Try ordering Evian at a restaurant in Sydney and you are likely to be treated to a lecture on the environment by your waiter. But while Australian society seems advanced and progressive on green issues, when you look at the “bottom line” it is getting nowhere.
Australia emits the same amount of Co2 as the UK, a country with nearly three times the population. In fact, per capita, amongst major economies it is second only to Saudi Arabia in its Co2 emissions. Tell that to your waiter.
This is disappointing. If we are to stop climate change globally, then we need the wealthier developed economies to set a good example and persuade the developing ones, and above all China, to clean up their acts. And yet Australia, one of the richest developed nations, has been going the wrong way. In the last, comparable, international report, Australia’s emissions were actually up by some 46% compared to 1990, while the US had managed to flat line, the EU’s had fallen 19.5%, and the UK was down nearly 36%.
Australia really has no excuse. It’s rich – to get an idea of how rich, just consider that it has the same population as the US state of Florida and yet it has a GDP that is 40% larger. It is proud to boast of its independence from the United States and Britain, the former colonizer, but it has carved out that prosperity by creating an economic dependency on China which is not healthy in two important ways.
Firstly, China’s business has given a boost to Australia’s dirtiest industries – most notably iron ore and coal extraction. Coal is particularly destructive – as the Economist notes “unlike natural gas and oil, it is concentrated carbon, and thus it accounts for a staggering 39% of annual emissions.” In America and Europe coal consumption has fallen 34% since 2009. In fact Britain closed its last deep coal mine in 2015. But, thanks to Chinese demand, Australian coal production has surged. According to the IEA, Australia and Indonesia now provide over half of the world’s coal exports.
Secondly, China has started to feel it can bully its supplier. Earlier this year, the Australia Strategic Policy Institute (ASPI) issued an excellent report 'Uyghurs for sale' on “a new phase in China’s social re-engineering,” detailing persecution of China’s Muslim minority. It described a world of constant coercion and surveillance – compulsory Mandarin classes, banned religious observance, and people being forced to sing the Chinese anthem and wave its flag. Stung by this criticism, China snapped back – unleashing a wave of hackers against ASPI itself, and harassing Australian journalists and Australian companies. When Australia joined the other ‘Five Eyes’ Anglophone countries in condemning persecution in Hong Kong, China threatened to “poke (its) eyes out.” Just recently, when Australia admitted mistakes in Afghanistan, the Chinese foreign ministry tweeted a faked photograph of an Australian soldier cutting a young girl’s throat, with the phrase “don’t be afraid, we are coming to bring you peace.” The idea of China bringing Afghanistan peace is truly cringe-making.
More worrying for Australia, is that this deterioration in relations has spilled over into trade. In May, China imposed tariffs on Australian barley, then in August on their wines. So far this year, at least sixty Australian ships laden with coal have been denied permission to enter Chinese ports.
Australia’s brave stance on Chinese human rights deserves praise. Although critics have pointed out it has come late in the day, and may have primarily been driven by Prime Minister Scott Morrison’s close relationship with Donald Trump, and a desire to join in with his “China bashing.” With a new President coming into the White House that dynamic is about to change. We can only hope that President Biden keeps up the pressure on China, and changes America’s course on climate change. Will Australia follow? There is pressure for Morrison to declare a new carbon neutral target. Kevin Rudd, former Prime Minister, warned Australia risked becoming a global pariah and must stop its “pathetic crab walk.”
Well, don’t hold your breath. Morrison once brandished a lump of coal in parliament in support of the fuel. Angus Taylor, the Emissions Reduction minister, has promised to reach net zero emissions… by 2100. As Adair Turner, chair of the Energy Transmissions Commission, said Australia risks “backing the wrong technology” and becoming “even more of an “outlier” among rich, developed economies.”
But there are other reasons for some hope. Many of the Australian states are taking a markedly different stance to Canberra. 52% of power generation in the state of South Australia came from renewables last year (95% in Tasmania). Just last month, the New South Wales parliament passed laws to build 12 gigawatts of clean energy – roughly equivalent to the country’s entire large scale renewables capacity. Could this mean the early closure of coal-fired power stations?
Australia’s Government is also being left behind by its business and investors. ANZ has committed to a net zero target, and Australia’s major retailer Woolworths says it will be 100% renewable within five years. Even the leading energy company, AGL, has said it will build a large scale battery next to its Loy Yang A Coal plant, and other major batteries have been announced in Geelong and Adelaide. All part of a shift to renewables.
Corporate change is coming thanks to investor pressure. The Responsible Investment Association of Australia (RIAA) reported impact investing has tripled in the last two years from $5.7bn to $19.9bn. The Australian Sustainable Finance Initiative now represents a huge portion of Australia’s financial system (including all major insurers, fund managers and banks). On November 24th they launched their ‘Roadmap’ to a sustainable future. And the Global Real Estate Sustainability benchmark now ranks Australia first in the world on ESG performance.
All of this is leading to real pressure, and real change. Responsible Investor has reported that the Australian advocacy group Market Forces is “filing an unprecedented series of shareholder resolutions at coal producers” and that “although Australia’s notoriously conservative climate change policies haven’t helped…the country’s “very advanced engagement culture” has.
So let us have hope. Hope that change might help free Australia from that abusive, toxic relationship with China. And that the bottom line – its Co2 emissions – will move in the right direction. The world is watching.
Christopher Walker is a writer on business and politics. He sat for several years on the asset allocation committee of a major asset manager.