Australian primary resources and other emissions-intensive industries will not be punished in the near-term for heavy greenhouse emissions, however clean coal technology and sequestration is critical to the coal, oil and gas industries’ viability in a carbon-constrained world, a Citigroup report says.
The research emphasises a proposal by the state governments’ National Emissions Trading Scheme (NETS) taskforce to compensate emissions-intensive export industries and industrial processes, such as steelmaking and oil refining processes, while cleaner technologies are developed. “Carbon trading will not have a major impact on our coal exports for some time. The industry will be sheltered in the shorter term,” Bruce Rolph, managing director of Citigroup Australia/New Zealand equity research, said. “But the longer term, say 10 to 15 years, is a different story,” he said. Draft proposals generated by NETS are open for discussion, with 2010 set as a possible implementation date. The federal government only recently announced a study into carbon trading. The Citigroup report analysed climate change strategies and policies already published by companies listed on the ASX100. Only 48 of the largest 100 companies provided extensive climate change-related information, with the abstainers including Coles, Woolworths, AWB and all the mainstream media companies. Industries at risk in the impending carbon-constrained economy are emissions-intensive industries, those exposed to high fuel costs or vehicle fleets and those with minimal ability to cut energy costs. Companies at risk include Bluescope Steel, Rio Tinto, Caltex and Transurban. Industries predicted to excel include renewable energy and gas, sustainable property and recycling, and financial institutions active in carbon markets. Companies listed in this category are Origin Energy, Investa Property, Boral and AMP. Investors’ reactions to climate change will favour renewable energy and gas, sustainable building, recycled and lightweight materials companies and sustainable investment funds, while companies reliant on vehicle use are at risk, the report states.
There is one investment area where Insignia’s $180 billion super arm has not lost money for the past 17 years, which is what it calls the insurance-related investments. The alternatives strategy is gaining popularity among asset owners due to its diversification benefit, but Insignia’s super and asset management investment chief Dan Farmer warns it is a space where investors can suffer if they “stumble in without doing the homework”.
Darcy SongJanuary 23, 2025
