New Matilda -
Dan Cass | Andrew Bray
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| IMAGE: Chuck Coker, Flickr. |
The dominance of 'econobabble' and market approaches have
hurt climate action. That's why renewable energy is vital to the future
of the climate and the economy, write
Dan Cass and
Andrew Bray.
The world seems particularly chaotic this winter. The climate news is diabolical, with fears about melting of the Arctic
permafrost and the ancient ice stores of the
Himalayas.
There is a Royal Commission into the brutal treatment of children in
prison in the Northern Territory. And that is before we get to ISIL
terrorism and other mass shootings in Europe and America.
There is Britain's brain-snap exit from Europe and the punchline that
Boris Johnston and the other Tory geniuses have no clear plan for it.
And there is The Donald. The Republican Party's candidate for President
of the United States of America, Donald Trump.
All these problems require sane collective action, which means
democratic use of the power of the state. The good news – and don't we
need some – is that after three decades, our handcuffs are coming off.
Since the 1980s (or even the mid-1970s according to
Michael Pusey)
the west has slowly strangled itself and the rest of the world with a
political obsession that goes under the name of "neoliberalism" (or "the
Washington Consensus", the Australian version of which Pusey called "economic rationalism").
During the recent Federal election, Australia took a step away from
the naïve adoration of markets and lower taxes. The Coalition had to
accept that generous superannuation tax breaks for the super wealthy are
not good policy. Both sides of the aisle heard the message that wealthy
property investors are less deserving of tax breaks than first home
buyers. The Coalition may be set on giving a
$51 billion hand out to corporate Australia but it is unpopular and may be resisted in the Senate.
It is against this background that we want to put forward a new idea, framed in response to a recently published essay titled
Balancing Act,
by George Megalogenis, the Australian author and economics graduate.
Our idea is that renewable energy provides the perfect act of renewal
for the democratic state at this time.
In
Balancing Act, an issue of the Quarterly Essay series,
Megalogenis pinpoints the driver of much of the malaise in Australian
policy making; neoliberalism, or the "open model" as he calls it. He
says that it time to accept that the open model which both sides of
politics have implemented over the last thirty years gives us no path to
future prosperity and the voters, yearning for long-term vision, want
"a return to some form of government intervention in the economy".
In our response to his
Quarterly Essay, we want to briefly explore how Megalogenis's arguments about the need for state intervention could be used to;
- slash greenhouse gas emissions
- build a reliable consensus in climate politics
- help fix the economic model.
Our argument is that the new conversation about government
intervention in the economy provides a way to solve the climate riddle,
by moving beyond the "
market fetish".
Megalogenis writes:
The Coalition can't lay claim to the
future until it adjusts to the two big shocks of our age. The first
shock is that the version of capitalism favoured by the conservatives is
broken… The second shock is that the international community may
finally be ready to tackle climate change.
Policy solutions that match the global warming threat require
transformation, not tinkering. As Megalogenis rightly points out, these
processes of restructuring require governments to stop simply devolving
agency to the invisible hand of the market.
The return to regulation in the economy could revitalise the
environmental agenda, cutting through the impasse of carbon politics
with a healthy dose of nation building in the area of renewable energy.
It would replace fifteen years of neoliberal environmental orthodoxy
with a new agenda that is both more rigorous and more popular.
Neoliberal Environmentalism
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| (IMAGE: Thom Mitchell.) |
Environmentalism from the 1960s until the 1980s was a diverse
movement. There were public transport and urban design activists calling
for more rational, convivial cities. Conservationists campaigned to
protect biodiverse forests from destruction. Greenpeace put its ships in
the way of nuclear testing and toxic waste dumping. Deep greens
proposed new cultural paradigms to replace consumerism and economic
growth.
Then, at some point in the late 1990s, the climate threat became so
great that it rightly dominated the environmental agenda in Australia
and around the world. This occurred at the same time in history that
free market ideology was ascendant. The timing was tragic.
Until this point, environmentalists responded to global warming with
tools that had already worked in achieving environmental and other
policy progress. These were forms of government regulation: bans on some
chemicals and practices, standards on imported and locally manufactured
products, incentives for clean production, plans for rational design of
cities around mass transit.
Unfortunately, however, greens became convinced that the best and
perhaps only way to save the climate was to monetise it. (Or more
accurately, to monetise tradeable rights to pollute the climate.) We
reduced the complexity of a global system out of control into the mere
absence of a price signal.
Rather than build a social movement for transformation, we operated
like technocrats. We learned to speak in what The Australia Institute's
Richard Denniss calls "
econobabble".
Too tentative to pick winners – solar and wind over coal and gas – we
hid behind economic talk of carbon prices and market architectures. It
is no wonder the public cooled to global warming.
The emerging criticism of the open economy doctrine now allows us to
return to a more rational and constructive conversation. Megalogenis
says "The debate we have to have is on the role of government in the
economy". The practical program he prescribes starts with public
investment in infrastructure.
Our view is that the first candidate for this infrastructure
development should be the switch to clean energy for electricity and
transport. Australia's economic opportunity here is vast as we have
prodigious renewable energy resources which are tragically
underdeveloped. We also have the opportunity to create goods for export.
Recent announcements in electric vehicles indicate just how rapidly the world will move towards green industries. The
Netherlands and
Norway
are looking to have only electric vehicles sold by 2025 and India has
an astonishing goal to replace all of its petrol and diesel cars with
electric vehicles by 2030.
If the Paris climate agreement succeeds, this would require wealthy
countries such as ours to decarbonise our energy sector by about
mid-century. For long-term assets such as energy infrastructure,
achieving a complete rebuild before 2050 means starting immediately with
a concerted program of investment. This is a massive economic
undertaking and requires strong government intervention. According to
the
International Energy Agency, rebuilding a clean energy system by 2050 would cost US$44 trillion globally. (Crucially, it would
save US$115 trillion, because fuels such as the sun and the wind are free as well as renewable.)
Giles Parkinson, the editor of
RenewEconomy, estimates that
Australia will end up spending $130 billion on electricity networks over
20 years from 2000 to 2020. He calls this "
pure folly",
propping up last century's old, dirty, one-way electricity model, when
our competitors are investing in renewable energy, battery storage and
smart grids that will deliver cheaper, cleaner, more secure energy. Our
mal-investment will be of little use when energy companies like AGL
eventually retire their coal-burning plants. Australia cannot afford
waste on this scale. Nor can our climate bear the consequences of
further delay.
What is needed to transform the energy system is for government to
set a clear goal to decarbonise by mid-century and take firm hold of
economic levers to make it happen. The
National Energy Objective
– the foundation of all energy policy in the country – needs to be
modernised to include decarbonisation as a goal, alongside secure and
efficient delivery of energy.
This greening of the energy and transport sectors would create real
investment in long-term, productive assets. It will generate jobs and
new industries. It is a perfect example of the kind of government action
that Megalogenis recommends.
The reason that we are both so upbeat about the renewables boom is
that it offers everything that carbon politics failed to deliver. Where
carbon markets are abstract, renewables are tangible; solar panels and
wind turbines you can touch. Carbon markets created a small number of
direct jobs within the banking sector – which is hardly the world's most
loved profession – but building renewables and a smart grid will
generate millions of mostly blue collar jobs around the world, according
to a recent report from the intergovernmental
International Renewable Energy Agency.
Where carbon price schemes are ultimately just another globalised
market – like currencies or commodity futures – renewables can be owned
and operated by local communities. For example, most of the wind farms
in Denmark are local co-operatives. Shareholding or direct ownership of
clean energy – especially
rooftop solar – gives it an unassailable social license, with electoral support across the political spectrum.
With the rise of smart grid technologies, even urban communities can
own their own 'virtual' power stations; roof-top solar and household
battery power, traded and optimised in real time, providing reliable
energy to replace baseload coal.
Energy As Innovation
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(IMAGE: Flickr, CeBIT Australia)
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Prime Minister Turnbull has called for innovation. Smart energy is
innovation on steroids. Australia already has start-ups making hardware
and software that we should export to a world hungry for clean energy.
Reposit is building solar and battery storage systems that sell their
aggregated energy into the grid, like a virtual power plant. Redflow is
developing consumer and utility-scale batteries on the 'flow' design,
which can provide very high durability energy storage and safety and
sustainability improvements over conventional lithium-ion batteries.
A combination of 'push' policies that stimulate innovation and 'pull'
policies that provide stable demand for renewables (and storage and
smart grids) would liberate a wave of entrepreneurship for the Prime
Minister. These products, services and new business models are more
responsible exports than coal and they are becoming more competitive.
Even if no top-down mandate for clean energy emerges from the Paris
climate agreements, the natural growth of unsubsidised renewables will
be worth US$7,800 billion by 2040 according to
Bloomberg New Energy Finance.
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| Former Australian Minister for the Environment, Greg Hunt, speaking at the Paris climate talks. |
The most important reason to rebuild climate politics around
renewables (as distinct from carbon markets) is the politics itself.
Renewable energy has a super-majority of support (70 per cent plus of
the electorate), in major markets all around the world. Polling
commissioned by the
Australia Institute
found that three quarters of Australians would support a party that
boosted solar and battery storage and 63 per cent are prepared to
endorse a national switch from fossil fuels to renewables by 2030.
Even in Australian wind districts, where a vocal minority of
opportunistic politicians have whipped up anti-wind farm panic, an
amazing majority prefer wind and solar to coal or gas. Detailed polling
in ten wind districts in 2011 found
83 per cent of people support wind power. Carbon markets are nowhere near as popular.
Tony Abbott's 'great big new tax' scare campaign killed carbon
markets in the popular imagination (assuming they were ever truly
popular to start with). Similarly, toxic misinformation makes it
impossible to conceive of a bipartisan national carbon market policy in
the US. Strange, extreme ideas are also percolating up in the Tory party
in England, including paranoid notions that wind turbines cause
'infrasound'
sickness and death.
Prime Minister Turnbull's post-election cabinet reshuffle has created
a perfect political setup to take a renewable energy leap forwards.
Energy Minister Josh Frydenberg has taken on the Environment portfolio.
It is a high risk situation for Frydenberg, because the 'jobs versus
environment' frame through which these issues are seen means he appears
to have to choose either energy or the climate. Encouragingly, he
recently told a clean energy conference that his job was to "move energy
into the environment [portfolio]".
As one of us has written in
The Guardian:
It depends entirely on whether the
two sides of the portfolio – energy and the environment – are set in
conflict or in harmony with each other.
…
If Frydenberg does not move quickly
to capitalise on this innovation, then he is caught between coal and a
hard place. He either fails one half of his portfolio or fails the other
half.
…
Unleashing the renewables
revolution is the only way that the new minister can do something
significant for the environment and at the same time, build Australia's
energy resources and energy security. This is an opportunity that Greg
Hunt never had when he was environment minister.
Renewables are the best and perhaps the only way to save the debate
about saving the climate. If Megalogenis is right, then Australia has a
narrow window of opportunity to use government intervention to reinvent
our economy and rebuild crumbling infrastructure.
The stakes are cultural as well as economic. Dark forces and racist
politicians are on the march around the world. Restoring public faith in
a collective, democratic space is a protection against the demagoguery
that Trump is bringing to the gates of the White House, if not to the
Oval Office itself. Clean energy infrastructure is the first and best
candidate for a new approach to nation building on a planet in peril.
Links
This, of course, has profound implications for
current energy industry business models. Instead of investing in large
fixed assets, as they have done for the best part of a century, Citi
suggests the utilities of the future will become distribution service
platform providers.
