Christopher Niesche: Renewable energy - The Covid-19 opportunity to reduce emissions and create jobs

Scott Morrison, Prime Minister of Australia. Photo / Getty Images

COMMENT:

Behind the death and misery caused by the Covid-19 pandemic lies a huge opportunity.

As governments around the world face up to the fact they will have to keep pumping fiscal stimulus into their economies for years to come, there's a chance to drive the transition from carbon-powered energy to renewables.

What will be a painful and expensive process of decarbonising the economy could be made a lot less painful.

Solar and wind generation plants, batteries, electricity grid upgrades, the decarbonisation of the transport fleet and manufacturing – all projects that will move countries closer to meeting their emissions reduction targets at the same time as they created ongoing jobs.

And what is Australia's government planning? A huge gas-fired power station.

Victoria's giant Liddell power station is scheduled to close in 2022, which the Scott Morrison's government says will leave a 1000-megawatt shortfall of baseload, on-demand power generation.

With a looming generation shortage, pressing emissions targets to meet, billions of dollars of government cash to be spent and a desperate need of new jobs, we have all of the ingredients to take a huge step forward in the decarbonisation of our economy.

But Morrison's solution is to replace this fossil-fuel generator with gas which, although cleaner, still emits about half the emissions of coal.

In an extraordinary intervention in the electricity market, Morrison says if in the next six months the private sector doesn't come up with its own plan to replace the lost generation capacity, then the government will build the power station itself.

But why would anyone start working on power plants when their project could be overwhelmed by the government's own giant generator? Morrison's announcement is more likely to deter investment rather than create it.

And then there are big problems with gas itself, even leaving aside the fact it is a fossil fuel.

The Government should ask itself why there are no private sector plans for a gas plant. If investors won't pay for it, why should taxpayers?

Aside from a few self-interested big power users, who think the plan will deliver cheaper electricity, the plan has attracted very little support from business.

That's because business is driven by pragmatism and not ideology and they can see where the power market is going.

There is a huge risk that as the cost of renewable energy and battery storage continues to fall and the economy uses less power more efficiently, the plant won't be needed and the taxpayer will end up with a white elephant.

This isn't to say there's no place for gas. Small, quick-start gas power plants will be needed to help with the transition to renewables because wind and solar power aren't yet reliable enough to meet demand all the time.

For Australia, this is a doubly wasted opportunity.

We are a vast empty continent with no shortage of sun and wind and have the chance to become a renewable energy powerhouse and create a multi-billion dollar export industry. Cheap and abundant power could also reverse the long decline in our manufacturing sector.

If Morrison's plan goes ahead, other countries will seize this opportunity, and we'll be left with a giant monument to a bygone era.

The sacking of three Rio Tinto executives after the mining giant destroyed a 46,000-year-old rock shelters in Western Australia's Pilbara sets a new bar for executive accountability.

Chief executive Jean-Sebastien Jacques, head of iron ore Chris Salisbury and head of corporate relations Simone Niven will all leave the company in the coming months.

Their departures come after it emerged that earlier this year Rio Tinto set of a series of explosions in the Juukan Gorge in Western Australia which destroyed 46,000-year-old rock shelters used by Indigenous Australians.

It is notable that the pressure for change came not from government, but from investors, in particular superannuation funds.

As distressing as the deliberate destruction of this sacred site was for the traditional Indigenous owners, it wasn't actually illegal. In fact, Rio had planning permission to do what it did.

But the departure of the three senior leaders from the company shows a shift in how companies approach stakeholder relations and environmental, social and governance considerations. For many years the ideal of considering the broader impact of a company's actions beyond its profit and loss existed mostly in the ESG section of annual reports. Aside from spawning arrays of executives with shiny new job titles, little actually changed.

Now, companies are required to act on ESG principles, with a growing body of research showing that over the long-term, looking after all stakeholders leads to more sustainable and more profitable businesses.

It's almost 50 years to the day since Nobel prize-winning economist Milton Freidman published his hugely influential essay, The Social Responsibility of Business is to Increase its Profits.

In Australia, at least, his influence is waning.