The Conversation: 29 Sep 2014: China is already on the record in viewing its clean technology sectors as key drivers of future prosperity and export platforms. Even though per Chinese capita use of renewables is still modest, the absolute size of the renewables investment in China allows new industries to scale up, which in turn leads to lower costs as efficiencies are captured. Through the principle of circular and cumulative causation, this leads to further market expansion and further cost reductions. The cost reductions then create opportunities for countries in the rest of the world to become involved in renewable energy as well.
The lesson for industrialised countries such as Australia is that renewables do not have to be framed solely as an issue of climate change and its mitigation. In keeping with the new emphasis of the Turnbull government on a 21st-century agenda, with the focus on tackling the challenges and seizing the opportunities created by industries of the future (such as renewables) rather than sticking with those of the past (coal), it is the business case that needs to be made.
China has shown very clearly that renewables make excellent business sense in the 21st century. Now it is up to Australian leaders, such as the new energy minister, Josh Frydenberg, and assistant innovation minister, Wyatt Roy, to act on the same understanding and help build – finally – a great renewables industry in Australia.
Key Words: Economics
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