After the Fires: Bob Carr in Conversation with Zali Steggall and Martijn Wilder

Bob Carr: Hi, I’m Bob Carr, I’m Professor of Business and Climate here at UTS. I was just reading an article from The Washington Post. It records that in the last few days within the Arctic Circle for the first time the temperature of one location reached 100 degrees, the first time ever. This follows a baking heat wave in Siberia and other evidence that I think makes the case, even for someone with the most sceptical disposition, that a shift in climate is real, it’s with us now, it’s how we live on this planet today.

To talk about it and what it means in Australian terms, I’m delighted to have Zali Steggall who won the seat of Warringah at the 2019 federal elections on the issue of climate, and has legislation ready for presentation for the Federal Parliament called the Climate Change National Framework for Adaption and Mitigation Bill 2020. We also have, to explore the provisions of the bill and what they’ll mean, Martijn Wilder who is founding partner of the Pollination Group, a climate change and advisory and investment firm, Chair of the Australian Renewable Energy Agency, and for 20 years with Baker & McKenzie as the head of their global climate law practice. He is currently president of the splendid nature conservation organisation, the WWF Australia.

So, Zali, let me put to you first, if your legislation were in place now and the Australian Government had a statutory obligation to bring forward a plan to cut emissions, what would you like to see in that plan?

Zali Steggall: So, if we had that long-term commitment to a net zero by 2050 – and it’s really clear, and important for everyone to understand, that is balancing the budget when it comes to our emissions. This is nothing drastic. It’s something that many countries around the world are committed to, our state governments around Australia are committed to, and most large corporations are committed to. So, if we have that commitment from the Federal Government, it would mean every stimulus, every recovery measure would be passed through a prism of guiding principles which would require a low-emission priority.

So, for example, HomeBuilder package and announcements that the government released a short time ago would be linked to lowering emission, energy efficiency of homes, for example. These are all ways in which every stimulus package could be working towards a greater good for Australia.

Bob Carr: Would energy efficiency be a big part of that? It’s a major focus of the Institute for Sustainable Futures here at UTS. People don’t seem to realise that being more efficient about industry is probably the easiest way to get towards that 2050 goal.

Zali Steggall: Well, yeah, to achieve net zero it’s got to be done across many sectors. Now, 50 per cent of our admissions are around energy production and supply. So, clearly, that’s why we have such a conversation in Australia around energy renewables, coal, fossil fuels, and now the talk from the government around a gas-led recovery. But energy is also in the home and in manufacturing and industry and how it’s actually applied. So, there is the other side of the coin where we can be more efficient and more proactive in how we use it. So, for example, homebuilder schemes that are geared towards renewable energy, but also storage. I think we are still behind and we have great progress and capability in terms of developing microgrids in residential areas.

We know New South Wales Government has renewable energy zones planned. There is a lot that can be done to accelerate our uptake and our efficiency around homes. So, of course, storage is a big part of the equation. So, the more we can focus on batteries, I think we will make great gains.

Bob Carr: Martijn, what emphasis would you give when it comes to designing a package that a government would be obliged to bring forward, where there’s a statutory obligation to produce a plan to cut emissions?

Martijn Wilder: Yeah, well, I think your point about a statutory obligation to produce a plan is very important. Because as Zali’s legislation shows – proposed bill, sorry, shows, if you articulate clearly in that legislation what has to be delivered, then governments are forced to act. I’ll just give you two very good examples of that. Your own legislation when you were Premier which you introduced in New South Wales, an emissions trading scheme, that drove action in the economy. In Victoria they have a Climate Change Act now, and the government is required to produce plans and every five years they have to look at how they change those plans.

So, it really focuses the mind of the government across every sector to look at putting in place measures that will ultimately move you towards the goal of reducing emissions to zero by 2050. So, legislation is really important because it plays a role in driving action, whereas just soft policy doesn’t do that to the same extent.

Bob Carr: Well, if the legislation were in place and the government were putting together its first plan to reduce emissions, what would you and your colleagues like to see with pride of place in that pan?

Martijn Wilder: I think, first of all, the target is very important, so what is the aspiration, and Zali’s bill does this very well. Secondly, how will you get there and setting in place the measures. So, there are really two tracks here. One is that you could have an overriding framework legislation, which is the approach which Zali’s bill does. Which is very much about decision making and making sure in every decisions that you make you take climate change into account. Which the business sector is doing now. But government should also do that, particularly when they’re expending public money.

That across each sector you have a plan to decarbonise those sectors. Then within those sectors you have measures that actually drive investment into decarbonisation. Because one of the challenges at the moment is that we often have vision but not the actual implementation.

Bob Carr: Yeah, I’ve been struck by what the two of you have said about business. I was astonished at how much has been crammed into this year. When everyone’s distracted by COVID-19, business boardrooms shifting their position. It’s a major shift in investment. You’ve now got a position where Japanese banks, Allianz, a German insurer, BlackRock in the US, none of them will put money, not a cent, into thermal coal. You look at the big energy companies, the energy giants, especially the Europeans, making it very clear that the net goes further than thermal goal.

Shell the other day making a point about gas. They regard gas as a carbon fuel. We’ll come back to gas because the Australian Government is giving such a priority to it. But business is a long way ahead of the Australian Government and that’s a remarkable thing.

Zali Steggall: Absolutely. I mean you just have to look at the recovery stimulus in the EU. €750 billion committed, but required in those packages is that it be towards lowering emissions and there has to be a disclosure of emission risk in relation to the project. So, there’s no doubt that big blocks like the EU and major countries are moving in that direction and are making that a key guiding principle of how they make their decisions. Which is why it’s so important for Australia to do it or we’ll be left behind.

You look at the UK, they’ve had a climate change bill for over 10 years now. So, they’ve been able to have two five-year emission reduction budgets. They can see how a legislative framework is efficient in driving investment and advances in technology and lowering emission. When I’ve spoken to people in the UK, they very much describe it as it’s decoupling economic growth from emissions. That’s what I think we desperately need in Australia.

Martijn Wilder: The other tact about legislation is that although in Australia carbon tax, pricing carbon, is considered to be politically unacceptable, many, many countries around the world do have a price on carbon. Again, yourself introduced one in New South Wales. The Federal Government introduced one. During those periods emissions dropped and people responded to that. The truth is that many companies today in Australia put a price on carbon into their project modelling. So, it’s not an anathema for businesses to have this. Yet we seem to be in this very difficult political bind in Australia, where any discussion of climate change is just very politically difficult.

Zali Steggall: My understanding is we’re at real risk of having carbon tariffs imposed on Australian goods at the border for countries, for the EU, for example, in relation to goods from Australia if we don’t have good energy reduction policy. So, whilst there’s a reluctance to look at those kind of mechanisms in Australia, the equivalence may well be imposed upon us by our trading partners.

Bob Carr: Well, the government seems to have pivoted away from coal, thermal coal, but it’s talking up gas. Something you said raises the possibility that they won’t find investors prepared to put money into gas power plants. If European companies are all guarded by policies that say we don’t put investors’ funds at risk from carbon-related activities, there’s no doubt in my mind that that is going to be, for a cautious board, a warning about investing in gas fields or gas power plants in Australia. I think the government is going to find that the world energy sector will not respond to them putting out the shingle and saying come to Australia, be part of our gas-led recovery.

Zali Steggall: I think that’s very true. My understanding from talking to analysts, talking to people within that private investment sector of whether there is confidence in gas in terms from an investment point of view, already pre-COVID there was a great reluctance and uncertainty. It’s not seen as a stable market. There is a great fear that there is going to be a reset in the next 10 years. There will be a climate-driven reset from an investment point of view. Now, we can either be at the forefront of that, in terms of having legislated and have plans in place, so that Australian investors and investors international into Australian projects can feel confidence that we’re equipped for the reset. Or we will have a big disruption, and that is not what investors are looking for.

Martijn Wilder: It’s interesting. If you turn to the US as an example, people talk about the coal seam gas sector. The coal seam gas sector in America is basically collapsing before our eyes. The problem is that in order to make that economic you need a high price for gas, but that higher price can’t compete with cheaper renewables. If you’re doing things like coal seam gas, it’s a huge amount of upfront investment that takes many years to get back. Whereas with renewable energy you can build it quickly, it’s a lot cheaper and it out-competes that other form of energy which is gas. So, the result is that in the US now we’re seeing an entire collapse of the coal seam gas industry.

Bob Carr: Yeah, it’s been held up to Australians as a model for so many years; we should go the way of Americans on fracking, it’s given them cheap energy. But I haven’t seen Australian papers actually report the bankruptcies of those associated with fracking in the United States. It’s a business model that has fallen on its face.

Zali Steggall: In the United States the growth in renewable energy is huge. It’s by far the fastest growing sector and now equivalent to coal in 2019. So, there’s no doubt that it’s happening. What’s interesting about the gas-fired recovery talk is what we really should be talking about is be technologically agnostic. Let’s not hitch our wagon to any particular technology. But let’s give everything a proper economic merit assessment to make sure that it stacks up, so that public money is invested for the long-term future. That it should create jobs, there should be stimulus that comes from projects. But it should also stack up economically so that that public investment is worthwhile.

From all reports it’s very clear that renewables stack up, storage stacks up. Of course, a lot of talk around green hydrogen and where the new technologies might be. But there’s great uncertainty when it comes to gas.

Bob Carr: I’m impressed by the fact that there is a fleet of satellites circling the earth, even as we speak, measuring gas in the atmosphere. They’re so precise they can home in on a plume of gas coming out of a wetlands in South Sudan or some faulty technology in a field or a compressing plant in west Turkmenistan. They are so precise. They include European, Japanese and Canadian satellites. If the evidence mounts, with the data they’re collecting, that there is serious leakage at a much higher level than ever before guessed at from the gas industry, the pressure at the next international climate conference, expected in November next year, will be pretty strong.

I can imagine the European delegates saying, well, our own satellites are telling us this about methane leaking into the upper atmosphere, and at levels we only guessed at before, we can now confirm it. Huge pressure then on Australia. The pressure could come, as you say, in the form of tariffs put on us, put on our exports not only by the Europeans, but by the United States which finds carbon tariffs quite an appealing way of forcing China and India to do more, to do as much as America and the Europeans are doing.

Zali Steggall: Yeah, I mean I think it’s the irony of we often hear from members of the coalition and government that the argument against proper action in terms of reducing actions is this idea that we’re only 1.3 per cent of world emissions and, really, the big emitters need to do their bit. I mean it ignores the reality that we’re the fourteenth largest per-capita emitter, so we are a really important part of the equation. But countries will take action. If other countries are not coming on board and taking the necessary action, there will be consequences and we will find ourselves on the receiving end.

I think if we take the analogy of the virus, where inefficient maybe border control, not strong enough measures within certain countries about reducing the spread of the virus, then there’s that question of, well, okay, do we want an open border to that country if they’re not taking proper care. I think when it comes to emissions and impact, when it comes to climate change, it will be quite similar. That we’ll see ourselves on the receiving end of a world movement wanting to take action.

Martijn Wilder: I think it also plays out, at a government level we have a lot of political debate but what actually what happens in the business level is quite different. I think at the moment we’ve had the BCA in recent weeks call for a net-zero-emissions future, but the government has not done that. Yet we’re also seeing many people who buy our products asking for those products to be offset. So, a large Asian government recently put out a tender for LNG, and in that LNG they said we want the supply to be offset with carbon offsets. This is a government asking for carbon-neutral gas. Now, when we start to see those sorts of dynamics play out, that means that you have to provide gas that is basically emissions free.

The other thing that we’re seeing is that there’s increasing talk about scope 3 emissions. So, for companies like BHP, Rio, [INEL], many [countries] are looking at how to reduce the emissions that they create in other countries from their products. So, we’re seeing a lot of focus being on a company’s emissions no matter where they are. Boards, as you quite rightly said, asking about what are the consequences of this and, quite frankly, investors just not being prepared to invest anything that has that climate risk.

The interesting thing – coming back to the COVID issue – is in Canada, any company above $300 million which wanted COVID relief had to demonstrate that they were disclosing their climate change impact under TCFD. So, again, at a private sector level, I think it’s moving much faster than a lot of the government policy is.

Bob Carr: From your knowledge of the private sector – and you were a lawyer in that field for 20 years – what would be the atmosphere on the board of a company, say a bank, some investment house, if an investment proposal otherwise attractive but touching in some way the carbon sector, what would be some of the issues that would be kicked around as the board looked on whether they should put shareholders’ money or borrowings into such a project?

Zali Steggall: Well, I think the finance sector is actually further ahead of companies. That’s the first point I’d make. That most finance companies have incorporated TCFD, which is the Task Force on Climate Financial Disclosure, into their decision making. So, in the same way that you assess OH&S risk on any project, you also assess climate risk. So, if that particular project comes with a large climate risk which might be an impact on the climate or it’s subject to risk, they will assess that risk as part of the process. That’s why nearly – well, I think all Australian banks now have said they will not invest in the coal sector. Many of them will not invest in CSG.

Bob Carr: That’s not only thermal coal but coking coal.

Martijn Wilder: Then also, in addition to that, you’re seeing a lot of the Australian insurance companies saying we will not insure those sectors. We won’t insure coal companies. I think IAG last week said they won’t insure CST [sic] in Queensland, coal seam gas. I would say the finance and insurance sector, they’re very smart, they don’t want to lose money, so they won’t take the risk. Then I think on the corporate side, there are some corporates that are large Australian companies that are moving in that direction and understand climate risk. I think for others it’s a bit of a shock that the financiers are taking that view. So, I would say that while the finance sector is very advanced, corporates are really starting now to catch up to that.

Zali Steggall: It’s also where the pressure is coming from. I think it’s coming from shareholders, it’s coming from consumers, I think it’s coming from employees’ expectation within large corporates. There is now that directors’ responsibility when it comes to the board. Also, then looking at their business models. Because we saw, for example, in Australia I think, arguably, we had our first climate refugees this summer. People evacuating with the Australian Defence Force off Mallacoota beach is not something Australians were quite prepared to see. We saw whole communities ravaged by the impacts of climate change through the bushfires. We know, from the Royal Commission into the bushfires, over 400 deaths as a result of smoke and over 3000 hospital admissions.

So, we’ve got very real impacts that are now coming on in terms of what do climate change impacts mean to people. This is not something for the never-never, in 10 years’ time I’ll worry about it. It’s now.

Bob Carr: It’s the way we live now, we’re living that now.

Zali Steggall: Yeah. So, that really impacts the business model as well. For example, I’ve had a number of meetings within the insurance industry and superannuation industry. Again, it’s where the money is flowing. But from an insurance point of view, they’re looking at the bands of risk around Australia geographically. We will have at risk of extreme weather events, storms, hailstorms, bushfires, flooding, which really impacts sections of the population and really impact their business models. So, I think for many, many sectors this is a reality, it’s an everyday reality that they have to deal with.

Bob Carr: You did something that few others have done. You spoke to a community for months about this issue, every day, just about every hour of every day, to win that marginal seat against someone with the status of former prime minister. What did you learn about the public understanding of the issue? I’m interested in where you got people holding out, people who might have been, shall we say, infected by climate change scepticism or even denial?

Zali Steggall: I think what’s really interesting is in Australia it’s been so divisive for so long. We’ve had 10 years of polarisation around climate. It’s a little judgemental I would say as well. So, some people have come to accepting climate risk and needing to lower emissions more recently than others. Some have been worried about it for 10 years, some for five, some for less. I think what we did well in Warringah was that it wasn’t about judging, it wasn’t about where were you, or looking back. Especially in the political arena there’s always a lot of – I did a panel with John Hewson and Peter Garrett and there was still a lot of talk about who did what when 10 years ago and the political baggage that there is.

I think it’s really important – and I know it’s easy for me as a newcomer to present that – that I think we need to draw a line in the sand and look to the future, and not keep looking back as to who did what when to who and undid whose legislation.

Bob Carr: Did you say that during the election?

Zali Steggall: I did. Because, for me, pulling people together in Warringah was about we need to be more collaborative. We need to seek to understand before being understood. You have to understand people’s position; why are they concerned about taking stronger action on decarbonising, what are their reluctance. Not everyone identifies with the Extinction Rebellion strong green kind of activism. A lot of people are, I would say, sensible centre that want to see credible, logical policies around decarbonising, around economic management, sound policy. They understand that it needs to be collaborative and you need to bring everybody on board.

So, for us, the focus in Warringah was very much about how do we bring everyone on board towards better policy. As an independent, bring forward solutions. That maybe the major parties are a little stuck in their corner and can’t quite come around to the table. To try and mediate the issue, find the middle ground, so that we can all move forward with better action.

Bob Carr: Martijn, what have you learnt in your unique combination of roles – lawyer specialising in this area, and the advocate, the leader for a major conservation organisation – about how you best talk to people about climate?

Martijn Wilder: I think it’s very important to listen and to hear what people think. I think Zali’s point is right, everyone comes from a different perspective. There are sometimes those who, no matter what you say, will never move. They just have a particular position. Whether that’s the Alan Jones’ point of the world. I have a number of friends who I play touch football with who are very in that camp, and no matter what I say I will never convince them. But then there are others who are really interested to learn. Often you find people have been told a particular line or they’ve been told a particular point of view that just simply isn’t true. So, you need to spend the time to unpack that and to explain what’s really going on.

You have to build confidence because someone will say, well, why should I believe you. People always have reference points. So, there’ll be some people who’ll always believe what’s in The Australian or will always believe what’s in The Guardian. You have to sometimes come to it with more impartial points of view, and to also have people listen to people who they respect and don’t see as having a vested interest. It’s really just a process of trying to explain and also story tell. I think telling stories and giving examples is very, very powerful. When people get to see things how they’re happening in the real world, they will sometimes say, oh, that’s really interesting.

Your example before of the US, just the gas industry collapsing from a financial point of view, if you speak to someone who’s an investor and you present that investment material, they’ll suddenly stop and think, oh, that’s interesting, maybe what I’m thinking is not right. So, you have to find what resonates with that individual and why is it important to them. Then just go through a process of trying to change the understanding. But also listening at the very beginning as to why they have that view is very important. Sometimes people have a view for no particular rational reason. It may just be because that’s a friend’s view or it’s something they heard somewhere else.

Then there are also many people who change their view constantly, and so understanding that as well. I mean as a former premier and experienced politician, you would understand those in the middle who swing. There are those at the edges, but there are those who are more open-minded and that’s often who you’re trying to convince.

Zali Steggall: I know there is urgency. I read the article about the ice caps and the record temperatures within the Arctic Circle and that is scary. But most people don’t react well to that.

Bob Carr: The stranded polar bear, they don’t react to that. It seems too distant or farfetched?

Zali Steggall: If we talk too much about the gravity of the situation, unfortunately, people have a tendency to then think, well, it’s too hard, too late, too difficult, I can’t do anything about it. So, it’s one of those things of how do we get everybody on board. I visualise that we have to get everybody on board a bus, make it an electric bus. We will start going slowly, but we can gradually speed up once we have everyone on board. So, the extreme talk I find disenfranchises a lot of people in the community, and that is why we then don’t have a consensus to move forward. So, everyone needs to feel like their voice is going to be recognised.

Bob Carr: The problem-solution format works very well in politics, and I think that can be applied to this great challenge.

Martijn Wilder: I think that quite often in this area people talk about the problem, and they talk about a solution being maybe, as we were talking about, a new gas pipeline. On the other side of the debate we talk about decarbonising, here are the big-picture policies. We need to show more of the solutions. So, for example, one of the other roles I have is chairing the Australian Renewable Energy Agency. In that agency we’ve invested in many really fantastic projects. One thing that many people don’t understand is that Australia has led the world on the efficiency of solar panels. The University of New South Wales has done great work on that for 20 years. We are world leaders in that space. So, that’s fantastic, it’s exciting, it’s Australian ingenuity.

There’s a lot of examples where we can lead the decarbonisation race, and to actually demonstrate that is really important. Anybody who loves driving a petrol car, when they get in an electric car that goes twice as fast is always very excited. So, that is also something. Examples and, as you said, problem solution and problem-positive solution, also, I think often helps.

Bob Carr: Thank you, Martijn, and thank you, Zali. Good luck with your legislation. I think you’ve made the case for it very well in this discussion. Thanks for your time here on the UTS campus.