Who will be the business ‘winners and losers’ from the repeal of the ‘carbon tax’ under Australia’s new conservative Federal Government? This was a question I was asked in a recent interview for ABC TV’s The Business. You can see the resulting report here.
The ‘winners’ in this story should come as no surprise – mining and energy companies -especially those involved in fossil fuel extraction and consumption, which would no longer be required to pay for their greenhouse gas emissions. By contrast, the ‘losers’ were seen as those groups promoting renewable energy and seeking to wean us off our fossil fuel addiction. However, what struck me in participating in this interview are the incredibly short-term time horizons business people frame their decision-making within. ‘Winners’ are defined in terms of the immediate financial savings that result from changed legislation, rather than the strategic implications of continued high carbon emissions in a changing world.
Indeed, while the language of ‘risk’ and ‘opportunity’ is often promoted in discussions of business and climate change, it seems many companies are actually ill-equipped to accommodate the real risks that climate science is highlighting. As the recent IPCC 5th Assessment Report has demonstrated, the world is on track for some of the worst-case scenarios of 4-6 degrees Celsius warming by 2100. A recent article in Nature, suggests that on a ‘business as usual’ approach by 2050 much of the world will have moved into an entirely new climate. This will result in dramatic economic and political change as the world struggles to respond to extreme weather events and the impacts of climate change.
So the bigger implication of the repeal of the ‘carbon tax’ is the signal this sends to business and the broader community; that essentially climate change is something we don’t really need to concern ourselves about and ‘business as usual’ is just fine. Not only does this fly in the face of what the climate science is telling us, but it neglects institutional and market changes that are beginning to surface around the concept of a ‘carbon budget’ and ‘unburnable carbon’. As a result, the medium term viability of fossil fuels like coal are coming under serious question at the same time that massive Australian mines like the Galilee Basin are proposed for expansion. The new Government contends that the rest of the world is not acting. However, China is not only introducing carbon trading schemes, but limiting coal use and restricting new coal fired generators in many of its industrial regions. The US has also effectively banned new coal power generation.
The repeal of the ‘carbon tax’ then simply serves to distract us from the critical work businesses need to do in order to adapt to a carbon-constrained world. As a result, next year’s apparent business ‘winners’ may very quickly become ‘losers’ as the changed legislation fails to drive the sort of business innovation we need for a clean energy future.