Australia’s bushfires reveal which green tech will make it

In 2015, fire expert David Packham made his submission to Victoria’s Inspector-General for Emergency Management. If the government didn’t listen to him, he said, “a massive bushfire disaster will occur. The forest and alpine environment will decay and be damaged possibly beyond repair and homes and people incinerated.”

Did they listen? It’s an unfair question given the benefit of hindsight.

But even back then, Packham knew what was coming:

If they do decide that, and it’s a democratic country, they can decide that, but I want them to stand up and take responsibility when the outcome falls apart.

But what exactly was Packham urging the government to do? A carbon tax? An emissions trading scheme? Green energy subsidies? Banning coal exports? Culling 10,000 camels to reduce methane emissions?

Nope. Practically the opposite. He recommended burning the forests, in a controlled way.

Melbourne’s The Age newspaper explained at the time that “forest fuel levels had climbed to their most dangerous level in thousands of years”. The consequences are on the news at the moment.

Packham wasn’t being controversial. He just recommended implementing what the 2009 Royal Commission into Australia’s previous bush fire disaster had recommended. Rolling burn-offs. The idea is to reduce the severity of fires by burning forests before they accumulate enough brush to cause a major fire.

Of course, Packham’s recommendation was just a repeat of past recommendations which amounted to much the same thing. But they got gradually ignored over time. And those recommendations were just a repeat of previous recommendations which amounted to the same thing too. Those weren’t followed either.

The 2009 Royal Commission into a major bushfire called the government’s policy a “minimalist approach to prescribed burning”. It also compared the fate of areas which had and hadn’t completed the prescribed burning to establish that it was a proven and crucial policy.

Of course the fires which led to the 2009 Royal Commission were also predicted by a fire captain who noticed the lack of burn-offs in the areas affected.

In other words, bushfire crises are consistently predicted, analysed with the same resulting conclusions, and both are ignored.

So why isn’t enough forest burned to prevent severe bushfires? Because such burning releases carbon emissions…

Climate change campaigners stopped the burning and politicians responded to the electorate which demanded paying more attention to climate change and less to bushfires. Less burn-offs led to a bigger fire.

This chart from the Guardian shows the pattern, but for just one state in Australia:

Now, if you ask me, climate change should lead to more frequent bush fires. And more frequent bush fires are supposed to be less severe, because they act like burn-offs in and of themselves. So I’d expect to see more, but less severe fires if climate change is the key factor.

But we’ve seen the opposite. Less fires – a lull – that precede a big one each time. It’s the lack of fires that are leading to big ones.

Not that climate change is the only factor changing. Population growth, the expansion of urbanised areas, forest management and plenty other factors also affects the likelihood and severity of bushfires. The number of arson offences is one measure. In Victoria they rose from 50 in 2011/12 to 227 in 2015/16.

Then there’s the bizarre nature of fighting bush fires. The more you succeed, the worse the fire is likely to be next time, when more area hasn’t been burned off by the last fire.

It works the other way too. The plan to cull 10,000 camels in the Australian outback to reduce methane, recently given a green light, pales in comparison to the carbon credits which arsonists have recently generated according to Bloomberg: “One Billion Animals Now Feared Dead in Australia’s Wildfires”.

But what does all this mean? The chaos, confusion and irrational amount of conviction held by both sides is tough to make sense of.

Will Australia’s fires be the straw that breaks the camel’s back for climate change sceptics?

Well, it seems to me that attempts to engineer the climate with government policy have a habit of backfiring. Diesel subsidies, the lack of burn-offs and ethanol are good examples of this.

But when technology actually makes a breakthrough, for the right reasons, things really can change.

Being able to tell the difference is the key. The difference between doing burn-offs to prevent severe bushfires and not doing burn-offs to prevent emissions, for example.

You might think this doesn’t have investment implications. But a lot of former Aussie homeowners might disagree with you. Those living in areas with burn-offs are more likely to have their most valuable asset in tact.

Buying Aussie property probably isn’t relevant to Exponential Investor readers though. Instead, you’ve got to actually investigate whether commercial applications of green tech are viable. And cost efficient. Whether they make sense, or whether they’re floating on a wave of media attention and government subsidies.

That’s where Eoin Treacy enters the picture. He thinks he’s found the new oil – but it’s something that even the environmentalists will love. For a very particular reason.

It takes a lot of electricity to produce the new oil – to convert it into the form in which we see it being used outside our office here in London. And renewable energy, which green campaigners love, has a particular problem. It produces decent amounts of power, but at inconvenient times. People turn on their lights precisely when solar power cuts out, for example. Or the wind stops blowing when people want to turn on their air-conditioning.

The current solution is a battery. Which sounds nice, but isn’t quite perfected yet.

Well, what if the two problems cancel each other out? What if the poorly timed but immense power potential of renewable energy is put to work in producing the new oil during periods of excess capacity, making the new oil’s production economical?

Find out what that would mean in tomorrow’s Exponential Investor.

Or, if you don’t want to wait, click here.

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Energy

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