Climate cash goes offshore

Courier Mail
Friday 23/7/2010 Page: 44

ONE of Australia's biggest fund managers yesterday said huge amounts of money available for investment in technology to fight climate change was exiting Australia because of inadequate government policy support. Colonial First State Global Asset Management head of responsible investment Amanda McCluskey said major institutional investors were eager to protect their assets from the physical or regulatory risks from climate change. As a result they were investing in clean technologies.

But the funds were flowing offshore to China and Europe where policies, such as carbon pricing, national clean-energy feed-in tariffs or state loan guarantees, gave investors confidence to invest in newer technologies over incumbent coal and gas power plants. At a Committee for Economic Development of Australia forum in Brisbane yesterday, Ms McCluskey said more supportive policies were needed to marshall private investment. "When I look across our portfolio, the place where we've got the most renewables investment is in China", she said. "There's real investment certainty there. Australia needs a carbon price, an emissions trading scheme".

Professor John Cole, director of the Australian Centre for Sustainable Business and Development, said China had invested a third of its economic stimulus in renewable energy But Australia, which used renewables for only 7% of its power, spent much of its (economic stimulus) at Harvey Norman, he said. The International Energy Agency has said recent studies suggested climate change was occurring faster than expected and even if global carbon emissions could be halved by 2050, it might not limit temperature rise to 2-2.4C a level that could render some countries uninhabitable.

Australia's renewable energy investment is languishing behind levels seen in other developed and even developing economies. The United Nations Environment Program this week said Europe and the US in 2009, as in 2008, added more renewable energy capacity than coal, gas or nuclear generation combined. China added 37GWs of renewable power capacity more than any other country. "We can take some lessons from the Chinese", Prof Cole said. "Increasingly, the power stations China builds will be renewable and nuclear.

Queensland Energy Minister Stephen Robertson said the Government wanted Queensland to be the "solar state" but he suggested there wasn't public acceptance of the higher electricity costs he claimed would come from a shift to clean power. Ms McCluskey said consumer trends showed people increasingly were trying to buy more environmentally friendly goods and services. Mr Robertson was asked if Queensland's state-owned electricity utilities should be more proactive in helping bring renewables on line.

"For governments, any decisions to reach new levels of investment in this area ultimately comes down to the price", he said. "You need to ensure there is public acceptance of an investment such as that... that results in a price increase". "The blowback we've seen from electricity price hikes this year... hurts our interests. Yes, people want to see investment in renewable energy but... are people prepared to pay for it?" Ms McCluskey asked him if the Government saw itself working with investors, perhaps by helping secure more affordable loan terms or loan guarantees, as is occurring in the US, or taking on some of the development risk.

Mr Robertson said the Government had a "range of tools it could bring to the table". A high school student later asked Mr Robertson what the economic impact could be for his generation from climate change. Mr Robertson said it could be huge and governments had a responsibility to take action. Prime Minister Julia Gillard will today unveil her plan to establish a Citizens Assembly to help formulate Australia's official response to climate change.