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The Next Boom
A surprise new hope for
Australia’s economy?
The Next Boom
Future Business Council
- 2015A surprise new hope for Australia’s economy?
| Page 1
About this publication: The Future Business Council (FBC) represents the next generation of business in Australia and
is setting the vision for the next 50 years. We advocate reforms that will make Australia a more innovative, sustainable
and resilient economy, and a global hub for future business. This publication was written by Tom Quinn, Executive
Director, Future Business Council with the support from our Founding supporters:
Please contact the Future Business Council at [email protected] for further information.
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Table of Contents
Executive Summary
What the Data Shows
The Drivers:
1. Consumer preference: changing
values, changing demand
The Drivers:
2. Government regulation: the great
enabler and destroyer
The Drivers:
3. Environmental necessity:
a force of nature
Future projection
Catching the next boom Recommendations for Australia
Reform recommendations
Acknowledgements
Data Sources
The Next Boom A surprise new hope for Australia’s economy? | Page 3
Executive Summary
Across Australia and around the world, demand for sustainable goods and services is booming. The Future Business
Council has tracked the performance of leading sustainable goods and services since the turn of the century. We found
compelling evidence that sustainability should not be seen as a cost, but a business opportunity. From solar panels
to green buildings and sustainable agriculture, the results are striking and represent a significant new economic
growth story.
The next boom represents a major opportunity for businesses to become sector leaders in Australian and international
markets. At the national level, there is a once in a lifetime chance for Australia to position itself among the world’s
leading suppliers of sustainable goods and services, capturing a share of the trillions of dollars that will be invested
to meet the explosion in demand.
The rest of the world is not sitting idly by. Australia must do much more to develop new industries and support
companies making the transition to more sustainable business models if it is to compete for a share of these fastgrowing markets.
The three main factors accelerating the global green business boom - changing consumer preferences, government
regulation and environmental necessity - are likely to keep growing in the sectors we analysed. This presents a crucial
opportunity for Australia to diversify its exports and decrease its reliance on the mining sector, particularly in light of
receding mining investment and volatile commodity prices.
What the data shows
• Boom times for green business: FBC found annual demand growth rates of 100 per cent or more across several
sustainable products and services.
• Sustainable options outperform the competition: For example, organic food sales have been growing at over 80
per cent a year, compared to just 6 per cent for food retail as a whole, and the Dow Jones Sustainability Australia
Index has increased by 8.4 per cent a year on average, compared to 3.2 per cent in the All Ordinaries index.
• Green labelling means go: Price sensitive and values driven consumers want trustworthy sustainable products - in
several of the sectors we analysed trusted certification schemes were the key that unlocked massive consumer demand.
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Booming Demand for Sustainable
Products and Services
Energy
118% growth
in annual solar
installations
Energy
Efficiency
Water
Efficiency
26% increase
in fridge,
freezer and
dishwasher
efficiency
82% of taps,
showers,
toilets sold
now 3 WELS or
higher
Transport
Resources
New Markets
Buildings
Food
165% average
hybrid sales
growth
48.5% of all
plantations
now FSC
certified
100% increase
in climate bond
issuance
116% growth
in annual
Green Star
certifications
73% average
growth in
Fairtrade sales
*Growth figures cover a range of dates, refer to full report for specific details
Governments have a key role to play in enabling sustainable business growth. Provided we get our policy settings
right, Australia is in a good position to take advantage of the next boom. Local businesses can benefit from several
elements that work in Australia’s favour, including:
•
•
•
•
•
•
•
a highly educated and innovative workforce
advanced education and research facilities
good levels of capital availability
latent manufacturing potential
access to abundant renewable resources
proximity to Asia
the increasing viability of long distance service provision due to advances in technology
Australian participation in global booms has a mixed history. A strategic and confident approach is needed to ensure
that Australia makes the most of the next one. The trends outlined in this report show that the sustainable business
boom is not just on the way, but underway. Australia still has a chance to capture the benefits if it takes rapid action.
The Drivers
Three primary drivers underpin the growth in demand for sustainable goods and services. Each sector is also influenced
by a multitude of sub-drivers, but these three factors stand out as major influencers in the majority of data sets.
The primary drivers are:
1. Changing consumer preference
2.Government regulation
3.Environmental necessity
Our research has analysed the role of each in accelerating the growth in demand for sustainable goods and services.
The influence of all three drivers is forecast to increase in strength over the coming decades, further expanding the
market for sustainable goods and services and underpinning the sustainable demand boom.
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1. Consumer preference: changing
values, changing demand
Consumer demand is changing and a growing number
of values-driven and quality-focused consumers are
selecting more sustainable products and services. This
trend is especially pronounced in product categories such
as climate bonds, Green Star rated buildings, Fairtrade
and other certified food products, FSC certified timber
products, and star-rated whitegoods. In these product
categories, consumer preference is the main driver of
change, with little to no influence from the other drivers
identified through our research.
Figure 1:
International issuance of green & climate bonds (US$m)
40000
35000
30000
25000
20000
15000
10000
5000
2014
2012
2010
2008
2006
2004
2002
2000
0
Source: Climate Bond Initiative
Figure 2:
Australian green & climate bonds issuance ($m)
1400
1200
1000
The issuance of green and climate bonds is a global trend,
which is now taking the Australian investment market by
storm. The introduction of domestic climate bonds lagged
the international market, but as is clear from Figure 2, so
far demand in Australia looks set to follow the explosive
growth path seen in the rest of the world. (Note that 2015 is
not yet over, so by the end of the year this growth is likely
to be even more impressive).
800
600
400
200
0
2013
2014
2015
FBC analyse based on data sourced from: Climate Bond Initiative
The Next Boom A surprise new hope for Australia’s economy? | Page 6
Green Star rated buildings have become the building of
choice in Australia’s CBD property markets. Environmental
responsibility, combined with the productivity benefits of
greener building designs and higher property investment
returns, is driving rapid expansion of demand for Green
Star buildings, tracked via the total number of certifications
depicted in Figure 3.
Figure 3:
Green Star total certifications
1000
800
600
400
200
2014
2013
2012
2011
2010
2009
2007
2008
2005
2006
2004
2003
2002
2001
2000
0
Source: GBCA
Changing consumer preferences and values are also driving
rapid growth in the demand for socially and environmentally
sustainable food, as seen in Figures 4 and 5.
Figure 4:
Certified organic food sales ($m)
2000
1500
1000
500
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: Biological Farmers of Australia, Organic Market Report
Figure 5:
Fairtrade certified product sales ($m)
Image Source: Grains by Lukas Schweizer from Unsplash
Mandatory performance labelling for whitegoods has
improved market knowledge and facilitated consumer
driven demand for better products. Consumers’ preference
for higher-rated products has led to an increase in the
average energy star rating of whitegoods on the market.
250
200
150
100
50
0
2000
2002
2004
2006
2008
2010
2012
2014
Source: Fairtrade Australia New Zealand
Figure 6:
Average energy star rating for whitegoods
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Refrigerator - average star rating
Freezer - average star rating
Dishwasher - average star rating
Image Source: Tap drip - photo by Dimbledar (flickr)
Source: E3, Greening Whitegoods Report
The Next Boom A surprise new hope for Australia’s economy? | Page 7
Increased demand for FSC certified timber (see Figure
7) can be ascribed to consumer demand for better paper
choices and incentives for its use in the building industry.
Figure 7:
Percentage of Australian plantations FSC certified
60%
50%
40%
30%
20%
10%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: FSC Annual reports; ABARES, Annual Wood Production
A trusted certification or labelling scheme is critical to enable consumer-driven market change. Certification schemes
– like Fairtrade, Green Star, WELS, Energy Star, FSC and Climate Bond Standard – can reduce consumer confusion
and give customers the confidence that they are getting what they pay for. The value that customers place on trusted
brands creates a unique opportunity for Australia to differentiate locally produced goods and meet the demand for
trusted and credible products (see Catching The Next Boom for recommendations).
Trusted labelling schemes provide the additional benefit of unlocking both latent demand for better, cleaner products
from price sensitive consumers, such as for more energy efficient washing machines, and deliberate demand where
consumers choose to purchase more sustainable products even if that comes at additional costs, such as with
certified food products.
Certification schemes are a response to consumer demand for improved market knowledge, and in some instances,
government mandates and industry self-regulation. This is a global trend, with the number and type of certification
schemes growing strongly. In the United States the number of eco-labelled food products and forestry products has
grown at 20-30 per cent per year since the late 1990s and early 2000s. Comparable figures have not been collected for
Australia, but the strong growth recorded for indicator products, like Fairtrade certified, suggests a similarly robust
local market.
Image Source: FairtradeSverige - Wikipedia
The Next Boom A surprise new hope for Australia’s economy? | Page 8
2. Government regulation: the great
enabler and destroyer
Government regulation in Australia and internationally has a significant impact on the local market for sustainable
goods and services, both positive and negative.
Our research demonstrates how government regulation and incentives can either be a force for rapid change and
development of the clean economy, or – when deployed to impede these emerging trends – a destroyer of jobs,
investment and opportunity. This is particularly notable in the carbon market and renewable energy sectors.
When applied constructively, government regulations, such as those that mandate higher energy performance for
lighting products and whitegoods, are demand creators that have delivered significant change in these markets.
Demand changes have been observed from the imposition of water restrictions during drought years, and in the
energy sector through carbon pricing and renewable energy targets.
The Next Boom A surprise new hope for Australia’s economy? | Page 9
The sale of compact fluorescent lighting, LEDs, rooftop
solar (see Figure 9) and WELS-labelled products (see
Figure 8) have all expanded immensely since 2000 due,
in large part, to government policy. In each of these cases
government action has delivered broader economic
benefits and has helped to fix market failures in ways that
often become self-sustaining over time. This is particularly
notable in areas where high up-front costs deter consumer
purchases that deliver longer-term savings. Often a nudge
from government was all that was needed to shift the norm.
Figure 8:
Percentage of taps > 3 star Water Efficiency
Labelling and Standards (WELS) rating
90%
80%
70%
60%
50%
40%
2006 2007 2008 2009
2010
2011
2012
2013
Source: Department of Environment, Evaluation of WELS scheme
Figure 9:
Cumulative capacity of solar energy installations (MW)
5000
4000
3000
1000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0
2001
Mandatory disclosure of product performance, from light
bulbs to buildings to dishwashers, while not forcing
product improvements directly, has improved market
knowledge and enabled consumers to make informed
choices and select more sustainable products.
2000
2000
Image Source: Clotheswashers - Andreanna Moya (flickr)
Source: Clean Energy Australia Report 2013
Figure 10:
Total number of National Australian Built Environment
Rating System (NABERS) certified buildings
2500
2000
1500
1000
500
2014
2012
2010
2008
2006
2004
2002
2000
0
Source: NABERS annual reports
The inverse of this is that government regulation also has
the potential to destroy jobs, businesses and industries
delivering sustainable goods, whether through a lack of
policy support or ongoing policy uncertainty or through
actively regressive policies. The events of recent years have
clearly demonstrated the power of government regulation
to do harm as well as good to this century’s most promising
growth industries.
The removal of the price on carbon led to the collapse of the
Australian carbon-trading sector and deliberate regulatory
uncertainty for renewable energy projects has stifled
investment in large-scale renewable energy projects, as
demonstrated by Bloomberg New Energy Finance statistics
which reveal an 88 per cent drop in large-scale clean energy
investment in 2014 compared to 2013.
Figure 11:
VEEC lighting certificates
2500
2000
1500
1000
500
0
2009
2010
2011
2012
2013
2014
2015
FBC analysis on data sourced from Victorian
Essential Services Commission
The Next Boom A surprise new hope for Australia’s economy? | Page 10
2009
2008
2007
2006
2005
2004
2003
2002
5
2001
2000
Figure 12:
Average energy use of whitegoods
0
-5
-10
Total improvement
(from 2001 to 2009)
-15
-20
Fridge Energy 23%
Freezer Energy 33%
Dishwasher Energy 21%
-25
-30
FBC analysis based on data sourced from
E3, Greening Whitegoods Report
Figure 13:
New large-scale investment in clean energy (AUD m)
3000
2000
1000
0
‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14
Source: Bloomberg New Energy Finance
Image Source: CSIRO Solar Concentration - North Sullivan Photography
Figure 14:
Average emissions intensity of new
vehicles sold in Australia (g CO2/km)*
Our research suggests that the lack of emissions efficiency
standards in Australia compared to other producer and
export markets should be counted among the factors
that led to the closure of the car industry in Australia.
Locally produced vehicles didn’t have a strong incentive to
innovate and improve fuel efficiency, and lost the capacity
to compete internationally or meet local expectations.
270
230
190
150
2000
2002
2004
2006
2008
2010
2012
2014
Source: BITRE, Fuel Consumption Trends; NTC Australia,
Emissions Intensity for New Australian Light Vehicles
*New passenger and light commercial vehicles
Figure 15:
Number of climate policies introduced globally
1600
1200
Australia’s economy is highly exposed to global economic
changes. Government regulation, whether local or
overseas, will often have strong flow-on effects for the local
economy.
800
400
0
While car-makers suffered, among other factors, from
Australia’s failure to introduce fuel efficiency regulations,
other businesses have prospered from the introduction
of smart regulations, such as water trading and efficiency
policies. Spurred to innovate, Australian businesses are
now competing internationally by exporting water-efficient
products and know-how to major markets like California
and Brazil.
‘05
‘06
‘07
‘08
‘09
‘10
‘11
Other*
Energy Efficiency
Renewable Energy
Climate Change
‘12
‘13
‘14
Source: HSBC Climate Change Centre of Excellence; IEA
*Includes forestry (LULUCF and REDD+), waste and adaptation policies
The overall global trend is for governments to regulate
markets when they fail to account for costly environmental
side-effects (externalities). This has already been observed
with the ongoing roll-out of national and regional carbon
prices around the world.
Other regulations are being adapted to boost the trade in more sustainable products, as observed in 2014 with Asia Pacific
Economic Cooperation (APEC) commitment to free trade in environmental goods. Regardless of government decisions
made in Australia, government regulation in other countries will continue to increase the breadth and size of the export
market for more sustainable products and services. But there is a risk that the lack of proactive national regulation will
undermine Australia’s brand strength on sustainability and limit local businesses’ ability to compete in this growing market.
The Next Boom A surprise new hope for Australia’s economy? | Page 11
Image Source: Drought in Australia -Tim J Keegan
3. Environmental necessity:
a force of nature
Drought, resource shortages, climate change. Environmental necessity is a direct driver of change in a number of
economically significant sectors. Compared to changing consumer preference and government regulation, fewer
sectors have environmental necessity as a major driver, but its influence is pronounced, and likely to become more
so over time. The impacts are easier to identify in specific sectors like agriculture, industrial production such as steel
processing, as well as in the form of increasing insurance premiums due to damage from extreme weather events.
The Next Boom A surprise new hope for Australia’s economy? | Page 12
Image Source: Duststorm - MrCricket48 (wikipedia)
Figure 16:
Steel production water use per kilotonne (ML/kT Raw Steel)
5.0
Millenium Drought declared over
4.0
3.0
The impact of environmental necessity is, to a
certain degree, dependent on the duration of adverse
environmental impacts. One example is the rapid increase
in water use following the end of the Millennium Drought.
The short-termism of resource efficiency improvements in
these sectors suggests that further reforms are required to
embed long-term structural change.
2.0
1.0
0.0
2000
2002
2004
2006
2008
2010
2012
2014
FBC analysis based on data sourced from
Bluescope Steel Annual Reports
Figure 17:
Agricultural water use per ha
5.0
Millenium Drought declared over
4.0
3.0
2.0
1.0
0.0
2000
2002
2004
2006
2008
2010
2012
2014
FBC analysis based on data sourced from
ABS - 4618.0 - Water Use on Australian Farms
Figure 18:
Percentage of products sold rated 3 WELS or higher
Demand for more sustainable goods and services due to
environmental necessity is also likely to have an impact on
the expanding market for higher-rated products under the
Water Efficiency Labelling and Standards (WELS) scheme.
100%
80%
60%
40%
20%
0%
2006 2007 2008 2009
Taps > 3 WELS (%)
Showers > 3 WELS (%)
Toilets > 3 WELS (%)
2010
2011
2012
2013
Topload clothes washers >
3 WELS (%)
Frontload clothes washers
> 4.5 WELS (%)
FBC analysis based on data sourced from
Department of Environment, Evaluation of WELS scheme
Resource scarcity, such as high or volatile oil prices and
urban density growth, is another driver of increased
demand for sustainable goods and services.
The Next Boom A surprise new hope for Australia’s economy? | Page 13
Spikes in the cost of iron have seen the recycled content
of steel increase (the same trend is underway in China,
opening up potential service export opportunities for
Australian businesses with relevant expertise). In a world
with a growing population and limited resources we
should expect the prices of most commodities to rebound
from their current slump at some point. We are probably
entering a long-term era of high but volatile resource
prices, which is likely to incentivise greater resource
efficiency and sustainable innovation.
Figure 19:
Oil price and hybrid and electric vehicle sales in USA
Source: Argonne National Laboratory, light vehicle sales
Figure 20:
Recycled content of raw steel production,
Bluescope Australia (%)
35%
30%
25%
20%
15%
10%
5%
0%
2000
2002
2004
2006
2008
2010
2012
2014
FBC analysis based on data sourced from
Bluescope Steel Annual Reports
Image Source: Drip Irrigation - Joby Elliot (flickr)
6000
5000
4000
3000
2000
1000
2011
2009
2007
2005
0
2003
Insurance claims related to extreme weather are also likely
to continue increasing, which in turn will affect insurance
premiums.
Figure 21:
Annual disaster insurance claims, Australia ($m)
2001
Environmental necessity will become a more important
driver over the next few decades as the severity and
frequency of natural disasters and extreme weather
increases due to climate change, causing businesses
and consumers to adapt by demanding products and
services that address the problems. Already this can be
seen in the viticulture sector where, due to continuing
water shortages, most properties have now installed
water efficient drip irrigation systems and other resilienceboosting systems.
Source: Insurance Council of Australia
Image Source: Lake Hume at 4 percent - Tim J Keegan
The Next Boom A surprise new hope for Australia’s economy? | Page 14
Future Projection
The economy is on the cusp of a boom in demand for sustainable goods and services.
The past 15 years have seen strong increases in demand for cleaner products as innovative and affordable goods
entered the market and trusted sustainability certification schemes gained traction. The rise in consumer demand
has been assisted by the catalysing effect of government policy, setting standards and providing support to open up
new markets like the renewable energy industry and carbon trading markets. Finally, environmental pressures are
placing a strain on the economy and society and creating a need for cleaner, lower impact business models. This is
spurring innovation and creating a larger market for more efficient, lower-impact products and services.
The boom in demand for sustainable products will be marked by rapid change in diverse sectors. We know that
fundamental market shifts are on the way, but their arrival and speed can take even keen observers by surprise – as
has been witnessed with the recent plummet in solar prices (see Figure 22) and subsequent boom in residential and
commercial demand.
Figure 22:
Cost of solar modules ($US/Wp)
Supporting wholesale shifts towards sustainable business
models across the entire economy is the best way to enable
6
Global silicon shortage
local businesses to capture new opportunities.
5
4
3
2
1
2012
2008
2004
2000
1996
0
1992
Mass disruptions will occur across the economy as the
next boom gains momentum. Australia will need to move
fast to ensure the local economy and business community
are prepared to capture the benefits. The overall economywide trend strongly suggests continued and rapid
increases in demand for sustainable goods and services.
An economy-wide response is therefore the best approach
to position Australia to prosper from the next boom.
FBC analysis based on data sourced from
Renewable Energy World
The Next Boom A surprise new hope for Australia’s economy? | Page 15
Catching the next boom Recommendations for Australia
The economics of the 21st century will be defined by the rapid growth in demand for sustainable products and services.
The first 15 years have already been notable for the boom in more sustainable business models across the world. In the
United States, the ‘green market’ is already outperforming the overall economy and grew by over 40 per cent from 2004
to 2009. A parallel surge has been observed in Australia, as shown in this report. It is not yet clear, however, whether
Australia is ready to capture the supply side as well as the demand side of this global economic transformation.
The Next Boom A surprise new hope for Australia’s economy? | Page 16
Australia has a once in a lifetime opportunity to not just catch the boom but lead it, however we need to implement the
right incentives for business now.
Catching the boom will require a step change in Australia. Sustainable innovation was once seen as primarily a
Corporate Social Responsibility (CSR) compliance consideration. No longer. In light of the clear trends here and
overseas, it must now be seen for what it is – a growth opportunity and a magnet for investment.
Government has a critical role to play in creating the right market conditions for the growth of innovative sustainable
business in Australia. Regulatory inconsistency and policies that protect old business models hamper innovation
and new investment and will cost Australia the ability to prosper from the next boom. Positive policy reform is needed
to incentivise the growth of more sustainable business and to support business attitude shifts if Australia is to seize
this opportunity.
It will be equally crucial to accelerate the transition of ideas from the lab to the production line, and to build an
entrepreneurial start-up culture to ensure that good ideas are welcomed locally and are not lost to competing
economies (see box 1: Australian Solar).
Other nations are already preparing their economies and are investing heavily to seize the lead. Germany’s infrastructure
bank has a five-year €100 billion green investment plan, Singapore has positioned itself as a global resource efficiency
and sustainability leader, California is using a combination of aggressive targets, supportive policy and incentives
to spur sustainable business growth, while Abu Dhabi has invested between US$18-22 billion in the sustainability
incubator, Masdar City.
Australia will be left behind without rapid investment in sustainable innovation and low impact business models of
the future.
Image Source: Solar Installation - GW Solar Institute (flickr)
Box 1: The Australian solar story
Australia has been one of the world’s leading developers of solar technology since the 1960s. Most recently,
researchers at UNSW set a new record by achieving a solar conversion efficiency rate of 40 per cent. However
Australia has not been able to convert technical innovation into a viable local production industry, with only
one local solar panel manufacturer remaining, and has thus missed out on much of the economic benefit
stemming from this enviable innovation record.
Global manufacturing of solar cells expanded 67% in 2004, and a further 45% in 2005, and 85%
in 2008 - growth reminiscent of the electronics industry in the booming 1980s. What’s more,
the industry further expanded by 55% in 2009 despite the Global Financial Crisis. - UNSW
A lack of government support to establish the fledgling industry as well as a high Australian dollar during the
solar boom crippled the industry before it could achieve manufacturing scale.
So despite training some of the world’s leading solar researchers, designers, and entrepreneurs, the vast
majority have relocated overseas – including to other high-income countries like Germany and the USA – to
commercialise businesses stemming from their solar innovations. Local support was lacking and Australia
has lost a generation of our best and brightest in one of the star sectors of the new economy.
The Next Boom A surprise new hope for Australia’s economy? | Page 17
Reform recommendations
The Future Business Council has consulted with its members to unearth positive suggestions for policy reform. The
ideas that follow indicate the many avenues through which governments at all levels could help Australian businesses
to make the most of the growth in demand for sustainable products and services. Further consultation would be
required at the policy design stage to avoid duplication and ensure regulatory simplicity.
The following recommendations are the start of the conversation between the next generation of business leaders,
policy makers and the broader community to create a reform blueprint for the future economy.
The Next Boom A surprise new hope for Australia’s economy? | Page 18
1. Make “Made in Australia” the global
mark of sustainability excellence
Benefits:
• Increased consumer confidence
• Expanded international market share
• Economic growth and job creation
Australia has a unique opportunity to make “Made in Australia” a global byword for sustainability excellence. This
will position the national brand in preparation for booming demand for cleaner and better products and services, and
could expand the market for Australian made and designed goods.
The international branding of Australia is currently under-realised. Compared to nations such as Germany and Japan
whose exports carry strong associations with quality and excellence, Australia’s exports – with some exceptions –
lack a close association with a specific and universal attribute.
We could build a stronger international reputation for the sustainability of Australian exports. Immediate benefits
would be gained by sectors (and high performers within these sectors) that already exemplify sustainability
excellence, such as in agriculture, commercial building, water efficiency and climate resilience.
To secure a lasting competitive advantage the integrity of the branding must reflect reality. It must therefore be
secured by a suite of interconnected reforms that assist business innovation, set standards and enhance consumer
knowledge.
Positioning “Made in Australia” as a trusted – and trustworthy – mark of sustainability excellence, will enable
Australian business to better access and command premiums in the global market.
Supporting actions
Trusted certification schemes accelerate demand growth and are a critical mechanism for improving consumer
knowledge and building new markets for sustainable products. Government should:
-- Promote trusted certification schemes to raise consumer knowledge and protect the integrity of established and
verifiable marks;
-- Introduce a weighting for certified products in government procurement processes;
-- Provide incentives to support companies applying for certification relevant to their sector;
-- Initiate the establishment of certification schemes in sectors that lack them such as in agriculture (sustainable
farm certification), clothing and apparel, and housing rental markets.
The Next Boom A surprise new hope for Australia’s economy? | Page 19
2. Remove market barriers to new
business models and lift product
standards
Benefits:
• Less red tape for more sustainable business
• Improved efficiency and better products for consumers
• Boost to business confidence and clarity on future expectations
The market for new sustainable products is being hampered by outdated regulations, high barriers to entry and
distorting subsidies to established ‘old economy’ businesses. The Future Business Council recommendations
include the following options:
-- Remove artificial barriers to entry for new products and business models (such as arbitrary limitations on
sharing economy businesses and grid connection barriers for renewable energy);
-- Streamline the approval process for sustainable products and services (buildings, renewable energy, electrical
products);
-- Phase out subsidies for unsustainable business models, such as new coal mines;
-- Remove tax exemptions for fossil fuel consumption and extraction.
The introduction of clear standards is required to give business the confidence to invest in the development of
innovative sustainable products that meet customer expectations, for example:
-----
Introduce particulate emissions standards for power stations and vehicles;
Lift standards for water and energy efficiency products;
Index existing standards to the level of the current best performing product on the market;
Expand the list of mandated products covered by the Product Stewardship Act (coverage should extend to all
electronic products and goods containing hazardous materials);
-- Increase minimum standards in the building code.
Standards provide a minimum performance floor which, when combined with clearly signalled future improvement
curves, incentivise innovation and new product development.
The Next Boom A surprise new hope for Australia’s economy? | Page 20
Image Source: Science CSIRO - Morgan Brown
3. Introduce market mechanisms
and boost investment in innovation,
science and research
Benefits:
• Effective and efficient mechanism to drive economic development
• Boost Australian innovation and entrepreneurship
• Create new industries and jobs
When properly designed, market mechanisms can foster rapid, cost-effective business innovation and incentivise
positive business practices. Placing a price on negative externalities enables business to factor the cost into their
budgets and spurs enhanced product development. Options include:
-- Placing a price on greenhouse gas emissions, whether in the form of an emissions trading scheme (such as by
substantially lifting the Direct Action baselines), carbon price, or equivalent. Market design should be simple, fair,
efficient and subject to independent oversight to give business confidence and remove regulatory uncertainty.
-- Placing a price on recyclable waste materials to incentivise reuse and investment in better collection and
sorting facilities;
-- Expanding state based energy efficiency white certificate schemes;
-- Extending tradeable water rights to urban water retailers (accompanied by a mandate to lower fixed costs while
raising excess usage charges, ensuring ordinary consumers are no worse off);
Introducing new market mechanisms will support local firms to innovate, generating expertise and products that can
then be exported.
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Increased investment in innovation, science and education is also critical to enable primary research and to progress
early stage innovations through to commercial feasibility. There are several significant opportunities to boost
innovation, science and research support in Australia. For example, governments could:
-- Establish dedicated industrial research parks to foster stronger links between universities and industry,
accelerate sustainability innovation, and capitalise on the benefits of clustering;
-- Increase total investment in universities and research institutions;
-- Increase the Research and Development tax incentive for verifiable clean tech initiatives;
-- Invest in a future focus scholarship series to attract the best and brightest from around the world to study and
work in new industrial research facilities;
-- Invest in fee-for-access advanced manufacturing facilities to remove barriers to entry for new businesses and
product prototyping;
-- Invest in new infrastructure, including grid access to renewable energy hot spots, advanced waste recycling and
EV charging networks;
A series of sector specific recommendations are outlined in the full version of The Next Boom report. Please download
the full report from the Future Business Council’s website or contact the team at [email protected] to
obtain a copy. The Future Business Council will provide additional information and more detailed recommendations
on each sector in future releases.
Acknowledgements
This report was written by Tom Quinn, Executive Director of the Future Business Council with substantial contributions
from Anton Griffith, Miriam Lyons and William Sandover.
The Future Business Council would like to thank the following people for their expertise, assistance and time in
developing this report.
Astha Batra, Adam Beaumont, Tim Buckley, Sophie Ellis, Felicity Ford, Damien Griffante, Chris Hale, Rob Hyndman,
Craig Irvine, Zac Jasper, Nathan Lim, Eleni Matheou, Ian McAuley, John O’Brien, Francis Pamminger, Matthew Rose,
Neil Salisbury, Charlie Wood, Anna Young.
We would also like to thank the wide range of companies and organisations that have published the primary data over
the years that has enabled this cross-sector analysis to be undertaken.
The Future Business Council would like to thank our supporters and the many external reviewers for their insights
and assistance.
Data sources
The Future Business Council has sourced data from a wide variety of public sources, annual reports, research reports,
company reports representative of specific industries and of leading products and sectors indicative of longer term
trends. Please refer to the full version of the report for the bibliography and footnotes with more detailed information.
The Next Boom A surprise new hope for Australia’s economy? | Page 22
Disclaimer
All rights reserved. No part of this publication may be reproduced or used in any way without acknowledgement to
the Future Business Council.
The Future Business Council has taken reasonable care in publishing the information contained in this publication but
does not guarantee that the information is complete, accurate or current. In particular, the Future Business Council
is not responsible for the accuracy of information that has been provided by other parties. The information in this
publication is not intended to be used as the basis for making any investment decision and mus not be relied upon
as investment advice. To the maximum extent permitted by law, the Future Business Council disclaims all liability
(including liability in negligence)to any person arising out of use or reliance on the information contained in this
publication including for loss or damage which you or anyone else might suffer as a result of that use or reliance.
Further notes: The Future Business Council has undertaken this research using a wide range of publicly available
data from a variety of sources. We have found the collection of data on sustainable business trends to be inconsistent
across sectors. As a result, some data sets are highly comprehensive (such as insurance), while others are either
incomplete across time (such as organic food demand) or represent broad estimates. In some sectors, such as LED
lighting, reliable data is virtually non-existent and, therefore a trend line has not been established. Where incomplete
and estimated data exists, the average percentage change has been interpolated. A more consistent and timely
collection of data on key sustainable products and services across the economy would enable better analysis in future
reports.
The absence of indicator data sets across the whole of the economy, as determined by ABS industry categories, is a
limiting factor for gaining as wide and accurate a perspective as possible. This is due to challenges in determining what
constitutes a more sustainable approach in the services sector in particular (for example hospitals and education).
While there is anecdotal evidence that sustainable demand is increasing within this sector (for hospital products, or
sustainability-focused degrees for example), there is no consistent indicator that could be used with confidence to
determine a sector-wide trend.
The definition of environmentally sustainable goods and services has been purposefully been construed widely
to capture the significant breadth in improvements across all product categories.Comparison analysis has been
completed where possible on analogous data sets, or where this is not an option, on reasonably similar products.
This report has not attempted a unified forecast due to the widespread uncertainty of mass-disruption innovation that
makes accurate prediction both impossible and foolhardy.
The Future Business Council welcomes the opportunity to work with other organisations for future research in
this space, especially to either produce complementary data sets for sectors not currently covered or more detailed
analysis of the sectors where there is incomplete data.
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