the false dichotomy of sustainability

a game of cat and mouse

2008-11-07T18:17:00.003+11:00

The Australian government is flirting with the actual policy settings it will use for emissions trading at the moment and it struck me that a game of cat and mouse, and 'double dare' is going on right now.

Looking at the challenge of decoupling economic and emissions growth, the Government has prepared its modelling for the economic impact of climate policies under four scenarios which all assume we reduce emissions by 60% of year 2000 levels by 2050. Essentially the only difference between the scenarios (especially given the marginal differences by 2050) is how quickly we start taking action. This prompted one Australian Senator to ask why we can't go further given the small differences, and it also supports my idea that dealing with climate change won't be that hard: it's just a matter of what we lose, and the increased risks we will face, between now and when we start to take action. And this is where the game of cat and mouse begins.

If reducing emissions is easy, then the urgency to do so is less. So in order to create the urgency for action, governments have to talk tough. On the other side, business does not want this urgency so it ramps up its rhetoric even further, daring the government to make decisions that will cause supposed untold damage, hoping it will take decisions that reduce the urgency.

Ultimately I think in this instance the government needs to call the bluff: despite what CEOs and other Executive's claim to know, one thing they are not very good at predicting is the next crisis (just look at the state of finances at the moment!). And the problem with the climate crisis is that we actually don't know what will eventuate if it takes hold, nor how much worse it will be if we don't take action sooner rather than later.

The other side of the modelling that I found intriguing was an implicit assumption which arguably underlines the report's conclusions and simplicity: how business will actually respond.

Given the long term nature of the modelling it is largely based on trend averages which only consider if a sector is going to grow or decline, and at what rate. The basic assumption was that a carbon price will start the decline for high energy industries relative to their ability to introduce new technology or achieve energy efficiencies.

To that end, the assumption was that high energy industries - all industries for that matter - do not want to decline and thus will make changes to prevent this. What will be interesting to observe as time plays out will be how accurate the implicit assumption is: that changes will be driven more by technology than location change. Under the technology driven assumption the economy can continue to grow without producing carbon, and therefore the report concludes that the government’s climate policies will have little negative impact on the economy in the long-term.

The dare, however, is that high-emitting industries are arguing that they will move their operations first, and take other actions second.

Personally I am not sure who will call the bluff - the government or business - but I am inclined to think that for business to call the bluff and move it operations offshore is a knee-jerk reaction that could have longer term implications as the climate issue extends across the world.

Unlike the free-trade movement or global institutions which try to create a better world, global climate change policies have the chance to actually take effect quickly and grow if the burning platform of the very climate we live in, starts to burn quicker and hotter.

And if (when?) that happens, what will be the benefit of being a company that moved its operations to avoid climate change legislation? Very quickly those extra dollars might seem quite small as the increased PR and other promotional activities add up to convince consumers that the company takes its global responsibility seriously.

And if this happens, then the cost of climate change to business will be higher still. And no one wants this.

Does action on climate change make a company sustainable?

2008-10-24T18:08:00.001+11:00

Less than three years ago climate change was still a relatively small issue for Australian businesses and the Federal Government. At that stage only a small group of public servants were starting to develop a public discussion paper on how the State Labor governments – independent of the Federal Coalition Government – could develop a National Emissions Trading Scheme.

I remember going to one of the very first public forums on the issue. Although the general Australian business community wasn’t really awake or alert to the issue of climate change, it was obvious that a number of small businesses and consultants could see the emerging issue and wanted to be part of the solution.

Most of the consultants I met that afternoon had a background in sustainability and had personal passion to help increase the sustainability of the business sector. With all respect to those people I met, I don’t think they actually realised how action on climate change and action on sustainability were actually different things.

Action on climate change and action on sustainability are different. Fundamentally, action on climate change is a sub-set of the sustainability agenda that attempts to improve the energy efficiency of processes and reduce the negative by-products of energy consumption. Sustainability, on the other hand, attempts to increase the longevity of business and decrease the negative by-products business can have on itself, society and the environment through short-term thinking and self-interest.

Despite what many people believe, action on sustainability is not about donating to charities, volunteering, or community service. Rather, it is an attempt to create a local environment where business can continue to grow. For example, a community which does not have enough skilled people leads to a business that cannot make or sell its product. Likewise, a community without businesses does not have enough income to create a quality of life that keeps people happy, healthy and living locally.

As such, while action on climate change might reduce our carbon footprints, it does nothing to ensure we have the skilled people to make and lay our bricks, or create a situation where people want to improve their living circumstances by building new homes.

As such, despite the looming threat of higher manufacturing costs and a massive effort to reduce this, it is imperative that businesses don’t forget that they still need to engage and nurture their local communities to ensure prosperity beyond the climate change threat.

Furthermore, action on climate change will become the norm and all businesses will learn how to reduce their costs through manufacturing efficiency improvements. Conversely, action on sustainability will continue to provide a competitive edge that increase real value within the company, not just efficiency dividends.

Climate change ignorance

2008-04-17T21:09:00.002+10:00

Last year the Australian Coal Association agreed to develop a clean coal technology fund through a 20c/tonne levy which was expected to raise over $1billion. It did that, easily, because amoung other things the price for coal actually increased by between 130-250% thus dramatically increasing the coal company profits.

Now I am not fussed that they got the extra profits or that they didn't choose to increase the size of their contribution to the clean coal technology fund; what I am surprised about, however, is the ignorance of their comment when asked by green groups why they don't contribute more...

"The fund is regarded as a great contribution for the industry and adequate for the purpose"

The ignorance of this comment is astounding for two reasons: First, "...a great contribution"?? Umm, hello, clean coal is not something they should be merely 'contributing' to... it is something they should be betting their lives on! If the renewables sector (which is supported in Australia and world-wide by the academic sector, multi-nationals and Government) get the answer first then they are out of business. It's as simple as that!

Secondly, "...adequate for the purpose"?? What purpose? The purpose of deflecting criticism or buying good PR? Maybe they think the purpose is to buy them favour with the Government so that they will be protected from actually having to do anything?

Either way, I think this demonstrates their complete lack of understanding of this issue. Irrespective of how it started, a new movement has started at both national and international levels of politics which will eventually change the way the we use energy forever. One day (and sooner than we think) we will all have solar cells on our roofs, buildings will be self-sufficient, products and materials will be designed properly and will actually break down rather than just becoming landfill.

It will be this way because although the human race is incapable of changing its wasteful ways, it is more than capable of developing goods and services that mean we don't have to think about it.

And that is where the problem with this comment lies; they still think dealing with climate change is about giving money, buy off-sets or writing sustainability reports. It's not, its about developing new and better products and services: ironically, those companies that get to this first will make a CRAP load of money doing it.

Is geosequestration really an option?

2008-04-17T07:55:00.003+10:00

There was an article in The Age this morning talking about the potential health hazards of a carbon waste dump as compared to a nuclear waste dump. The basic argument was the author would prefer to live on a nuclear waste dump because at it could be monitored.

The carbon waste dump he was referring to was a site that was used for carbon geosequestration, and his conclusion was that all the investment in 'clean coal technology' could amount to nothing because the technology is not proven and it could create other problems over the long term. In his mind, it was better to go with nuclear.

Putting aside the issue of nuclear and if it is an alternative or not, I too have issues with carbon geosequestration. In a nut shell, my issues pivot on the reason we are seeking geosequestration as a solution: when we started producing more carbon dioxide we never thought that a natural chemical could create a problem, let alone a problem of this scale.

About a 100 years ago we realised that by burning fossil fuels (coal) we could create large amounts of energy and produce goods on a much larger and cheaper scale. In our not-so-infinite wisdom we have done this in increasing volumes ever since and pumped layer upon layer of carbon into the atmosphere. In over 100 years, it has only been in the last 30, and in particular the last 10, that we realised this created a problem. So now, to fix the problem we are proposing pumping carbon dioxide underground where C02 is also a natural chemical.

Is it just me, or does it seem like we haven't learned the lesson of why we are in this mess to begin with? How long will it be before the sequested C02 gathers in such a quantity that it starts to change the formation of rock, alters the properties of soil or does something to our table water? To be honest, I think the issue of 'leaking' is our least concern.

And in all this, I can't help but remember a Simpsons episode where Homer is Mayor and he has a problem with all the trash being generated by Springfield; in his infinite wisdom, he decides to dump all the trash in the volcano. Of course everyone loved him, it was a great idea, until there was too much trash and the volcano erupted, spitting all the trash back onto Springfield...

How long do we really think it will it be before our 'great idea' becomes another problem and Mother Nature spews our trash back at us?

Does greater density create greater sustainability outcomes?

2008-02-17T21:15:00.002+11:00

To the outsider (and dare I say, for the insider), most urban planning pivots around the central assumption that greater density creates greater sustainability outcomes. Even without having any urban planning background, this assumption does intuitively make sense because with density you can minimise the amount of land cleared for housing, roads and infrastructure, and furthermore, get greater economies of scale for these and other investments, particularly public transport. Despite this intuitively making sense, after attending a number of recent forums and conferences, I get the feeling that environmental reasons and not economies of scale are driving the push for greater density.

Interestingly, however, the emphasis may be one-sided because despite the numerous planning guides limiting land release and promoting density, according to the Australian Bureau of Statistics (ABS) “… current homes (have) more bedrooms on average than homes ten years ago. At the same time, households are getting smaller on average with decreasing proportions of couple families with children and increasing couple only and lone person households.”

Other data doesn’t necessarily support the density assumption either. According to research conducted by the Australian Conservation Foundation (ACF) in conjunction with the University of NSW, suburbs that typically have a higher density of population are actually less sustainable than those suburbs on the fringes of cities. According to Australia’s Consumption Atlas report, “…on average, single-person and small households have greater environmental impacts than larger households… (suburbs) with higher average household size also tend to have markedly lower levels of greenhouse gas pollution per capita, and smaller but still clearly lower levels of water use per capita.” ACF proposes that this is the case because wealth is higher in the inner suburbs and by extension, consumption is also higher. The primary argument of the ACF is that consumption is the key sustainability metric rather than location.

So where does the assumption that greater density produces greater sustainability outcomes emerge from? Especially if we look at some of perverse implications that urban growth boundaries have created.

Restricting land supply on the urban fringes of cities has created the situation where demand is massively outstripping supply. When combined with a prolonged period of economic growth that has provided the type of certainty individuals look for before making significant housing decisions, we now see people making decisions to have children or upgrade their homes (building their castles!). These individuals are then competing for the limited supply of land and what is interesting is that whereas once there may have been a greater sense of caution, currently we are seeing these competing individuals and families taking on greater mortgages and other debt because economic conditions are so good.

This is dangerous territory because while we may have environmental sustainability by virtue of reducing the amount of land cleared for housing, it is arguably at the cost of economic, and in particular social, sustainability outcomes. And while I agree that we should never understate the interconnected nature of the environmental system we live in, it seems that our current planning assumptions are not providing sustainable outcomes.

At the end of the day I think sustainability is a product of design because as the ACF’s research pointed out, the higher environmental impact caused by higher density suburbs is a product of consumption rather than location. If the products being consumed were designed better so that they used less electricity and water, and produced less waste, and likewise if fringes were better designed to take advantage of solar-passive design, used smarter materials (like brick!), and overall made less of an impact, then urban planning and environmental management would require a fundamentally different set of assumptions.

Because unfortunately I think that planners have occasionally lost touch with the very reason they exist, just as environmentalists have forgotten that individuals do have aspirations that are greater than their concern for the environment, and equally as business has forgotten that if there is no stable environment, then they will constantly lose money because of ‘acts of nature’ such as drought, flood, hail, etc etc.

Which brings us back to the question; does density create greater sustainability outcomes? Ironically, I think the planners had it partly right by imposing certain restrictions on developers. These restrictions, in the forms of land releases, environmental impact statements, infrastructure development etc have seen the rise of master planned estates that actually emphasis the benefits of good design. Things like recycled water, renewable power generation, tree planting, river and land regeneration, public transport, schools, and perhaps most importantly, partnerships with local businesses (to ensure jobs and services exist so the community can be self-sufficient) have become increasingly sophisticated and common.

So let’s not throw the baby out with the bath water; perhaps our best bet is to go to these developers and ask them questions about how they could do more of the good things they do, and likewise, what regulations should be in place to stop the ‘cowboys’ giving an entire industry a bad reputation! Because I think its fair assumption that leading developers would like anything which lifted their reputation in the community!

EU Climate change plans

2008-01-24T13:45:00.000+11:00

The EU released their draft bills on how they will tackle climate change and reach their goals of greenhouse reduction over the next 50 odd years. This is a good thing because it gives all the other countries a chance to refine (and dare I say it, improve) the laws before they are introduced in their respective countries.

I found two things to be interesting in the bills: the first was the decision to set a 30 per cent reduction target on 1990 levels if other developed countries come on board to match the EUs 20 per cent by 2020, the second was the biofuels target. I think the first decision is a good thing, the second, not so much. This is because as with any new thing, there always needs to be someone to 'test the water' and if the Europeans are brave enough to do this by extending their 20 per cent target, then the rest of us should all appulade them because they will make our lives easier for it.

Regarding the biofuels and the intention to have 10 per cent of all vehicle fuel coming from biofuels by 2020, I am not so sure it is a good move. While the dependance on oil and the by-products it creates are definitely a problem, there would hardly appear to be enough farming land to actually support a large-scale take up of biofuels as serious alternative.

With all things like this, I think some longer term thinking is needed; what would actually be the impact of wide-spread use of biofuels especially given motor vehicle use is going up, not down (and China and India are really starting to purchase cars!). In my mind, it just can't work based on the infrastructure requirements to support people needing to fill their cars, let alone trying to find the land to grow the crops! Even biofuels for the aviation idustry seems a bit of a stretch, but at least it seems a little more realistic given that infrastructure requirements are more condensed.

The problem with these types of targets is that they potentially divert resources from other initiatives that may actually be much better in the long-run. Most major car manufacturers - lead by Toyota - have already announced desire to completely do away with the internal combustion engine. If they do this, what's the point of having a biofuel industry when it is based on the premise of an internal combustion engine?

There are many other examples of this, and in Australia, nuclear subsidies - while not quite as silly as biofuel targets - are a good example. According the previous Prime Minister Howard's own report, nuclear power is 10-15 years away, would need to be subsidised by government and benefit from a carbon price in order to compete with coal and gas electricity generation. Bringing in the concept of long-term thinking, surely the existence of solar power in 10 - 15 years has to be factored in. Again, thinking about the long-term, isn't solar energy development a much better prospect than any other source given it's readily available, wont present us with a problem at some point down the line where we 'run out' of uranium, and what's more is a more envrionmentally friendly solution?

And with that in mind, if the Government subsidies nuclear - espeically the development of a large scale nuclear power capacity in Australia - isn't this just diverting resources that might go to solar which is probably a much better long-term solution anyway. Government subsidies for nuclear seem even more ridiculous when you think that in 10 years solar technology will probably look vastly different than it does today...!

The economics of sustainability

2008-01-20T15:01:00.000+11:00

Interesting times; we have a US market staring down the barrel of recession and Australian commentators debating the impact this will have on Australia, while, ironically, talking about inflation and interest rate increases... go figure.

So with all this going on, it is possible that businesses might start to look more at economics than sustainability. Likewise, the new Australian Government, with all its hopes to kick start an education and renewable energy revolution, will be forced (by the Opposition at the very least) to look more closely at their spending (something the Opposition, while in Government, never had to do...).

Seriously examining spending is a good thing, but to do so now - when things are looking pretty shaky to say the least - is too late. For a long time I have argued that sustainability should be more about economics than the environment; more specifically, sustainability is about opportunity cost and long-term decision making.

If we leave aside the new Australian Government (because, let's be fair, they have not really contributed to any of the current financial or economic issues the country is currently facing), and look only at businesses, the successful businesses in the next two years will be those that made long-term decisions to save (or invest) their good fortune over the past two years, so that it could begin to deliver returns when the cycle dipped. At the end of the day, I fundamentally believe, that is sustainability.

Investment in new technology, processes or training that reduce waste, on-going costs or dependence on something else (ie the electricity grid, water supplies, or - dare I say it - people) will be critical now. Not only will it reduce costs over the coming two years when things aren't as good, but it will also better position companies to deal with the new global expectations arising from concerns about climate change.

Likewise, those companies that invested in their people, spent the extra money to refine, extend and enhance the skills of their people will also be better off during the coming two years. Now more than ever companies need smart people to develop really smart ideas about everything from the business model, to marketing and technology. Without these people, many companies may find themselves losing the good people thus creating a double negative feedback loop: productivity decreases and costs increases. And when the cycle starts to dip, these are the last two feedback loops a company wants to feel.

A new perspective

2008-01-16T11:44:00.000+11:00

A new year, a new perspective. For me this is even more true with the change of job. I've moved from educating the small and medium businesses on sustainability and climate change issues to educating the brick industry. Fortunately, in Australia at least, the brick industry is already quite proactive in using sustainable development practices, and even better, the industry association I have started working for - Think Brick Australia - has a huge research portfolio to demonstrate the sustainability of bricks as a building material. My job is to get that research out to builders, architects, consumers, government... the works.

Of course this does raise the question - which I have mused about often - about what would happen if we have the most sustainable businesses and buildings etc; would this make us sustainable. There is a growing body of research which says no. This, while not quite part of my job description, is what I am ever increasingly interested in.

the Kyoto Protocol

2007-12-09T21:27:00.000+11:00

As was to be expected given Australia’s ratification of the Kyoto Protocol and the UN Meeting in Bali at the moment, there has been a lot of discussion about what Kyoto actually means to Australia.

I think to answer that question, it is necessary to consider what Kyoto actually is: the first attempt to globally acknowledge the problem of climate change and do something about it. Given that environmental issues have never had much weight across the political or business spectrum, any first attempt to get global acknowledgement of climate change as a problem was always going to struggle.

To be honest I think Kyoto has been successful… at least 50 percent successful anyway! Through Kyoto (and a little help, ironically, from the climate!), both politics and business are now seriously looking at the issue. That always had to be the starting point of any such protocol, and the fact that countries haven’t actually reduced emissions only highlights how, despite the UN conventions of the early 90s, neither politics nor business has taken the issue seriously. Effectively what happened was that we aimed for the stars, missed, but have fortunately landed on the moon.

So now that we are on the moon, what does it look like? Unfortunately for some (the species that will become extinct, for example) it’s probably worse than we thought. Perhaps fortuitously, the scare campaign didn’t turn out, and because we are now all seeing and experiencing the effects of climate change, politics and business are now responding to a real problem rather than a fluffy, ‘nice to have, but…’.

This is a good thing because despite the best intentions of some, inevitably we are a society that responds to real problems, and dare I say it, a crisis. Interestingly if the climate hadn’t changed as dramatically has it has over the past five years, climate change could have been written off as another scare campaign by left wing hippies and tree huggers, and action would still be a long way off.

So what does Kyoto mean to Australia? As reported in the Australian Financial Review this weekend, it provides ‘business certainty’. Finally the economy has the signals that we will take action. For business, certainty is huge. There were many ways that the new Australian Government could have provided the certainty, and for perhaps symbolic reasons, Kyoto was it.

So where to now? As everyone is saying, Kyoto needs some major revisions if it is going to be successful during it next phase. That’s fine. As every good entrepreneur knows, success is a product of past experience, and importantly, failure. So while Kyoto was not a failure because we now have politics and business seriously looking at the issue, it didn’t deliver on its intended emissions reductions, and that means it needs an overhaul.

Does that mean we need a completely new framework? I don’t think so, but what we do need is some serious exploration of where it fell down: a good starting point? The WIIFM: What’s In It For Me? As climate change develops, as our experience of it increases, the WIIFM will be easier to sell, and for Australia, action on climate change is probably needed to help us manage not only on-going water issues, but more importantly to decouple our future wealth and prosperity from our future emissions growth. To do this, we need to think about powering our economy with something other than coal.

And that’s where the new Government should start. While they have signaled their intentions by signing Kyoto, one of their key drivers – the emissions trading scheme – still needs major work. Now that business has certainty that something will be done about climate change, it needs – as quickly as possible – the new rules it will have to operate within.

In some ways it is like when cricket moved from test matches to one day games; Kerry Packer signaled the intention to modernise cricket, but payers had to learn new rules and learn how they would play the game under those new rules. The same goes for business: they need to learn the new rules and work out how they will change their businesses to ensure – like any game of sport – that they are a winner, not a loser!

cap and tax? maybe just tax?

2007-11-18T22:04:00.000+11:00

I was at breakfast yesterday and the rumour running around was that the Europeans were going to Bali for the post-Kyoto meeting to suggest than an emissions trading scheme was not the best way to deal with the climate change problem.

Interesting... especially after I saw a basic stat saying that carbon abatement in Australia might cost $1.5-2b, but an emissions trading scheme is more likely to cost closer to $12b!

I wrote a post at work talking about why and emissions trading scheme is a good idea, and while in theory, it could work, I actually don't think I 100% support my own argument. In all honesty, I think I was writing it to defend the position we had taken and help some other people understand why there was all this talk over trading. But thinking about it now, and after hearing about the European example, I think a tax (as advocated by the economist over 12 months ago!), is much smarter.

The questions are, however, will business accept it? Have we gone too far down the path of trading? What will the public think given that they are going to an election on the promise of a trading scheme?

At the end of the day I don't think questions 2 or 3 really matter... I just hope that number 1 doesn't prove to be a stumbling block.

seven years and one day... to the day!

2007-11-13T16:33:00.000+11:00

A couple of years ago someone told me that you just have to wait seven years and a day to see everything come back again. Of course I wrote this off at the time as just one of those things we all say, but yesterday I saw how true the statement is. Furthermore, I learned just how true the sentiment around the current Federal Government’s climate change inaction really was.

At a meeting on Friday it was suggested that we should put a submission together for the current consultation being under taken by the Department of Prime Minister and Cabinet on Abatement Incentives prior to the Commencement of the Australian Emissions Trading Scheme. Fantastic idea I thought, and I was glad they had bought it to our attention because I had missed that this was out there.

So in my rush to get across the issues, I googled “early abatement consultation” and found a consultation paper titled “Encouraging Early Greenhouse Abatement”. Without pausing I hit the (double-sided, two-to-a-page) print button and headed to the café where I do my best thinking (with three other reports for good measure!).

After reading the report through, and I admit, thinking about how it felt like we were on a merry-go-round, I turned to the front cover to make some notes for the submission. It was at this point that I noticed the date on the consultation paper: November 2000! I couldn’t believe it. Not only had I read an entire paper that was seven years old without seeing anything that indicated it was out of date, but exactly seven years ago the same Federal Government had put out consultation papers with the same intent! If this isn’t evidence of just how long we have sat around and done nothing, then I don’t know what is.

Another manifestation of this inaction was last week on Difference of Opinion. The discussion was centered on Kyoto and what Australia needs to do to make significant cuts to its greenhouse emissions.

At the end of the discussion I asked a friend if he understood what they were talking about. I wasn’t surprised when he said that at best he understood only 40% of what they were talking about. What intrigued me, however, was his observation that the five ‘experts’ were all essentially saying the same thing with only marginal differences. Ironically, if said this to those experts, I’m sure they would all vehemently argue that it wasn’t the case.

And so we have it, less than two weeks away from the Federal election and the common man (or woman!) is saying “what’s the difference anyway?”. I am struck with two thoughts based on this
that climate change really wont make a difference at this election despite what some people say; and
That Rudd and the Labor opposition really missed the opportunity to actually make it the issue.

Two months ago I wrote an article entitled “What’s the difference anyway?” At that time I thought the key differences between the political parties on climate change was use of long-term targets. While the Coalition argued the benefit of aspirational targets to build flexibility into the system, Labor had argued the need for a 60 percent reduction by 2050 because that is what the science was telling us we needed to do.

Where I think Labor has gone wrong in this election is not stick to it guns on the target. Ask any financial analyst or trader what the absolute starting point the emissions trading system needs and they will tell you firm targets. These set the guidelines for carbon supply, and without supply, there can be no market.

So ironically as Labor has got caught up in this game of me-tooism, it has missed what people are most upset about: government inaction on this issue. Government inaction has created a situation where bureaucracies are wasting time writing the same report many times, where experts on national TV argue marginal differences about the same thing, and where a Federal Opposition – so scared that voters might actually not understand the real policy – forget about (or hide) their winning strategy to action on climate change.

And I ask… how did we get to this point?

my lessons in advocating sustainability to business

2007-11-07T20:25:00.001+11:00

I am currently in the process of winding up in my current job and having been giving a lot of thought to my key learnings in advocating sustainability to business over the past few years. What is interesting is that when I started I almost had a directive to demonstrate that sustainability in business had nothing to do with the environment.

While you could argue this by looking at the environment as any other business input, output or risk factor, I think in this current landscape, business actually doesn't want to separate itself from the environment. I think more than anything they just want some honesty in advertising... ie, sustainability and triple bottom line is all well and good, but why don't we just say, "helping the environment?"

So anyway, in a nutshell, these are my four key learnings after 2+ years of advocating sustainability to businesses:

You can't divorce the environment from sustainability
If a business says they want to be sustainable, they are talking about environmental sustainability.
Once a business actually starts measuring their resource use and comparing it to industry benchmarks they realise how much money they wasting and take action to reduce this.
Sustainability innovation in product/service offerings and/or business models generally flows from the lessons of reducing inputs to meet industry benchmarks.

So based on this, and as I have recommend to the organisation I work for, anyone advocating sustainability or climate change should embrace the environment in their sales pitch, they should also concentrate on outlining the benefits of business measuring its resource use. If they can get business to do this, the battle is as good as won!

And just in case anyone is wondering, some of the benefits of resource measurement in business are:

identify excess costs and waste (in turn saving the business money);
produces a good PR story which has obvious benefits in the current climate;
reduces the impact of on-coming regulation which will mandate businesses of nearly all sizes report their resource use;
will contribute to the future success of an Australian Emissions Trading Scheme (ETS) by helping to reduce miscalculation of Australia's carbon footprint, and by extension, an ETS starting with an oversupply of carbon credits which will only lead the carbon price to fall;
will off-set the increases in electricity and other costs that will arise from an ETS;
its a practical action which makes employees feel like they work for a progressive company and provides opportunities for them to engage in something different from their day-to-day operations;
will make it easier to meet current and future procurement conditions being included in major supply contracts by big suppliers (ie Westpac, Woolworths, Coles, Wal-Mart, Tescos, Corporate Express, just to name a few).

Why climate change action wont create an economic depression

2007-11-01T21:04:00.000+11:00

Check out this YouTube clip ... This guy pretty much hits the nail on the head without even going into some of the other benefits that you get from column A which don't come from column B.

I mean if we take action to prevent climate change and the warnings all end up to be false, a global economic depression seems like a bit of a stretch given that

we wont be paying as much for electricity, yet we would have employed many people in the development of alternatives;
we'll have more and better quality water which means our agriculture industries and our ability to feed ourselves will still exit; and,
products will have minimal long-term presence so business will still be required to a employ people to produce the goods that we are all demanding and don't show any inclination to stop doing so.

So to extend his theory, really, there is no option but to take column A; the big question is what should column A include, and will we be able to take this action without the regulation and taxes he refers to?

Also, thanks to Sam de Brito for bringing this to my (our) attention. I enjoy Sam's blog (most of the time!) and highly commend he commentary on the movie Ferris Bueller's Day Off if you want a laugh!

Emissions trading as a mechaism to do something about climate change.

2007-10-31T19:16:00.000+11:00

I attended the Sydney Public Forum being held in conjunction with the Labor party initiated Garnaut Climate Change Review today and took away some very interesting points which I am not sure were the actual intention of the day. Having said that, however, the Garnaut Review has been set up to identify the real issues of climate change for Australia, so any and all points should be considered relevant to the outcome which is Professor Ross Garnaut's final report due in mid-2008.

Basically, the key message I took away from the session was the difference between carbon abatement and carbon trading. Although putting a price on carbon and setting up a market to trade carbon as a commodity should theoretically lead to carbon abatement in the economy, there is no guarantee that this will happen. Further to this, I learned that it is possible that the cost of carbon abatement (most probably defined as improving energy efficiency and investing in alternative technologies) may actually be 7 to 8 times cheaper than the cost of carbon trading!

That's huge... and it does beg the question as to why trading schemes have been identified as a key component in overcoming the climate change challenge... especially by environmentalists who would probably quake if they understood the full breadth of what markets actually create. (And please don't take that as a swing at environmentalists... I am just trying to highlight how climate change is never going to be an environmental issue again!).

To try and answer the question as to why trading has been proposed it is probably best to think about this in terms of economics 101: what is carbon? It's a negative externality of production. A trading scheme aims to place a price on carbon to internalise this cost. Why are we using a market mechanism? Because this lets the forces of demand and supply set the appropriate price of carbon. If a trading scheme wasn't used, it would (most probably) be left to government to set the price in the form of a tax.

So while a tax would be cheaper for the economy in theory (ie no need to auction permits, have bodies set up to ensure compliance, use trading houses or brokers to sell and buy carbon permits, or hire lawyers to create complicated rules regarding what constitutes a carbon off-set), if the price was set too high, there would be unnecessary burden on the economy, and conversely, if the price was set to low, there would be no real incentive to take action.

Because of this and because ultimately no one like taxes, a carbon trading scheme is now the quasi bi-partisan policy in Australia. What is interesting about this is that there is no bi-partisan support for the fundamental tool of controlling a carbon market... emission targets.

At the end of the day, regardless of what the target is, for the market to operate successfully (and many of the speakers outlined what would make the market successful today... see below*) targets are needed because they set the supply. Without the supply there can be no real demand and without demand or supply, according to economics 101, there can be no market. Furthermore without targets, business (regardless of their sector or structure) does not have the certainty to invest in carbon abatement which, when all is said and done, is the main goal of any climate change action.

*According to one speaker the requirements for a successful carbon market are

certainty
breadth and depth
mature and large enough to encourage speculators
long-term
not dependent on a specific exchanges (ie the transaction will occur where is makes most rational sense).

Bringing on board the skeptics

2007-10-26T08:12:00.000+10:00

I am an advocate of climate change, but something that really annoys me is when the 'believers' totally shut down the non-believers.

I spoke at the Mosman Council launch of the clean energy for eternity chapter last night. First of all, what the guys in Bega, in particular Dr Matthew Nott, have done is fantastic. They get climate change, they are doing something about it and see it not as the end of all things, but as the start of a new era in science, technology, and, coincidentally (for their name!), clean energy!

Unfortunately, however, last night was a classic example of violating an individual's right to free speech. After all the speakers had done their thing (me included... I was talking about the impact of climate change on business), a motion was put that the Mosman area adopt a 50/50 by 2020 climate change target. Basically, that the council area would work to reduce consumption of energy by 50 % and increased the production of energy from renewable energy to 50% by 2020. Nice. But as the motion was being put, one individual asked that there be time for questions before the motion was voted on. Fair enough I say. Unfortunately for free speech and fair debate, it would seem this individual was well known to everyone there last night and is, as the Mayor put it, a "regular nuisance".

Be that as it may, not allowing him to ask one single question and speaking over the top of him every time he did attempt to ask a question doesn't help anything. In my experience talking to many businesses, many of whom are very pragmatic and not 100% sure of this thing called climate change, the one thing I have found is that you can actually find common ground. There is a way to help them see the benefit of taking action, or at least understand the concerns of those around them.

Two of the best ways to overcome most business opposition I have found are this: tell them they could save between 15-50% of their annual operating costs with Return on Investment of between six months to three years. Really, it is that simple. They save money, their business makes more money, and they are using less resources that are contributing to the climate change problem. More interestingly is that once they start these things they see quite quickly all the other things they can do and the new markets that exist for sustainable products and solutions. Before you know it, they are full-blown converts... or dare I say it, believers!

The second way is to appeal to their sense of innovation. Tell them that we use technology to power our cars and cities that is over 100 years old... for a modern, innovative economy, and more importantly for a leading-edge, innovative business, what does that say? It says pretty quickly that we aren't that modern or leading-edge or innovative. For all the new technology we have we still use these antiquated technologies. For business... that's the opportunity. Invent better technology! And you can bet your bottom dollar that if they do, they will make a fair fortune from their investment!

why sustainability is both an envrionmental and economic issue

2007-10-23T20:01:00.000+10:00

"Most businesses still operate according to a worldview that has not changed since the start of the industrial revolution. Then natural resources were abundant and labour was the limiting factor of production. Now there is a surplus of people whilst natural capital - natural resources and the ecological systems that provide vital life support services - is in decline. The next industrial revolution, like the first one will be a response to changing patterns of scarcity. It will create upheaval, but more importantly it will create new opportunities. Business must adjust to these new realities. Innovative businesses are already doing that"

Hawken, Lovins and Lovins, Natural Capitalism, 1999, p.19, taken from "Digital Eco-Sense: Sustainability and ICT - A New Terrain for Innovation" by Chris Ryan.

This isn't the first time my reading has taken me past Ryan's work; I like what he says and although this isn't probably his best quote, it is one that grabs me right now...

A "... new focus on innovation and sustainable development (has created) a growing conviction that ICT will provide the technological basis for a transition to a sustainable future... we are seeing the 'co-evolution' of information technology and sustainable development, where new technical capacities are appearing just at the moment in history when they will be needed to support structural change for a sustainable existence." p.10

An introduction

2007-10-23T17:52:00.000+10:00

I find sustainability fascinating. There are so many people out there running around telling me that our whole world is on the verge of collapse and that we should be doing everything from implementing emissions trading schemes to preventing the establishment of any new coal mines to save the planet.

What I find most amazing is that while there are so many things that help people 'be green', realistically, very few people do much that actually makes a significant difference. While turning off lights and off-setting our carbon emissions may make us feel good, they don't really change the fact that the majority of the emissions are economic emissions that exist because we live such a high standard of life.

And this is where the irony exists; any action we take to tackle climate change will actually reduce our standard of living. Now I don't subscribe to the economic ruin argument of one 'great' Australian because the simple act of developing solutions will provide a new means of economic activity to replace those we lose, however, things like emissions trading schemes or stopping new coals mines at this current stage do have the impact of increasing the costs of the current lifestyles we all lead.

Perhaps this is a good thing because people are buying more things than ever (just look at our constant economic growth figures for proof) and don't look like stopping this trend just because they are now concerned about climate change. If they were really concerned, they may realise that consumption is actually as much of the problem as anything else. Accordingly, they might choose to stop buying many of the products they current enjoy, even though this probably wont change the situation much either, because there will always be someone else just around the corner to buy it instead of them... and around the corner in this case, might just be someone overseas.

And this is where it all gets tricky; if we do implement measures such as an emissions trading scheme, we actually run the risk of 'exporting' the problem. Australia has some of the highest economic, environmental and social regulations in the developed world. Any good made in Australia probably damages the environment less than some goods made elsewhere, however, if we don't manage the climate change transition appropriately, our companies may just stop making goods in Australia because it is too expensive. Instead they will go overseas, where costs are less, regulations are less, and unfortunately, environmental damage is higher...

and if that happens, how have we created a positive for the global environment by implementing tough new measures to prevent climate change in Australia? Isn't this even more ironic when we consider that our contribution to the global problem is less than 2 percent? Wouldn't it be better if we could encourage more development of goods in Australia, and complement this development by massive investment in R&D to make those goods more sustainable?