Carbon and energy pitfalls for business and brand names

The portents for business out of the Coalition’s solid though not spectacular election win over the weekend aren’t all unadulterated good when it comes to carbon, energy and the environment. Especially for big consumer-facing brand names that are caught between the fossil past and a cleaner future.

Two popular cliches come to mind. The first is the Chinese curse ‘be careful what you wish for’, and the second often attributed to Albert Einstein is that the definition of insanity is to continue doing the same the thing and expect different results.

For businesses that desperately wanted a return to Coalition government, perhaps with an expectation that it would offer more stability and clear road blocks to enterprise by cutting ‘tape’ of red and green hues alike, good luck with that one in the courts of law and public opinion.

From Day 1, incoming Prime Minister Tony Abbott will set about doing exactly what he has promised, including repealing the carbon tax and almost certainly the whole carbon pricing mechanism with it, ending the mining super-profits tax regime, devolving environmental regulatory powers to the now mainly Coalition-controlled states, and being the infrastructure PM building the roads – and presumably the mines and coal loaders – of the 21st century.

But stability? The removal of carbon pricing will be politically and economically messy, and in any case means demolishing the best fig leaf that big business has in terms of what it’s doing about cutting greenhouse gas emissions and responding to dangerous climate change.

When asked what they are doing to reduce emissions, under the former minority Labor Government’s Clean Energy Future regime corporations can say with conviction that they pay their taxes, and over the long-term a market-based carbon pricing scheme was always the best mechanism for an orderly transition to a low-carbon economy.

Now there will be more scrutiny on the businesses themselves and their actions. Because the environment and wider social change movements won’t keep doing the same things that have just failed them so comprehensively in terms of achieving change through the formal political process, and will focus more on hammering brand and corporate reputation-sensitive aspects of business and its various value chains.

Think of how campaign pressure was built on the highly contentious Gunns paper mill project in northern Tasmania, including targeting the one-time forestry giant’s overseas customers in markets like Japan, helping to bring down the whole corporate edifice when taken in combination with business vulnerabilities exposed by the GFC and international market trends. Then imagine similar tactics being applied to the Australian economy as a whole, here and overseas, with ‘soft’ business and market targets being pursued to indirectly influence government in lieu of less sophisticated, less effective head-on confrontation.

Expect more direct activist pressure – versus ‘Direct Action’ – on the likes of banks, insurance companies, big retailers with their market-dominating forays into the fuel business, appliance and vehicle manufacturers, and the big electricity utilities and downstream oil and gas players. Their consumer and community exposure makes them more vulnerable than the standalone miners, drillers and generators per se, so they will be targets.

The truth is that many big businesses in particular hoped to have their cake and eat it too, just to introduce a third overused cliche. In their boardrooms they wanted an end to Labor and a return a return to what they commonly see as the safer hands of a Coalition government, but they also mainly preferred to keep the carbon pricing scheme now it exists, though with the former proving more compelling for most than the latter.

Now they get wedged. The Abbott-led victory comes with a populist ‘blood oath’ to cut the carbon tax, which plays far better with many in small business rather than big business, and it will be brave CEOs and company Chairs and Directors that speak out against this so-called reform. Given that such bravery has been largely lacking from business for the nearly two decades of the carbon era, that’s unlikely to surge suddenly now.

Nor, however, are civil society and consumer-dom mute participants in all that will follow. The new Coalition government itself faces a fascinating cocktail of forces at work in Australia and internationally:

• Until July 1 next year, the Balance of Power in the Senate will remain under the control of Labor and the Greens, the architects of the carbon pricing scheme, and then it looks set to shift to a highly unpredictable mix of minor parties – the final shape of which remains to be seen;
• The most vocal and politically effective opponents of major coal and coal seam gas expansion are the farmers and rural communities in the Coalition’s own heartland, and this constituency won’t just shut up now there’s a new team in Canberra, as recent experience in NSW demonstrates
• Meanwhile the loudest voices inside conservative governments are often the most extreme and reactionary, which will see the Coalition under internal pressure to act in areas that will alarm the more reasonable middle ground on issues like marine parks, land clearing, and wind turbines, rooftop solar and whole Renewable Energy Target space
• Speaking of solar, there are now a million Australian homes and growing with PV panels on their roofs, and they are beginning to flex their political muscle, a new dynamic that has an economic basis as much as an environmental one
• Australia now has many homegrown and international branch businesses whose interests lie far more in a clean new economy than a dirty old one, and they will want to be heard too
• Internationally, the world is working up to another serious push on a post-2020 Kyoto second round, with the UN climate summit in Paris in 2015 the target, and the roles of the main players such as the US and China are in a state of change that has huge implications for trade-dependent and ally-loyal Australia.

In spite of the pre-poll bravado, the ambiguities of the election outcome itself suggest the Coalition will be in no hurry to run off to a double dissolution early election just to get its way on carbon sooner rather than later. That could backfire badly, and it’s a risk totally out of whack with the steady caution and delivery commitment being promised elsewhere as the hallmarks of an Abbott Government.

As the Coalition is about to discover, the most bittersweet spot of democracy is the aftermath of victory, when the all-care-and-no-responsibility years of Opposition are flipped overnight into the complexity-ridden burden of ‘being the Government’.