In this keynote speech to the Global Green Leaders Summit I explore the need for a robust conversation on how the growing global population and the rise of the middle class in developing countries will have a huge impact on climate change. It is little discussed in terms of what is happening on the ground from an increase in consumer demand, the connection with energy and, dare i say it, food supply. In the speech i call for a more innovative approach to supporting business and industry to innovate, invest, invent and create
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Climate Change, Population and Energy
1. Key Note Speech: The climate change challenge: why we need to
address the combined issues of energy infrastructure and
population growth.
≥ Global Green Leader’s Summit, September 9th
– 12th
2013, Sydney Australia
≥ Matthew Tukaki, CEO of the Sustain Group, ex-Officio Director of the Board of the United
Nations Global Compact.
Good afternoon ladies and gentlemen. It’s great to be here and thank you Sien Way for that very
warm introduction. So, let’s have a conversation about climate change. Before I start I want to make
it clear what I won’t be talking about and that’s the science of the argument both for and against. To
engage in the debate or discussion around whether or not human beings have had an impact on the
planet from the perspective that temperatures are increasing specifically because of human activity
in the last 100 years or so is a moot point to me. It is moot because irrespective of what has
happened and the reasons why, we need to look at what is yet to unfold and, therefore, why it is
important to plan from a business perspective – because it is certainly not going to be a future of
business as usual. So let’s talk honestly about the real impact on the planet and the fact that these
two central issues will cause a great many challenges for us as we lead into 2040. The challenges of a
transition of energy supply and infrastructure and the growing global population sit at the heart of
how and why we need to respond when developing policies to address climate change and the blunt
message that in order to really grapple with these issues business not only plays a pivotal role – but
a fundamental one. The role of business must be about innovation and the development of new
technologies to allow for the replacement of our energy stock while at the same time taking into
consideration the growing population which will more than 9 billion by 2020.
In its last report back in 2007 the International Panel on Climate Change took a position whereby
“most of the observed increase in global average temperatures since the mid-20th
century is very
likely due to the observed increase in anthropogenic greenhouse gas concentrations.” What they
were really trying to say is we had been burning a lot of fossil fuels. If we have a look at the
benchmark year used by many countries, 1990, then we would see that 90% of non-renewables
(fossil fuels) provided 90% of global energy (Reference the University of Wisconsin) at that time. In
the United States that figure was 92%. The fact is, over many years, not just one economy, but the
global economy, invested heavily in the non-renewable sector. That investment included
infrastructure, the building of power plants, the development of line infrastructure to take the
power from the plant to industry and the home. The sector in Australia (Reference the Australian
Coal Association) has grown so significantly that more than 55,000 people are employed directly
with an estimated 100,000 operating indirectly through-out the supply chain. So not only has the
global economy invested heavily in non-renewables over many years the truth is that investment has
created significant job growth and the generation of immense swathes of energy that has fuelled the
ongoing development of industry in both developed and developing countries. To put things into
perspective two industries in Australia have loomed large since European settlement – the coal
sector and agriculture.
But since 1990 the world has changed. We accept that in order to reduce our footprint on the planet
we need to do more when it comes to lowering our reliance on non-renewable forms of energy. This
2. has seen two things fundamentally shift. The first is the cost of renewable forms of energy is
beginning to reduce. That has been a slow process as the cost of production reduces in line with
Governments providing forms of tax credits or concessions to motivate the switch. In the early
1980’s for example, the solar energy industry began to take off after the federal government
provided tax concessions for solar water heaters. It slowed during the early 1990’s as the cost of
non-renewables was still relatively low. Since 2000 a series of factors have driven growth in
renewables from concerns over climate change to the introduction of a number of schemes that
seeded innovation while also providing forms of subsidy for households and business to convert.
Return on investment models became more structured showing the medium to longer term cost
savings of energy intensive industries while at the residential level manufacturers cottoned onto the
fact that there was a real market when it came to the mass production of more energy efficient
appliances that not only reduced power consumption but, for a period, could be sold for a premium
thereby creating a new energy efficient standard that could be used to convert whole consumption
patterns. But just as we have started to become more sophisticated in how we reduce the cost of
renewables the truth is we are heading towards a model that has made non-renewables such as coal
attractive for so many years – and that is the subsidy. The IMF recently published a report that
concluded the global fossil fuel subsidy regime stood at $1.9 trillion dollars annually. They noted that
$1.4 Trillion of this was due to externalities while $800 billion was due to a raft of initiatives based
around climate change. Today we are seeing Governments shift the subsidy regime from non-
renewables to renewables as a solution to the adoption rate and, therefore, a hopeful reduction in
emissions as people move from one form of energy to another.
The challenge is much of the infrastructure that has been built in the developed world is yet to reach
its use by date and currently there is no defined transition process for the workforces of these
industries into the new world of renewables. Take the United States where approximately 174,000
blue-collar, full time jobs relate specifically to coal mining. While it only represents 0.12% of the total
US civilian workforce of some 141 million people you have to understand where the majority of
these jobs reside; invariably in economically depressed States whereby if you remove the industry
you run the potential of making a significant dent in the local economy that impacts the entire
labour market supply chain. West Virginia, Kentucky, Pennsylvania, Wyoming and Ohio are all States
where you cannot simply remove an industry for fear of greater economic uncertainty – because as
sure as night follows day people while wanting to make a difference when it comes to climate
change will be more concerned about putting food on the table and keeping a roof over their
families heads.
This is a challenge we face in Australia as well – in fact challenges faced by developed countries
across the world. Knowing full well that many regional centres rely on the mining and coal industries
it is not a simple case of closing the industry immediately or even the next five and ten years. So the
first challenge we have is developing a coherent and structured plan to implement a wholesale
renewal program of our current energy infrastructure stock with the acceptance that this will not be
an overnight job.
The second major impact area we need to deal with is population. The US Census Bureau estimated
that we reached a population of 7 billion people on the 12th
of March 2012. Current United Nations
projections estimate that we will reach 8.3 to 10.9 billion by 2050. By 2025 a further 300 million
people will grow China’s population to 1.458 Billion. India will grow by an additional 400 million
3. people while Indonesia will move from 178 million to an estimated 273 million people. Why is
population so important? Because unless we address access to resources, the renewal of our energy
stock and infrastructure we will be grappling with a much larger issue that will be completely out of
control. The truth is any number of discussions we are having today about emissions trading or
direct to not focus on developing new inventions that focus on growing demand. Let’s look at some
basic data. In March this year the Boston Consulting Group estimated that the rise of the middle
class in Indonesia would hit 141 million people by 2020. There are currently 74 million people who
are considered to be in that group. This means the total net gain will be approximately 67 million
people. For the sake of averages let’s use only half of that number for an example. Based on current
consumption trends it is reasonable to assume that as people reach the middle class and they have
access to more disposable income they buy goods previously unobtainable. Lets say that 33 million
Indonesians by 2020 would have used this consumer power to purchase what we would consider in
a developed country to be five basic electronic goods: a computer, a smartphone that requires an
energy source, a LCD television, an electric rice cooker and a reverse cycle air conditioner. That’s an
additional 165 million connections to an energy grid that currently does not meet current supply
demand. In India we already have rolling black outs across many States because demand outstrips
supply. If we consider that a further 100 million Indians and an additional 100 million Chinese will
also move into the middle class, and using the same example of appliances for those in Indonesia,
we will see an additional billion new connections to the grid in both of those countries. Of course,
I’m not dealing with the immense amount of packaging and waste that will be generated to landfill
based on a significant increase in consumer demand which in itself increases the emissions count. In
Australia a large number of Local Government authorities were listed as being liable for the carbon
price regime because they owned waste management and landfill installations based on more than
20,000 tonne per annum.
So, here we have a combined challenge where old models of subsidising transition or policies that
are not truly seeding innovation and invention are stalling our march to find real and viable solutions
to the volume problem we have when it comes to climate change. On the one hand we need a
structured transition process in place from non-renewable infrastructure to renewable sources of
energy. In doing so the cost of renewables must come down but the question remains should be
turning to the old incentive models to simply subsidise the cost without addressing the fact we will
need to build large scale facilities to meet demand? On the other hand if we are not careful,
developing countries will be tempted to go with the low cost of alternative whereby the cost of
production and the resource for non-renewables is lower than the cost of installation of renewable
options that still do not solve the problems of current and future demands on the energy grid.
This is why we need to turn our focussed attention to the research and development of much more
advanced and forward thinking technologies that may be able to solve both todays challenge and
tomorrows issue. The fact is we do not have the investment we need to seed the very innovation
that will probably lead to the invention of a solution that will address both energy demand and
supply aligned with the growing needs of an expanding global population. The role of Government is
to provide an incentive based environment through which technological innovation can occur – the
role of business is to create, invent and put to market. We still have not settled on the
commercialisation of the climate change challenge because we are still focussed on the science and
the “wow” factor. Coming back to the beginning, I buy into the “wow” factor so what I am looking
for now are the solutions.
4. My challenge to both business and government is to invent now, create now, innovate now – it
should not take a series of natural disasters for us to wake up and smell the opportunity.
Thank you.
About Matthew Tukaki:
≥ Matthew Tukaki is the Executive Chairman and CEO of the Sustain Group. In 2013 Matthew
was appointed by Secretary General of the United Nations Ban Ki Moon, to occupy the ex-
Officio Director of the Board Role of the United Nations Global Compact. His role is to
represent the views and aspirations of the United Nations Global Compact's more than 100
outposts around the planet. Matthew is also active in leading Sustain teams into the field,
working directly with clients on mapping social investment returns and sustainability
initiatives.
≥ Matthew has been the head of Sustain Group since 2010. In addition to his leadership of
Sustain, Matthew is Australia's Representative to the United Nations Global Compact, the
world’s largest Corporate Citizenship. He has held that role since 2010 and having been re-
elected in 2012 to serve through until 2014. In that role Matthew represents Australian
signatories when it comes to Anti-Corruption, Human Rights, the Environment and Labour.
≥ Matthew is a Director of the Board of Australia's Peak Mental Health Body, Suicide
Prevention Australia, Director of the Board of Australia's Indigenous Chamber of Commerce
and a Member of Deakin Universities Centre for Sustainable and Responsible Organisations
Advisory Board. At the beginning of 2013 Matthew was appointed to Head the Australia
India Leadership Forum and is active in furthering trade and investment in the Asia region.
Contacting Matthew:
≥ matthew.tukaki@sustaingroup.net