbers of property owners and communities alike. The potential of batteries to disrupt and reinvent the grid is exciting and there are new calls for the people in built environment and electricity world to transition to collaboration. They’re the key messages we heard in scoping out content that will be heard at the All Energy conference next week in Melbourne, which we’ll be attending.
The mood on this side of our silly divide, is upbeat and surprisingly powerful, given what it was a year ago. The PM, despite his faults, has at least removed some of the toxicity from the climate debate. (Maybe it’s about to creep back) At home, sentiment is moving firmly positive and internationally we can see the giant capital markets awaken and flexing their muscles.
Survey says yes to climate action
First the good news at home. This week we heard from the Climate Institute’s Climate of the Nation series that support for climate action was nearly back to its 2008 high at 77 per cent.
A massive 90 per cent of respondents in the survey said responsibility for action sits with the federal government, and 67 per cent said they should take the lead.
The institute’s chief executive John Connor said he didn’t expect the strength of sentiment.
“The interesting thing from the polling – and I was a bit surprised – was that two thirds of people thought the Feds should take the lead on climate. I thought people had given up on that,” he told us on Thursday.
In view of that what did he think of our PM having his Donald Trump spray?
“I think he’s embarrassed himself. I think Australians can see a scam campaign.
“The big question is renewables. People see it as part of future economic opportunities and they can see its benefits.”
Connor says more companies at the big end of town are also starting to embed climate change into their strategy. His team is working with people in the finance sector. “We’re talking to a lot of senior financial folk, those who advise CEOs and the C-suite and actuaries,” he said.
The work is backed by the institute’s report in May this year, There Goes the Neighbourhood led by Kate Mackenzie and as Connor puts it, is about “opening channels” and using the institute’s role as “trusted messengers” to help these corporates work out what a 2 degree warmer economy might look like.
What Mark Carney said this time
While Australia phaffs around with a prime minister who uses a dreadful storm in South Australia to attack renewables, governor of the Bank of England Mark Carney made it clear last week that in his patch in the capital markets, they’re doing no such thing.
Carney is fast becoming the poster boy for the low carbon economy after his seminal speech to the insurance sector ahead of COP 21 last year. Now he’s done it again.
In a fabulous Arthur Burns Memorial Lecture in Berlin last week he not only stepped through the risks of climate change to the world’s financial stability – and how dependent our economic systems are on stability –but he also nailed the nature of the capital markets.
And if climate change doesn’t frighten you then the capital markets should.
What the capital markets do is price risk, he said, but not always today’s risk. They also price future risk, today, “even if the real impact is several years into the future.”
The screamingly dangerous side of the capital markets, though, is the speed at which they can price risk. We know that when markets smell a rat, they run. They don’t care about consequences., so when they run the whole world should get out of the way.
As evidence of the way the markets will respond to climate risk, Carney points out in his speech how the values of the top four US coal producers have plunged 99 per cent since the end of 2010, with three filing for bankruptcy. (Much of this, by the way, while the energy sector carried on its bombastic campaign that renewables were no match and no threat to fossil fuels. Again, evidence that the markets don’t care about the politics or operational needs of any industry, they just care about the money.)
Insurers too face existential risk
Carney’s last speech was addressed to the insurance industry. In this one he cames back to the topic. The generally thinking is that the insurers protect themselves very well indeed by taking a short term horizon, generally 12 months. Great for them, not so good for the banks (and the rest of us) who hold assets for much longer terms.
So, says Carney, “Warren Buffett can observe that climate change is not a threat to Berkshire Hathaway’s insurance business.”
In time though, many property assets will become uninsurable, he says, unless the government becomes the insurer. (And that’s going to be tough in a world that hates paying taxes.)
It’s “hardly the prescription for a growing business,” and it’s why the insurance sector has in fact been “particularly active in organising itself to address these existential issues.”
Part of the adjustment to a low carbon economy requires disclosure and information. Right now, he says, “companies do not know what to report or how to report it. Investors – even well-informed ones – cannot access the information they need to assess the risks in their portfolios.
However, the Task Force on Climate-related Financial Disclosures and the Need for Better Information under the leadership of the US’s Michael Bloomberg is making good progress, he says.
It’s not just carbon footprints a company needs to factor into its risk assessment. There are other concerns around governance and management. CalPERS for instance has estimated that out of the 10,000 firms in their equity portfolio, 314 are responsible for 75 per cent of the emissions.
Other risks are legal. Who’s responsible for not protecting assets against damage and can they be sued? Those questions alone can rack up the hours in legal fees.
Amid the risks are the opportunities though. Carney was upbeat on the prospects for green finance. Not just as a way to fund a transition to a low carbon infrastructure but as a way to protect financial stability.
“By ensuring that capital flows finance long-term projects in countries where growth is most carbon intensive, financial stability can be promoted,” he says. “By absorbing excess global saving, equilibrium interest rates can be raised and macroeconomic stability enhanced.
“And by allocating capital to green technologies, the prospects for an environmentally sustainable recovery in global growth will increase.”
“Financing the de-carbonisation of our economies implies a sweeping reallocation of resources and a technological revolution. The International Energy Agency estimates that globally as much as €45 trillion of investment in total could be needed in power supply and end-use efficiency to meet the two-degree target agreed in Paris,” he says.
China alone needs €500 trillion a year from now to 2020, he says.
For the benefits to be released, however, green finance “cannot conceivably remain a niche interest”.
“One proposal is international collaboration to facilitate cross-border investment in green bonds. The development of this new global asset class is an opportunity to advance a low carbon future while raising global investment and spurring growth.
“For investors, green bond markets offer a stable, rated and liquid investment with long duration. For issuers, green bonds are a way to tap the huge US$100 trillion pool of patient private capital managed by global institutional fixed-income investors. “
He notes the green bond market, at US$42 billion in 2015, has the potential to double this year.
Read the whole speech here