Putting stimulus spending to the test: 4 ways a smart government can create jobs and cut emissions



Flickr/Greenfleet Australia

Thomas Longden, Australian National University; Frank Jotzo, Australian National University, and Zeba Anjum, Australian National University

The COVID-19 recession is coming, and federal and state governments are expected to spend more money to stimulate economic growth. Done well, this can make Australia’s economy more productive, improve quality of life and help the low-carbon transition.

In a paper released today, we’ve developed criteria to help get this investment right. The idea is to stimulate the economy in a way that creates lasting economic value, reduces greenhouse gas emissions and brings broader social benefits.

An Organisation for Economic Cooperation and Development (OECD) outlook report released this week predicts an economic slump this year in Australia and globally.

Governments will be called on to invest. In this article, we investigate how stimulus spending on infrastructure can simultaneously achieve environmental, economic and social goals.

Stimulus spending can help the economy, the environment and the community.
Dean Lewins/AAP

Best practice

Europe has already embraced a “green stimulus”. For example, Germany plans to spend almost one-third of its €130 billion stimulus package on renewable power, public transport, building renovations and developing the hydrogen and electric car industries.

In response to the pandemic, New South Wales and Victoria produced criteria for priority stimulus projects which include environmental considerations.

Whether the federal government will follow suit is unclear.




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Most federal stimulus spending has been on short-term JobKeeper and JobSeeker payments, plus the HomeBuilder scheme that will largely benefit the construction industry and those who can afford home improvements.

So how should governments decide what to prioritise in a COVID-19 stimulus package?

Our criteria

We developed a set of criteria to guide stimulus spending. We did this by comparing ten proposals and studies, including current proposals by international organisations and think tanks, and research papers on fiscal stimulus spending after the 2008 global financial crisis. Synthesising this work, we identified nine criteria and assessment factors, shown below.

Before the pandemic hit, Infrastructure Australia and other organisations had already identified projects and programs that were strong candidates for further funding.

We applied our criteria to a range of program/project categories to compare how well they perform in terms of achieving economic, social and environmental goals. We did not assess particular programs and projects.

The four most promising categories for public investment are shown in this table, and further analysed below.

1. Renewable energy and transmission

The electricity system of the future will be based on wind and solar power – now the cheapest way of producing energy from new installations. Australia’s renewables investment boom may be tailing off, and governments could step in.

The Australian Energy Market Operator, in its 2018 Integrated System Plan, assessed 34 candidate sites for Renewable Energy Zones – which are places with great wind and solar potential, suitable land and access to the grid.




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The NSW government has committed to three such zones. These could be fast-tracked, and other states could do the same.

Investment in power transmission lines is needed to better connect these zones to the grid. It’s clear where they should go. Governments could shortcut the normally lengthy approval, planning and commercial processes to get these projects started while the economy is weak.

Now is a good time for governments to invest in large-scale renewable energy.
Mick Tsikas/AAP

2. Energy efficiency in buildings

There’s a strong economic, social and environmental case for investment in retrofitting public buildings to improve their energy efficiency. Schools, hospitals and social housing are good candidates.

Building improvement programs are quick to start up, opportunities exist everywhere and they provide local jobs and business support. And better energy efficiency means lower energy bills, as well as reduced carbon emissions.




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One existing program is showing the way. Under the Queensland government’s Advancing Clean Energy Schools program, which involves solar installation and energy-saving measures, 80 state schools have been brought forward to the project’s first phase as part of COVID-19 stimulus.

A focus on public buildings will bring long-lasting benefits to the community, including low-income households. This would bring far greater public benefit than programs such as HomeBuilder.

3. Environmental improvements

Stimulus initiatives also provide an opportunity to boost our response to last summer’s bushfires. While the federal government has announced A$150 million of funding for recovery projects and conservation, more could be done.

The ACT has shown how. As part of COVID-19 stimulus, 26 people who’d recently lost their jobs were employed to help nature reserves recover after the fires. Such programs could be greatly scaled up.

In New Zealand, the government is spending NZ$1.1 billion on creating 11,000 “nature jobs” across a range of regional environmental projects.

In New Zealand, Jacinda Ardern’s government has created
Daniel Hicks/AAP

4. Transport projects

Several transport projects on the Infrastructure Australia priority list are well developed, and some could be fast-tracked.

Smaller, local projects such as building or refurbishing footpaths and cycle paths, and improving existing transport infrastructure, can be easily achieved. The NSW government is already encouraging councils to undertake such projects.

Sound analysis and transparency is needed

Our analysis is illustrative only. A full analysis needs to consider the specifics of each project or program. It must also consider the goals and needs in particular regions or sectors – including speed of implementation, ensuring employment opportunities are spread equally, and social and environmental priorities.

This is the job of governments and agencies. It should be done diligently and transparently. Australian governments should lay out which objectives their stimulus investments are pursuing, the expected benefits, and why one investment option is chosen over another.

This should improve public confidence, and taxpayers’ acceptance of stimulus measures. This is good practice for governments to follow at any time. It’s even more important when they’re spending billions at the drop of a hat.The Conversation

Thomas Longden, Research Fellow, Crawford School, Australian National University; Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National University, and Zeba Anjum, PhD student, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Want an economic tonic, Mr Morrison? Use that stimulus money to turbocharge renewables



Chris Fithall/Flickr

Elizabeth Thurbon, UNSW; Hao Tan, University of Newcastle; John Mathews, Macquarie University, and Sung-Young Kim, Macquarie University

The chaos of COVID-19 has now hit global energy markets, creating an outcome unheard of in industrial history: negative oil prices. With the world’s largest economies largely in lockdown, demand for oil has stagnated.

Essentially, the negative prices mean oil producers are willing to pay for the oil to be taken off their hands because soon, they will have nowhere to store it.

Federal energy minister Angus Taylor has proposed a partial solution: Australia will spend A$94 million buying up oil, to bolster domestic supplies and help stabilise global prices.

That strategy is a fool’s path to energy security. Right now, the best way to shore up Australia’s future energy supplies is to invest economic stimulus money in renewables – essentially to manufacture our own energy security.

Prime Minister Scott Morrison with Angus Taylor, right, who wants Australia to buy surplus oil.
Mick Tsikas/AAP

A flawed plan

Australia’s oil reserves have for years languished well below the International Energy Agency’s recommended 90 days. Taylor says his plan would address this, and help stabilise (read: push up) oil prices and restore faith in the global oil market on which Australia depends.

But the plan is undermined by a simple fact: unstable global oil prices have been a recurring problem for decades, largely for political reasons well beyond Australia’s control. We need look only to the price shocks triggered by the Yom-Kippur war of 1973, the Iraq war of 2003, and the Saudi drone attack of 2019 – to name just a few.




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Price instability is all but guaranteed to increase in future, as climate change concerns drive insurers and investors away from fossil fuels and towards green energy.

The current chaos actually creates a much better opportunity for Australia: use the massive COVID-19 economic stimulus to manufacture real energy security in the form of renewables.

Buying large volumes of surplus oil will not ensure stable prices.
Flickr

Renewables: a win-win

The price and supply of energy from fossil fuels is vulnerable to natural resource depletion, geopolitical tensions and climate change concerns. This is true not just for oil, but coal and gas too.

The only real path to energy security is manufactured energy such as solar panels, wind turbines, electrolysers, batteries and smart grids.

These technologies can turn infinite natural resources into energy, then store and distribute it to ensure stable supply.

Victoria and South Australia now enjoy higher levels of energy security thanks to large-scale stationary batteries that even out electricity peaks and troughs.




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For example, a large-scale battery in Victoria stores energy produced by the Gannawarra solar farm. The battery provides energy during peak times when there is no sun.

Manufacturing energy is also important from an economic security perspective, promoting the creation of high-tech, high-wage industries.

These industries can create thousands of skilled jobs and open up massive new export markets – all while helping to mitigate climate change. This reality has been accepted by major East Asian economies, from China to South Korea, for more than a decade.

The Australian government must use its enormous stimulus to help local companies dramatically expand their wind, solar, hydrogen and energy storage investments.
This would satisfy domestic energy needs and grow the new green export markets ready and waiting in Asia.

Asia presents huge export potential for Australia’s renewable energy.
DAN HIMBRECHTS/AAP

A jobs boon

There is no shortage of projects waiting to be turbocharged. The government could start with Sun Cable, linking Australia’s and Singapore’s clean energy markets via an undersea cable.

It could also kickstart Australia’s clean hydrogen industry. According to the government’s own National Hydrogen Strategy, developing hydrogen would dramatically reduce Australia’s oil import reliance and energy costs and vastly expand its clean energy exports.

By simply following its own strategy, the government could create about 7,600 skilled and semi-skilled jobs and add about A$11 billion each year to Australia’s gross domestic product to 2050.




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The cheaper energy prices that follow could help Australia revive its techno-industrial base by making energy-intensive manufacturing a viable proposition once again.

According to leading economist Ross Garnaut, Australia could then bring home its long-lost materials-processing industries and re-emerge as a world-leading exporter of (clean) steel and aluminium.

Geopolitical benefits would also flow from Australia becoming a green hydrogen superpower, such as reducing our worrying export dependence on China.

An investment injection in renewables would be a huge jobs boost.
Flickr

Seize the moment

The idea of using the COVID-19 stimulus to turbocharge Australia’s clean energy shift is not pie in the sky. Indeed, doing so is the explicit recommendation of the International Energy Agency, which this week noted:

These huge spending programmes are likely to be once-in-a-generation in scale and will shape countries’ infrastructure for decades to come… Governments can … achieve both short-term economic gains and long-term benefits by making clean energy part of their stimulus plans.

COVID-19 has undoubtedly been disastrous for Australia and the world. But it creates new opportunities in energy, economic security and climate action. To seize these opportunities, the Morrison government must chart a new industrial course for the nation by manufacturing Australia’s energy security.The Conversation

Elizabeth Thurbon, Scientia Fellow and Associate Professor in International Relations / International Political Economy, UNSW; Hao Tan, Associate professor, University of Newcastle; John Mathews, Professor Emeritus, Macquarie Business School, Macquarie University, and Sung-Young Kim, Senior Lecturer in the Department of Modern History, Politics & International Relations, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Site is Moving House


There are some massive changes happening at kevinswilderness.com – it will soon not even be called that. The name of the site will be called simply ‘Kevin’s Wilderness and Travels and will be hosted on WordPress.com. The domain name will probably be disposed of, by simply letting it slip off into history.

The move has come about because of the dramatic rise in hosting costs – which jumped greatly after the hosting company was sold to another. It did concern me at the time that a major price rise would be on the way. So the rise has arrived as expected and I’m now moving on. I love the WordPress.com platform, so the move won’t upset me too much at all. Being able to have ‘kevinswilderness’ in the site name has been a great bonus also, as it will mean that previous site visitors won’t find it
too difficult to remember.

WordPress.com offers the opportunity for so much more social interaction with visitors to the site – especially through comments being available on every page hosted there. Expect more photos and videos at the new site, with these to be hosted at Flickr and YouTube respectively. There should also be opportunities for chatting on site (via a widget or a link to Pip.io), forums, etc. The move is an exciting one for furthering the capability and usefulness of the site.

Work is already well under way and I am hoping that the move will provide new stimulus to improve the site, as well as add new features along the way. The social network hosted at Grou.ps will become a more important associated site and I am hoping to try and promote that more and more. I may however look at some other bushwalking/camping social networks that are out there too – perhaps they will provide a better enhancement to the site. Time will tell.

Please visit the new site and add it to your bookmarks/favourites – the old site has only a month or two to go before it ends forever.

The site is moving across to WordPress.com at the following address:

http://kevinswilderness.wordpress.com/