America is swapping sides in the climate war we aren’t fighting

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Around the world the climate is shifting and so is the global warming debate. There's a new momentum across science, technology, politics, business, media coverage and community attitudes. The Climate Institute documented these trends in a report released in July, Top Ten Tipping Points on Climate Change.

The public release of the Al Gore movie An inconvenient truth is further proof that global warming is a hot topic. Hollywood has given an emotional punch to what has been viewed as a complex subject. The movie is unlikely to compete with Pirates of the Caribbean 2, but its emotional pitch will strike a chord and bring new people into the debate.

The Climate Institute will partner with Westpac on Tuesday in Sydney for a private screening of the movie with more than 100 members of the Australian corporate community.

The US has changed direction, we have not

Beyond the box office, the most powerful message is barely on the screen — a strategic shift in the position of the US, and international business, that has so far gone unnoticed in Australia.

While Australia continues to focus on President Bush's opposition to the Kyoto Protocol we are wrongly interpreting this position as one of inaction by all of the United States.

In fact, as Al Gore points out in his film, outside of the White House there's action everywhere you look:

  • US Republicans from California Governor Arnold Schwarzenegger to Senator John McCain are calling for action.
  • Governor Schwarzenegger has agreed to the country's most ambitious plan to cut greenhouse gases in his state of California, one of the world's biggest economies.
  • Governors of seven north-east states established the first mandatory cap-and-trade program to control emissions in the US, to stabilise power plant emissions through 2015 and reduce emissions by 10% by 2019.
  • The mayors of some 284 US cities have pledged to cut emissions of greenhouse gases through the US Mayors Climate Protection Agreement, which calls for cities to meet or beat the US emissions reduction target in the Kyoto Protocol, a 7% reduction below 1990 levels by 2012.
  • Twenty two American states have ordered utilities to obtain as much as 33% of their electricity from renewable sources within the next 10 years.
  • The world's largest retailer, Wal-Mart, announced a US$500 million climate change commitment including initiatives to reduce greenhouse gas emissions by 20% in seven years, and increase truck fleet fuel efficiency by 25% in three years and double it in ten.

The end of a beautiful climate relationship

Australia has for years taken the view that action on climate change here is futile without action by the largest economy and largest emitter in the world — the US. Strangely, now that this is happening, the Australian position remains the same.

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The US shift on climate leaves Australia politically and economically isolated, not just as the only other major developed country that has not ratified Kyoto but also as the least-prepared developed country in the world on this issue. The safe position under the wing of the White House that Australia nestled in for so long is gone. So far few commentators have noticed.

Some, though, can see the writing on the wall. Westpac CEO David Morgan referring to a conversation with the General Electric CEO Jeff Immelt summed up the mood in the US when he said, “He said to me he was virtually certain that the first action of the next President of the United States, be it Republican or Democrat, would be to initiate urgent action on climate change.”

Carbon has a price, it is profitable and global companies are setting the pace.

The uniquely Australian notion that reducing greenhouse gases harms economies and corporate profits is being blown out of the water by a surge in corporate activity to exploit the upsides of climate change.

Climate Institute Launch

Companies around the world are using climate change as a strategic business driver across not only emissions reductions, but also the development of new markets, technologies and investment opportunities. Previously, corporate leadership on climate change has come from Europe and Japan. Now it is global and coming from the US and developing countries as well.

Some are surprised that the global response is, to a large degree, being driven by business. For example, there is a rush to invest in clean energy, a global market now worth $74 billion. The global carbon market was worth $13 billion last year and grew to $18 billion in the first half of this year. The projected technology investment for greenhouse abatement in developing countries by 2012 is $133 billion under the mechanisms of the locally-criticised Kyoto Protocol.

The proof that economic benefits can sit alongside reducing greenhouse gases is highlighted by the recent Business Roundtable report signed by six leading CEOs. One would assume that the CEO of Westpac has a firm grasp of the economic realities of Australia.

In his film Gore links two important partners at the hip — America and business. "There's a sea change underway in American business. What's different in business audiences in the past year or so is a new and widespread receptivity, a keen awareness, an eagerness on the part of large numbers to find out how they can take a leadership position. And a recognition, too, that there are profits to be made."

Australia is in deep trouble as the juggernaut of US multinationals sets about making money from tackling climate change across the globe. The move has been swift; one minute we were in the passenger seat with the US, now we are caught beneath the wheels. No one should be surprised that the US is driven by vested self-interest and global economic power — why would it be any different on climate change?

America , then China, then what?

There is growing evidence that China too is following in America's footsteps. China is set to spend US$220 billion on renewable energy over the next 15 years. That kind of money would buy an oil firm the size of Chevron with change left over to fund the current renewable programs of all Europe's top oil firms for 25 years.

This week I spoke at a renewable energy conference in Canberra with Zhengrong Shi, ironically Australia's first solar billionaire. He left Australia as the renewable energy industry was being shut down. He is now building solar factories in America as well as in China. Chinese wind companies are launching IPOs in international markets.

The globalization of the trend towards carbon-constrained economies has left Australia behind whilst we continue to operate in a carbon-bloated economy that is getting fatter every day.

So the first question I will ask the business audience on Tuesday is; can a movie have an impact on investment choices?

Skeptics will claim the movie is typical, left-wing green rabble-rousing stuff that won't make an impact on the Australian public beyond the latte-drinking fringes of Leichhardt.

Too late, as establishment America is gathering pace in the war to fight climate change, and shifting direction without us noticing.

Gore's global warming crusade and some Hollywood magic can only highlight the economic pain that Australia is bringing upon itself through its inaction. This is a lonely and expensive place to be with the Americans no longer by our side. That is the inescapable truth of this movie for Australian audiences.


For a free copy of The Climate Institute's 'Top Ten Tipping Points on Climate Change' report, go to: www.climateinstitute.org.au/cia/downloads/TopTen_fullrep.pdf

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