Something clean to sell

In 2003 George W. Bush's first press secretary, Ari Fleischer, was asked by a journalist whether the administration had any plans to encourage the conservation of fossil fuels.

"Absolutely not," he replied. "It's an American way of life."

Five years on it's unlikely that any press secretary would give such an unequivocal answer – the war to liberate Iraq's oil reserves has not gone to plan, and some experts are now saying that world oil supply simply cannot be expanded to meet demand, with or without new Iraq wells.

It's likely, too, that press secretaries around the developed world will soon be fielding a different question – whether or not they have plans to conserve not just fossil fuels, but energy more widely. The double whammy of rising oil costs and skyrocketing demand in China and India cannot be underestimated – a point driven home by Robert Gottliebsen's ominous article last week (Nuclear opportunity, June 12), in which he describes the deeply unpopular, but seemingly necessary step of embracing nuclear power.

But is this politically difficult step really required if, as Gottliebsen says, "the world is to reduce carbon emissions by the huge amounts scientists are demanding without going into a deep depression"?

Like so much of the climate debate, this is still largely a matter of opinion, but top-line economic and energy data show that the shift towards nuclear power, in Australia at least, is not inevitable.

As a starting point, it's important to acknowledge the gaping divide between energy use in the developing and developed worlds. By International Energy Agency figures, at the beginning of the Iraq conflict, the average Indian citizen was using around 512 kilograms of oil equivalent (kgoe) per year, or around 7 per cent of the energy consumed by each American. To believe that this kind of disparity can happily continue in the long term is, as Gideon Rachman of the Financial Times said recently, "morally unsustainable".

But as energy use rises in India and China, market prices put pressure on Australia and other developed nations to reduce energy use per capita, or replace our old dirt-cheap energy source – oil – with the only other dirt-cheap alternative in a carbon-constrained world, nuclear power (ignoring, for the moment, capital costs). China is now perfecting the 'mass production' of nuclear facilities, the Italian government looks set to rebuild the nuclear industry it shut down in 1987 and last week French president Nicolas Sarkozy said he wanted to work with Germany on new nuclear facilties – with German chancellor Angela Merkel saying in the same news conference that her country's decision to close its nuclear power plants was "absolutely wrong".

So Australia should join the party, right? Perhaps. But before we do, it's worth looking at current patterns of energy use, which show something of an unhealthy addiction to the stuff.

The good news is that energy use per unit of GDP has been falling (see chart below), but the bad news is that Australia's domestic consumption of energy has continued to rise.

Put another way, technology and productivity improvements give us more bang for our buck – and our response has been to cry: "Great! More bangs!"

Australian energy consumption patterns have long been similar to what Ari Fleischer unshrinkingly called the "American way of life". We are at the profligate end of the scale, as the chart below shows.

For most of the post-war period Australia has been a nation of big energy-inefficient houses, big cars parked on driveways at the front of big blocks of land connected by big roads. This is what we consciously sold to one another in an era when cheap oil made it possible. As Giles Parkinson put it recently in Business Spectator: "Energy costs in Australia have been so low most boards probably thought it was free."

Clearly it's not free anymore and forward-thinking boards are beginning to sell a different way of life. In September of last year Delfin Lend Lease announced that it wanted to build a giant 'green' suburb 30km from Melbourne's northern periphery. Unlike previous projects, the plan included a train station to bring workers into Melbourne and a bus network to service a resident population of up to 35,000 people, that could eventually grow to the size of Shepparton (60,000 residents) though with a considerably reduced carbon footprint.

The Victorian government has been slow to respond to the proposal, with a key sticking point being that the development would undermine the government's commitment to Melbourne's 'urban growth boundary' – part of the 'Melbourne 2030' metropolitan growth strategy. Delfin is still waiting for a decision on the proposal.

Perhaps even more remarkably, Supercheap Auto last month spent $7.4 million on two bicycle retail chains (The new business cycle, May 13) and Flight Centre – traditionally a vendor or highly energy-intensive products – announced it had bought a bicycle brand and was negotiating a possible bike retailing joint venture with the 99Bikes chain.

These developments drive right to the heart of what kind of economy Australia could have in 20 years' time. Energy-efficient housing, public transport infrastructure that can move the population around quickly, cheaply, reliably and comfortably – perhaps including the odd bike ride to the local shops – together offer to slash our energy use.

But while many businesses are already selling 'cleaner' products suited to a carbon- or energy-constrained future, state and federal governments may have to let go of an 'Australian way of life' that worked in the 1950s and instead encourage economic development that suits the current era.

The federal government is adamant that Australia needs a 'car' industry – expending considerable diplomatic and financial effort to base production of Toyota's hybrid Camry here – when the economy is in ever more urgent need of a functioning 'transport' industry – the optimal mix of car, bus and rail to solve transport problems most effectively. As Shane Bolton in The Conversation put it: "Australia will never be able to compete again in manufacturing but that is okay – manufacturing is not where the wealth is created. It is in the ideas, design, development, capabilities, licensing and marketing. As for building a hybrid car – why would we want to spend a lot of money on an old technology that is, at best, an interim solution?"

Nuclear power which, among other things promises to make hydrogen-powered transport viable, will encourage Australians to continue consuming energy in current patterns, giving us more cities that take hours to traverse, more congested freeways, more far-flung and socially isolated infrastructre-poor housing developments.

Inflexible thinking by governments – and less imaginative business leaders – will deliver to Australia all the wonderful things we used to have, all made possible by the nuclear power industry we didn't have to have.