Climate Change: Clean Energy Will Bring Exponential Returns

The Age - Editorial

Climate denialism has dissuaded billions of dollars of potential investment in renewable energy. Photo: Jessica Shapiro

America's great family dynasties were, for the most part, founded on the industries that powered Western economic growth. Oil, railways, car manufacturing, chemicals, banking and property development dominate the landscape of generational wealth in the United States.
One of those dynasties, the Rockefeller family, derived its vast riches from ownership of Standard Oil, now known as ExxonMobil. But one of the philanthropic funds controlled by the Rockefellers has declared it will no longer invest in fossil fuels because of its profound concerns about climate change.
The Rockefeller Family Fund says the clear evidence on climate change leads it to believe that reserves of oil, coal and tar-sands must remain in the ground "if there is any hope for human and natural ecosystems to survive and thrive". It says "there is no sane rationale for companies to continue to explore for new sources of hydrocarbons" and it makes "little sense, financially or ethically" to invest in companies that exploit fossil fuels.
And, in a spectacular denunciation of the company that made the family rich, the fund has damned ExxonMobil for engaging in "morally reprehensible conduct", saying it appears to have deliberately sought to confuse the public about climate change and its effects while seeking to exploit oil exploration as Arctic sea ice recedes.
It is a powerful statement, one that will reverberate through the global investment community because it is testimony to how opinion on climate change has profoundly shifted. The science cannot be denied. "History moves on, as it must," the Rockefeller fund says.
And yet, here in Australia, we are still waiting for this kind of seismic change to sway the investment community and, indeed, the political class. While a smattering of superannuation funds, equity funds and philanthropic foundations prioritise alternative energy investments over those that contribute to greenhouse gases, years of climate denialism from federal and state Coalition governments has dissuaded billions of dollars of potential investment in renewable energy technology and initiatives.
Prime Minister Malcolm Turnbull has been slow to show his credentials on climate change. Still, we welcome his decision to create a $1 billion innovation fund that will invest in clean energy projects. We also welcome his decision to retain the Clean Energy Finance Corporation (CEFC), which invests in sustainable energy initiatives, and the Australian Renewable Energy Agency, which has issued grants totalling $87 million for research and developing pilot projects involving solar, bio-energy, thermal and hydro-power generation.
But The Age urges Mr Turnbull to do much more than this. We say as much because the proposed new fund's $1 billion (dispersed in dollops of $100 million a year over 10 years) is a loan from the CEFC, not new money. It also appears to be focused towards large projects only. By contrast, government grants, which are essential to research and development projects and to small start-ups, do not feature in his announcement.
The fund is a good move, as far as it goes, but we urge Mr Turnbull to be far more courageous in developing intensive policies that might influence industry to move away from fossil fuels. Clean energy development is crucial but, as we have said before, a price on carbon emissions – in conjunction with new energy production – would dramatically change big polluters' behaviour and help transition Australia to a cleaner environment.