As some of us may be honest enough to admit, humans are procrastinating animals. While there are some, like Hitchhiker’s Guide to the Galaxy author Douglas Adams, who love the sound deadlines make as they whoosh past, most of us find deadlines imperative for actually getting things done. Deadlines are the last defence against the easiest failure of all, that of doing nothing. And yet, the Australian Government continues to resist an emissions reduction deadline, preferring instead to take refuge in the false security of politics’ short time horizons.
Hesta, a leading industry superannuation fund trusted by 860,000 Australians, has joined a host of other major investment firms nationwide calling on the Federal Government to end its climate and renewable energy policy vacuum.
Hesta has stated that the Government needs to encourage large-scale investment in a green recovery by setting a ‘net zero’ emissions reduction target for 2050. Only with the “clear pathway” provided by a target, says Hesta, can Australia pick up the pace on its transition to a low-carbon future.
The fund made the call in a submission to the Government’s Technology Investment Roadmap discussion paper, in which Hesta warns that urgent climate action is necessary or global investors will increasingly balk at Australian prospects due to increased climate risks or yet another political back-stabbing. After all, Australia’s Climate Wars have now raged for over a decade, a decade in which the Ides of March seems to recur on a monthly basis.
“Domestic investment opportunities with appropriate scale and long-term contractual certainty are relatively rare,” said Hesta CEO Debby Blakey. “While we want to invest more here, for every $1 we have invested in Australian renewables, we have $3 committed to equivalent assets overseas. These assets are in countries that provide stable, predictable policy settings, which have given us the confidence to make long-term investments.”
The dire need of clear strategy at the federal level was recently evidenced by the Clean Energy Council’s (CEC) latest “Clean Energy Outlook – Confidence Index”, which showed that cliff-drop of investment at the end of 2019 caused by the petering out of the federal 2020 Renewable Energy Target has been gradually recovered thanks to universally clear climate and energy strategies at the state level.
Investment is a lot like going for a swim, in that investors like a clear strategy as a swimmer likes clear waters. Back in December 2019, investor confidence was at its lowest in recent memory. After a year punctuated by grid congestion, curtailment, transmission losses, negative power prices and the petering out of the federal 2020 Renewable Energy Target policy, investors reported a confidence level of only 6.8 out of 10. Indeed, according to data compiled by Bloomberg New Energy Finance (BNEF), investment in Australian renewable energy capacity fell 40% in 2019.
However, by June 2020, the CEC’s survey reports a rise in investor confidence from 6.8 to 7.3 out of 10. Though investors remain timorous in the face of connection uncertainty, confidence is gradually growing back in the knowledge that renewable energy is, quite simply, “inevitable.”
“We are at a critical juncture,” observes Blakey, who believes institutional investors like Hesta have an important role to play in driving the transition. “The time to choose and commit to a low-carbon economy is now,” stressed Blakey, “We don’t want to see a carbon-led recovery that locks in long-term emissions and increases the risk of assets becoming stranded.”
Australia is missing out on “potentially trillions of dollars of global investment” because it is failing to attract “green capital through setting stable, long-term policy.”
Blakey says that if the policy settings were right, funds like Hesta, which have a combined $3 trillion in pooled superannuation savings poised to invest in a “green-led recovery from Covid-19.”
Bipartisanship Across the Ditch
Wallabies fans are used to being embarrassed by our Kiwi neighbours, but New Zealand’s rational and prudential approach to the climate crisis and renewable energy investment now has the whole of Australia blushing. Blakey says Australia should look ‘across the ditch’ to see what long-term vision and commitment looks like.
“New Zealand’s Parliament has agreed to long-term Paris Agreement-aligned emission reduction targets and established a Climate Change Commission to deliver an annual carbon budget and report transparently on progress,” said Blakey.
The kind of bipartisanship shown New Zealand is exactly the kind of solidity investors are looking for, notes Blakey. Meanwhile, in Australia, Opposition Leader Albanese’s piddling attempt at outstretching an olive branch was derided by an obstinate Government. According to the ABC, Energy Minister Angus Taylor criticised Albanese, “They didn’t explain how their energy policies will create a single job,” he said.
And yet, the Australian Energy Council, representing 24 major electricity and downstream natural gas businesses generating the vast majority of Australian energy (including the owners of all coal-fired power plants in the NEM), decries both parties for their frail immobility.
“The first step to reducing carbon emissions is agreement on a long-term target which can act as the starting point for constructive consensus,” said AEC Chief Executive, Sarah McNamara. “Settling on an economy-wide target will let us then decide the best ways to get there and what policy and mechanisms could be applied.”
A Clarion Call
Hesta joins a cacophonous clarion call for Government action on climate change and renewable energy, a call to let green energy lead the nation’s economic recovery from the Black Summer Bushfires and the impacts of Covid-19.
CEC Chief Executive Kane Thornton has penned a personal plea to Canberra to allow the renewable energy industry to lead the Covid-19 economic recovery, saying the green sector could put the country to work over the next decade if meaningful action was taken now.
Think-tank Beyond Zero Emissions’ (BZE) published its Million Jobs Report early this month. The Report is a green scaffolded economic recovery positing that 1.8 million new jobs can be created through renewables and low emissions projects over the next five years. The Report already has strong support, including Mike Cannon-Brookes, Ross Garnaut, Malcolm Turnbull, Kevin McCann, and Christiana Figueres.
And only this week, a Climate Council commissioned study from Accenture’s AlphaBeta found 76,000 clean jobs just waiting to be created over the next three years in the most hard hit regions and occupations if a green recovery from the twin recoveries from the Black Summer Bushfires and Covid-19 were implemented.
And of course, if hearing that economic investors want clear climate and clean energy strategy from the horse’s mouth isn’t good enough. Last week, University of New South Wales (UNSW) researchers disproved claims that the energy transition to large-scale wind and solar would hinder the global economy.
Hesta has itself committed to a ‘net zero’ carbon emissions target for its portfolio by 2050 as part of its Climate Change Transition Plan (CCTP).
“We’ve seen how we can achieve amazing things together through COVID-19 and it’s time to apply this innovative mindset to addressing climate change,” said Blakey. “Our members and the investment community need leadership on climate change – and they need it now.”