Turning from a two speed economy to a clean economy
April 2012
Whether it’s the two speed economy or a patchwork economy, we’ve got every right to be worried in Victoria.
Victoria is losing jobs, not gaining them. Growth has stalled. The latest figures show while Western Australia gained 54,000 jobs last year, Victoria lost 34,000. The mining boom is forcing up the value of the Australian dollar making it much tougher for Victorian manufacturers and service industries like education and tourism to compete. Other sectors like retail and construction are not so exposed to the rising dollar but are nevertheless suffering from uncertainty and lack of confidence.
If Victoria is going to survive in these challenging times we need a plan to rebuild jobs and confidence.
With this in mind I was struck by a report of what states on the other side of the Pacific are doing. The Governors of the Pacific Coast states of Oregon, Washington and California in the USA, and the Premier of British Columbia in Canada, have just this month signed an action plan to create one million new jobs in their states by 2020.
How are they going to do it? By looking to the clean economy.
The governments have identified four key sectors of the economy that stand out for job growth potential across their region. The sector with the largest potential increase in new employment is energy efficiency and green building. Over three hundred thousand new jobs are planned in building retrofitting, energy saving products and green building construction. The plan also identifies hundreds of thousands of new jobs in resource management, clean transportation and clean energy.
A report prepared for the Governors stated: “The clean economy is the single most important global opportunity on the medium term horizon with revenues expected to reach $2.3 trillion in 2020.”
It’s true. Across the world, countries are switching to cleaner energy sources: wind, solar, hydro, bioenergy and geothermal. Bloomberg New Energy Finance estimates that a record US$260 billion was invested in new clean energy in 2011, five times the investment in 2004 and more than in fossil fuels.
Germany, for example, is undertaking a massive reconstruction of its energy supply and transforming to a low carbon economy. Germany has a target for 35-40 per cent of its electricity to be from renewable sources by 2020. It is investing 20 billion euros a year in renewable energy capital investments. Some 367,000 people are employed in the renewable energy sector. Last year alone, 7,500 megawatts of solar PV was installed – enough to power more than one million homes.
The clean tech sector in China is staggering. China is now the world’s largest investor in clean energy, investing $54 billion in 2010, mainly in wind and solar. China will quadruple its wind power capacity to 200,000 megawatts by 2020.
But China is also grappling with massive environmental problems as hundreds of millions of its people move from rural areas to east coast cities – the biggest migration in history. Now China is starting to build greener cities. This is a major opportunity for Australian firms who have considerable expertise in engineering, city planning, waste and water management.
Where are the other opportunities for Australia and Victoria in the clean economy?
A number of companies are leading the way in green building but there are massive opportunities to make our existing buildings and new suburbs more sustainable. Our manufacturers and industry would be more profitable and long-lasting if they reduced their costs through energy efficiency. We have high quality educational institutions that could attract more foreign students to learn how to meet global sustainability challenges. And we have great renewable energy resources with plenty of sun and wind and productive opportunities for algae based biofuels, wave power and geothermal power.
Modelling for the Climate Institute shows that with the right policies close to 34,000 new jobs could be created in clean energy in Australia by 2030, 7,800 of them in Victoria. Many of these jobs could be created in regional Australia where the best renewable resources are located. New wind farms could lead to billions of dollars of investment and thousands of jobs in construction, virtually all in regional Australia. However the industry is facing a headwind in Victoria courtesy of new government planning regulations that make it tougher to build a wind farm than a coal fired generator.
Renewable energy is only part of the story. A report by the ACTU and ACF estimated that 500,000 new jobs could be created in Australia by 2030 with the right incentives across six key sectors: renewables, energy efficiency, sustainable water, biomaterials, green buildings, waste and recycling.
A price on carbon and the Federal Government’s $10 billion Clean Energy Finance Corporation are steps in the right direction. But states and regions should develop plans that link clean economy opportunities and carbon reduction with new business opportunities and jobs.
Some regions are already doing that. Geelong and Gippsland have developed low carbon growth plans with the assistance of ClimateWorks Australia that identify the most financially attractive opportunities. Geelong has identified $1 billion of inward investment that could be attracted through building and manufacturing efficiency, transport improvements, cogeneration and generating power from waste. Gippsland has identified clean economy opportunities that would generate over $800 million in investment to the region and save businesses and households over $100 million a year through more efficient energy use.
Now is not the time to go backwards in Victoria. A plan to make the most of clean economy opportunities can create long-term, well paid jobs. As Oregon Governor John Kitzhaber said at the launch of the Pacific Coast action plan: “Job creation rates in the clean economy are well above those for other shrinking sectors of the economy, pay better, and have been more resilient to the recent economic downturn.”
John Thwaites, former Deputy Premier of Victoria, is Professorial Fellow Monash University and Chair of Monash Sustainability Institute and ClimateWorks Australia.