Doom and Boom

01 Dec 2008Archived News Energetics in the News

PUBLISHED: Ethical Investor Magazine - By Tony Cooper, Managing Director, Energetics Pty Ltd. Tony talks about the industries that are set to blossom and grow despite the current economic downturn.

It’s easy to get depressed about the state of the economy when we are constantly bombarded with negative news about the global and Australian economic forecast. But is the outlook all bad? Tony Cooper, Managing Director of Energetics doesn’t think so.

Although the current economic conditions are casting a dark shadow over many businesses, there are segments of the economy which are set to blossom and grow.

The doom and gloom picture being painted by many economists and business leaders needs to be examined in context. Although the economic forecast is bleak, there is some light on the horizon for businesses and professionals who position themselves to take advantage of the imminent global Green Revolution.

We need to recognise the resilience of Australia’s businesses and their ability to transform in the face of adversity. As has been proven before, as one door closes, another opens.
Right now we are on the brink of a 40 to 50 year global Green Revolution which will change the world’s economies with the same dramatic effect as the agrarian and industrial revolutions before it.

Full steam ahead

Despite the current global economic climate, it is clear the world’s leaders are still acutely focused on the issue of climate change and are now committed to address this issue in a meaningful way.
Most notably, President-elect Barack Obama has recently committed to an aggressive reduction target for his nation, pledging to reduce America’s greenhouse gas emissions by 80 per cent by 2050.

The new American President has also indicated that his administration will invest $150 billion in new energy-saving technologies.
At home, the Rudd government is showing every sign that it will remain strongly committed to the introduction of an emissions trading scheme (the Carbon Pollution Reduction Scheme) by 2010.

Furthermore, Australia’s government is prepared to underwrite and invest in the nation’s green economy with programs such as the Renewable Energy Fund (REF), the Energy Innovation Fund (EIF) and the National Clean Coal Fund (NCCF), to name but a few.
In addition to government spending programs, the private sector has already invested and continues to invest in the green economy through major infrastructure projects.

Australia’s energy industry is undergoing significant change to reflect the rise of the green economy. Putting a price on carbon will drive this in part.

The Australian Bureau of Agricultural and Resource Economics (ABARE) recently reported that there are renewable energy projects worth almost $2 billion dollars in advanced stages of development. In addition, there are 92 renewable energy generation projects around Australia in the preliminary stages of development.

The continued rise in popularity and presence in the market of sustainable investment funds means that companies who imbed sustainability principles into their business model will attract great levels of capital investment.
In short, the green economy will drive Australia’s future economic growth.

The winners

While many industry sectors will inevitably suffer in the current economic climate, those in the green sector are likely to boom. The emergence of the green class or green collar workers is gaining momentum.
There is now ample anecdotal evidence that jobs servicing the green industry are booming despite an overall softening in the Australian employment market.

We have already seen a significant uptake of green jobs. For example, close to 50 per cent of the top 100 companies on the ASX now have either an energy, carbon and / or sustainability manager in place. That was unheard of just a short time ago.
Industries involved in servicing the green economy including lawyers, accountants and environmental consultancies are forecasting growth in their businesses in the period ahead.

Energetics for example, has seen a 42 per cent increase in its workforce off the back of a 52 per cent increase in top line revenues year on year based on demand for climate change advice..

Identifying inefficiencies

For the many businesses who are not forecasting growth, the current economic climate will force them to carefully assess their operations to identify inefficiencies and adopt cost saving measures.
Some of those cost saving measures will include a review of human resources. Taking a broader view, businesses can improve their bottom lines by being more energy efficient.

Significant changes in energy use is another way to make bottom-line gains and increase the utilisation of resources.
Being energy efficient isn’t simply about being ‘green’ and doing the right thing by the environment. It’s about being business smart and good business leaders recognise the correlation between profits, efficiency and corporate reputation.
In fact as there is a shift from voluntary to compulsory corporate climate change actions, this will become a necessary business fundamental. Of course for companies who volunteered to, for example, report their carbon emissions, they will enjoy a competitive advantage in the current regulatory environment.

In Energetics’ experience, by simply implementing energy efficiency measures, our clients save on average around five per cent, and up to twenty per cent, off their variable energy input costs. The flow-on benefits to unlocking their energy puzzle are often many times greater for these companies in the form of productive and throughput gains.

Smart operators realise that energy efficiency is something which needs to be done on an ongoing basis as an integral part of the business strategy. Keeping a business eye on the energy efficiency ball will be a defining factor that will determine which companies remain on top of the corporate heap and why others will fall by the wayside.

The Westpac experience

There is no clearer example of energy efficiency measures unlocking bottom line benefits than the experience of Westpac. In the 1990s, an internal taskforce was formed that was responsible for identifying inefficiencies within the bank’s operations to save the bank money.

Through the implementation of energy efficient practices across the bank, Westpac was able to save $11million over three years. Savings which had a direct and positive impact on Westpac’s bottom line.

The future

It is not too late for businesses to position themselves to reap the benefits of the Green Revolution looming on the economic horizon. However, a failure to accept and embrace the new green status quo may cost a business dearly.
In this time of economic uncertainty, the distinction between the future business leaders and business laggards will lie in their ability to develop more efficient ways of operating and utilising resources, including energy.
The road ahead may be uncertain, but it will certainly be green.

Tony Cooper

Tony Cooper

Tony held the position of Managing Partner from September 2001 until his appointment as Managing Director in April 2006. In August 2006, Tony led a successful management buyout with Accretion Investment Management to acquire the company.

Tony has extensive experience in energy efficiency and greenhouse gas abatement measures. He has led and worked on numerous well recognized energy and corporate sustainability programs for the likes of Westpac Banking Corporation, Sydney Water Corporation and the Investa Property Group. Having previously worked in banking and aviation his experience includes Strategic Planning, Portfolio Analysis, Financial Planning and Performance Monitoring and Staff Management including Specialist Professional Teams working with Change Management and Project Control.

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