Consultant Dan
24 May 2010
A conservative economics of climate change
The Opposition’s budget disarray is not merely a strong of misjudgements and mishaps. It is a failure of intellectual leadership by Australian conservatives and their political parties. The big sleeper for Coalition economic (and industry and security) policy is ecological reality.
Anti-environmentalism came naturally for former Libearal PM John Howard and he mined this for electoral gain. But the political climate is catching up to the planetary climate and Howard’s protégé Tony Abbott would do well to wake up to reality.
The contemporary ALP has no particular affinity with ecology, which means the Coalition can define an economic approach to “the greatest moral challenge of our time”, although not without a formidable challenger. As Ross Gittins writes, “The most thought-provoking comment I’ve seen on the budget came from Senator Christine Milne of the Greens.”. There is no reason that the conservative parties could not define a liberal-conservative version of ecologically rational economics, in opposition to the left-progressive version of the Greens.
Here are the 3 obvious policy opportunities for the Opposition:
Energy Efficiency is the most economically rational way to cut emissions. The harvesting of wasted energy is actually so efficient in economic terms that these ‘nega-watts’ are a profitable new resource worth trillions of dollars over the next decade. This probably sounds to many in the Liberal and National parties like a deep green fantasy but it is the basis of the emerging scenario for Business As Usual.
Giles Parkinson writes in Business Spectator that the global energy sector is ‘dull, regulated, protected and predictable’ and that it deserves to be crushed by the firms with EE ambitions. Who are these radical companies that threaten to bury old outfits like Victoria’s antediluvian Hazelwood power station: GE, Google & Intel.
Clean energy is profitable business in 2010, not a cottage industry funded by those scary inner city Latte-lovers. Michael Liebreich, chief executive of Bloomberg New Energy Finance said recently “We stick to our forecast that 2010 will see record overall new investment in clean energy.”Not much of this investment will be made in Australia while the Government-in-waiting refuses to grow out of its quarry mentality.
Carbon costs are going up globally, independently of the Copenhagen UNFCCC fiasco. Part of this rise comes from carbon prices imposed by Governments and the rest comes from a diverse range of commercial and civic factors that impose de facto prices on greenhouse pollution: technical standards, ExIm policies, consumer preferences, CleanTech competition, brand-bashing campaigns, climate litigation and ‘Acts of God’, such as the BP oil spill. It is no wonder that Joe Hockey admits Australia will put a price on carbon eventually.
Just over the horizon of mainstream economic commentary is ecological scarcity, which scares Tony Abbott so profoundly. Peak Oil is happening now and Curtin University’s Professor Peter Newman blames the GFC on it. The US’s current Quadrennial Defense Review (QDR) puts Peak Oil and climate change firmly within the strategic planning framework for the army, air force and navy.
An intelligent conservative party would create a values proposition that melds thrift with opportunity and put EE and clean energy at the core of its economic policy.
An Opposition that understands the needs of business would bring in a carbon tax.
A Prime Ministerial aspirant who wants to appear strong on security would re-evaluate Australia’s strategic policy against the prospect of Peak Oil and not stop until he also understood Peak Coal, Peak Fish and Peak Everything.
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