Topic: Individual assignment
18/04/2018
1
Business and Government in the Global Context BUSM3886
Topic Nine: Business, Government and Sustainable Development
Associate Professor Darryn Snell
Issues to Discuss:
• Sustainable development
• Climate Change
– The Scientific Evidence
–The Political Response
• ‘Carbon Lock-In’ and Decarbonising the economy: The
Case of Victoria, Australia
• Discussion questions
• Readings for this topic
18/04/2018
2
Objectives:
• To understand the significance of sustainable
development
• To recognise the impact of climate change and why
addressing global warming might be difficult.
• To consider the complexity inherent in apparent
disagreements across multiple levels of governments,
businesses and civil societies
What is Sustainable Development?
"Sustainable development is development
that meets the needs of the present without
compromising the ability of future
generations to meet their own needs”.
- Our Common Future,
also known as the Brundtland Report, 1987
18/04/2018
3
Three major components of
sustainable development
Climate Change: The scientific evidence
The intergovernmental Panel on Climate(IPCC) has concluded in its Fourth
Assessment Report (2007) that:
• Warming of the planet is unequivocal, as evidenced by increases in global average air
and ocean temperatures, the melting of snow and ice caps and rising sea levels.
• Global warming since the mid-20th century is ‘very likely’ due to human activities.
• Climate change will have different impacts on different regions and localities.
• Evidence indicates the negative costs of climate change are likely to be significant and
will increase over time.
• With the increase in global temperatures, many ecosystems are likely to struggle
resulting in major social, economic and ecological impacts (drought and bushfires,
flooding of coastlines and small island states, ocean acidifications, extinction of flora
and fauna, spread of insects and tropical diseases).
18/04/2018
4
Climate Change: reconsidering politics
Global warming is a political issue/situation
– Conflict – many agents pursuing their own interests
– Power – used by those who possess it to gain advantage
– Uncertainty – difficult to predict the outcome
Climate Change: The political response
• “climate change is the greatest moral, economic and social challenge
of our time” (former Prime Minister Kevin Rudd).
• “The argument [on climate change] is absolute crap.” (Opposition Leader Tony Abbott 12 December 2009).
• “I don’t think we can say that the science is settled here…whether carbon dioxide is quite the environmental villain that some people make it out to be is not yet proven” (Opposition Leader Tony Abbott 14 March, 2011).
• "We do need to do something about emissions and the Coalition's position is that climate change is real. Humanity is making a contribution. It's important to have a strong and effective policy to try to bring emissions down and that's what we're doing” (Opposition Leader Tony Abbott 15 March, 2011).
18/04/2018
5
Malcolm Turnbull’s (Australia’s current PM) statements
while in Opposition
“We are as humans conducting a massive science experiment
with this planet. It’s the only planet we’ve got…. We know that
the consequences of unchecked global warming would be
catastrophic. We know that extreme weather events are
occurring with greater and greater frequency and while it is
never possible to point to one drought or one storm or one
flood and say that particular incident is caused by global
warming, we know that these trends are entirely consistent with
the climate change forecasts with the climate models that the
scientists are relying on…. We as a human species have a
deep and abiding obligation to this planet and to the
generations that will come after us” (2010).
Malcolm Turnbull’s (Australia’s current PM) statements
while in Opposition
“Politicians and shock jocks, scientists and coal barons, all of
them can argue for as long as they like, but they cannot
change the physical reality. I won't linger on climate change –
the hopeless, confused, hyper-partisan nature of the debate is
too well known to rehearse” (Malcolm Turnbull’s Speech,
Republican virtues: Truth, leadership and responsibility, 2012
18/04/2018
6
PM Malcolm Turnbull in response to the Opposition
Australian Labor Party’s commitment to introduce 50%
Renewables
‘Is new Australian prime minister Malcolm Turnbull already
a climate change turncoat?’ The Guardian
“Opposition leader Bill Shorten] is highlighting one of the most
reckless proposals the Labor party has made. Fancy
proposing, without any idea of the cost of the abatement, the
cost of proposing that 50% of energy had to come from
renewables! What if that reduction in emissions you needed
could come more cost-effectively from carbon storage, by
planting trees, by soil carbon, by using gas, by using clean
coal, by energy efficiency?” (September 2015).
Turnbull Government’s National Energy Guarantee Policy
National Energy Guarantee Policy aims to address trilemma:
1. energy security
2. affordability
3. emissions reduction
Political divisions have emerged:
• ‘States threaten to call off energy deal if renewables undermined’
(The Guardian 12 April).
• ‘National energy guarantee will 'lock in' poor climate outcomes, ACT
says’ (The Guardian, 17 April 2018).
• ‘Manufacturing bosses call on states for speedy national energy
guarantee take-up’ (Australian Financial Review, 15 April).
18/04/2018
7
Political Players (Stakeholders/Vested Interest)
• Businesses– local state and global (MNCs and TNCs)
• Governments – local state and global
• Civil Societies – local state and global
• Collectively their interest derive from a number of sources: social (implications of global warming, political (to be active in pressuring governments – involved in decision making) and economic (who stands to win or lose)
Climate Change as a Global Issue
It conflicts with state sovereignty
– Requires a global solution that may be at odds with state sovereignty (national mandate)
– The solution requires deference to formal global institutions – UN, World Bank, WTO, etc
– Global pressure groups like Greenpeace act as spokespersons for civil society and seek to influence governments at all levels
18/04/2018
8
Climate Change as a State Issue
• Challenge from global institutions – help to form and
implement a global solution
• Challenge from local and international business –
generally concerned with costs to those generating green
house gasses
• Challenge from civil society – mixed – some concerned
with the impact on the household budget – others with
climate change
Climate Change as a Business Issue
• The future of all those industries/businesses relying on
fossil fuels are directly affected
• Despite “creative destruction” (Schumpeter) being a key
feature of the capitalist system – those industries
rendered redundant resist
• Despite the claim that capitalism is based on
entrepreneurship and risk taking threatened industries
believe they have a right to corporate welfare
18/04/2018
9
Climate Change as Business Opportunity
• On the creative side of the business equation renewable
energy provides an opportunity for both old and new
businesses – old in moving to the new technology and
new in terms of establishing businesses in solar, wind,
tides and geothermal
• Once again cannot talk of a unified business position
Civil Society Activism
• Increased severe weather events impact directly on
people – indirectly on the economy
• Concern over the inheritance we will pass on to future
generations
• Increased electricity costs
• Loss of jobs
• Lower standard of living
18/04/2018
10
‘Carbon Lock-In’ and Decarbonising the Economy
‘Carbon lock-in refers to the systemic bias against carbon- saving technologies despite their obvious economic and
environmental advantages. It results because of inertia at
the corporate, government and system-wide levels and
these inertia are themselves the result of the historical
development of the technological system at hand’ (Perry,
2012).
18/04/2018
11
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
“the state was not inclined to let private
enterprise in on a good thing” (F.W.
Eggleston, the former Attorney-General of
Victoria, 1932: 161).
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
18/04/2018
12
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
18/04/2018
13
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
18/04/2018
14
A Very Short History of Power Generation in Victoria’s
Latrobe Valley
Responses of Multinational Corporations
Leaders or Lagers in Climate Change
Mitigation?
Evidence:
• Some diversification into renewable
energy
• Acknowledgement of climate
change science
• Initial opposition to Rudd/Gillard
Government’s effort to put a price on
carbon.
• Some willingness to participate in
Government proposals to bring
about early retirement of polluting
assets
Yallourn Power Station
Loy Yang A
Hazelwood and Loy Yang B
18/04/2018
15
Transitioning to What?
By Whom?
To Whose Benefit?
29
‘Transitioning’ to a ‘low carbon economy’?
Characteristics of the ‘unsustainable’ sector:
– Skilled workforce (credentialed/non-credentialed)
– Stable/ Long-term employment
– Highly Paid
– Unionised
– An aging and male dominated workforce
– Localised
– Declining job opportunities
18/04/2018
16
Community, Remuneration and the Skill Challenges of
Decarbonising the Economy
The ‘Sustainable Sector’:
– More jobs (e.g. fossil fuel versus renewables).
– Jobs for the long-term unemployed and young workers (‘Green New Deal’).
– Skills (new or old)?
– Remuneration?
– Unions?
– Locality of ‘new’ ‘green jobs’?
The current challenges for managing a ‘just transition’
• Recalcitrant employers
• Fragmented government and political uncertainty
• Workers and unions becoming marginalised and an unjust
outcome pursued by government and employers.
• Maintaining support and ‘spirit’ of workers and the
community.
• Supporting coal or moving beyond coal?
18/04/2018
17
‘Just Transition’
‘Just Transition must not just be about creating ‘green jobs’ to
meet the direct material needs of those workers affected by the
shift to a low carbon economy, but must also be about ensuring
those jobs are decent jobs. Environmental transition could not be
described meaningfully as ‘just’ if the new jobs it provided could
not ensure that work was productive and safe, delivered a fair
income, provided security and equal opportunity in the workplace,
provided social protection for families, and better prospects for
personal development’ (TUC, 2008a: 27).
‘A coalminer or a power station worker isn't going to leave their job
on $120,000-plus with well-regulated shift arrangements and
decent conditions to install low-wattage light bulbs or insulation’
(Tony Maher, General President of the Mining and Energy Division
CFMEU)
Transition Challenges
Who Leads?
–State or Federal Governments?
–Local government?
–Local community?
–The owners of power generators or other private interests (i.e. ‘the
market’)?
Who Benefits?
34
18/04/2018
18
Final Comments
• It should be easy to see why climate change is such a
complex political issue – as are most
• A numerous number of players and a numerous number
of preferred outcomes
• Considerable power differentials between the players –
but power is fluid
• Uncertainty – how will this unfold in the short, medium
and long turn
Discussion questions:
• “Can our capitalist system avoid the worst-case
consequences of global warming?” (Storm, 2009:1032).
Discuss
• .Why is climate change such a complex political and
business issue?
• How might government policies to address climate
change impact on businesses and communities?
• Who should lead on finding solutions to address climate
change (Business, Government or Civil society)?
18/04/2018
19
Readings for this topic:
• Storm, S. (2009) ‘Capitalism and Climate Change: Can the invisible
hand adjust the natural thermostat?’ Development and Change 40
(6): 1011-1038.
• Ihlen, O. (2009) ‘Business and climate change: the climate response
of the world’s 30 largest corporations’ Environmental Communication
3 (2): 244-262.
• Snell, D. and Schmitt, D. (2012) ‘It’s not easy being green’: electricity
corporations and the transition to a low carbon economy’ Competition
and Change 16 (1): 1-19.