Other fronts in the war
"If you believe the science of greenhouse gases, it's pretty hard to imagine over a 30-year period how carbon intensive investments are a good idea. It's not about the ethics. I have no problem with unethical investments, I just have a problem with stupid ones. On a 30-year time frame, most carbon-intensive industries will be stupid investments".
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Bronte Capital hedge fund co-founder John Hempson, January 2020
Investor involvement
Investors managing more than $20 trillion have called on member nations of the G7 and G20 to implement measures to encourage investments in carbon pricing, phasing out fossil fuel subsidies and introducing standardised reporting rules for companies to disclose their climate risks[1]. According to the Investor Group on Climate Change in Australia’s Chief Executive, some form of carbon pricing is regarded as a necessary component of the policies that governments need to institute. Investors belonging to the Australian Group include AMP, Australian Super, BT Investment Management, Mercer and Cbus. International Investors include huge US pension funds CalPERS and CalSTRS. Several large European investors are also involved.
The Chief Executive said that, whatever the US does (about withdrawing from the Paris accord) it was vital that “every signatory across the G7 and G20 adopts policies that drive better disclosure of climate risk, curb fossil fuel subsidies and put in place strong pricing signals sufficient to catalyse the significant private sector investment in low carbon solutions"[2].
And there are other examples. Two years ago, investor proposals forced Shell to sell off carbon-rich oil sands assets. Investors also made the company tie 10 percent of executive bonus pay to success in cutting emissions. And earlier this year BP, bowing to investor pressure, agreed to align future capital spending with the targets of the 2015 Paris climate accord, reducing emissions enough to keep global temperature rise below two degrees Celsius. That could mean cuts as high as 50 percent, depending on the country. [3]
In fact, of the more than 600 largest publicly traded companies in the U.S., 64 percent have now made commitments to reduce emissions, according to Ceres, a nonprofit group that tracks corporate sustainability. Many of those moves have come in response to proposals made at these annual shareholder gatherings. In addition to the actions taken by BP and Shell, Chevron has agreed to set an emissions-reduction target for methane, another powerful heat-trapping gas.[4]
As yet another example, the Church of England, part of the powerful Climate Action 100+ group of wealthy global investors, that is "reshaping the corporate landscape", controlling as it does some $US32 trillion ($A45.1 trillion) worth of asset investments, managed to influence Glencore, the 14th largest company in the world by consolidated revenue to limit its global coal production to about 145 million tonnes a year, in the interests of diversification, the planet and a desire to shield the world's poorest from the effects of global warming. The Church does not invest in any company that makes more than 10% of its profits from fossil fuels[5]
For those corporations who do choose to invest, the other side of the investment coin is that corporate investors generally and pension funds in particular are obliged to act in the best interests of their shareholders and members, and ‘best interests’ must consider the risks attendant upon investing shareholders and members funds in assets that are vulnerable to climate change such as coal-fired power stations. “This is no longer just an optional ethical issue; it’s a core financial and legal one and pension members can take action against trustees who ignore it”[6].
In the same vein, major lenders QBE, Japanese trading companies and China's Development and Investment Corporation have all taken steps to reduce their investment exposure to coal.[6.1]
As the Editors of the Scientific American point out, "(t)he motive of these investment funds is not unfettered altruism. While they hold oil company stock, they also invest in real estate along coastlines threatened by rising seas, in health care firms whose costs will increase, and in dozens of other sectors that stand to take a substantial hit if climate change is not brought under control. So they have to take a long-term and global view".[7]
More recently, global fund manager BlackRock – which has an eye watering Aust$10 trillion in assets under management, operates in dozens of countries and is often called the world's largest shadow bank – has said it will move towards positive climate investing, but at the time it was thought that the change will have limited impact on its hefty holdings in Australian mining and energy companies. An action plan outlined by its chief executive and founder Laurence Fink will see the company dump $US521 million of thermal coal shares held in its $US1.8 trillion actively managed portfolios.
It has followed this statement of intent with action. The following May (2020) it revealed it had divested from companies that derived a quarter of their revenue from thermal coal and warned again it would vote on the issue at annual general meetings. In the same month it demanded that the South Korean utility company, Kepco, explain its strategy in investing in coal-fired power plants in Indonesia and Vietnam. In its January announcement BlackRock had said it would abandon thermal coal miners – which it did by May – but it did not mention coal-powered generation companies. The Kepco warning suggests that BlackRock is moving on both. This could have significant repercussions for Australia's mining exports.
On another plane, in May 2020, one of the so-called Big 4 Banks, Westpac, said it will stop funding mining projects for coal to be used for power generation by 2030, as part of a broader commitment to reach a net-zero emissions business model by 2050. This would also see it decline to fund not only new coal plants but new gas plants as well. Westpac’s commitment will also ensure that the emissions produced by the energy production projects it does finance are dramatically reduced by 2030, making it the 30th major international financial institution this year (2020) to declare it was abandoning coal. Westpac also announced it aims to provide $3.5 billion of new lending to climate change solutions over the next three years and ensure that its own operations created net zero emissions by 2025.
Three months later BHP set a number of minimum standards for industry lobby groups – including the Minerals Council of Australia, the Business Council of Australia and the Australian Petroleum Production and Exploration Association - requiring them to advocate for Paris agreement-aligned emissions reductions and stop backing energy policies that favour fossil fuels over renewables. Among the miner's expectations are advocacy for targets that increase over time and aim towards achieving net-zero emissions by 2050, as well as policies to support that transition including a price on carbon.
The new standards also say the associations must ensure their lobbying is balanced – prohibiting them from emphasising the cost of climate action without considering the cost of inaction – and ensure their lobbying does not attack or promote one energy source or commodity over another, such as advocating for coal or against renewable energy. Lobbying that could "unduly exacerbate" policy tensions, such as support for the federal government's use of Kyoto carryover credits to meet national emissions goals, must also be avoided.
BHP has been a leading advocate among corporate Australia for climate change action, pushing policymakers for a price on carbon and committing to set ambitious goals to combat not only its own emissions but emissions from customers that use its products, such as coal and iron ore. But the mining giant has come under growing pressure over its links to lobby groups, which have advocated for policies said to be inconsistent with its own positions and the goals of the Paris agreement.
On another front, Australia's large superannuation funds that hold more than $2 trillion in retirement savings are coming under increasing pressure to do more to take action on climate change, as bushfires ravaged the countryside in 2019, 2020. Climate-change lobbyists are increasingly putting pressure on funds to take of a "whole-of-fund approach" to managing the financial risks due to climate change.
By way of example, environmental campaigner Market Forces is targeting UniSuper, the not-for-profit super fund for academics, researchers and university employees. It wants the fund to sell billions of dollars of investments it has in companies involved in fossil-fuels. UniSuper also has seven fossil-fuel free investment options available for members.
And, the giant industry super fund, Rest, is subject to a court case brought by one of the fund’s members who alleges the fund failed to act with “care, skill and diligence in its investing, by not properly considering climate risk". The case has the potential to clarify whether there is a specific legal obligation to consider climate change when investing and the extent to which the processes used should be more transparent to fund members.
Other asset managers and super funds are following suit. For example HESTA, an Australian super fund for healthcare workers, has also divested its thermal coal holdings as part of its plan to be a "net-zero" emitter by 2050, and in July 2020, First State Super (now known as Aware Super), which holds 130 Billion dollars in retirement savings, is preparing to dump its shares in companies that derive more than 10 per cent of their revenue from thermal coal mining as it embarks on the most aggressive immediate climate push of any large local investor.
The entity is distributing a new climate plan among its members detailing initiatives to shield their money from the threats of global warming, including setting a 30 per cent emissions-reduction target across its investment portfolio by 2023 and a 45 per cent cut by 2030 - more immediate goals than those set by many other investors, whose targets stretch out to 2050. Its current portfolio includes the ASX-listed Whitehaven Coal, Stanmore Coal, New Hope and Washington H. Soul Pattinson.
Even the government’s own regulators, the Prudential Regulation Authority, the Reserve Bank and the Australian Securities and Investment Commission have also made it clear that they want climate change to be taken seriously as a financial risk, and that includes the risks of financing projects exposed to climate change, such as investment in coal mines.
In other words, the future of coal has been decided and is being decided in the boardrooms across the globe. It has also been d escribed as an exodus the world barely noticed whilst looking the other way. Company after company is withdrawing from investment in coal particularly thermal coal, simply because it has become a bad investment and renewable energy is now no longer just a cleaner alternative to coal. It’s also cheaper and costs continue to fall. Wind and solar are now clearly the cheapest new form of electricity generation and although existing coal plants remained the lowest cost, when it comes to building new plants, coal cannot keep pace.
But the goose that laid the golden eggs is not yet dead, or at least not cooked. While consumption of thermal coal has fallen, the International Energy Agency said it expected it to increase as demand for electricity in developing countries outpaced the shift to renewable energy in industrialised nations: "Australia is the second largest producer of thermal coal after Indonesia. Last year, Thermal coal exports accounted for $25 billion in export income".[7.1]
Another court action
On 8 February 2019, Preston CJ, the Chief Judge of the NSW Land and Environment Court, rejected an appeal by a mining company Gloucester Resources Limited (GRL) against the NSW Planning Assessment Commission’s (PAC) refusal in 2017 of an application for a coal mine at Rocky Hill in the Gloucester Valley of NSW: Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7
His Honour’s decision was based in part on climate change factors. The mine was proposed to be an open cut coal mine producing 21 million tonnes of coal over a period of 16 years.
Preston CJ ultimately held that the mine should be refused due to its significant and unacceptable planning, visual and social impacts, which could not be satisfactorily mitigated. Avoiding GHG emissions and their likely contribution to adverse impacts of climate change merely added a further reason for refusal of the mine.
His Honour said:
“[688] I find that the negative impacts of the Project, including the planning impacts on the existing, approved and likely preferred land uses, the visual impacts, the amenity impacts of noise and dust that cause social impacts, other social impacts, and climate change impacts, outweigh the economic and other public benefits of the Project. Balancing all relevant matters, I find that the Project is contrary to the public interest and that the development application for the Project should be determined by refusal of consent to the application.”
.. and concluded:
“[699] In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.”
The Company decided not to proceed with an appeal.
The NSW government has since introduced legislation to change the law so that conditions related to Scope 3 emissions or other climate change impacts occurring outside Australia cannot be included in project consent conditions. The provisions of the Bill are not retrospective.
The Australian States [8]
New South Wales’s Climate Change Policy Framework was released in November 2016[9]. It includes 2 aspirational objectives to achieve net-zero emissions by 2050 and make NSW more resilient to a changing climate. Although the most populous State, NSW does not have any climate change legislation or a renewable energy target.
By mid-2019, NSW was not on pace to meet its target of net-zero emissions from the electricity sector by 2050. On current trends, renewables would comprise 28 per cent of NSW's total electricity use by 2030, based on expected rooftop solar uptake and new wind and solar projects, well below the 46 per cent renewables share needed by 2030 if NSW is to meet its 2050 target. NSW needs almost 5000 mw of new renewable energy projects over the next decade to bridge the gap. Victoria, South Australia and Tasmania were on target to reach their climate goals, but Queensland had also fallen behind.
In February 2019, the NSW Climate Change Council, a body set up by the Labor government in 2004 to advise the Environment Minister, drawing on independent experts from science to business and regional communities, advised the Government to develop a "comprehensive" Climate Change Act, with clear obligations and goals across the bureaucracy, much the same as that introduced by the Victorian Government. It also said that an independent statutory authority should be charged with implementing NSW's climate mitigation and adaptation plans. The approach has gone unheeded.[10]
However, in May 2019, the NSW State Government established an entity called the Energy, Climate Change and Sustainability Division, as part of a mega-agency of Planning, Industry and Environment ostensibly with a view to taking "decisive and responsible action on climate change", thus managing to "find room for a little climate change department within its voluminous skirts". [11] In September 2019, the government also renewed its pledge to set interim reduction targets to guide its economy to net-zero emissions overall by 2050, expressing a desire to become "the Silicon Valley of clean technology".
Then, in a refreshing change in the tenor of the debate, the State’s enterprising new environment minister Matt Kean has broken ranks with his federal Liberal colleagues, saying In December 2019 that "no one can deny" that climate change is to blame for the smoke haze choking Sydney and that Sydney's bushfires and smoke must be a catalyst for change. The NSW Government is also preparing a new ambitious emissions reduction target to address climate change and will commit to lowering greenhouse gases by 35 per cent by 2030, which will bolster NSW's previous target of zero emissions by 2050. The government has also commissioned the state's chief scientist to prepare a blueprint for a radically decarbonised economy that will lay the groundwork for the state to become a leader in clean energy exports and green technology.
Mr Kean followed this up in March 2020 by committing NSW to delivering a 35 per cent emissions reduction from 2005 levels by 2030, in the process attracting $11.6 billion of private investment and create 2400 new jobs. The plan identifies four key priorities, including driving the uptake of proven emissions reduction technologies and helping consumers and businesses to make sustainable choices.
As part of the plan, there will also be a $450 million Emissions Intensity Reduction Program to support businesses transition their plant, equipment and processes to low emission alternatives, and as part of its investment in the next wave of emissions reduction innovation, the government will establish a hydrogen program with an aspirational target of up to 10 per cent of hydrogen in the gas network by 2030. In mid 2020 the Government also established a number of highly successful renewable energy zones (REZ) in the State to encourage investment, and in so doing aiding and abetting the transition away from coal.
Then, in November 2020, the Government succeeded in passing the most ambitious landmark renewable energy plan in the country under which the government will support the private sector to build $32 billion of renewable energy infrastructure by 2030 as NSW faces the end of coal-fired power generation. The strategy is to make NSW a "renewable energy superpower", and to stimulate construction of a "whopping" 12 gigawatts in new wind, solar and pumped hydro projects. The plan will also see $1.5 billion in lease payments go to landowners for hosting new infrastructure on their properties and put NSW in the top 10 for the lowest industrial electricity prices in the OECD. The Coalition passed the plan with bipartisan support from Labor as well as the Greens and other crossbenchers.
Victoria’s Climate Change Act was passed in February 2016. The State also has a Climate Change Framework, released in 2016[12]. Its approach is modelled on the Paris Agreement and contains a five-yearly review process including interim targets. Victoria also set a target to reach net-zero emissions by 2050, and has renewable energy targets of 25% by 2020 and 40% by 2025.
South Australia, the leader in the field, first released its Climate Change and Greenhouse Emission Reduction Act in 2007, with targets to reduce greenhouse gas emissions by 60% compared to 1990 levels by 2050, and to have 20% renewable energy by the end of 2014. They have increased their renewable energy targets since and have now reached 50% this year, well ahead of the target year of 2050.
South Australia released its climate change policy in November 2015[13] including a target to achieve net-zero emissions by 2050, and a plan to make Adelaide the world’s first carbon neutral city.
Meanwhile, all of South Australia's power came from solar for one hour on October 11 2020, a world first. Because the generation of too much solar power can create grid instability, a new interconnector planned with NSW will help manage the growth of solar power
Local initiatives
As an instance of local initiatives under way in areas other than energy and electricity, during 2016 Strathfield Municipality’s residents generated 8,685 tonnes of domestic waste, which was then delivered to a Veolia’s Woodlawn Bioreactor (previously a copper, lead and zinc open-cut mine, now used as one of the largest and deepest purpose-built bioreactor landfill projects in the world, for energy recovery). This amount of waste has the potential to generate 728,000m3 of methane gas, the equivalent of 7,280 tonnes of CO2. The bioreactor captures these emissions preventing them from entering our atmosphere. The energy potential of this material will contribute 1,900 megawatt hours of renewable energy which can power 300 homes for 1 year.
And on the same day I received the Council’s email, I received another from my friendly Electricity supplier, Energy Australia, inviting me to go “Carbon Neutral”. “We will offset 100% of the carbon produced by your home's electricity, at absolutely no additional cost to you”, and here's how it works”, they said:
“EnergyAustralia helps you to make your electricity at home carbon neutral by purchasing carbon offset units from a range of Australian and international offset projects which can include:
EnergyAustralia’s carbon neutral program has been certified against the Australian Government’s National Carbon Offset Standard to provide carbon neutral electricity. To offset the amount of carbon released into the atmosphere we buy carbon offset units from a range of projects across the globe and right here in Australia”.
I obliged and made the election requested.
[1] Matthew Dunckley, “Investors with $20 in plea for climate change action”, SMH, 8 May 2017.
[2] Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change, in Ibid.
[3] "Climate Friendly Capitalism", May 2019, 6.
[4] Ibid.
[5] Latika Bourke, "Church unapologetic on Glencore pressure", SMH 23-24 February 2019: https://www.smh.com.au/business/companies/how-the-church-of-england-led-the-climate-push-on-miner-glencore-20190222-p50zh1.html The article contains multiple instances where the Investor Group is applying pressure to influence targeted Australian companies to lift their game.
[6] Alice Garton, ClientEarth lawyer, in Jane Wheatley, “The man most likely to change the world”, Good Weekend, 17 June 2007.
[6.1] Peter Hannam, "What's next for the Adani mine?", Sydney Morning Herald 26 May 2019: https://www.smh.com.au/environment/conservation/what-s-next-for-the-coal-mine-that-helped-return-morrison-to-power-20190520-p51p7j.html
[7] "Climate Friendly Capitalism", Scientific American, May 2019, 6.
[7.1] Nick Toscano, "Fund's choice on 'ideology' criticised", SMH 10 July 2020, p 5.
[8] This resume from Associate Professor Michael Box’s “Our Atmospheric Environment Environment” course, 6.3.6.
[9] http://www.environment.nsw.au/topics/Climate-change/Policy-framework
[10] Peter Hannam, "Climate experts plead fro a hearing from Premier", SMH, 13 March 2019.
[11] Lisa Visentin, "NSW sets up climate change division", SMH, 8 May 2019; Elizabeth Farrelly, "War footing needed on climate, yet we retreat", SMH, 18-19 May 2019:https://www.smh.com.au/federal-election-2019/climate-crisis-demands-war-footing-but-we-won-t-even-vote-for-the-greens-20190516-p51o38.html
[12] https://www.climatechange.vic.gov/victorias-climate-change-framework
[13] https://www.environmsnt.sa.gov.au/Science/Science_research/climate-change/climate-change-initiatives-in-south-australia/sa-climate-change-strategy
Investor involvement
Investors managing more than $20 trillion have called on member nations of the G7 and G20 to implement measures to encourage investments in carbon pricing, phasing out fossil fuel subsidies and introducing standardised reporting rules for companies to disclose their climate risks[1]. According to the Investor Group on Climate Change in Australia’s Chief Executive, some form of carbon pricing is regarded as a necessary component of the policies that governments need to institute. Investors belonging to the Australian Group include AMP, Australian Super, BT Investment Management, Mercer and Cbus. International Investors include huge US pension funds CalPERS and CalSTRS. Several large European investors are also involved.
The Chief Executive said that, whatever the US does (about withdrawing from the Paris accord) it was vital that “every signatory across the G7 and G20 adopts policies that drive better disclosure of climate risk, curb fossil fuel subsidies and put in place strong pricing signals sufficient to catalyse the significant private sector investment in low carbon solutions"[2].
And there are other examples. Two years ago, investor proposals forced Shell to sell off carbon-rich oil sands assets. Investors also made the company tie 10 percent of executive bonus pay to success in cutting emissions. And earlier this year BP, bowing to investor pressure, agreed to align future capital spending with the targets of the 2015 Paris climate accord, reducing emissions enough to keep global temperature rise below two degrees Celsius. That could mean cuts as high as 50 percent, depending on the country. [3]
In fact, of the more than 600 largest publicly traded companies in the U.S., 64 percent have now made commitments to reduce emissions, according to Ceres, a nonprofit group that tracks corporate sustainability. Many of those moves have come in response to proposals made at these annual shareholder gatherings. In addition to the actions taken by BP and Shell, Chevron has agreed to set an emissions-reduction target for methane, another powerful heat-trapping gas.[4]
As yet another example, the Church of England, part of the powerful Climate Action 100+ group of wealthy global investors, that is "reshaping the corporate landscape", controlling as it does some $US32 trillion ($A45.1 trillion) worth of asset investments, managed to influence Glencore, the 14th largest company in the world by consolidated revenue to limit its global coal production to about 145 million tonnes a year, in the interests of diversification, the planet and a desire to shield the world's poorest from the effects of global warming. The Church does not invest in any company that makes more than 10% of its profits from fossil fuels[5]
For those corporations who do choose to invest, the other side of the investment coin is that corporate investors generally and pension funds in particular are obliged to act in the best interests of their shareholders and members, and ‘best interests’ must consider the risks attendant upon investing shareholders and members funds in assets that are vulnerable to climate change such as coal-fired power stations. “This is no longer just an optional ethical issue; it’s a core financial and legal one and pension members can take action against trustees who ignore it”[6].
In the same vein, major lenders QBE, Japanese trading companies and China's Development and Investment Corporation have all taken steps to reduce their investment exposure to coal.[6.1]
As the Editors of the Scientific American point out, "(t)he motive of these investment funds is not unfettered altruism. While they hold oil company stock, they also invest in real estate along coastlines threatened by rising seas, in health care firms whose costs will increase, and in dozens of other sectors that stand to take a substantial hit if climate change is not brought under control. So they have to take a long-term and global view".[7]
More recently, global fund manager BlackRock – which has an eye watering Aust$10 trillion in assets under management, operates in dozens of countries and is often called the world's largest shadow bank – has said it will move towards positive climate investing, but at the time it was thought that the change will have limited impact on its hefty holdings in Australian mining and energy companies. An action plan outlined by its chief executive and founder Laurence Fink will see the company dump $US521 million of thermal coal shares held in its $US1.8 trillion actively managed portfolios.
It has followed this statement of intent with action. The following May (2020) it revealed it had divested from companies that derived a quarter of their revenue from thermal coal and warned again it would vote on the issue at annual general meetings. In the same month it demanded that the South Korean utility company, Kepco, explain its strategy in investing in coal-fired power plants in Indonesia and Vietnam. In its January announcement BlackRock had said it would abandon thermal coal miners – which it did by May – but it did not mention coal-powered generation companies. The Kepco warning suggests that BlackRock is moving on both. This could have significant repercussions for Australia's mining exports.
On another plane, in May 2020, one of the so-called Big 4 Banks, Westpac, said it will stop funding mining projects for coal to be used for power generation by 2030, as part of a broader commitment to reach a net-zero emissions business model by 2050. This would also see it decline to fund not only new coal plants but new gas plants as well. Westpac’s commitment will also ensure that the emissions produced by the energy production projects it does finance are dramatically reduced by 2030, making it the 30th major international financial institution this year (2020) to declare it was abandoning coal. Westpac also announced it aims to provide $3.5 billion of new lending to climate change solutions over the next three years and ensure that its own operations created net zero emissions by 2025.
Three months later BHP set a number of minimum standards for industry lobby groups – including the Minerals Council of Australia, the Business Council of Australia and the Australian Petroleum Production and Exploration Association - requiring them to advocate for Paris agreement-aligned emissions reductions and stop backing energy policies that favour fossil fuels over renewables. Among the miner's expectations are advocacy for targets that increase over time and aim towards achieving net-zero emissions by 2050, as well as policies to support that transition including a price on carbon.
The new standards also say the associations must ensure their lobbying is balanced – prohibiting them from emphasising the cost of climate action without considering the cost of inaction – and ensure their lobbying does not attack or promote one energy source or commodity over another, such as advocating for coal or against renewable energy. Lobbying that could "unduly exacerbate" policy tensions, such as support for the federal government's use of Kyoto carryover credits to meet national emissions goals, must also be avoided.
BHP has been a leading advocate among corporate Australia for climate change action, pushing policymakers for a price on carbon and committing to set ambitious goals to combat not only its own emissions but emissions from customers that use its products, such as coal and iron ore. But the mining giant has come under growing pressure over its links to lobby groups, which have advocated for policies said to be inconsistent with its own positions and the goals of the Paris agreement.
On another front, Australia's large superannuation funds that hold more than $2 trillion in retirement savings are coming under increasing pressure to do more to take action on climate change, as bushfires ravaged the countryside in 2019, 2020. Climate-change lobbyists are increasingly putting pressure on funds to take of a "whole-of-fund approach" to managing the financial risks due to climate change.
By way of example, environmental campaigner Market Forces is targeting UniSuper, the not-for-profit super fund for academics, researchers and university employees. It wants the fund to sell billions of dollars of investments it has in companies involved in fossil-fuels. UniSuper also has seven fossil-fuel free investment options available for members.
And, the giant industry super fund, Rest, is subject to a court case brought by one of the fund’s members who alleges the fund failed to act with “care, skill and diligence in its investing, by not properly considering climate risk". The case has the potential to clarify whether there is a specific legal obligation to consider climate change when investing and the extent to which the processes used should be more transparent to fund members.
Other asset managers and super funds are following suit. For example HESTA, an Australian super fund for healthcare workers, has also divested its thermal coal holdings as part of its plan to be a "net-zero" emitter by 2050, and in July 2020, First State Super (now known as Aware Super), which holds 130 Billion dollars in retirement savings, is preparing to dump its shares in companies that derive more than 10 per cent of their revenue from thermal coal mining as it embarks on the most aggressive immediate climate push of any large local investor.
The entity is distributing a new climate plan among its members detailing initiatives to shield their money from the threats of global warming, including setting a 30 per cent emissions-reduction target across its investment portfolio by 2023 and a 45 per cent cut by 2030 - more immediate goals than those set by many other investors, whose targets stretch out to 2050. Its current portfolio includes the ASX-listed Whitehaven Coal, Stanmore Coal, New Hope and Washington H. Soul Pattinson.
Even the government’s own regulators, the Prudential Regulation Authority, the Reserve Bank and the Australian Securities and Investment Commission have also made it clear that they want climate change to be taken seriously as a financial risk, and that includes the risks of financing projects exposed to climate change, such as investment in coal mines.
In other words, the future of coal has been decided and is being decided in the boardrooms across the globe. It has also been d escribed as an exodus the world barely noticed whilst looking the other way. Company after company is withdrawing from investment in coal particularly thermal coal, simply because it has become a bad investment and renewable energy is now no longer just a cleaner alternative to coal. It’s also cheaper and costs continue to fall. Wind and solar are now clearly the cheapest new form of electricity generation and although existing coal plants remained the lowest cost, when it comes to building new plants, coal cannot keep pace.
But the goose that laid the golden eggs is not yet dead, or at least not cooked. While consumption of thermal coal has fallen, the International Energy Agency said it expected it to increase as demand for electricity in developing countries outpaced the shift to renewable energy in industrialised nations: "Australia is the second largest producer of thermal coal after Indonesia. Last year, Thermal coal exports accounted for $25 billion in export income".[7.1]
Another court action
On 8 February 2019, Preston CJ, the Chief Judge of the NSW Land and Environment Court, rejected an appeal by a mining company Gloucester Resources Limited (GRL) against the NSW Planning Assessment Commission’s (PAC) refusal in 2017 of an application for a coal mine at Rocky Hill in the Gloucester Valley of NSW: Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7
His Honour’s decision was based in part on climate change factors. The mine was proposed to be an open cut coal mine producing 21 million tonnes of coal over a period of 16 years.
Preston CJ ultimately held that the mine should be refused due to its significant and unacceptable planning, visual and social impacts, which could not be satisfactorily mitigated. Avoiding GHG emissions and their likely contribution to adverse impacts of climate change merely added a further reason for refusal of the mine.
His Honour said:
“[688] I find that the negative impacts of the Project, including the planning impacts on the existing, approved and likely preferred land uses, the visual impacts, the amenity impacts of noise and dust that cause social impacts, other social impacts, and climate change impacts, outweigh the economic and other public benefits of the Project. Balancing all relevant matters, I find that the Project is contrary to the public interest and that the development application for the Project should be determined by refusal of consent to the application.”
.. and concluded:
“[699] In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.”
The Company decided not to proceed with an appeal.
The NSW government has since introduced legislation to change the law so that conditions related to Scope 3 emissions or other climate change impacts occurring outside Australia cannot be included in project consent conditions. The provisions of the Bill are not retrospective.
The Australian States [8]
New South Wales’s Climate Change Policy Framework was released in November 2016[9]. It includes 2 aspirational objectives to achieve net-zero emissions by 2050 and make NSW more resilient to a changing climate. Although the most populous State, NSW does not have any climate change legislation or a renewable energy target.
By mid-2019, NSW was not on pace to meet its target of net-zero emissions from the electricity sector by 2050. On current trends, renewables would comprise 28 per cent of NSW's total electricity use by 2030, based on expected rooftop solar uptake and new wind and solar projects, well below the 46 per cent renewables share needed by 2030 if NSW is to meet its 2050 target. NSW needs almost 5000 mw of new renewable energy projects over the next decade to bridge the gap. Victoria, South Australia and Tasmania were on target to reach their climate goals, but Queensland had also fallen behind.
In February 2019, the NSW Climate Change Council, a body set up by the Labor government in 2004 to advise the Environment Minister, drawing on independent experts from science to business and regional communities, advised the Government to develop a "comprehensive" Climate Change Act, with clear obligations and goals across the bureaucracy, much the same as that introduced by the Victorian Government. It also said that an independent statutory authority should be charged with implementing NSW's climate mitigation and adaptation plans. The approach has gone unheeded.[10]
However, in May 2019, the NSW State Government established an entity called the Energy, Climate Change and Sustainability Division, as part of a mega-agency of Planning, Industry and Environment ostensibly with a view to taking "decisive and responsible action on climate change", thus managing to "find room for a little climate change department within its voluminous skirts". [11] In September 2019, the government also renewed its pledge to set interim reduction targets to guide its economy to net-zero emissions overall by 2050, expressing a desire to become "the Silicon Valley of clean technology".
Then, in a refreshing change in the tenor of the debate, the State’s enterprising new environment minister Matt Kean has broken ranks with his federal Liberal colleagues, saying In December 2019 that "no one can deny" that climate change is to blame for the smoke haze choking Sydney and that Sydney's bushfires and smoke must be a catalyst for change. The NSW Government is also preparing a new ambitious emissions reduction target to address climate change and will commit to lowering greenhouse gases by 35 per cent by 2030, which will bolster NSW's previous target of zero emissions by 2050. The government has also commissioned the state's chief scientist to prepare a blueprint for a radically decarbonised economy that will lay the groundwork for the state to become a leader in clean energy exports and green technology.
Mr Kean followed this up in March 2020 by committing NSW to delivering a 35 per cent emissions reduction from 2005 levels by 2030, in the process attracting $11.6 billion of private investment and create 2400 new jobs. The plan identifies four key priorities, including driving the uptake of proven emissions reduction technologies and helping consumers and businesses to make sustainable choices.
As part of the plan, there will also be a $450 million Emissions Intensity Reduction Program to support businesses transition their plant, equipment and processes to low emission alternatives, and as part of its investment in the next wave of emissions reduction innovation, the government will establish a hydrogen program with an aspirational target of up to 10 per cent of hydrogen in the gas network by 2030. In mid 2020 the Government also established a number of highly successful renewable energy zones (REZ) in the State to encourage investment, and in so doing aiding and abetting the transition away from coal.
Then, in November 2020, the Government succeeded in passing the most ambitious landmark renewable energy plan in the country under which the government will support the private sector to build $32 billion of renewable energy infrastructure by 2030 as NSW faces the end of coal-fired power generation. The strategy is to make NSW a "renewable energy superpower", and to stimulate construction of a "whopping" 12 gigawatts in new wind, solar and pumped hydro projects. The plan will also see $1.5 billion in lease payments go to landowners for hosting new infrastructure on their properties and put NSW in the top 10 for the lowest industrial electricity prices in the OECD. The Coalition passed the plan with bipartisan support from Labor as well as the Greens and other crossbenchers.
Victoria’s Climate Change Act was passed in February 2016. The State also has a Climate Change Framework, released in 2016[12]. Its approach is modelled on the Paris Agreement and contains a five-yearly review process including interim targets. Victoria also set a target to reach net-zero emissions by 2050, and has renewable energy targets of 25% by 2020 and 40% by 2025.
South Australia, the leader in the field, first released its Climate Change and Greenhouse Emission Reduction Act in 2007, with targets to reduce greenhouse gas emissions by 60% compared to 1990 levels by 2050, and to have 20% renewable energy by the end of 2014. They have increased their renewable energy targets since and have now reached 50% this year, well ahead of the target year of 2050.
South Australia released its climate change policy in November 2015[13] including a target to achieve net-zero emissions by 2050, and a plan to make Adelaide the world’s first carbon neutral city.
Meanwhile, all of South Australia's power came from solar for one hour on October 11 2020, a world first. Because the generation of too much solar power can create grid instability, a new interconnector planned with NSW will help manage the growth of solar power
Local initiatives
As an instance of local initiatives under way in areas other than energy and electricity, during 2016 Strathfield Municipality’s residents generated 8,685 tonnes of domestic waste, which was then delivered to a Veolia’s Woodlawn Bioreactor (previously a copper, lead and zinc open-cut mine, now used as one of the largest and deepest purpose-built bioreactor landfill projects in the world, for energy recovery). This amount of waste has the potential to generate 728,000m3 of methane gas, the equivalent of 7,280 tonnes of CO2. The bioreactor captures these emissions preventing them from entering our atmosphere. The energy potential of this material will contribute 1,900 megawatt hours of renewable energy which can power 300 homes for 1 year.
And on the same day I received the Council’s email, I received another from my friendly Electricity supplier, Energy Australia, inviting me to go “Carbon Neutral”. “We will offset 100% of the carbon produced by your home's electricity, at absolutely no additional cost to you”, and here's how it works”, they said:
“EnergyAustralia helps you to make your electricity at home carbon neutral by purchasing carbon offset units from a range of Australian and international offset projects which can include:
- renewable energy projects in developing countries
- land management
- tree planting in Australia and more
- it's simple, effective and certified.
EnergyAustralia’s carbon neutral program has been certified against the Australian Government’s National Carbon Offset Standard to provide carbon neutral electricity. To offset the amount of carbon released into the atmosphere we buy carbon offset units from a range of projects across the globe and right here in Australia”.
I obliged and made the election requested.
[1] Matthew Dunckley, “Investors with $20 in plea for climate change action”, SMH, 8 May 2017.
[2] Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change, in Ibid.
[3] "Climate Friendly Capitalism", May 2019, 6.
[4] Ibid.
[5] Latika Bourke, "Church unapologetic on Glencore pressure", SMH 23-24 February 2019: https://www.smh.com.au/business/companies/how-the-church-of-england-led-the-climate-push-on-miner-glencore-20190222-p50zh1.html The article contains multiple instances where the Investor Group is applying pressure to influence targeted Australian companies to lift their game.
[6] Alice Garton, ClientEarth lawyer, in Jane Wheatley, “The man most likely to change the world”, Good Weekend, 17 June 2007.
[6.1] Peter Hannam, "What's next for the Adani mine?", Sydney Morning Herald 26 May 2019: https://www.smh.com.au/environment/conservation/what-s-next-for-the-coal-mine-that-helped-return-morrison-to-power-20190520-p51p7j.html
[7] "Climate Friendly Capitalism", Scientific American, May 2019, 6.
[7.1] Nick Toscano, "Fund's choice on 'ideology' criticised", SMH 10 July 2020, p 5.
[8] This resume from Associate Professor Michael Box’s “Our Atmospheric Environment Environment” course, 6.3.6.
[9] http://www.environment.nsw.au/topics/Climate-change/Policy-framework
[10] Peter Hannam, "Climate experts plead fro a hearing from Premier", SMH, 13 March 2019.
[11] Lisa Visentin, "NSW sets up climate change division", SMH, 8 May 2019; Elizabeth Farrelly, "War footing needed on climate, yet we retreat", SMH, 18-19 May 2019:https://www.smh.com.au/federal-election-2019/climate-crisis-demands-war-footing-but-we-won-t-even-vote-for-the-greens-20190516-p51o38.html
[12] https://www.climatechange.vic.gov/victorias-climate-change-framework
[13] https://www.environmsnt.sa.gov.au/Science/Science_research/climate-change/climate-change-initiatives-in-south-australia/sa-climate-change-strategy