Pricing carbon: $3bn boost to Australian sustainability investment by 2014

The new carbon tax and clean energy package will boost Australia’s corporate sustainability investment market by $3 billion by 2014, says a new report.

Published by market analyst company, Verdantix, the report predicts new spending to occur in four key areas – carbon and energy software systems, energy efficiency programs, green building technologies, and clean-technology projects.

The report is based on market analysis and interviews with executives from organisations including Alcoa AustraliaCarbon Trade ExchangeCarbonSystems, the Clean Energy Finance Corporation, Johnson & Johnson,Macquarie Generation, and National Australia Bank.

The forecast is based on analysis of spending by 139 firms with Australian revenues of at least $900m and cross-industry research into over 1,000 Australian corporate sustainability initiatives.

It finds that the Australian sustainable business market will grow from $1.7bn in 2009 to $3.1bn in 2014 at a compound annual growth rate of 13 per cent, in addition to direct clean energy investments.

The report warns that these high growth forecasts hinge on the enforcement of a carbon price in 2012, and will not occur if political opposition successfully pushes back or repels the carbon price legislation.

In 2011 energy and emissions-intensive industries will account for 43 per cent of sustainable business spending in Australia, says the report. The basic resources sector will this year invest $360m, accounting for 20 per cent of sustainability spending. Oil and gas firms will account for 12 per cent, travel and transport 6 per cent, and utilities 5 per cent.

“Many Australian business leaders perceive climate change and sustainability trends as a break on growth and a cost to business” commented Susan Clarke, Verdantix analyst and author of the report. “But carbon regulations, rising energy prices and natural resource scarcity also create new market opportunities. A pure focus on blocking and tackling new energy and climate change regulations will protect margins in the short-term but misses out on big opportunities like bio-diesel refining.”

Carbon pricing will increase requirements for financial grade carbon and energy tracking and reporting to provide greater financial accountability for greenhouse emissions, according to CarbonSystems CEO, David Solsky.

“Pricing carbon will hasten and reward capital investment in renewable and less carbon intensive forms of energy. This is well overdue – for too long stalling investment has put a brake on clean energy alternatives by large carbon emitters in sectors like mining, manufacturing, transport, commercial property, and power generation.

“Critically, the reforms will hasten widespread adoption of energy efficiency behaviours and programs that will reduce our greenhouse emissions and make our economy more internationally competitive in a global trading environment where carbon embedded products and services will become less price competitive.

“The federal coalition has committed itself to repealing the legislation should it win office in 2013. If this occurs it will stall the significant level of investment funds being mobilised to exploit and profit from the certainty now supporting a range of markets such as emissions trading, renewable energy, energy efficiency, and carbon abatement.

“This would be regrettable. Australia’s inconsistent and incoherent approach to carbon pricing policy has been a brake on renewable energy and related investments for a decade, and has adversely affected the nation’s reputation as a stable investment destination.”

David Metcalfe, Verdantix Director stated: “Australia is already experiencing a boom in commodities demand as the Asian economy gathers steam. Our forecast for a 13 per cent CAGR between 2009 and 2014 assumes economic growth in Australia of 3pc to 3.5pc over the period.

“Spending on sustainability is positively correlated with global and national economic growth because they drive up the price of fossil fuels and other natural resources. As a result, spending on initiatives such as energy efficiency, sustainability communications, lobbying and renewable energy production will be higher if economic growth is above current forecasts.”

Media contact - Dan Gaffney +61 411 156 015

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