Why we are toast: Aussie Corporate perspectives on #climate innovation

Mikler, J and Harrison, N. 2013. Climate Innovation: Australian Corporate Perspectives on the Role of Government. Australian Journal of Politics and History, Vol. 59, (3), pp.414-428.

Nothing I have learnt in the last two years of reading a lot (no, even by my OCD*-ish standards) has so much as grazed – let alone dented – my sense that our species is toast, sooner than most folks think.    And one of the many latest things I’ve read is the above paper.

Mikler and Harrison got access (on basis of anonymity) to a bunch of Australian corporate executives, at or nearish the top of the food chain.  As you’d expect from ‘agentic deadlock’, they blame the government for not setting the rules of the game.  Believe it or not (and some will not), I have some sympathy for the view – though of course other corporates have been busy white-anting [that’s Australian for ‘under-mining’] all efforts at bringing in predictable/strong rules.  For gory details, see Clive Hamilton’s Scorcher and Guy Pearse’s High and Dry especially.

Here are some quotes (especially ones that contain quotes from interviewees)

Given the lack of a business case for climate innovation purely on the basis of GHG emission reductions, all interviewees stressed that those of the radical variety in particular, entailing the entire redesign of processes or products, were highly unlikely without strong regulatory requirements and substantial support on the part of government. To one degree or another, they echoed the sentiment that “regulatory is by far the strongest driver” of GHG emission reductions and that “regulations drive innovation”.

(Mikler and Harrison, 2013:421)

[compare with 2006 letter to Blair from 14 top execs in UK]

Echoing the point made earlier about price inelasticity of demand, it was interesting to note that nearly all the interviewees said the tax needed to be much higher, with one commenting that although it was high enough to reduce profitability it was not high enough to substantively drive innovation. One interviewee put the case thus:

Either you put it in as a token leadership issue, and awareness issue at something like $10 a tonne which we could easily cope with, or you put it in at $60 or $70 which would actually drive innovation and change. Putting it in at $23 is completely useless, achieves nothing in terms of drivers for innovation and just costs the economy.
(Mikler and Harrison, 2013:422)

The time frames are all wrong, of course.

Another point made by all interviewees was that much more was required of government to drive climate innovation, especially that of the more radical variety. As one interviewee put it, “climate innovation has got to be long term, so there’s got to be a strategy and it’s not about short-term programs”. Given that more radical climate innovation involves substantial capital expenditure and a five to eight year commitment at least, with the prospect of uncertain future returns over a longer period of time after this, “if your legislation is changing on a six monthly basis you just can’t do it”.

(Mikler and Harrison, 2013:422)

And reading this in 2016 makes me cry (with hollow laughter)

It was sobering, to say the least, to hear all of them view the potential for a change of government at the 2013 election with nothing less than a sense of dread. As one interviewee put it, “we’ve got Mr Abbott making a blood oath to repeal the carbon tax, and we’re not too sure what that really means”. Another said “the conservative governments will deliberately stuff it up so that in an election year nothing is working, regardless of the fact it will just mean a few more years of the pain for everybody”. Yet another said “a change of government would be a disaster”.
(Mikler and Harrison, 2013:423)

And it’s the customers fault, natch.

All interviewees stated, often quite bluntly, that they perceived no business case for climate innovation specifically. This is because they did not believe consumers were sufficiently demanding less GHG emissions-intensive products, unless they can be provided at the same or lower cost. With the costs and risks involved in climate innovation for such products, there was therefore limited incentive to invest in them.

As one interviewee said, “the options around the consumer driving it are fairly limited”, while another noted that “we can’t build a model around […] the top two per cent of consumers who will buy green products”.
(Mikler and Harrison, 2013:424)

Hey, guess what. The market will not provide. Neither will the state.  Ooh, here comes the fricking apocalypse.

The sentiment of all interviewees was summed up by one who said “if it’s not supported by government, then they vote with their feet, the public vote with their feet, and whatever’s most cost efficient they’ll move to”. In the absence of this support, none of the interviewees saw market imperatives for climate innovation, either now or in the future, despite raised awareness. Indeed, one said that “what the community expects is that government will reflect their attitudes because they’re not going to pay for companies to reflect it”, while in a similar vein another said that “you can’t afford to create awareness. It costs too much money. The very best way of initiating change is through government regulations.”
(Mikler and Harrison, 2013:424)

This is a good paper. The authors are well into the whole Varieties of Capitalism stuff, (see their book), and this article, based on interviews within a Liberal Market Economy called Australia (aka quarry with a state apparatus attached) is a depressing companion to books by Clive Hamilton, Guy Pearse, Philip Chubb and Maria Taylor.

And once you’re done with them, then these beckon-

Fred Block, “Swimming Against the Current: the Rise of a Hidden Developmental State in the United States”, Politics and Society, Vol. 36, 2 (2008), pp.169-206;

Fred Block and Matthew R.Keller, “Where do Innovations Come From? Transformations in the US Economy, 1970-2006”, Socio-economic Review, Vol. 7 (2009), pp.459-483;

Fred Block and Matthew R. Keller, State of Innovation: The US Government’s Role in Technology Development (Boulder, 2011).

*I know I am probably mis-using the term, but not by so much.  Why do I read so much? A host of reasons from my upbringing, I suspect [as if you could ever say for sure!]. To do with retreat, with a sense of control, physiological [autonomic] responses, then because … oh, who knows. A post for a very slow news day.

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3 thoughts on “Why we are toast: Aussie Corporate perspectives on #climate innovation”

  1. re: ‘A post for a very slow news day.’

    A very useful post for my own education on these matters and to share the link to Alberta’s political establishment, especially on the left. Very timely.

    Our one year old centre-left provincial government in its climate plan will bring in a $30/tonne tax and phasing out coal by 2030.

    But very little regulatory changes even contemplated otherwise.

    1. Cheers Edwina, my next (and probably last for a while) Conversation piece is coming up soon (it’s election-focused). All best wishes.
      Marc

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