Eco Investor August 2015

Editorial

Labor Rejoins World's Clean Energy Leadership

The Labor Party's adoption of a target of 50 per cent renewable energy by 2030 is a big positive that will lift the confidence of investors now and boost it hugely next year if Labor wins the election.

While a scare campaign from the Abbott Government and its fossil fuel allies in the Murdoch media began almost immediately, the world picture suggests the winner in this debate will be Labor.

Labor's position has widespread public support in Australia, and similar targets are supported by many of the leading governments around the world. A week before Labor announced its 50 per cent renewables target, the European Commission took another step towards putting into law the EU's target of at least a 40 per cent emissions cut by 2030. The 40 per cent target is far stronger than anything contemplated by Australian governments so far.

The European Commission said its latest proposals will also help transform Europe's energy system, deliver a new deal for energy consumers, update energy efficiency labeling, and revise the EU Emissions Trading System.

Two weeks before Labor's announcement, the US based Union of Concerned Scientists published a damaging report called The Climate Deception Dossiers. This contains 85 internal company and other documents that show major oil and coal companies knew as far back as the 1980s that climate change was real but mounted a long campaign of deception to spread misinformation and block government action.

The report says this was done by "a handful of the world's largest fossil fuel companies" and it names BP, Chevron, ConocoPhillips, ExxonMobil, Peabody Energy, and Shell.

The scientists do not pull their punches. They say the documents "tell the story of this deception... that, for nearly three decades, major fossil fuel companies have knowingly worked to distort climate science findings, deceive the public, and block policies designed to hasten our needed transition to a clean energy economy."

"Their tactics have included collusion, the use of front groups to hide companies' influence and avoid accountability, and the secret funding of purportedly independent scientists. Companies' front groups have even used forged letters, claiming to be from nonprofits that advocate for the wellbeing of women, minorities, children, seniors, and veterans, to dissuade members of Congress from supporting much-needed climate legislation."

The campaign of deception continues today, with some of the documents from 2014 and 2015.

This report is sure to cost the fossil fuel industry dearly in the court of public opinion. The public has no tolerance for dishonesty by big corporates and the Report's comparison of the tactics of the fossil fuel industry to the tobacco industry before it is telling and suggests the long term outcome could be the same - a gradual loss of public acceptance and a reduction in the industry's social licence to burn fossil fuels.

Another comparison of tactics could be with the asbestos industry, which saw a complete loss of its social licence and its products banned.

While Australia does not get a mention in the report, there is no shortage of misinformation in our public domain and debates. Some of it comes from or is repeated by the Coalition - recall how the carbon price would see Whyalla wiped off the map (it didn't move, Tony!) and roasts would cost $100 (still $30 at our supermarket, Barnaby!).

Aligning yourself with the ethically challenged is not a long term survival strategy in a democracy, so it is going to be an interesting election next year.

Labor and Shorten have been much smarter in aligning themselves with the progressive side of this debate, and heavy hitters at that. Obama. China. The EU. And many others. The United Nations' Climate Change Conference in Paris at the end of the year is also before the election, and could again see Abbott, and Australia, embarrassed at the international level.

Many governments are deeply committed to climate action, and among the big ones none more so than the EU. Unlike the Abbott Government, the EU is not afraid to lead the world with what it describes as a forward looking climate change policy. The EU Commission's Vice-President for Energy Union, Maroš Šefcovic said "this Summer Package shows our determination to decarbonize our economy", to "putting energy efficiency first and becoming the number one in renewables".

The EU Commissioner for Climate Action and Energy, Miguel Arias Cañete, said "Actions speak louder than words. Today we take a decisive step towards enshrining the EU's target of at least 40 per cent emissions cut by 2030 into law. My message to our global partners ahead of the Paris climate conference: the EU stands by its international commitments. And my message to investors, businesses and industry: invest in clean energy; it's here to stay and continue to grow. With these proposals, Europe is once again showing the way and leading the global transition to a low-carbon society."

If only the fossil fuel companies had chief executives like that. If only the Coalition had political leadership like that. The people want it so it will happen. It's only a matter of time. If Labor wins next year's election, investor confidence in clean energy and the environment will rebound. There will likely be an initial surge, but given the damage done by the Abbott Government, deeper and wider change may take time and unfold more slowly.

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