Virgin urges business to lead on warming

Australian
Friday 6/7/2007 Page: 40

AUSTRALIAN businesses have been urged to take advantage of technological breakthroughs arising from climate research. Virgin Blue chief executive Brett Godfrey said advances in technology to reduce greenhouse gasses could pay long-term dividends despite additional costs, in much the same way the costly space race between the US and the Soviet Union did.

Mr Godfrey this week challenged businesses to look beyond any short-term reductions in gross domestic product to the wider benefits. Recent figures in the The Economist showed global investment in renewable power generation, bio-fuels and low-carbon technologies rose to $US71 billion ($82.8 billion) in 2006, up 140 per cent in just two years, he said.

Mr Godfrey has become a vocal contributor to the environmental debate and has committed Virgin to a leadership role. He raised eyebrows last month by urging airlines to do more to address the issue, and warning that Australia's susceptibility to climate change meant that it could become unrecognisable if predictions of global warming were not addressed. Moves at Virgin to tackle the issue include the introduction of environmental programs aimed at reducing the airline's carbon footprint. In March it became the first airline to introduce what is believed to be the world's only government-certified airline carbon offset program.

Set up as part of an Australian Greenhouse Office initiative, it allows passengers to neutralise their emissions by donating money to approved greenhouse abatement projects such as reforestation, energy efficiency measures, recycling and renewable energy. It backed this with a board-approved financial commitment to address the greenhouse effect of crew, staff and other employees travelling on company business. It expects this to cost about $500,000 annually.

It last month introduced "waterless" aircraft cleaning by agreeing to coat its planes with a polymer that reduces drag and eliminates the need to wash the planes. Virgin has a fuel management group looking at strategies to further reduce fuel burn through more efficient flight planning and weight reduction and it is introducing waste, water and office recycling as well as green procurement. It has also joined 800 other businesses in the Greenhouse Challenge Plus program aimed at improving energy efficiencies, and will include its environmental impact in its statutory reporting from this year.

The Virgin chief likes to quote the Kermit the frog's famous it ain't easy being green" line when describing the transition. But, he says, the move is essential and soon, he believes, will be required of all businesses. Not surprisingly, he is opposed to suggestions that airlines should be subject to punitive taxes to offset environmental damage. He argues an across-the-board tax provides no incentive for people to innovate. But he strongly advocates carbon trading, even on a country-by-country basis. This puts him at odds with some of his international colleagues who argue carbon trading should not be introduced until there is a global system.

Godfrey believes business has been slow in acknowledging the sustainability issue but is now recognising that it is far better to be in the inner sanctum, participating in the design of future legislative change, than having it thrust upon them. This brings him back to his original point. "It is also likely that many companies are likely to be more inspired by the "carrot" of strategic and business opportunities than by the "stick" of regulation," he said.

The development of cleaner energy means new technology, and new technology to companies means money. "As crass as that sounds, nobody should be offended by it. In fact, it could be the profitability aims of business sector which become a key driver in rejuvenating our planet." To immediately address emissions in line with Kyoto expectations, the Intergovernmental Panel on Climate Change estimates that a price of $25-$60 per tonne of carbon dioxide by 2020-30 should see CO2 concentrations in the atmosphere begin to stabilise at acceptable levels.

The Virgin boss called on all governments in Australia to take a lead on the issue. This included setting a long-term goal of reducing Australia's impact on the environment and, in conjunction with the world community, agreeing to safe and stable levels of greenhouse gas emissions. Business and the Australian government should also work together on a solution that offered tax credits and other fiscal incentives to unlock private enterprise in research and development.