Building a cleaner, smarter economy Opinion Article

Jun 21, 2011 - 3:20pm

By Erwin Jackson, Deputy CEO, The Climate Institute

The recent Productivity Commission report on pricing carbon pollution confirms much of what we already know – the world is moving to limit pollution and drive clean energy investment, and Australia needs to keep moving too.

However, the report has led some in media, politics and business to jump to the wrong conclusion – that putting a price on pollution, by itself, will be the silver bullet solution in the climate change debate.

There is no question that pricing pollution is fundamental to cutting emissions cost effectively across the entire economy. But it’s only half the story. We need equal weight on policies that will unlock the opportunity to promote energy efficiency and develop our world class renewable energy resources.

With our power sector the eighth dirtiest on the planet and barely a toehold in the world’s multi-billion dollar low-pollution economy, Australia needs to be looking at the bigger picture.

Competitor countries in Asia and Europe are combining a triple set of policies: a price on pollution, energy efficiency measures and renewable energy targets.


They’re not only reducing pollution, they’re busy building energy efficiency into their economies and measuring carbon productivity – that is, the amount of pollution per dollar of GDP - in order to find low-carbon opportunities in their industries, goods and services.

They are making use of all three policies to increase domestic energy security and improve living standards by reducing local, regional and global air pollution.


Our competitors are taking the long-view, realising that investing today in energy efficiency and renewable energy, in addition to a carbon price, brings long term benefits. Pollution can be cut even more quickly and, eventually, more cheaply.

As a direct result, clean energy investments globally now regularly outstrip investment in traditional power generation. In 2008-09, 46 per cent of the world’s total electricity capacity came from renewable energy sources such as wind and solar. Globally, it’s estimated the renewable energy industry now employs up to three million people.

We have some catching up to do. A recent study by global technology giant GE found that energy efficiency growth in the US, Germany and the UK is almost double that of Australia.

Besides reducing pollution, energy efficiency measures conserve and cut energy use and save industry and businesses money - making them more competitive internationally.

Independent modelling commissioned by The Climate Institute shows effective action on energy efficiency could save AU$4 3 billion on the investment required by the electricity sector to meet long-term pollution targets. The Renewable Energy Target (RET) cuts another $5-6 billion off the bill by driving and fast-tracking innovation.

Importantly, energy efficiency measures come into their own in helping households manage their energy bills .

M odelling undertaken in 2010 for the Prime Minister’s Task Group on Energy Efficiency showed that households could save between $50 and $245 a year under a proposed National Energy Savings Initiative. More recently, the Victorian Government found that extending its energy efficiency schemes would deliver a net benefit of $1.9 billion to $2.6 billion to the state’s economy.

The other leg of the policy trifecta is the Renewable Energy Target. Under the RET, introduced in 2009, Australian companies and industries are already adopting cleaner technologies and innovation is underway in our universities and on the factory floor.

For example, Suzlon Energy, one of the world’s largest wind companies has reduced costs through a number of programs since setting up in Australia. 

It now pre-installs cables in wind towers, works with local wind tower manufacturers adapting generic designs that suit Australian specifications and is researching ways to incorporate Australian OHS standards, hot weather operating conditions and local grid requirements into local operations.

Amid the scaremongering and short-sighted politicking, it’s encouraging to see many businesses intelligently getting on with the job.

A carbon price is central to cutting Australia’s pollution, but to reap the full dividend of our efforts now is the time to aim higher and smarter with a bolder policy approach. With the right tools and imagination – and a little less fear - Australia can become a competitive, clean energy nation with an energy efficient culture. There is much to gain and we should not be afraid to step up and take our place among the best global players.

Erwin Jackson

Erwin is Deputy CEO of The Climate Institute. With nearly 20 years practical experience in climate change policy and research, Erwin has developed and led many national and international programs aimed at reducing greenhouse pollution. This work has been undertaken in Australia, Europe, North and South America, the Pacific and Antarctica. He has represented non-governmental groups and advised government and business in national, regional and international fora, including being a non-governmental expert reviewer of the reports of the UN’s Intergovernmental Panel on Climate Change. Erwin has written, researched and produced many publications on climate change and energy policy including a number of review papers in scientific journals such as the Medical Journal of Australia.
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