au iconAU



Going green

After COVID-19, Australia’s sustainable industries are quickly approaching a tipping point

Going green
smsfadviser logo

While measuring just when and how Australia’s growing stable of green industries arrived, or even how big they are, can be difficult, their influence and impact is becoming increasingly difficult to ignore

New industries have never cropped up overnight, and green industries aren’t actually all that different in that sense. Australia doesn’t quite have its own Tesla yet, but there are now countless green energy and infrastructure providers, from solar panel manufacturers to those involved in the burgeoning ‘big battery’ sector.

For many, the moment that this growth really began to accelerate was 2008. In the wake of the Global Financial Crisis (GFC), the United Nations Environment Programme launched the Green Economy Initiative. The idea here was to capitalise on the economic crisis and use it as a catalyst for a more sustainable status quo. Rather than a recovery that led to the same carbon-intensive normal of the pre-GFC era, the Green Economy Initiative tried to reframe the crisis as the perfect opportunity to push for a greener economy.

If you’re going to rebuild, it makes sense to do it in a way that respects the future as much as it does the past. Instead of settling for lowering the level of carbon emissions our economy creates, green economy efforts look to raise the bar by aiming for the outright elimination of emissions.

According to the United Nations, “an inclusive green economy is an alternative to today’s dominant economic model, which exacerbates inequalities, encourages waste, triggers resource scarcities, and generates widespread threats to the environment and human health”.

However, speaking to Public Accountant, Smart Energy Council chief executive John Grimes argues that the notion of green industries in Australia actually predates this international initiative.

“A lot of this technology is really old,” he says. “Not only have we known that climate change is a serious problem for us, but a lot of the technologies that are going to help solve it have been around for many, many decades.”

While things like solar panels may have taken several decades to mature, he noted that “a lot of that technology was developed here in Australia, including at the University of New South Wales.”

Mr Grimes argues that solar energy is now the cheapest way to generate energy in the history of the world.

“That is just the facts,” he said, noting that the cost curve has come down dramatically for renewable energy in recent decades.

From a current level of around 20 per cent, the Reserve Bank of Australia expects that a combination of factors including government policy incentives, rising non-renewable energy prices and declining costs of renewable tech will see it rise further still in the future.

The green economy and the going green economy

Ben Peacock, the founder of Republic of Everyone in Sydney, argues that the definition of green industries is even broader. To him, the term encompasses not just companies set up specifically to create positive social and environmental change, but also third-party consultancies that help less-green industries become greener.

Even NGOs fit into Mr Peacock’s vision of green industries, “who have been driving the agenda here for a long time and have often brought to market the information required.”

Speaking to Public Accountant, Mr Peacock suggests that if you asked 100 people to define green industries, “you’d get 100 definitions.”

For that reason, he argues that a broad definition is necessary.

“Anyone or any company that is working towards a way of doing business or a way of running our economy and a way of establishing our lives better considers the environmental and social impacts of everything we do and work towards,” he said.

In the wake of COVID-19, calls for increased investment in green industries and infrastructure have only intensified. Where the UN’s post-2008 efforts to recalibrate the world away from carbon-intensive infrastructure yielded uneven results, supporters of Australia’s green industry are hopeful that things will be different this time around.

Still, Mr Peacock describes a sense of collective fear when everything stopped as the pandemic began.

“Finally, finally, sustainability was getting on agendas and business agendas. There was a huge fear, that everything was going to suddenly be dropped, and, and all this momentum has taken so long it’s going to disappear. It was massive. And then, I think what happened was the opposite.”

Thankfully, these fears proved unfounded.

“The push towards sustainability within companies has actually grown significantly,” Mr Peacock said. “From what I can see, COVID-19 showed the world how fragile it was. In the history of things that have challenged the world, it’s tiny. When you look at the Black Death, that killed 30 per cent of people. When you look at the World Wars, [they] killed incredible amounts of people. While it’s shaken things up, it’s actually a small-scale challenge in the scale of challenges the world can face.

“I think a lot of people went, ‘Oh, if this is what a pandemic can do, what can climate change do?’”

Uncertainty meets inevitability

Looking forward, Mr Grimes suggests that many of the barriers to growth are going to fall away over time.

“In the past, the framing has always been that you can either have a strong economy, or a safe climate. That taking decisive action on climate change is simply too expensive. Certainly, that’s something that we hear from the federal government in Australia a lot. That’s just no longer true. Not only do we have renewable energy now which is zero emissions energy, but it’s also the cheapest form of energy.”

He said that “because of the cost implications, it’s likely that renewables and zero emissions energy technology [are] now going to transform our entire economy.”

According to him, “we’re not just talking anymore about transferring a bit of renewable energy off the electricity grid, but the possibility to pull emissions out of transportation.”

“Transportation over the next decade is going to be transformed as we transition to electric vehicles, electric buses, electric trucks, and so on. We’ll be powering not just the electricity sector but the transportation sector as well.”

In addition, Mr Grimes said that there’s a “huge opportunity” for Australia when it comes to exporting green energy abroad.

“Australia is actually one of the lowest cost jurisdictions in the world to create renewable energy in terms of pricing. That gives us a huge international competitive advantage. It means that we can create renewable energy at the world’s lowest cost, and then actually export it to other markets.”

As Australia’s growing crop of green industries grow in size and influence, this transformative effect will extend further and further.

“If we can actually produce the world’s cheapest electricity which also is green energy, then you actually make every business more competitive. In a sense, every business will transition to become a clean energy business. They’ll do it indirectly without even doing anything.”

There’s just one problem, Mr Grimes continued.

“The technology works. The economics work. The big challenge that we have at the moment is government, government policy and leadership. Unfortunately, we have a federal government that really wants to do everything it can to protect existing fossil fuels and stop any disruption from renewables.

“But I’m pleased to say that in every state and territory, this transition is inevitable.

“The opportunities for those that want to get into the sector, to actually build because this is economically transformative. It’s a massive, massive business opportunity.”

Australia needs to break out of its old habits

Mr Peacock suggests that Australia has always been a “dig it up” country.

He said that there’s a sense that “if we just keep growing it, or digging it up, and selling it. We’ll be right. And the truth is we have been right. So, why would we change that?

“We are a naturally complacent country, because we’ve never had reason not to be.”

However, going forward, his hopes are high for the growth of green industries.

“I can’t see how, over the next three years, every company is not in transformation towards being part of the world’s great industries. I just don’t think there’s a future for any company that isn’t.

“You’re looking at leadership contingent to a lot of companies that have the same people that have been running them.

“They’re running an agenda that’s been around for a long time, and they’re probably less likely to be amenable to understanding that it’s time to change.

“You’re already seeing huge investor pressure for companies to have an agenda in the space. You’re seeing customer and employee demand for it. Employees want to work for companies that have a great agenda.

“Customers are probably the slowest along the way because there’s always a gap between what they say and what they do, but they’re certainly starting to speak with their wallets in the space, and then ultimately, there is some level of government leadership that I think you’ll only see grow because it has to.”

Regarding the lack of federal leadership for Australia’s growing green industries, he acknowledged the support of state-level and local governments.

“We’ve seen a lot of good movement there, and even federally. We’re starting to see them show almost more acceptance than leadership, but at least it’s something.

“There’s certainly less love from government leadership in this country than there has been overseas, particularly in Europe, and that’s led Australia to be a fair way behind the rest of the world.”

Subscribe to Public Accountant

Receive the latest news, opinion and features directly to your inbox