In the current political environment, climate change is a charged issue. In part, that’s because it can appear party-political. But let’s put politics and ideology aside, and consider a more pragmatic approach.
For business, the point isn’t whether or not an individual believes that climate change action is justified - or even that the risk is real. What matters most is that decision-makers, including company management and financiers, have a solid base on which to make long-term plans.
See, the country requires more energy. More roads, tunnels and pipelines. We’re going to need more buildings and at some point, new aluminium smelters, steelworks and brick pits. But no one is building them - at least not at a scale and in numbers sufficient to meet future needs. And the reason is the lack of regulatory certainty, whatever side of the debate you’re on.
Speaking of sides, there tend to be three main groups in this discussion: those who believe we should proactively mitigate the causes of climate change as a national priority, those who think something should be done, but only in concert with the international community, and those who just straight-out reject the science of climate change.
I have some sympathy with the first two groups; there’s enough reason to believe climate change is a clear and present danger to think we should be taking large steps, immediately, to mitigate its impact. There is, though, a pragmatic reality: we could reduce Australian emissions to zero, and it wouldn’t change the world’s path to global warming. In that sense, the second group has a good point - let’s convince others to join a global push, but not sacrifice economic success by being the only one playing by harder rules.
That’s also the view, economically and financially, that makes the most sense: lead the debate, call for action and advocate for real change. But don’t sacrifice prosperity in a vain attempt to - alone - make a global difference. Be on the leading, not the bleeding, edge. We should join a coalition of the willing, to subvert a phrase, not go it alone.
This would mean giving business a bipartisan commitment to a policy that spans a decade or more. And yes, it would mean a commitment to a fair dinkum renewable energy target, so that investors in fossil fuels and renewable energy alike - along with those that use large amounts of electricity - could plan their projects accordingly.
That will upset some of you, probably on both sides of the political see-saw. The ‘do more’ and ‘do nothing’ groups fervently believe in their cause. Fair enough. But those approaches just can’t be supported, economically at least. And I have my personal views on climate change, just like everyone else. We can choose, as a country, to put extra government spending toward less pollution and less waste. For now, at least, though, the ‘spend extra’ view is a social decision, not an economic one - a topic for another article.
Here’s the acid test: if companies didn’t believe that climate-related policies would change and that those changes could have an impact, they’d be investing, as normal. But they’re not. They’re voting with their wallets, and those wallets are snapped shut.
Speaking economically, and as a shareholder in some large and small Australian companies, it’s clear that the lack of a co-ordinated climate policy is retarding our economic potential.
Tax is most effective when levied on the things we want less of, and removed from those things we want to encourage. If we really do care about jobs and growth - and a better world - it’s time to provide certainty, and government support to get there. Which means putting the ideology wars behind us, and putting a price (permanently) on carbon.
Scott Phillips is the Motley Fool’s general manager.