ABC The Drum Opinion: What’s in a green job?

by ericknight

While in England I worked for  a little while in a venture capital firm. It was an enlightening experience. Not only did I learn how to read the minutiae of balance sheets, I also got a glimpse of companies on the edge of capitalism. Venture capitalists put money into companies which sit somewhere between tin pot ideas and the next big thing.

I mention this because, in my own small way, I helped create a few jobs. There were a some health care jobs, the odd IT job, and then a few green jobs. What’s a green job you ask? Good question. Politicians throw the term around like confetti. I can assure you they are very hard to create.

That’s why I wrote a piece in today’s ABC Unleashed. For my take on the real story behind green jobs, green business, and the industrial base of the Australian economy click here.

{ 7 comments… read them below or add one }

Brett March 17, 2011 at 11:13 pm

Completely agree with this. In fact, this was one of the topics we spoke around at the Festival of Thinkers in 2009, essentially started by Rajendra Pachauri. The room was full of people firmly in the camp of embracing a carbon price as a driver for green job growth, particularly in light of the credit crisis. I found an unwitting ally in the Crown Prince of Greece (!) in asking where do you draw the line between what is a ‘new’ green job and when does it replace an existing job. Finance is the classic case of this. If a banker was not raising capital for a solar energy plant, would she be out of a job, or would she be raising capital for some other project — and can we count the former as a green job? Unfortunately, while the principle is something to aspire towards, the idea of a green job is so often just green wash these days.

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John March 19, 2011 at 2:05 am

Eric – you raise some interesting questions in your ABC unleashed article. But there is a historical perspective you are missing out on.

During the 1990s, for example (and there are probably more), Prof Martin Green of UNSW and Dr David Mills were world leading researchers for photovoltaic and solar thermal research, working in AUstralia.

Both hilighted the possibilities for renewables industries in Australia arising out of their work, but both bemoaned the lack of support and funding to develop their work to pre-commercial stage, never mind actually developing industries.

Initially it was the ‘competitive economic advantage’ argument that justified fossil-fuel dominated beaurocracies from supporting their work – “why waste money developing renewable industries when AUstralia’s natural strength is in mining?”

Then it was the Denialist years of the Howard era that explicitly sought not only to stifle any renewables research, but to actually drive out climate realists from government positions (for example, from the CSIRO ).

I clearly recall a news report during the 2007 election of Howard and Costello repeating the “coal needed for baseload, renewables won’t work” mantra. The news report cut to show David Mills packing up his Sydney office as he was moving to become Chief Scientific Officer at Ausra Inc, and their California venture-capital funded factory which was to become the largest producer of solar thermal baseload generating technology in the world. Very ironic indeed.

(http://www.ausra.com/news/releases/080306.html if you don’t believe me)

We don’t need to have a renewable manufacturing industry to benefit from it. Questioning Australia’s record on manufacturing is a fair point, but I don’t accept it as inevitable. Anyway, technology lcences can produce revenue streams from the research that goes into them without actually having the manufacturing plants (my God – remember the Clever Country?!?!). A good start is Government policy that supports that research, rather than inhibiting it.

Would it be too much to ask to have Government funding for academic institutions to develop a range of policy options for maximising economic benefit out of whatever academic strengths and natural advantages Australia has left to it? And Duh!! – if the term ‘green jobs’ like the term ‘UnAustralian’ has lost its meaning and raises more problems that it addresses – then just suggest something else instead of banging on about it!!

So you ask what lies behind the ‘green promises’? My initial reaction is that you have a bit of a nerve to ask that – I would expect someone in your position should know a bit better, and be informing the debate rather than adding more FUD. Or are you simply using a dialectic tactic of putting one side of the argument down in order to appear more ‘balanced’ youself?

And my example of what one “green job” ought to look like is as follows. Since the start of the climate debate in the late 1980s, Energy Efficiency was one sectors that justified itself economically, but was held back by an industry structure that was focussed towards generation and distribution (ie criteria was sale of more kWh rather than providing energy services at lowest cost). Government energy policy in areas such as building, transport, consumer goods, manufacturing, labelling, government procurement etc would (according to published research) have produced a greater ROI as a result of more efficient end use, than on the result of inefficient use and wasted generation capacity. So, jobs that were created as result of a climate policy that addressed the ‘low hanging fruit’ – justifiable on both economic and environmental criteria – could reasonable be called ‘green jobs’?

My question to you as a climate economics researcher would be – did those jobs eventuate?

If they did, why havn’t you cited them as examples?

If they didn’t then you could also have cited them as one clue as to why we haven’t developed a renewables technology industry in Australia.

Now, as in decades past, Australia’s energy policy is dominated by the needs of the mining industry and its representatives in the governments and beaurocracies.

Climate policy in Australia will not progress until that changes.

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ericknight March 19, 2011 at 4:03 am

Hi John, Interesting comments and you have thought through this alot.

First off, you are right about energy efficiency. This is where most of the investment in Silicon Valley is heading. Interestingly, the people in these sectors are IT people switching to clean tech to deploy their skills to a new problem: energy. I suppose you could call these green jobs. They are also just IT jobs, or the sort of things one does in improve the cost structure of a business in response to fluctuating electricity prices.

I don’t by any means indeed to diminish the importance of these jobs. My hope is to simply ask ourselves to think critically about what a green job actually looks like. You’re right. Energy efficiency is one of these. If that’s the case, does government need to support them. Perhaps they make sense on an ROI basis alone so there is no need for government intervention. Maybe government needs standards to enforce efficiency…but that’s the level of granularity we need to think at.

I also agree with you on R&D funding. In particular, the small volume of R&D put into clean tech research by energy companies is a problem and different to big pharma and IT. See my earlier piece in the SMH on this. I have more to say here. Maybe we need to offer some tax incentives here. From a commercial perspective, there is some sense in promoting investment within these corporations. You can see the success of Professor Green and their relationship with Pacific Solar here as an example.

But, again, we need granularity.

In last week’s ABC Insiders, Wayne Swan was throwing around the term ‘green jobs’ like there was no tomorrow. My sense of this is that it is a political strategy. One response to this is ‘who cares? Something is better than nothing.’ I am more cautious. If we want a clean tech industry in Australia, it is not clear that a Department of Clean Tech Innovation (for example) is the right way of getting there. What would it do? Maybe more funding into research in our universities is better.

Let’s move the debate to that level.

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John March 19, 2011 at 11:23 pm

Thanks for your reply Eric. Yes we do desperately need more debate – but don’t lose sight of the fact that we have had this debate before – several times.

In relation to your comments about the need for government intervention on decisions apparently justified by ROI..

In a truly free market, supply and demand side measures would be seen on an equal footing and the result, perhaps, decided on ROI.

But the term ‘demand side management’ has more currency in the USA where the sale of energy services is somewhat more disconnected from the interests of generation than in Australia.

Here, the structure of our energy sector (market structure and government policy framework) reflects the fact that our mineral resources are seen as a national asset . Thus you have energy end-use policy decisions, that may otherwise be decided on ROI, being complicated by their potential impact on asset values of traditional energy reserves (more energy efficiency = less coal). A market distortion?

It depends on what you define as your energy market – maximising return on assets, or minimising costs. Maybe that in turn depends on whether you are a Conserve-ative or not? ;-) . In reality, both Labour and Liberal Governments have, when it came to the crunch, protected the interests of the fossil fuel industry. Ironically this has, for both sides, included alliance with the power unions even when it is clear that policies which promote a competitive energy services industry would create more jobs.

I think a new Department of Sustainable Energy could well be the answer if there was true ‘power’ equality between renewables, fossil fuel and demand side sectors. That way economically rational decisions could be made in the context of a carbon constrained global economy. Not sure if that is a vain hope when there is so much patronage to be had.

PS – Amory Lovins was one of the demand side experts who visited this country in the early nineties ( http://www.rmi.org/rmi/ ), but whose ideas were pretty much shelved by an industry whose success was (and is) measured by sale of kWh.

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ericknight March 20, 2011 at 4:55 am

Hi John,

Sure – I get your point about a Department of Sustainable energy. But surely the more interesting question is what would it do exactly? Competition and removing oligopolies is a fantastic outcome. The tools of achieving it are hard to decipher.

I’m writing a piece on this in more detail (re your point on success stories of australian clean tech etc). Keep posted…

Ps the CSIRO dept with Alex Wonhas or the new Australian Carbon Trust may interest you

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john March 27, 2011 at 1:35 am

I had a look at these links – thanks, and just to wind up the conversation for now – thanks for these exchanges.

1) Alex Wonhas & CSIRO Energy Transformed Flagship – also looked at McKinsey website, where he was for a while. Exhibit 6 on this link http://www.mckinsey.com/clientservice/sustainability/pdf/Impact_Financial_Crisis_Carbon_Economics_GHGcostcurveV2.1.pdf makes interesting reading. a) re comments about role of government in decisions apparently already justified by ROI – approx 13GtCO2e at ‘negative cost’. These graphs have existed for 20 years or more. I think there is now (unfortunately) a need for someone to do some research on the history / cost of missed opportunities in climate policy b) Organic soil restoration is a cheaper GHG abatement measure than nuclear power, with more than a few other benefits – some of which have been known for a while and are listed here http://www.rodaleinstitute.org/global_warming. I don’t see any specific research being done in this area by the other CSIRO Flagships on food or sustainable farming
2) Australian Carbon Trust – I wonder how much better off Australia would be now if Robert Hill (Chairman) had had more influence on climate policy during the Howard years. I think that the book by Guy Pearse (on Robert Hill’s staff in the mid 90′s) ‘High and Dry’ could kick off above mentioned History of Missed Climate Policy Opportunity. See also http://www.guypearse.com/

I agree the concept of creating ‘green jobs’ is more of a political spin than one grounded in economic theory. Jobs are ‘good’ when you want them to be, or an unnecessary cost when you don’t. The merits or otherwise of talking about green jobs rests, to some extent, on whether we believe the market economy can be made to deliver on climate objectives in time – can it? I guess that is the real question for you economists and academics. We can take more time arguing about the relative costs of tax vs trading scheme, but is anyone counting the cost of further delay?

I don’t understand your hesitancy about the granularity of climate policy though. We have known for decades (yes we can say that now) what has to be done, and had pretty good ideas about how to do it. What we have never been able to do is find the political tools and willpower to implement and defend those policies against the attacks of the fossil fuel industry.

But I do like your line of questioning, so keep up the good work. At some point Abbot & Co will move on, and a Liberal party which is serious about addressing climate change could once more compete for my vote.

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ericknight March 27, 2011 at 3:04 am

Thanks John, keep posted. I have a bigger piece coming out in June related to this whole issue and feeding into bigger questions about the industrial base of the aussie economy and future macro economic issues… ek

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