'Bailing out' the Environment

The last couple of weeks have made history in the management of global financial markets. The threat of a looming global financial crisis has led to the swift implementation of brave ideas by governments and regulators. The response may reveal how the world could avert the looming crises of climate change and resource depletion by backing the clean technology (‘cleantech’) sector.

The United States Federal Government rushed through emergency legislation that will inject up to US$700 billion into the banking system to remove the problem of ‘toxic debt’ from the US financial markets. This debt will apparently include sub-prime mortgages, credit card and other debts that could cause large financial institutions to come under increasing pressure. The financial crisis has already led to the nationalisation of three of the larger US financial institutions and the Government’s response is an attempt to stabilise other companies before they too need to be nationalised. In addition to this ‘bail out’, regulations have been implemented to restrict short selling practices, preventing hedge funds profiteering from, and thereby driving, the collapse of companies. Several markets around the world have emulated this response in varying degrees, with Australia taking the most extreme position.

AT the same time Gordon Brown, the UK Prime Minister, has been calling for an international system of regulation to oversee the global financial system, admitting that it is impossible to effectively regulate the world’s markets on a national basis alone.

Commentary, other than from hedge funds, appears to be generally supportive of the initiatives taken in the US and elsewhere. They are commended as being necessary and courageous moves to shore up the global economy and to reduce the risk of the world descending into financial depression. Confidence in the decisions made has stemmed from deep knowledge of causal factors in economics and the likely responses.

The world of course faces another potential catastrophe that could have an impact far worse than a financial meltdown: continuing global climate change and resource depletion.

Of course, the precise consequences of both financial depression and climate change are uncertain, but the risk of catastrophic outcomes of both is very real. Indeed, the issues involved in both problems are in many ways similar. There are companies that will fail due to pursuing toxic, legacy activities beyond the bounds of a sustainable system; there are groups profiteering from activities detrimental to the health of the overall system; there is a need for government investment combined with regulation; there is a drive towards global regulation; and, if done well, there are immense opportunities to increase both global wealth and well being.

Imagine what would be achieved by a response to the global ecological environment on a par with what we’ve seen for the financial environment. Consider a Bernanke/Paulson type team, with knowledge and confidence in the economic and environmental consequences of their recommendations, persuading a President in one of the richest countries of the world that there is a looming global crisis and that, as one of the worst offenders, there is a responsibility to secure the global system through an investment of several hundreds of billions of dollars.

Not only would such an approach ‘bail out’ the world from a possible catastrophe, but it would also drive a new global industry with the potential to improve the quality of life for all the world’s inhabitants: not merely through increasing wealth, although that is an important aspect, but also by changing the way wealth is created by breaking the ties with emissions and resource depletion.

The adoption of cleantech will happen regardless of such an intervention, but it will be a far less painful experience if the courage and belief demonstrated by recent actions in Washington were to be replicated in the response to global climate change.


This article was originally published in Environmental Management News and on ABC Online. To read the bizarre collection of comments on the latter site follow the link - http://www.abc.net.au/news/stories/2008/10/03/2381148.htm

CPRS Green Paper Submission

Plan to Build Australia as a Centre of Excellence for Clean Technology

Australian CleanTech made a submission to the Department of Climate Change on the Carbon Pollution Reduction Scheme Green Paper. The submission focussed on how to best secure the long term opportunities that are being presented by the transition to a low carbon economy rather than focussing on short term gains or losses by industry participants. A seven point plan is presented in this submission with an overview presented below.

For a full copy of the submission see http://www.climatechange.gov.au/greenpaper/consultation/submissions.html or request a copy at info@auscleantech.com.au

Stage 1 - Carbon Risk: Don’t back long term losers
Understand the carbon risk of current Australian industries and make sure that, other than transitional measures, we do not back those industries that will inevitably decline as carbon pricing increases. Australia will not deliver a prosperous future by being the last to be supporting legacy industries.

Stage 2 - Facilitate Easy Wins: Back Energy Efficiency Service Providers
Back the suppliers and service providers of the ‘easy wins’ for emissions reduction through matched expansion funding. Energy efficiency products and services will provide the quickest return on investment. By investing in the service providers rather than grants to emitters there will be greater and longer term economic development from generating expertise and commercial knowledge, rather than simply providing greater longevity for single companies.

Stage 3 – Build Supply Side Capability: Cleantech Parks – Promote and support the development of sustainable manufacturing and innovation hubs. Examples of State based initiatives include the Tonsly Park proposal in South Australia and the Springfield development in Queensland. To make these true successes, they need to very specifically target and attract Australian and international companies that are or have the chance to play on the world stage. This process should also look at attracting industries at varying points in their maturity.

Stage 4 – Build the Demand Side through the Australian Climate Initiative
Taking the Clinton Climate Initiative (CCI) as a template, there may be an opportunity to stimulate the sustainable manufacturing initiatives of Stage 3 by effectively forming a buying group of local councils and State and Federal Government departments. To do this on an Australian scale, an ‘Australian Climate Initiative’ (ACI) would only require an initial group of several State and Federal Government departments and some key Councils. Through publicity and exposure, others would be encouraged to join across all three tiers of Government.

Stage 5 - Local Empowerment: Facilitate Local Innovation
Promote projects and provide facilitation services to enable local councils and local communities to develop smaller scale projects in their own area. This will allow the community to feel part of the solution, will harness many more hands, will attract greater and more diverse investment models and will deliver significant community behaviour change. A Victorian example is the Hepburn Wind Farm project. Another example is the proposed Just Peachy project in the northern suburbs of Adelaide that combines urban regeneration, increased social capital underpinned by the growth in sustainable businesses.

Stage 6 – Negotiate Infrastructure Hurdles
There are some large scale infrastructure projects that are unlikely to be developed in the short term without Government leadership. If these projects are delivered, however, they will provide a step change in the delivery of new technologies and a spring board for the country to become a centre of excellence. The best example of this is a High Voltage Direct Current (HVDC) cable that could be constructed from the renewable energy resource rich areas of the country to the energy demand centres.

Stage 7 – Demonstrate Success: Power Parks
Professor Stephen Schneider from Stanford University suggested the South Australian Government develop power parks promoting multiple low emissions technologies and ‘showcase the State as a centre for innovation in greenhouse emissions reduction and renewable energy development’. This concept could be developed across the country with demonstration facilities in specific sectors show casing the best of breed for many technologies.

Cleantech Growth through Collaboration

Tangible cleantech outcomes can only be effectively achieved through collaboration between the four core groups of cleantech participants and by adopting a four point collaboration strategy.

The four core participant groups of the cleantech industry are business, governments, researchers and the finance community. Extraordinary outcomes will be achieved by combining the knowledge, capacity and resources of each of these groups.

The combination of innovative research, business needs, commercialisation skills, financial drivers and all three tiers of Government can deliver solutions that not only meet environmental needs but also deliver economic and social dividends. If any one of the core groups is missed from any stage of the process then the result will be, at best, sub-optimal.

Collaboration between the core groups must occur throughout the lifecycle of the project. The adoption of a four point collaboration strategy facilitates behaviours which lead to cleantech innovation and growth.

• Strategy 1 - Networks. Cleantech networks are starting to emerge. They provide valuable forums for making new connections and starting new discussions. One example is the Adelaide Cleantech Network, which organises educational events to facilitate cleantech growth in addition to other opportunities for members of the core groups to meet and exchange information and opinions.
• Strategy 2 – Drive Demand. Through establishing buying groups of companies, government departments, local councils or businesses, it is possible to jump start emerging technologies.
• Step 3 – Drive Innovation. The establishment of cleantech manufacturing and development parks creates and enables the positive interdependencies between researchers, companies and financiers. This enhances product development both in terms of quality and time to market.
• Step 4 – Demonstrate Success. Highly publicised demonstration parks or projects are required to provide access to multiple technologies in-situ. The successful technologies are likely to be those that were conceived at network events and borne from the impetus of buying groups and cleantech parks.

Amidst the noise of emissions intensive industries crying foul, the voice of opportunity is starting to be heard. Grasping this opportunity requires the implementation of a comprehensive collaboration strategy that brings together the four core groups of cleantech participants. Governments and other facilitators can lead this strategy, but it requires commitment from all four groups for it to succeed. Once implemented, the multiple dividend streams of cleantech will be fully unleashed.

This is an edited extract of an article that was originally published on Environmental Management News. For a full version of the article please email info@auscleantech.com.au

Adelaide Cleantech Network - Grants & Investment Seminar

The First Adelaide Cleantech Network Seminar was held on Tuesday 2 September 2008 at the National Wine Centre in Adelaide

The high level seminar was organised by the Adelaide Cleantech Network, the only organisation of its kind in Australia. The conference brought together representatives of business, finance, government and academia and promoted collaboration across these groups to stimulate the growth of cleantech companies.

Commenting on the event, John O’Brien, Managing Director of Australian CleanTech said that Australia will adapt quickly to a future of low emissions and resource constraints by providing an environment for new companies and technologies to flourish. “Maintaining and protecting existing industries is important in the short term, but it does not result in a leadership position in the long run,” he said.

“Adelaide is leading the way in demonstrating how the collaboration between business, finance, government and academia can produce sustainable companies providing investment returns and economic development.”

The first session of the seminar focussed on State and Federal Government grants and incentives available to cleantech companies. This included one of the few good news stories from the closure of Mitsubishi’s Tonsely Park plant. The Federal and State Governments have jointly launched the South Australian Innovation and Investment Fund which will provide up to $30m for investment in new manufacturing ventures. Another grant that was discussed was the Federal Government’s Climate Ready Grant that will provide up to $5m of matched funding to successful applicants.

Show casing a successful case study, Anthony Kittel, the Managing Director of Lonsdale-based REDARC talked about his company’s success in securing a multi-million dollar grant that has enabled it to expand its operations.

The second session of the PricewaterhouseCoopers event turned the focus from companies to investors. It started with an overview of the Rudd Government’s Carbon Pollution Reduction Scheme along with the current state of lobbying by ‘big business’ looking to protect and forward their interests. Other topics included an overview of picking stock market winners and losers for a carbon constrained world and the investment strategy of South African bank, Investec, to make money from cleantech.

In the last session of the morning, Fiona Waterhouse from the Australian Cleantech Marketplace explained the new ways Australian investors can access environmentally friendly investments. Included was a commentary on the world-first Sustainable Investment Market, the Sydney based stock exchange that will only list cleantech companies.

Cleantech investment differs from ‘socially responsible investments’ and their ilk, focusing only on companies whose output positively enhances communities and ecologies. “It is about doing ‘more good’ rather than ‘less bad’,” Mr O’Brien explained.

To round off the day IBM Australia’s Malcolm Mackey explained how IT is the enabler of both the technologies and investment returns associated with cleantech.

Australian CleanTech has estimated that, if the Australian growth matches the global forecasts, annual revenue for the Australian cleantech sector could exceed $40Bn within the next 10 years.

“Successful cleantech investments are about looking at future trends and understanding which technologies will achieve both economic and sustainable development,” Mr O’Brien said.

“The drivers behind cleantech are much more than just climate change. Increasing wealth, increasing populations and decreasing natural resources require the world to adapt to cleaner technologies,” he added.

Mr O’Brien concluded by dismissing what some commentators have coined as a ‘green bubble’, similar to the IT bubble of the turn of the century. “With many real assets being constructed and global demand for its products and services increasing, the cleantech revolution is here to stay.”

“Finally we have a solution to the dichotomy between good returns and positive environmental investments. We now have a way to make money and save the world.”

EMAIL acn@auscleantech.com.au FOR INFORMATION ON FUTURE EVENTS

The Cleantech Cure for Climate Fatigue

A new challenge for those fighting the effects of climate change is on the horizon - ‘climate fatigue’. Each day the public is bombarded with terrifying prognoses for the future that they and their forebears have created.

Many people are understandably confused about the possible effects of climate change and feel an inability to make any meaningful difference. They sense a lack of control and eventually fear will give way to resigned boredom and the distractions of more immediate and local issues. So, ironically, as media exposure on the issue of climate change increases so too does the danger of climate fatigue.

Yet it is essential that individuals and their communities do stay motivated and engaged with the solutions to climate change – it is not enough simply to rely upon scientists and politicians to alleviate the consequences. Cleantech provides the solutions that will deliver both global and local benefits and ensure the community engagement is maintained.

“Climate fatigue” may be compared with the well documented phenomenon of famine fatigue. As news of ever more famines continue however, the length and depth of compassionate feelings reduces until there is tendency to accept famines as unavoidable.

Famine fatigue or, more generally, compassion fatigue occurs fastest when the suffering is far removed. Climate fatigue is no different, as shown by Putin’s retort that Russians are unlikely to suffer from a slight rise in temperature, and the effects of climate change are often seen as a problem belonging to the distant future and far flung places of the world. However, recent Australian weather conditions – both floods and droughts – have focussed many Australians on the immediacy and relevancy of the problems created by climate change. Extreme weather patterns elsewhere, such as the US and parts of Europe, have had the same effect. Enthusiasm for change is high, both here and abroad, and fatigue has yet to set in.

To harness this enthusiasm and secure its benefits requires two aspects: firstly, local benefits must be visible to communities so that the benefits of change are clear; and secondly, networks and forums must be established to facilitate new connections and enable new collaborations. This is where cleantech comes in.

Focusing on local benefits whilst also delivering part of a national or international solution is not easy. It requires collaboration and understanding between business, investors, academia, all three tiers of government and most importantly the general public. Providing a forum to have these conversations is a vital first step to delivering the greatest benefits from changes that are going to be required as a result of climate change.

One example of this first step is the recently formed Adelaide Cleantech Network. This brings together all of the disparate groups and enables discussions to start on wider more ambitious solutions.

By changing the story from one of worry to one of opportunity, cleantech alters the whole dynamic of climate change. It is a twist on the concept “think global - act local” which has historically been seen as taking local detrimental actions to achieve global benefits. Instead this is thinking about worrying global events and turning them into an excuse to deliver local benefits.

By focussing on how cleantech solutions can deliver local, as well as global, benefits and by starting new conversations and collaborative relationships, we have the opportunity to make climate change seen as the great motivator to a better world.

This is an extract of the full article that was first published Environmental Management News. For a full version of the article please email info@auscleantech.com.au

What is Cleantech?

On forming Australian CleanTech early in 2007, I was asked several times whether I would be cleaning carpets and curtains. Although understanding of the term has now grown to a point where I no longer face queries about rejuvenating soft furnishings, the actual definition of ‘cleantech’ seems to change depending where you look.
John O’Brien, Australian CleanTech

Guiding principles may be given in an attempt to define what cleantech is. An example is the following from US firm Clean Edge, which states cleantech is:

A diverse range of products, services and processes that harness renewable materials and energy sources, dramatically reduce the use of natural resources and cut or eliminate emissions and wastes.

Broadly, cleantech seems to encompass companies that have both environmental and economic benefits.However, each individual is left to decide whether a particular industry sector fits within the spirit of cleantech as defined by such principles. Some organisations clearly state what they are and are not including in their definition, but then do not go on to explain how these decisions have been made.

The term cleantech therefore tends to be a more amorphous industry group than, say, environmental services, and a less rigid investment asset class than, say, financial services.

Sectors that appear to fit into the definition of cleantech without dispute include:

• Renewable energy – wind, solar thermal and photovoltaics, wave, tidal, hydro, geothermal, biomass and biogas;
• Water technologies that increase efficiency;
• Energy efficiency, green buildings and biomaterials;
• Waste management and recycling;
• Energy storage and fuel cell technologies;
• Low emission vehicle technologies; and
• Environmental Services.

Other sectors are controversial with some including them within cleantech by reason of their environmental benefits whilst other reject them because of insufficient positive environmental benefits, or too many perceived negative impacts. Examples include:

Biofuel, an emotive subject seen by some as the saviour to high oil prices and energy security issues but by others as the cause of rising food prices, food riots and increasing monoculture.

Carbon Trading is clearly driving much of the investment behaviour in cleantech, but it is questionable whether the act of trading has any direct environmental benefits.

‘Clean’ fossil fuels include natural gas, coal seam methane, underground coal gasification, gas to liquids, carbon capture and storage and clean coal technologies.

Nuclear power clearly has a lower emissions profile than the fossil fuel equivalent and is highly likely to form part of the long term global solution to climate change. However, deep concerns remain over the environmental and social impacts of uranium transport, usage and waste storage.

Agri-Businesses, included in many measures of environmental performance due to their clear interaction with the environment. Yet this interaction is not always a positive one for the environment and the communities involved.

It is clear that decisions on what counts as cleantech depends on the viewpoint and vested interest held. Lobby groups, investment fund managers and participating companies all have desired outcomes that help shape their arguments on the definition.

Despite this, cleantech is not is just another term for Socially Responsible Investments (SRI) or Environmental, Social and Governance (ESG) performance. Cleantech is a term which embraces organisations whose essence, whose raison d’être, is to provide environmental benefits.SRI and ESG look at incremental improvements in company performance and can be seen as ‘operational hygiene’ measures that find the best in class. Cleantech is about doing ‘more good’ rather than ‘less bad’.

To those who ask ‘What is cleantech and what does it encompass?’ there is no definitive answer as both subjective opinion and vested interests are involved. However, this should not detract from the multiple benefits available to investors, communities, employees and society from the work of the cleantech industry.

This is an extract of the full article that was published Environmental Management News. For a full version of the article please email info@auscleantech.com.au

Adelaide GreenDrinks

Cultivating an Eco-Minded Community

First meeting: 8th July ‘08.

Venue: Sangria, Corner of Gouger and Morphett St, Adelaide

Regular meetings : Second Tuesday of the month.

Contact Details: suhit.anantula [at] worldisgreen.com or 0433 601 501

Next meeting: 12th August, 2008

People are the key. And the best way to learn more and make life interesting is to meet more people. And what better way to do that than to have a regular place to chill out, drink and discuss.

And in the green area, there is something called Green Drinks managed by Edwin at Biothinking. Green Drinks is an organic, self-organising network running in 380 cities worldwide.

Australian cities like Melbourne and Sydney have their version of the Green Drinks and Adelaide lacked this. Well, not anymore.

For more information see http://worldisgreen.com/

“Make Money and Save the World”

Cleantech Index Outperforms Market for Second Year Running

The ACT Australian CleanTech Index has outperformed both the S&P ASX200 and the S&P Small Ordinaries for the second year running.

Over the 2008 fiscal year, the ACT Australian CleanTech Index recorded a loss of 16.0%, better than the S&P ASX200’s loss of 16.4% and significantly better than the S&P ASX Small Ordinaries’ loss of 23.0%.

The Index is the initiative of Australian CleanTech which provides research services and investment analysis of the cleantech sector.

Commenting on the results, John O’Brien, Managing Director of Australian CleanTech said that the strength in the cleantech concept comes from its diversity. Over the year some of the cleantech sub-sectors performed extremely poorly with the Biofuels industry continuing to tank. However, the waste sub-sector held up the index this year through its strong annual growth. In previous years, it has been sub-sectors such as Geothermal that have provided this growth.

“Successful cleantech investments are about looking at future trends and understanding what technologies will achieve both economic and sustainable development,” Mr O’Brien said.

“The drivers behind cleantech are much more than just climate change. Increasing wealth, increasing populations and decreasing natural resources require the world to adapt to cleaner technologies,” he added.

The ACT Australian CleanTech Index monitors companies across 14 industry sectors: solar; wind; biofuel; water; waste management; energy efficiency; energy storage & fuel cells; wave, tidal & hydro; biogas generation; vehicle technologies; geothermal; carbon trading; environmental service providers; and ‘other’ additional companies providing beneficial environmental and economic outcomes.

Cleantech focuses on companies whose output positively enhances the communities and ecologies in which they reside. “It is about doing ‘more good’ rather than ‘less bad’,” Mr O’Brien explained.

The market capitalisation of the 73 stocks in the ACT Australian CleanTech Index now exceeds A$15 billion. The best performers over the 2008 fiscal year were Sims Metal Group and Cougar Energy with some of the many that performed poorly including Traffic Technologies, Energy Developments, Viridis, Australian Ethical Investments and Ceramic Fuel Cells.

The performance of the seven sub-indices underneath the ACT Australian CleanTech Index reflected the wider market with strong gains in FY07 offset by losses in FY08. The ACT Wind Index, ACT Waste Index and the ACT Geothermal Index are all showing strong net gains over the two years with the ACT Environmental Services Index joining the ACT Biofuels Index with notable losses.

Mr O’Brien concluded “Some commentators have dismissed the cleantech phenomenon as being a mere ‘green bubble’, similar to the IT bubble of the turn of the century. With many real assets being constructed and global demand for the products and services increasing, the cleantech revolution is here to stay”.

“Finally we have a solution to the dichotomy between good returns and positive environmental investments. We now have a way to make money and save the world.”

Inaugural Adelaide Cleantech Networking Drinks

The inaugural Adelaide Cleantech Networking drinks were held on Tuesday 1 July 2008. Over 80 people attended the event and made the inaugural drinks a great success. Attendees included representatives of water, energy, waste, carbon and environmental services companies. There was also a good representation from the finance industry with companies attending from venture capital, private equity, stockbroking and financial services. Finally there were also people from Government agencies and professional services firms.

The sponsor for the evening was Playford Capital and the event was kindly hosted in the rooms of the Water Industry Alliance. Playford Capital announced a cleantech deal that they closed the previous week with Ember Technologies to enable them to commercialise their energy efficiency technology.

The next Adelaide Cleantech Network drinks will be held on Tuesday 5th August. If you are interested in attending or learning more of the Adelaide Cleantech Network please email acn@auscleantech.com.au.

Adelaide Cleantech Network Events

The Adelaide Cleantech Network will establish South Australia as a leading national and international provider of Clean Technology services, products and innovation. The concept has been developed and will be launched by Australian CleanTech in association with industry and State Government partners. The Adelaide Cleantech Network was officially launched at the Beyond Carbon 2008 Conference on 3 June 2008 in Adelaide.

To receive further information about all events, please email acn@auscleantech.com.au with Register for the Adelaide Cleantech Network in the Subject line.

Are you interested in Cleantech?
The cleantech sector comprises industries with both environmental and economic benefits. Sub-sectors include renewable energy (wind, solar, wave, tidal, hydro and geothermal), water, waste and recycling, energy efficiency, green buildings, biomaterials, energy storage and fuel cells, environmental service providers and carbon traders.

Monthly Drinks
To provide a regular and informal environment for collaboration and networking, the Adelaide Cleantech Network will hold monthly drinks and nibbles on the:

FIRST TUESDAY OF EVERY MONTH
5:30 until 7:00pm

The Adelaide Cleantech Network Drinks begin on Tuesday 1 July 2008. Bookings are essential for these events.

Formal Seminars
More formal seminars on specific topics will be held on the

FIRST TUESDAY OF EVERY QUARTER

These seminars will vary in format but will generally conclude by joining the monthly Adelaide Cleantech Network drinks. The Adelaide Cleantech Network formal seminars begin on Tuesday 2 September 2008.

Who will you meet?
The Adelaide Cleantech Network aims to provide education and links to the finance industry and government services.
Investor involvement ranges from angel investors and venture capital companies that can provide early stage capital through to larger financial institutions able to fund major infrastructure projects. These attendees find the sector highly attractive because the participating companies are involved in high growth industries, have strong reputational capital and offer a positive outlook.

A diverse range of industry participants including industry associations, Government departments and Universities are involved in the Adelaide Cleantech Network. Global connections are provided through international affiliated organisations.

Take the Opportunity!

Be part of the Adelaide Cleantech Network and help enable South Australia to become a centre of excellence for cleantech.