That’s the value of the damage China’s Ministry of Environmental Protection estimates was done to the environment in 2010 alone. The damage was calculated based on costs arising from pollution and destruction of the ecosystem, with some analysts suggesting the figure could be even higher. The problem is getting worse, not better. At 3.5 per cent of GDP, the damage is three times higher than it was in 2004.
China’s leaders are facing up to the fact that it can’t continue its headlong pursuit of growth at all costs and that the staunch state support of inefficient coal mines and steel mills to help millions of peasants out of poverty and, by extension, keep themselves in power has to change.
China, repeating what has worked for three decades, is throwing money at the problem. The Beijing government has just announced it will spend $16 billion over three years in a bid to clean up its water, air and waste. It will be a massive undertaking and an opportunity that Australia should be uniquely placed for.
Could this be the turning point for promising Australian clean-tech firms to finally return to Australia after years of pursuing capital in Europe or the US?
Two clean tech leaders hope so. Peter Le Lievre and Russell Howard recently won awards from Advance, a global Australian diaspora organisation. Both have firms based in California, a world leader in environmental protection and a state where power bill surcharges paid by each household deliver $400 million annually into R&D for clean tech and energy efficiency.
Peter Le Lievre helped take one of Australia’s most successful solar thermal companies to California in search of capital in 2006, before selling out to a French power company in 2010. Le Lievre is now the founder of Chromasun, and is developing research from ANU that allows thermal solar mirrors to be mounted on buildings to provide both heating and cooling. He claims it is more efficient that standard photovoltaic solar, and competing thermal technology.
Chromasun has received a $3.5 million grant from the Australian Solar Institute to trial its technology at Echuca Hospital. The solar array will be built at Futuris’ automotive manufacturing plant because, as Le Lievre says, the skill of the workers there is second to none, and the technology to make the array is effectively the same as making car components – essentially bonding glass to aluminium.
Le Lievre says that only 25 per cent of the cost is in the manufacturing process – the majority is in installation – which means that even a high wage country like Australia can compete worldwide.
Chromasun is based in the US and is undertaking production at a similar automotive plant in California. Peter Le Lievre is keen to come back to Australia but the funding is in America. Hopefully he can find the capital he needs here to grow the business in Australia.
An Australian who has already moved back is Russell Howard. He’s an expert in microbiology and after working as the scientific director of Affymax, a company that was sold to Glaxo for $500 million, he started a second microbiology firm that raised $110 million via IPO.
Now he’s using microbes to break down carbon dioxide. His research has discovered that the carbon released from limestone when it’s processed into cement clinker can be consumed by microbes. Instead of Co2 being released, the microbes turn it into biodegradable plastic. It’s a potentially a huge innovation given that cement production accounts for 5 per cent of global carbon emissions.
Howard believes it will take five years to prove the technology and he is working with one of California’s largest cement plants to further the research.
These are the kind of businesses Australia desperately needs if we are to ensure we do more than export commodities. They are research driven, not beholden to margin pressure and so can compete globally, even with our high cost base.
They sit in the sweet spot of global spending on the environment, a growth industry right on our doorstep.
They are also the kinds of businesses we do poorly. Our research base is world class, our venture capital capabilities are not. Despite having the third largest pool of pension capital in the world, our investment community is risk averse. So Australian know-how will likely again find its way into foreign hands, either as huge returns for VC, or, if the technology is proven, as manufacturing jobs elsewhere.
Russell Howard says the most likely outcome for Australia is that high net worth Chinese entrepreneurs realise the money to be made in cleaning up China’s $230 billion a year mess and snap up Australian technology for a song.
Peter Le Lievre, an optimist clearly, says that may not be so bad a thing. Better we get 5 per cent of something, he says, than 100 per cent of a nothing, if the local companies fail either through lack of decent market size or access to venture capital.
That would be a shame.
Australian clean tech firms are finding that Californians and Europeans believe in a social contract to protect the environment. Government, business and voters are willing to align to promote technologies and ideas to reduce ecological harm. Argue about climate change if you wish but 250 years of industrial revolution has been compressed into 30 years in China. The same thing will happen shortly in India.
Australia could be at the forefront of helping clean up the mess if we recognise the opportunity soon enough. If we don’t, China will beat us to it. The peasants will certainly revolt if they can’t drink, eat or breathe.