Crushing the corporate myths
Some of the more spurious arguments that have occupied the corporate climate space have resurfaced since Marius Kloppers speech last week. There are three key examples: One is that Australia’s competitive position is harmed by acting on climate; second is that Australia shouldn’t lead on this issue; and thirdly, companies that advocate action, like BHP Billiton, are only doing so out of self interest and should therefore be ignored.
As I have argued in my columns here and on Business Spectator for several years, Australia is in a risky competitive position when it comes to CO2 emissions. A common response to the issue of Australia having among the highest per capita emissions in the world is to say yes, but our total emissions are so low they don’t matter globally compared to the big emitters – therefore we shouldn’t act. This misses the economic point. Having high per capita emissions – leveraging our cheap coal – was a clever economic strategy while carbon pollution was free. It becomes an expensive strategy when carbon pollution is priced.
And have no doubt, carbon is effectively being globally priced, independent of anything we do. Whether that’s through border adjustments, taxes or trading – and whether or not it’s by global agreement, a series of national agreements or just through the pricing of market risk – is unimportant. If we are stranded with a high-carbon economy then we will be uncompetitive and the longer we take to act, the worse off we will be.
Kloppers made this obvious point because he knows that an uncompetitive Australia makes it a harder place to do business.
The second argument that has been resurfacing is that Australia shouldn’t lead on climate or we’ll face carbon leakage – our industries will move offshore to places with less restrictions on carbon pollution. This argument still works in Australia for some people, but it is laughed at everywhere else. We are in as much danger of leading in action on climate change as we are of leading on indigenous health. China is likely to have a price on carbon before Australia does. India already has a carbon tax on coal. This means the danger of us losing industry elsewhere is patently absurd. It’s more likely there’ll be carbon leakage as dirty industry moves from China to Australia, the last bastion for pollution left in a low-carbon world! Of course I’m kidding, but does anyone really believe a sophisticated global investor is going to make a decision to shift a plant from a laggard country like Australia on an assumption they will get a 20-year free kick somewhere else? Where would that be, exactly?
The third argument is the attack on BHP Billiton and others, like AGL and before them IAG, Westpac and others, that when they argue for action on climate change they are only doing so out of self interest. This is my favourite by far, coming as it always does from advocates for the power of markets. I have spent the last 15 years working on sustainability inside the corporate sector, advising the boards, CEOs and executives of major Australian and global companies on how sustainability is a serious question of business strategy. I have and do advise companies as varied as DuPont, Ford, BHP Billiton, IAG, WMC and ANZ. In doing so I’ve learnt the truth about how corporations behave and I’m going to share the secret right here. You ready? Business advocates in its own self-interest. What an amazing discovery!
Of course Kloppers was acting in BHP Billiton’s self interest. He is no green warrior, he’s a miner and he wants to position BHP Billiton to be influential in the debate. He wants carbon regulation to favour his company. That’s the market at work – rational self-interest arbitrated by government on behalf of the people.
Does that make such advocacy less credible? Of course government has to act in the collective interest and be cautious in taking advice from any one sector. But I think there’s a reasonable chance that when our largest utility and our largest miner argue for action, and before them were joined by our largest insurer and all of our major banks, then perhaps the general principle might have some merit!
That’s why opponents of action are panicking. It’s hard to argue that action is bad for the economy when the most successful participants in that economy disagree.
The bottom line is those advocating standing still don’t have an economic or business agenda so much as an ideological one. They are now increasingly desperate because they’ve lost the debate. The science is clear, the economic argument is clear, the public is on board and the world is moving forward.
The challenge Kloppers has laid down for others in business is also now clear. The debate over whether we have a carbon price is over. The only debate left is how it’s applied and who benefits and who loses. BHP Billiton will argue strongly for policy that suits their interests. If others don’t engage with equal enthusiasm then they will have to live with the consequences.
Comments on this article
Snapshot
Hi John See, here's another link that may be of interest. It indicates how 1934 was once the hottest year in the US 20th century temperature record, hotter than 1998. Temperature records for most Australian capitals were also set in the late 1930's.
The recent CSIRO 50 year snapshot is very telling in that had it gone back a little further in time, it would paint a somewhat different story.
http://stevengoddard.wordpress.com/2010/09/25/thermometer-magic/
Crushing the corporate myths
The valid point in the article is that Klopper is saying what he believes is good for BHP, a large international company. There is no suggestion that it is good for Australia or Australians.
Any tax (whatever it is called) increases the cost of business. It is then passed on to the consumer who pays double for it. BHP don't really care whether the average Aussie has to pay more for fuel, electricity, groceries etc. They have worked out that it won't affect their bottom line as they can either charge their customers for it, or write it off against current taxes. (or both)
Please get real.
Intelligible comments
Great comments by John See, John Bennetts (as usual) and others. These arguments are really raising the bar.
Thanks for keeping the debate rational and interesting.
Empirical evidence
I'm aware of several SMEs and private businesses that have changed their business model to reduce their environmental impact, and each one of them has achieved a reduction in their level of pollution and GHG emissions, and they have improved their profitability.
There is an opportunity here that we risk missing.
Well written article Paul though it is fascinating that no matter what evidence science produces, we still get caught in the politics rather than the pragmatism of positive action.
Keep up the good work - really enjoying Climate Spectator
“there are none so…”
I am disappointed that you don’t trust the CSIRO Bill (Trust, Bill Koutalianos). I am a science graduate of the ANU, have worked with CSIRO scientists and have 20 years experience teaching science to secondary students, 10 of those to senior students. I have found CSIRO scientists and their work to be excellent and I trust their judgement. CSIRO is not my only source of information. Look at the graphs available from NASA Goddard Institute for Space Studies, http://data.giss.nasa.gov/gistemp/graphs/, and choose your range of years for temperature change. Looks like the stockmarket and the trend is up! Ask why Aoraki/Mt Cook in NZ has “Glacier Sea-Kayaking” on a glacial lake that wasn’t there a little over 3 years ago. It’s happening Bill. We should take the opportunity to act, before we have to play catch up.
Roger...
Things have changed a little since 1971!
Bill Koutalianos - that is misleading
Bill, that statement is misleading. "96.5% of emissions come from nature itself"! The actual situation is about balance. We have upset the balance by burning significant amounts of fossil fuels and clearing land. Skeptical Science says:
"The CO2 that nature emits (from the ocean and vegetation) is balanced by natural absorptions (again by the ocean and vegetation). Therefore human emissions upset the natural balance, rising CO2 to levels not seen in at least 800,000 years. In fact, humans emit 26 gigatonnes of CO2 per year while CO2 in the atmosphere is rising by only 15 gigatonnes per year - much of human CO2 emissions is being absorbed by natural sinks. "
http://www.skepticalscience.com/human-co2-smaller-than-natural-emissions...
skeptical science.com/argument.php
had a look at the site.
Almost every claim they made is, in fact, false.
eg I well remember discussion in the staff room at Sydney uni in 1971. No discussion of global warming, plenty of discussion about how to reverse an ice age if it started. The claim that global warming was the major topic is revisionist history.
Claims that the medieval warm period was cooler than now and mainly restricted to Northern Europe are also at odds with recorded history. Tibet, India and China had warm period at that same time. Irrigation from Tibetan glacial melt was greater than we can now manage. Canada was named "vinland" because of the native grapes growing there (try growing grapes in Newfoundland now!).
And so on. Practically all the claims of scientific "fact" made on this site are, at best, dubious.
Of course the science really doesn't matter. AGW has been politically proven therefore the science is irrelevant.
Our pollies intend to pander to the extreme greens by hampering the economy and too bad about the science.
How can increasing power cost to all be good for the economy and create real jobs?
The last time this happened was during the oil shock of the 1970's and we wound up with a decade of world wide stagflation.
I don't see how increasing power cost can have any other result.
Trust
Hi John See, our trusted CSIRO seems to place a lot of trust in the IPCC which is a personal concern of mine. If you look past those recent CSIRO decadal temperature block diagrams you will find that temperatures fell from 1940 to 1975, rose from 1975 to 1998 and there has been a slight fall since then. Please try a few respected sources not too closely linked to the IPCC to confirm this. Then ask yourself how does this relate to our constantly rising CO2 emissions. I trust you are aware that 96.5% of emissions come from nature itself. If any of the above is news to you, you would be well advised to broaden your information sources.
Business advocates in its own self-interest
So do consultants. We're expected to believe a consultant on the nebulous concept of "sustainability", who has worked for big business for years (and no doubt been well rewarded financially - nice work if you can stomach it), that this will be good for us?
Kloppers appears to be just another despicable big business rent seeker.
Can we drop the "carbon pollution" tag , please? We're actually talking about carbon dioxide, the compound.
There's no science to show that the little extra CO2 is doing anything bad, just vast amounts of conjecture and twisted logic by third rate "scientists" not worthy of the name.
Companies might move from Australia if we tax "carbon", to places where electricity is more cheaply generated by hydro and nuclear which in Australia are limited and non existent respectively for which the greenies are to blame.
Can we really run an advanced technological civilization on myths and wishful thinking?
CO2 is not going away
I support Paul's view of things. I have read every issue of ECOS (a scientific environmental journal produced by the CSIRO) for over 20 years now and seen the debate and evidence grow about CO2 emissions and the impact on our environment. The emission of CO2 is growing and its impact also growing and not diminishing. I don't want to live with the consequences of doing nothing and neither should anyone else. I hope by the end of this current election cycle we have a structure in place to reward business and households for decreasing their emissions. For those that don't think CO2 is a contributor to global warming I am reminded of the old saying "there are none so blind as those that will not see and none so deaf as those that will not hear", or words to that effect.
Engaging with enthusiasm
50% of the Australian voting public just voted for "no carbon tax" and approximately 35% voted for a "delayed carbon tax". Doesn't that qualify as engagement or signify an enthusiasm level? BHP's self interest push to gain advantage over its rivals, will inflict collateral damage on ordinary Australians and the Australian economy.
Public Opinion
Bring on the tax. There was an article in the SMH recently about the large number of major industries moving interstate and overseas from NSW because of there high energy costs brought about by a dodgy carbon dioxide reduction scheme and government incompetence with manageing the energy infrastructure. With pols showing the average person (voter) not interested in global warming and certainly not an extra tax, a sharp rise in energy costs and unemployment rates reaching the same levels as other countries, such as Spain, who have gone down this path (approx 20%) then both the Greens and the Labor party should get their comeupance at the next election. I predict that in a couple of election cycles the Greens will go the way of the democrats.
Another myth
Australia's place as one of "the highest per capita emissions in the world" is solely due to poor accounting/poor ecological understanding - we only measure sinks in about 10% of our forests & woodlands. If we included the sink in all of our woody communities (as, for example, the USA does) when calculating total net emissions our per capita figure would immediately fall by at least 25%. This is the true net emissions that the atmosphere above this continent "sees". All other constructs are what politicians, bureaucrats and green zealots choose to use to drive their own particular agendas. Its time all emissions figures in national inventories (inclusions and omissions) were subject to international scientific audit.
Bill Burrows
Know nothings and do nothings
Welcome back from dark places, those who deny (yes, I know, it is an emotive term) ... those who deny that GHG is causing climate change and that mankind is at the root of it all.
When Paul stated that the international community was moving, he was not arguing science or non-science - he was stating it as it is. The weight of public opinion has moved and is still moving. Marius Kloppers and many others have seen this and do not wish to try to base a business in a country which stands a chance of being given the cold shoulder because it is not keeping up.
Australia has for years represented 1.5 or 2% of global GHG emissions and has the highest per-capits emissions. So, it is reasonable to expect that Australia will be first to become an internation al outcast on this issue.
Do you see? Not a word about the science. Just statements of how the largest mining corporation reads the tea-leaves and seeks to manage or reduce risks to its operations. There is no point in further arguing whether the hockey-stick had too much bend in it, or whether weather stations are inconveniently sited or all those other diascussion points.
What matters is that Australia's largest corporation has announced, through its CEO, that it is not happy about the prospects of its assets becoming stranded due to Australia's failure to take limely and meaningfull action against climate change.
Australia's CO2 contribution globally
Australia emits 1.5% of global CO2.
If Australia reduces its CO2 emissions by 20% ( 20% of 1.5%) How much will that reduce global CO2 and by how much will it reduce global temperatures.
Is it worth imposing a tax on the entire population for such a miniscule amount of reduction ?
Crushing the CO2 price myths myth
The Certified Emissions Reduction (CER) price on the Eurpean Climate Exchange was 13.56 Euro as of this morning. CER's are essentially the key regulated global unit of carbon trade so the best indicator of how carbon is currently valued. Considerably more than 10 cents......
Some powerful references for Geoff's rebuttal
Hi Geoff:
Love your arguments for why we should not do anything. I believe its really important to attach references to sustantiate your points, so I thought I would help you out:
http://www.skepticalscience.com/argument.php
I would guide readers to references 3,5,13,18, 35,36 and 42 as these support your claims. Enjoy the reading.
The pendulum is swinging
Hi Paul, Good work as ever.
I have a sense of a large pendulum swinging towards the "pro-carbon price" arrow on the dial. It will swing back in due course. But our job, collectively, is to create momentum to shift the axis so that when it swings back to the "no-carbon price" arrow, it does so with less conviction.
However you look at it, BHP Billiton nailing their colours to the mast in this way is a good thing.
Cheers, Ben
Crushing the CO2 price myths
Paul Gilding says: "carbon is effectively being globally priced.." Chicago Climate Exchange has it priced at 10¢ tonne. Now that's what I call effective.
However, what is not being address is the oxymoron Carbon (Dioxide) Pollution. Paul says: "The science is clear..." No scientist has yet shown Carbon dioxide to be pollution. The fault-ridden IPCC, whose claim to peer-reviewed science, has been exposed. The Global Climate Models that tried to show a correlation between man-made CO2 emissions have been shown to be innaccurate. The "Hockey Stick" relied on by the IPCC (and Al Gore) has been questioned.
Yes, Paul, "The science is clear..." The science IS clear, clearly found wanting.