Australia risks major shocks if an orderly transition to a low carbon economy is not planned, business leaders have been warned.
Former EU Climate Commissioner Connie Hedegaard told a business lunch hosted by the City of Sydney, and The Fifth Estate in a follow-up interview, that Australia could plan an orderly transition to a low carbon economy, or wait for disruptive and costly change.
“If one acknowledges that we need to go to a low carbon society, that climate change is real and we have to do something about it, then the choice is whether to do something about it in an orderly, gradual way, or in a very disruptive way,” Ms Hedegaard said.
“That is the choice. Do we want to plan how are we getting there, or do we wait and suddenly you will see disruptions that are much more difficult to handle as a society?”
Ms Hedegaard is a former conservative Danish politician who in her time as EU Climate Commissioner helped get the 28 member states of the European Union to agree to a binding resolution on carbon emissions reduction.
She was joined by Sydney Lord Mayor Clover Moore, Clean Energy Finance Corporation chair Jillian Broadbent, Climate Change Authority chair Bernie Fraser and Sustainable Business Australia chief executive Andrew Petersen to discuss Australia’s climate targets ahead of the United Nations Climate Change Conference in Paris at the end of the year.
In Australia, Ms Hedegaard said, she saw an “enormously polarised debate”.
“In Europe you would not be able to see party lines so much when it comes to climate,” she said.
“Right of centre and left of centre, they can have their discussions about tools and what is more efficient but they will not be discussing whether there is a climate change problem.
“That debate should be over.”
Australia was “not within cooee” of having a mature debate around the best policies to handle the issue, Climate Change Authority chair Bernie Fraser said.
Other countries are moving, Australia must act
Ms Hedegaard told The Fifth Estate there was a parallel between Australia’s situation of an economic reliance on fossil fuels and that of Norway, whose vast wealth was created on the back of oil and gas.
“Norway can already see they have lost 10,000 jobs [because of the clean energy transition],” Ms Hedegaard said. “The prognosis is it will continue to lose 10,000 jobs each year [for the forseaable future].”
Norway had had a great time with fossil fuels, she said, but accepted the future of energy markets restructuring.
“They have said they need to transition and have green competitiveness.”
Other sectors would fill the gaps where oil and gas were, but this would not be something that happened tomorrow or in the next year.
The crux was that we could “have an orderly transition or wait for disruption”.
But even with an orderly transition it will not be a walk in a park. It would take political and business leadership, she said, because transitioning from a coal economy could see loss of jobs, and it could take more years before the gains were seen and new jobs in renewables were created.
“That’s where political and business leadership is needed to find out what is a sustainable way of doing this,” Ms Hedegaard said. Responsible politicians were those that would seek to transition the economy in the best and most cost-efficient way, and ideally over a long-term horizon.
Australia’s situation with a heavy reliance on coal was not unique either. In the European Union, Ms Hedegaard said, there were also countries battling with the decline of coal, such as Poland.
“Poland is the coal nation, but if you ask the Polish business community, more and more business people say, ‘Yes, we have a great coal industry, but the world of the 21st century will look different to that of the 20th century.’”
Denmark proof of the low carbon economy’s success
Ms Hedegaard said Denmark was a great example of green economic transformation.
Before the oil shock of 1973 Denmark was 100 per cent fossil fuelled. By 2020 50 per cent of electricity will be wind-powered, and 35 per cent of the country’s total energy consumption will be renewable.
It’s also created jobs and export opportunities.
“In 2013, our general export grew by only 0.5 per cent, while clean tech exports grew by 17 per cent,” she said.
“We are actually living proof that we can make this transition in a way that is economically sustainable, which of course is the key.”
Renewables in fact, helped Europe during the global financial crisis, Ms Hedegaard said.
“There was one sector that managed during the first years of the [global financial] crisis really to contribute net to job creation – that was the green sector, clean tech sector, call it whatever you want.
“Today Europe has 4.2 million jobs in the eco-industries. Only in the renewables industry we have now more than one million jobs. And more than half of that – half a million jobs – were added to the renewables industry since 2008.
“During the time of crisis, and high unemployment, these sectors proved they have the potential to create jobs.”
On how Australia can fill the hole left by the coal industry’s decline, Ms Hedegaard would not be drawn.
“It is not for me to tell the Australians,” she said. “In Europe we are very conscious not to tell each state or country – that recipe will be to find what works for you.
Getting the process started now, though, was crucial, she said.
For Paris, the key priority for Australia, and other developed nations, was to have the emerging economies also living up to their responsibilities.
Emerging countries would only get on board if developed countries were aware of their special responsibility to reduce emissions given their historical contribution to the problem.
While many conservative commentators in Australia have ridiculed the divestment movement, Ms Hedegaard is one conservative who thinks it is a very important strategy.
“It’s interesting when the investment bank in Nordic area says we are divesting from coal. The Norwegian Sovereign Wealth fund – the biggest sovereign wealth fund – says we are going out of coal. Rockerfeller, Bank of England, it’s not small institutions anymore.”
It was a clear message, she said: do not continue business as usual.
“One can argue that at this stage it’s merely symbolic, it’s politics, but investment patterns are changing.”
Business must lead
Business community support and input was crucial to the climate change task, Ms Hedegaard said.
“We need business to spend the attention you can get, not to ask if there is a climate change problem or not, not to preach or lobby in favour of business as usual, but actually for coming up with specific solutions as to how we can best and most cost-efficiently make the transition we need so badly.”
It was a responsibility for everybody too, she said, not just a handful of leaders.
“We have to come from climate change being something the front-runners take care of to be something that goes into the core of our economic thinking. We must mainstream climate change into our economy. And that will happen best and fastest if there is an international framework.”
Ms Hedegaard will speak Tuesday 25 August at the City of Sydney’s CityTalk, The Politics of Climate Change, along with Shadow Minister for the Environment Mark Butler, Australian Greens Deputy Leader Larissa Waters and former Liberal Party leader Dr John Hewson.