Monday, 4 April 2011

Real stimulus should be in new technology

Sydney Morning Herald
26 March 2011, Page: 14

PERHAPS in Australia we tend to assume every other country wasted their stimulus money during the depths of the financial crisis on stuff such as cash splashes, covered outdoor learning areas and badly installed, smouldering insulation materials. OK, that's harsh but let's just say they didn't, as the government's chief climate change adviser, Ross Garnaut, reminded us in his latest update this week.

Citing International Energy Agency figures, Garnaut wrote: "the injection of substantial 'green' stimulus spending by governments,.. reversed the 35 year decline in real terms in low emissions energy research, development and demonstration and raises the prospect of significant breakthroughs". That stimulus investment, he told a Sydney lunch on Wednesday, was "starting to pay off". The worry for Australia is that we will fall behind in the race to develop clean technologies that will reduce the cost of mitigating climate change.

This month the US company Clean Edge, reviewing trends over the last decade, noted how clean technology investment had raced ahead of projections that were originally deemed optimistic. The solar PV market grew from $US2.5 billion in 2000 to $US71.2 billion last year or 40% a year, compounded. Sectors such as wind, hybrid electric vehicles, green buildings and smart grid also enjoyed spectacular growth rates.

Not here. HSBC recently scored Australia the lowest compared with the European Union, the US, Japan and Russian climate investment. Of eight key areas, we rated positive in just one (modal shift, because we are doing feasibility on very fast rail) and negative in two (carbon markets and climate strategy, based on political uncertainty). On one area we went backwards:" [EISBC] have downgraded our momentum score for renewables from positive to neutral, as we do not expect any new additional incentives". So investors move on.

Paddy Manning Twitter: @gpaddymanning