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  2. Abstract

Technological innovation is the most politically palatable avenue for governments to reduce greenhouse gas (GHG) emissions. It avoids less palatable alternatives, such as regulating social behaviour. However, technological innovation in advanced, liberal capitalist states such as Australia is the product of the interaction of science possibilities with market demands, and is primarily reliant on the choices of profit-seeking corporations. Therefore, interviews were conducted with key office-holders in Australia's most carbon-intensive industry sectors. The perspectives they offered challenge the conventional wisdom that Australian business desires less government intervention. Instead, corporate representatives expressed a desire for stronger, clearer and more strategic long-term government support. This is because a liberal economic basis for capitalism in Australia means government, more than the market, is central for climate innovation as opposed to normal market innovation.

  • 1

    For example, see Peter Newell and Matthew Paterson, Climate Capitalism: Global Warming and the Transformation of the Global Economy (Cambridge, 2010).

  • 2

    See both Kate Crowley and Peter Christoff, this issue.

  • 3

    For example, Guy Pearse, Greenwash: Big Brands and Carbon Scams (Collingwood, 2012); Clive Hamilton, Scorcher: The Dirty Politics of Climate Change (Melbourne, 2007).

  • 4

    Peter Dicken, Global Shift: Transforming the World Economy, 4th edition (London, 2003), p.85. The first quotation is originally from Alvin Toffler, Future Shock (London, 1970). The second is originally from Joseph Schumpeter, Capitalism, Socialism and Democracy (New York, 1975 [1942]).

  • 5

    For example, in several studies the management consulting firm McKinsey and Company explicitly argues for only market-based systems, while such a perspective underpins much of the analysis of the OECD. For example, see OECD, The Economics of Climate Change Mitigation (Paris, 2009); OECD, OECD Environmental Outlook to 2050 (Paris, 2009).

  • 6

    Richard G. Newell, A US Strategy for Climate Change Mitigation, Paper #49, The Brookings Institution (Washington, 2008).

  • 7

    UNFCCC, Summary of GHG Emissions for Annex 1 (no date), available at <> viewed 30 January 2013.

  • 8

    This is based on 2010 data. For this sector, the other main sub-areas are: energy industries (39 per cent) and manufacturing industries and construction (15 per cent). The other sectors are industrial processes (7 per cent); solvents (2 per cent) and agriculture (1 per cent).

  • 9

    It is estimated that up to 85 per cent is accounted for by road transport. See UNEP, Transport available at <> viewed 26 May 2003; M. Paterson, “Car Culture and Global Environmental Politics”, Review of International Studies, Vol.26, 2 (2000), pp.253–270.

  • 10

    IEA, Energy Prices and Taxes: Quarterly Statistics, Second Quarter 2009 (Paris, 2009).

  • 11

    K. Small and K. Van Dender, “Long Run Trends in Transport Demand, Fuel Price Elasticities and Implications of the Oil Outlook for Transport Policy”, Oil Dependence: Is Transport Running out of Affordable Fuel?, Round Table 139 of the Transport Research Centre, OECD and International Transport Forum (2008, Paris), available at <>, p.182.

  • 12

    Daniel Graham and Steven Glaister, “The Demand for Automobile Fuel: A Survey of Elasticities”, Journal of Transport Economics and Policy, Vol. 36, 1 (2002), pp. 126; Daniel Graham and Steven Glaister, “Road Traffic Demand Elasticity Estimates: A Review”, Transport Reviews, Vol. 24, 3 (2004), pp. 261274.

  • 13

    It may also be that they have little choice but to do so. For example, in the US around 90 per cent of travel is by private motor vehicles. See OECD, Environmental Performance Reviews: United States (Paris, 1996); Winston Harrington and Virginia McConnell, Motor Vehicles and the Environment, Resources for the Future (Washington, 2003), available at <>.

  • 14

    John Mikler, “The Price is Right? The Limitations of Market Mechanisms in Encouraging Low Carbon Mobility”, Local Economy, Vol. 27, 7 (2012), pp. 722731.

  • 15

    IEA, Transport, Energy and Climate Change (Paris, 1997). See particularly chaps 5 and 6.

  • 16

    That profit-seeking firms use innovation as an evolutionary response to the external conditions affecting their business strategies, and therefore they do so in distinct national contexts, has long been stressed by authors such as Richard Nelson and Sidney Winter, An Evolutionary Theory of Economic Change (Cambridge, 1982,). For environmental innovations, see Curtis Moore and Allan Miller, Green Gold: Japan, Germany, the United States, and the Race for Environmental Technology (Boston, 1994).

  • 17

    John Mikler and Neil E. Harrison, “Varieties of Capitalism and Technological Innovation for Climate Change Mitigation”, New Political Economy, Vol.17, 2 (2012), pp.179–208.

  • 18

    Milton Friedman, “The Social Responsibility of Business is to Increase Profits”, New York Times Magazine, 13 September 1970.

  • 19

    Peter Hall and David Soskice, “An Introduction to Varieties of Capitalism” in Peter Hall and David Soskice, eds, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford, 2001).

  • 20

    IEA, Global Renewable Energy Policies and Measures Database, available at <> viewed 20 February 2012.

  • 21

    Fred Block, “Swimming Against the Current: the Rise of a Hidden Developmental State in the United States”, Politics and Society, Vol. 36, 2 (2008), pp. 169206; Fred Block and Matthew R. Keller, “Where do Innovations Come From? Transformations in the US Economy, 1970–2006”, Socio-economic Review, Vol. 7 (2009), pp. 459483; Fred Block and Matthew R. Keller, State of Innovation: The US Government's Role in Technology Development (Boulder, 2011).

  • 22

    Fredrick L. Pryor, The Future of US Capitalism (New York, 2002), p.363.

  • 23

    Robert MacNeil, “Seeding an Energy Technology Revolution in the United States: Re-conceptualising the Nature of Innovation in ‘Liberal-Market Economies’”, New Political Economy, Vol. 18, 1 (2012), pp. 6488.

  • 24

    They are known as the “FT Global 500”.

  • 25

    Financial Times, FT Global 500 2010 (2011), available at <> viewed 3 June 2011.

  • 26

    This index measures foreign direct investment (FDI) flows; FDI stock; foreign affiliate value added; and employment by foreign affiliates versus domestic sources. Stephen Wilks, “The National Identity of Global Companies” in John Mikler, ed., Handbook of Global Companies (Oxford, 2013); UNCTAD, World Investment Report: Transnational Corporations and the Infrastructure Challenge (New York, 2008).

  • 27

    Wilks, “The National Identity of Global Companies”, p.38.

  • 28

    IEA, CO2 Emissions from Fuel Combustion: 2010 Edition (Paris, 2010), pp.III, 44–49. These states account for 48 per cent of global emissions, and if the European Union is included, given that three of its most dominant economies are represented in Germany, the UK and France, the percentage is 54 per cent.

  • 29

    This sounds like an odd statement, as the destruction of the planet would surely be bad for business. Even so, the point is clear.

  • 30

    As opposed to the idea of a price on GHG emissions which in theory was accepted and welcomed.

  • 31

    One interviewee spent considerable time discussing the stronger manner in which the US government funded and supported innovation, and then acted to protect its corporations’ intellectual property, by comparison to Australia's.

  • 32

    For example, see Johan Olsen, “Change and Continuity: An Institutional Approach to Institutions of Democratic Government”, European Political Science Review, Vol. 1, 1 (2009), pp. 332; James Mahoney and Kathleen Thelen, eds, Explaining Institutional Change: Ambiguity, Agency and Power (Cambridge, 2010).

  • 33

    For example, see Christopher R. Knittel, “Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector”, American Economic Review, Vol. 101, 7 (2011), pp. 33689.

  • 34

    This may seem at odds with our opening statements that governments face constraints as well, but the point here is that they are less constrained by comparison to corporations. As one interviewee put it: “I think it's really naive to expect that corporations, under the current structure that Western democratic society operates under, should or even can be the ones to take some sort of initiative in the absence of clear, strong, government regulation”.

  • 35

    Stated by Susan Joy Hassol for the Presidential Climate Action Project, available at <>.