Greenhouse Opportunities for theVictorian Economy

Griffith Hack PresentationMelbourne

Brett JanissenDirector, ACG

17 June 2009

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Project overview

Phase 1 - Identify prospective climate ‘winners’desktop study, informed by in-house expertiseidentify key market opportunitiesalign with strong & emerging Vic capabilitiesproduce ‘shortlist’ of contenders

Phase 2 - Case study discussions5 activities to be nominated by clientStakeholder workshops/ meetingsground-truth phase 1: investigate outlook, opportunities,impedimentsinform further industry policy development

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Phase1 report: released May 09

Market opportunitiesMitigation = activities stimulated byemission reduction effortsAdaptation = activities stimulated byclimate change (and human response)Support activities = activities needed tofacilitate the above

Vic industry capabilityestablished areas of strength (eg. worldclass performers, exporters)emerging areas of strengthpotential areas of strength & capacitybuilding

Available on DIIRD and ACG websites

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Approach — broad methodology

Identify expanding demand for goods & services (incl.technology) ….. outlook to 2030

stimulated by greenhouse mitigation and adaptation

focus within and beyond Victoria

track adjustment: pressure on status quo (incumbents), imperative tocontain costs, maintain or grow revenues, and service new demands(new activities, technologies)

Map onto Victoria’s capability set

graft onto existing comparative advantage, leadership

asset base (resources, industries, skills, knowledge)

Highlight lower risk & higher pay-off set

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Market outlook - mitigation

UNFCCC ests (2030)Energy supply: US$432b

Industry: US$36b

Buildings: US$51b

Transport: US$88b

Ag & forestry: US$19b + US$1-5b

RD&D: US$35-45b

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Market outlook - adaptation

Who shares our challenges?

Water shortages

Foodproductivity

… and storms,coastal inundation,

health

UNFCCC (2030 ests)Ag, forestry & fishing: US$14b

Water infrastructure: US$11b

Health: US$5b

Coastal protection: US$11b

Infrastructure ‘hardening’: US$8-14b

Greatest need in DCs

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Bonus points: state resilient activities

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A set of commercial heuristics …

Checking the ‘form guide’ Large potential market Likely product superiority, access to scarceresources and few competing suppliers Market proximity and familiarity Flexibility Demand stimulated by carbon prices Demand stimulated by expected climateimpacts High value to embodied emissions ratio

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… a filtering process ….

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Ranking the contenders

Assess potential mkt sizeglobal mktoutlook to 2030

Determine ‘prospectivity’Vic capability & global competitivenessconfidence in future demand

Adjust for timing and risk using NPV metric‘commercially’ oriented discount rates (up to 25% pa!!!)an indicative pay-off range identifiedAssume 5% potential

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Assessment outcomes (risk adjusted)

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Phase 2: Case studies

Confirmedemissions trading hub (concluded)water services and technologies (underway)construction materials, services, technology (underway)2 more to be agreed!

Policy aimsimportant catalyst to thinking/ critical mass/ networkdevelopmentidentify impediments, risk attitudes, outlookongoing communication & engagementcoordinated, informed response

Roll-outwater/ construction workshops 22/23 Juneworkshop draft report 6 weeks lateragree remaining studies shortly!

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Brett JanissenACG, Canberra

bjanissen@allenconsult.com.aup. 02 6204 6505m. 0418 495 042

(ACG has offices in Melb, Syd, Canb & Perth)

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Need for greenhouse action — projections

Source: IPCC (2007), 4th Assessment Report (Nairobi presentation)

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Carbon prices 2100?

Source: IPCC 2008: AR4 WG3