The Climate Zeitgeist is Here

bradkerin Market Intelligence

by Peter Castellas, Chief Executive Officer of the Carbon Market Institute.

A zeitgeist can be defined as ‘the defining spirit or mood of a particular period of history as shown by the ideas and beliefs of the time’…

The global momentum for addressing climate change will not be stalled by any decision the Trump Administration makes on staying in or out of the Paris Agreement. The economic, environmental and social drivers to act on reducing global emissions are powerful. Lets face it, Trump’s decision will have little bearing on the air quality of Beijing and Dehli. When you can’t breathe the air outside your front door there is a compelling need to act. 

The world is moving, fast. New alliances are being struck – China, Korea, Japan, the EU, Canada and NZ have all entered into recent new pacts to connect on the economic and market linkage opportunities. The global subnational movement on the climate leadership, the Under2MOU, now includes 170 jurisdictions, states and cities. And international business and finance are now critical actors in the transition.

In Australia, fresh from an invigorating gathering of over 500 delegates at the recent CMI summit, it strikes me that key players in the Australian business and finance community have now moved into the slipstream of the zero-carbon zeitgeist.

However, for Australia to optimize its position in the transition that is underway, we need business and government to move in sync. I don’t think this is the case as it seems the more progressive, internationally minded businesses and capital market participants have moved ahead of domestic climate policy settings. Critically, the window is open now for the Government to strengthen policy settings and set alignment with business and international developments ahead of the next election.

The Finkel and climate policy reviews have received over 400 submissions each! This demonstrates willingness on the part of business to engage and offer constructive input into the way current policies can and need to evolve. This window can’t be wasted. Using this valuable business input, in my view, is a smart way for the Prime Minister and other key Ministers in the Government to reframe, educate and inform all their cabinet members and back benchers on the economic implications – the cost and the opportunity – associated with the zero-carbon transition. Political will is needed now and it can be strengthened knowing business will back the reforms required to meet our international targets. The ideological divide must end. 

But the onus is on business too. There is no point in large emitters asking for long term policy certainty and efficient market based approaches to emissions reductions only to then demand to be protected from any costs that might eventuate from tightening policy settings. Carbon has a price and reducing emissions has a cost. Government must send the right price signal through policy settings and business must adjust and recalibrate accordingly.

So let’s not get distracted by the coming Trump decision. Instead, as a nation, let’s get in the slip stream. I think it would be far better to get in the game and enjoy the ride than sit on the sidelines of one of the greatest economic transformations in history.