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Category: Articles

  • The electric car revolution will soon take to the streets

     

    The North American International Auto Show in Detroit is the domestic auto industry’s biggest annual showcase, and the new models have traditionally been brought out in a son et lumière of dancing girls, deafening music, and dry ice smoke. The few green cars that made it this far were usually for display only — very few actually made it to showrooms.

    But not this year. It’s become a race to market for green cars, and soon you’ll be able to buy many of the electric vehicles that were on display last week in Detroit. The auto show featured one hybrid and battery electric car introduction after another. Although the only truly road-worthy, plug-in electric vehicle you can buy today is the $109,000 Tesla Roadster, by the end of 2010 it will be joined by such contenders as the Nissan Leaf, Coda sedan, and the Think City.

    Indeed, the entire auto industry — from giants such as Ford, GM, and Renault-Nissan to startups such as Fisker Automotive — has joined the movement to build and market affordable electric vehicles.

    There’s a reason the automakers in Detroit are finally plugging in as something more than a greenwashing exercise. Spurring them forward is a historic confluence of events. Chief among them are Obama administration green initiatives, including Department of Energy (DOE) loans and grants, as well as economic stimulus funds that provide $30 billion for green energy programs, tax credits for companies that invest in advanced batteries, and $2.4 billion in strategic grants to speed the adoption of new batteries. (Much of that money is going to Michigan, which despite record unemployment is emerging as something of a green jobs center.)

    Other factors behind the push to manufacture electric vehicles are a federal mandate to improve fuel efficiency to an average of 35.5 miles per gallon by 2016, concerns about global warming and peak oil, and sheer technological progress building better batteries.

    Even without federal largesse, some companies are moving aggressively into the electric vehicle market. A prime example: Coda Automotive, a southern California start-up, has raised an impressive $74 million in three rounds of private funding. CEO and President Kevin Czinger is a former Goldman Sachs executive, as is co-chairman Steven Heller. Among the company’s investors are Henry M. Paulson, who was Goldman Sachs’ chairman and Treasury Secretary under the second President Bush. Clearly, these former investment bankers see electric cars as a good bet.

    A key factor in making today’s electric vehicles possible is the rapid development of the energy-dense lithium-ion battery. William Clay Ford Jr., the executive chairman of the company that bears his name, told me in Detroit, “Five years ago, battery development had hit a wall, and we were pushing hydrogen hard. But now so much money and brainpower has been thrown at electrification that we’re starting to see significant improvements in batteries in a way we hadn’t anticipated. Now we have the confidence that the customer can have a good experience with batteries.”

    Drawing a huge crowd, Tesla Motors Chairman and CEO Elon Musk showed off his company’s 1,000th electric Roadster at the auto show. “For a little company, it’s a huge milestone,” he told me. “A year ago, we had built only 150 cars. We had two stores then, and now it’s a dozen.”

    For a major automaker, 1,000 cars would not be much to show for a year, but electric vehicles are still in their infancy. And since the electric car’s first swan song in the 1920s — when the widespread availability of petroleum ushered in the era of the gasoline-powered car — very few start-up companies have reached the milestone of making green vehicles, especially battery-powered ones.

    Here’s a look at some of the prime contenders bringing battery cars and plug-in hybrids to market:

    * Renault-Nissan Alliance. This is the one automaker with a truly global plug-in strategy and the means to carry it out. Under the Nissan banner, the company will deploy the Leaf battery sedan, with 100-mile, all-electric range. Nissan isn’t just dumping its sleek entry into the market — it’s also building a home charger with new partner AeroVironment and partnering with local, state and federal governments — both in the U.S. and abroad — on public charging stations. In partnership with Better Place, the company will deploy a second Renault electric vehicle as part of its plan to wire up Israel with charging stations for electric cars. Renault-Nissan chief Carlos Ghosn predicts that electric vehicles could constitute 10 percent of world car sales by 2020.

    * Ford Motor Company. Ford’s green strategy includes a plug-in version of the new Focus for 2011 and a “next-generation” hybrid — based on its global compact-car platform, or C-platform — in 2012. The company announced in Detroit that it would invest $450 million in Michigan as part of its electrification strategy. Michigan Governor Jennifer Granholm told me at the auto show that until recently the state “wasn’t sure it had a viable auto industry.” Today, she said, the state is enjoying $1 billion in new auto-related investment, much of it jump-started by a combination of federal funding and state tax credits.

    * General Motors. GM’s big news is the Chevrolet Volt, which has definitely helped the company’s image. The Volt, which uses a small gas engine to generate electricity for its electric motor, is a lot of fun to drive if the version I drove recently in Michigan is any indication. Until now, GM has stumbled in its hybrid strategy, and it really needs this car — which will go on sale at the end of the year for a hefty $40,000 — to be a hit. But success may be more a matter of perception than actual sales. “In terms of numbers, the Volt will be pretty small for the first couple of years,” says product chief Bob Lutz. A Cadillac version of the Volt is also a possibility.

    * Tesla Motors. This California start-up launched at the top of the market with its $109,000 Roadster, which combines sexy looks with supercar performance (zero to 60 in 3.9 seconds). The company is on something of a roll, having sold 10 percent of itself to Daimler for $50 million, and landed $465 million in DOE funding for its forthcoming Model S sedan — a Maserati-like, more practical version of the Roadster. Tesla’s Musk says that the company’s strategy has always been to use its sale of performance cars to finance its third vehicle, a mass-market electric vehicle. The company is currently looking at California locations for a Model S factory.

    * Fisker Automotive. Perhaps Tesla’s closest competitor when it comes to glamour electric vehicles, Fisker – whose CEO is Danish-born automotive designer Henrik Fisker — is preparing to debut a high-performance plug-in hybrid (zero to 60 in 5.8 seconds, with 67 mpg fuel efficiency) known as the Karma at the end of the year. Al Gore is on the waiting list. Fisker also has a lower-cost car in the wings, called Project Nina. Fisker won $528 million from the DOE to build the Nina in a former GM factory in Delaware.

    * Coda Automotive. This start-up will deliver, in late 2010, a small battery-powered sedan with batteries from its own joint venture in China. The car is based on the Saibao, a Chinese car, but Coda has put a host of western companies to work honing an electric drivetrain for it. “A large part of our mission is to accelerate adoption of all-electric vehicles,” Coda CEO Kevin Czinger told me. “We have put together a core group of auto and battery engineers, and are leveraging specialty automotive firms that we think can get us to the right price point.” Coda will launch with an Internet marketing strategy in California only, but it will have the capacity to produce 20,000 cars a year.

    * Think Global. Think is a survivor, with perhaps the longest and most colorful history among green automakers. It is a Norwegian company that attracted Ford Motor Company investment in the late 1990s with its plastic-bodied City commuter car. Ford sold the company in 2003 and it went through bankruptcy proceedings in late 2008. It has since emerged under the partial ownership of U.S. battery company Ener1, which snagged $118 million in DOE funding to expand its battery production in Indiana. Think electric vehicles will also be built there starting in 2011, in hard-hit Elkhart — once proudly known as the “RV Capital of the World” — and now suffering the effects of the recession. The two-seat Think City (with approximately 100-mile range on lithium-ion batteries) will sell for less than $20,000 in the U.S., but that price does not include the leased battery pack and includes the $7,500 federal tax credit for electric vehicles.

    The list of players in the electric vehicle race goes on. Toyota is building plug-in hybrids and fuel-cell vehicles, and showed off a small cousin of the Prius in Detroit. Chrysler has an ambitious electric vehicle rollout that’s been stalled by the company’s bankruptcy and merger with Fiat. Honda continues to deploy clever hybrid cars, including the upcoming two-seat CR-Z it showed in Detroit. BMW has electrified the Mini for a test program, and has similar intentions for the Concept ActiveE, a plug-in version of the Series 1 BMW coupe. And Audi has shown sudden interest in this segment, debuting the second of its electric e-tron vehicles.

    By this time next year, electric cars will no longer be just on auto show stands, but will have arrived in showrooms at last.

  • The open-source hydrogen car set to change the industry

    The open-source hydrogen car set to change the industry

    Alex McDonald

    20th January, 2010

    Cars are evil, right? But what if they ran on hydrogen, did 300 miles per gallon, were leased rather than owned, and were produced under an open source business model…

    We have often been introduced to the car of tomorrow, but one company has now created a car with the future in mind. But it is about far more than just a car, it’s about a business model that is challenging the very architecture of the auto industry.

    Riversimple’s network electric car is a hydrogen fuel cell powered car, with unique technologies that enable it to run on a 6kW fuel cell, with a fuel consumption equivalent to 300 miles per gallon and greenhouse gas emissions at 30g per km, well-to-wheel – less than a third of that from the most efficient petrol-engine cars currently available. 

    It also has the potential to be 10 times cleaner still if the hydrogen is produced from renewable energy.

    Open source

    But what is extraordinary about Riversimple is that their business model is trying to move away from the current auto industry practice that has left us with the inefficient, one-size-fits-all car.

    The first departure from the conventional business plan is that the designs of the car will be released under an open source licence. This allows people to freely build on ideas and designs, speeding up innovation and enabling technologies to be quickly improved, meeting the needs of people rather than markets.

    ‘There is such a yawning gap between the environmental performance of cars and what is sustainable, that I don’t believe a purely competitive world can ever get us there,’ says Hugo Spowers, the brains behind Riversimple.

    ‘[open source] really does produce this constant and very rapid drive toward absolute excellence, which I think is needed in the current circumstances. I have precious little faith in regulation ever pushing us in that direction.’

    Shared learning

    To aid the development of the open source hardware community, Riversimple has set up the 40 Fires Foundation, an open-source hardware group that anyone can join to share expertise and develop technologies.

    Before any official launch, the foundation has already registered over 300 people with expertise in various areas, showing the huge potential for an open-source technology community.

    And this potential can be far reaching:

    ‘Open source allows [developing] countries to build their own technological capacity without having to be liable for any cash fees to the first world,’ says Spowers. The foundation can also take briefs from other countries, adapting technologies as required.

    Small-scale production

    Complementing the open source philosophy, the manufacturing requirements of the car mean that the size of production plant will be greatly scaled down.

    The low component count of the cars and their carbon composite bodies, means that smaller plants will be needed. Riversimple expect one plant to manufacture around 5,000 cars a year, unlike the production of the conventional pressed steel bodies, where a factory will spit out about 300,000 a year of the same model – necessary for the economies of scale.

    ‘When you are doing it at that scale,’ says Spowers, ‘the breakeven volume at which a model becomes commercially viable is 100 times lower. So you can genuinely build cars that suit people’s needs, rather than the opposite extreme which is the lunacy of the “world car”.’

    As a result, the industry can become more distributed: it will be possible to have smaller plants in different places, making different models that are more suitable for different geographies or cultural needs.

    Cars will not be sold

    Another significant departure from the conventional business model is that the cars will be leased, not sold. The leasing will include the maintenance of the car, the fuel and the recycling of the car at the end of its life.

    The idea behind leasing the cars is primarily to bring the incentive of making the cars more sustainable in their production, maintenance and use, back to the manufacturer.

    ‘There’s no driver for resource efficiency if we sell the car,’ says Spowers. ‘If we sell the cars… we have a direct incentive to sell as many cars as possible, so there’s absolutely no commercial sense to build in longevity, low running cost or fuel efficiency – the opposite in fact.’

    In providing the opportunity to produce niche specific cars, Riversimple will also be paving the way for a wider cultural shift in car use. The leasing of the cars will undermine the ‘commodity value’ of the car, leaving drivers only with the use value of the car and, as designs develop and specialised cars are produced, people will – in theory – lease the right car for the right job, rather than the right car for their image.

    Car clubs

    With this in mind, Riversimple expects car clubs to be major customers.
    ‘Car clubs tease apart the functionality of cars,’ says Spowers.

    For most people, he says, ’95 per cent of their [car] requirements will be covered by a certain set of needs, but they buy a car to meet 100 per cent of their needs, and that’s dictated by the last 5 per cent. If 95 per cent of their requirements is on their own, commuting a 20 mile distance and then every couple of weeks they’ll go away with the family, they’ll buy an estate car for that one journey every couple of weeks. …

    ‘If you have car clubs – and they really have mushroomed recently – it means that people can buy the car for 95 per cent of their needs and rely on the car club for the 5 per cent. I think that is a really crucial element in moving towards much more niche, specific, appropriate vehicles for appropriate uses.’

    Riversimple cars are expected to be on trial in the UK from 2012. Around 50 cars will be leased in one or two cities, supported by the local authority.

    Several local authorities have expressed interest including Oxford and Leicester.

    Hydrogen fuel

    One of the major challenges for the Riversimple concept is getting the hydrogen to the cars. In partnership with BOC and participating Local Authorities, Riversimple hopes to overcome this by starting small and building the infrastructure as demand grows.

    Hydrogen refuelling stations will be built in the participating cities, and, as the cars and their hybrids become more popular, the network will build and eventually become extensive enough to support intercity travel.

    The efficiency of the Riversimple car is expected to make the transportation of enough hydrogen to fuel stations feasible.

    Opportunity

    Spowers himself conveys an infectious sense of urgency.
    ‘There’s a window of opportunity of about ten years in which I think we’ve got a chance of establishing this,’ he says. ‘In about 10 years time, people will have a steel bodied fuel cell car with probably a 60 KW fuel cell system in a commercially viable, ordinary five-seater family car.

    ‘The problem with that is that it will require about four times as much fuel than a car built on the principles we are advocating. And once fuel cell cars are available in the conventional steel bodied platform, then it will be very much harder to ever go back and re-address the fundamental architecture. I don’t think you’ll be able to do it.’

    If the opportunity is missed, says Spowers, cars will be made for the mass market, people will depend on one-size-fits-all and innovation will remain slow.

  • One quarter of US grain crops fed to cars- not people. new figures show

     

    “The grain grown to produce fuel in the US [in 2009] was enough to feed 330 million people for one year at average world consumption levels,” said Lester Brown, the director of the Earth Policy Institute, a Washington thinktank ithat conducted the analysis.

    Last year 107m tonnes of grain, mostly corn, was grown by US farmers to be blended with petrol. This was nearly twice as much as in 2007, when Bush challenged farmers to increase production by 500% by 2017 to save cut oil imports and reduce carbon emissions.

    Graph - US grain used to make ethanol

    More than 80 new ethanol plants have been built since then, with more expected by 2015, by which time the US will need to produce a further 5bn gallons of ethanol if it is to meet its renewable fuel standard.

    According to Brown, the growing demand for US ethanol derived from grains helped to push world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian revealed a secret World Bank report that concluded that the drive for biofuels by American and European governments had pushed up food prices by 75%, in stark contrast to US claims that prices had risen only 2-3% as a result.

    Since then, the number of hungry people in the world has increased to over 1 billion people, according to the UN’s World Food programme.

    “Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world,” said Brown.

    “The worst economic crisis since the great depression has recently brought food prices down from their peak, but they still remain well above their long-term average levels.”

    The US is by far the world’s leading grain exporter, exporting more than Argentina, Australia, Canada, and Russia combined. In 2008, the UN called for a comprehensive review of biofuel production from food crops.

    “There is a direct link between biofuels and food prices. The needs of the hungry must come before the needs of cars,” said Meredith Alexander, biofuels campaigner at ActionAid in London. As well as the effect on food, campaigners also argue that many scientists question whether biofuels made from food crops actually save any greenhouse gas emissions.

    But ethanol producers deny that their record production means less food. “Continued innovation in ethanol production and agricultural technology means that we don’t have to make a false choice between food and fuel. We can more than meet the demand for food and livestock feed while reducing our dependence on foreign oil through the production of homegrown renewable ethanol,” said Tom Buis, the chief executive of industry group Growth Energy.

  • Kevin Rudd’s speech in full

     

    I understand also that down in Glenelg, hundreds of South Australians will be participating in the Havaiana Australia Day Thong Challenge, an event that, I am advised, will see a large number of South Australians floating on massive, mutant versions of Australias national footwear. The challenge, I understand, is to beat the record from Bondi Beach last year, where 908 people were afloat. It should be a memorable Australia Day in Glenelg.

    Exactly one year ago, in the lead-up to Australia Day 2009, I came to Adelaide and spoke about the enormous challenge we faced with the worst global recession in 75 years. Since then, the global recession has taken unemployment into double digit figures in many countries across the world, but in Australia, we are weathering the global storm.

    As a nation, Australia now has the fastest growth, lowest debt, lowest deficit and the second lowest unemployment rate when compared with the major advanced economies. The strong consumer confidence index numbers released today, showing a 5.6 per cent increase in January, give us further reason to be optimistic about the year ahead.

    South Australias unemployment rate actually fell last year – from 5.7 per cent at the beginning of the year, to 5.3 per cent at the end. Thats an extraordinary achievement.

    2009 was a tough year, but Australia rose to the challenge of the global financial crisis. It shows what can be done when we all join together and work together, governments of all persuasions state, territory and local; businesses large and small; unions and local communities right across the nation.

    On Australia Day 2010, as we enter this second decade of the 21st century, Australians can be optimistic about our future, but we cannot afford to mistake optimism for complacency.

    This week I am travelling across the nation ahead of Australia Day in a series of addresses on our need as a nation to prepare for our long-term future challenges. Today, I want to discuss the role of investment in advanced 21st century infrastructure, in lifting productivity growth and responding to the challenge of an ageing population.

    The Government will shortly release the third Intergenerational Report, entitled Australia to 2050: Future Challenges. The Australia to 2050 report analyses the key long-term challenges facing Australia over the next 40 years three key facts.

    The first key fact: our population will grow substantially over the next forty years. By 2050, the Australian population is expected to grow from 22 million to 36 million. That increase alone will put huge pressure on our towns and our cities. We will need more homes, more roads, more rail lines, more hospitals, more schools just to accommodate so many Australians.

    Then take into account that the population is ageing. Today, the proportion of Australians who are aged 65 and over, and are therefore most likely out of the workforce, is 14 per cent. By 2050, that figure will almost double to 23 per cent.

    Thats almost one in four Australians, compared to just one in seven Australians in 2010. 

    The second key fact is that this will significantly affect our economy and working families around the nation. Building the infrastructure we will need for a population of 36 million will require significant investment. On top of that, it will simply cost more to look after older Australians in health, aged care and age pensions.

    At the same time, a smaller proportion of Australians will be working, so tax revenues wont keep pace with those rising costs. In 1970, there were 7.5 people of working age to support every person over 65. Today, there are five. By 2050, that number is projected to drop to 2.7.

    So we will face higher costs yet slower economic growth, and that is the heart of the economic challenge of an ageing population.

    The third key fact is that we will need a sustained, strong and long-term national effort to respond to this challenge with a focus on raising productivity and removing barriers to people participating in the workforce. The Government has already acted to lift workforce participation by removing barriers to work for women and young people, but even with these measures, workforce participation will fall over the next 40 years from its peak of around 65 per cent now to around 60 per cent by 2050, so our long-term response to the ageing of our population must centre on a sustained effort to increase annual productivity growth.

    We need to lift average productivity growth back towards the 1990s mark of 2 per cent per year, up from the 1.4 per cent that it declined to in the first decade of this century. Achieving that goal would produce enormous benefits for the nation and for Australian families. On average, every Australian man, woman and child would be $16,000 better off a year in 2050 if productivity returns to the levels under the Hawke and Keating Governments.

    But there is a long time lag between implementing the policies that can lift long-term productivity, and experiencing their payoffs. That is why building Australias future must start now.

    Yesterday in Hobart I discussed another dimension of the challenge posed by the ageing population, the challenge to the sustainability of government budgets. As I noted earlier, the ageing of our population will result in higher costs for health, aged care and the age pension. It will also result in a smaller proportion of the population being in work, thus slowing the rate of growth of government revenues.

    The task of meeting the challenge of the ageing population has also been made more difficult by the aftermath of higher budget expenditure during the late 1990s and in the 2000s, which has locked in a permanently higher spending base. During the growth period of the 2000s, the average real growth in government spending actually increased to 3.8 per cent, compared to 2.5 per cent during the growth period of the 1990s.

    In response to this challenge, the Government has committed to a fiscal strategy that will help us manage the challenge of an ageing population by delivering a permanent structural improvement in Australias public finances. The long-term consequence of the Governments medium-term fiscal strategy is that by 2049-50, the Budget outcome will be around 3.5 per cent of GDP better off, or $130 billion in todays dollar terms. The Governments commitment to fiscal discipline builds sustainability into the Budget.

    The ageing of our population demands two strategies: first, that we lift our workforce participation and our productivity in order to lift economic growth, and second, that we pursue a disciplined fiscal strategy to deal with the additional needs of our ageing population.

    Building productivity is the key for Australias long-term economic future. I describe the new decade that we have just begun as Australias Building Decade, putting in place the building blocks of long-term productivity growth. It is our Building Decade because now is the time when we must implement the big policy changes to drive higher productivity growth.

    Advanced infrastructure will play a central role in putting Australia back on track to higher productivity growth. Its productivity impact will be complemented by the productivity benefits of the education revolution and the comprehensive microeconomic reform agenda that the Government has underway.

    The Australia to 2050 report highlights something that is well understood by South Australians, that infrastructure plays a key role in long-term economic expansion.

    The key points I want to make this afternoon about the role of infrastructure in building Australias future are these:

    • First, economic evidence, including that cited in the Australia to 2050 report, shows that infrastructure investment contributes directly to a more productive, growing economy.
    • Second, despite this fact, measures of Australias infrastructure investment in recent decades show a trend decline in our infrastructure investment. That has contributed to a growing backlog of infrastructure projects and an increasing number of choke points that have held back our economic growth.
    • Third, in response to the infrastructure backlog, the Australian Government has for the first time made infrastructure a national priority.

    We are providing national leadership in infrastructure investment through Infrastructure Australia evaluating and for the first time prioritising nationally important infrastructure projects, and through increasing the Commonwealths infrastructure investment.

    We are also undertaking regulatory reforms to remove roadblocks to infrastructure investment.

    This strategy is a key part of how we intend to make the decade ahead Australias building decade.

    The Australia to 2050 report cites the International Monetary Fund showing that theres a direct link between investing more in public infrastructure and increasing economic growth. According to the IMF research, in developed countries like Australia an increase in the public infrastructure stock by 1 per cent leads to an increase in output by around 0.2 per cent.

    It also cites Productivity Commission research showing that improving the efficiency of Australias energy and transport infrastructure could, after a period of adjustment, increase GDP by nearly 2 per cent.

    This research is not surprising. What is surprising is Australias track record in infrastructure investment.

    The long-term trend for that investment is that it has not been increasing, but falling. A 2009 OECD report shows that Australias investment in transport, storage and communications infrastructure as a percentage of GDP fell between the 1980s and 1990s, and fell again in the first decade of this century. In contrast, across the OECD group of developed nations, infrastructure investment for these sectors has been rising.

    If this trend continues, Australia will fall further behind other nations on productivity and in the long term, on future growth and living standards. Australias shortfall on infrastructure investment has generated a yawning gap between the infrastructure weve got and the infrastructure we need. We see this in ports, in freight, in rail, on our roads and in broadband.

    A few years ago the Business Council of Australia estimated the infrastructure deficit at $90 billion. Addressing the infrastructure gap will involve large scale investment and take a long period of time. One measure of the scale of the task from Citigroup estimates that Australia is set to spend $770 billion on infrastructure in the decade to 2018 underscoring the extent to which this must be the Building Decade.

    Given the infrastructure backlog, it must be a national economic priority to facilitate and support investment in advanced infrastructure. The Government is committed to providing that leadership, and investing in the infrastructure of tomorrow, from transport and freight networks to the high-speed National Broadband Network.

    First, we have established an overall policy framework for infrastructure investment.

    In 2008, shortly after coming to office, the Government established Infrastructure Australia. For the first time in our nations history, with Infrastructure Australia we have a central body to advise on the long-term planning of our infrastructure needs.

    Second, we have increased the national investment in infrastructure. That includes a record $36 billion national investment in transport infrastructure in roads, railways and ports.

    Third, we are acting on the regulatory reforms needs to foster increased infrastructure investment. We are undertaking significant policy reforms including creating single national regulators for heavy vehicles, rail safety and maritime safety.

    Finally today, I want to address just one part of the task ahead in the Building Decade that is crucial to the productivity of Australian businesses, both large and small. That is freight transport our ability to move commodities, food, all kinds of products from one place to another in markets across the nation and across the world.

    According to work conducted by IBIS World for a 2009 report by Infrastructure Partnerships Australia, Australias freight task will triple by 2050 from 503 billion tonne kilometres to 1,540 billion tonne kilometres. Meeting this task will require a massive effort companies will have to improve transport and logistics strategies and efficiencies, and governments will have to undertake substantial new investment and policy reform.

     According to IBIS World, transport infrastructure investment should be increased by 2050 to $62.5 billion, almost four times the spending levels of 2008. A 2008 Interim Priority List compiled by Infrastructure Australia, identified as priorities 40 road projects worth $69 billion, eight freight rail projects worth $16 billion and six port and airport projects worth $6 billion.

    The needs are truly staggering, but meeting the freight task isnt only about Commonwealth investment. Its also about policy coordination and reform to provide the right incentives for private sector investment as well. Thats why in 2010, the transport priority for the Council of Australian Governments will be freight transport.

    Infrastructure Australia is currently focusing its work on two new strategies: a National Ports Strategy and a Freight Network Plan. Initial work by Infrastructure Australia in these areas already suggests some important principles for these strategic plans:

    • coordination along the supply chain is a major field for productivity improvement for business;
    • the freight network is not simply about individual road and rail projects, but a set of nodes that are interconnected by road, rail, sea and air links, and
    • the case for dedicated road and rail freight infrastructure has become stronger to minimise conflict with passenger transport and economic losses.

    I look forward to considering this work in detail later in the year.

    Building a better future for Australia requires leadership at the national level on key areas of economic policy, but equally, it relies on the efforts of individual Australians in every walk of life, Australians who demonstrate courage, persistence, ingenuity and compassion.

    One of the ways we recognise such individual achievement at this time of year is through the Australian of the Year Awards. South Australias finalist for 2010, Julian Burton, is a man who has shown great strength of character and dedication to helping others. Julian sustained life-threatening third degree burns in the 2002 Bali bombings, but he has turned that terrible experience to good in service of the community. Through the Julian Burton Burns Trust, he is working to improve the prevention of, care for and research into burn injury.

    I know South Australians will be proud of him as he stands alongside his fellow finalists in Canberra next week when the Australian of the Year is announced.

    So for each of you this afternoon, I wish you all a very happy Australia Day for next week and I hope you take a moment to enjoy the sense of pride in being part of a great state and a great country. So its with great pleasure I ask you to raise your glasses filled with the finest South Australian wine as I propose a toast to Australia.

  • PM warns of ageing population time bomb

     

    ”Unless we make big changes, we will either generate large, unsustainable budget deficits in the second quarter of the century, or else we’ll need to reduce government services, including health services, as the needs of an ageing population become greater,” Mr Rudd said.

    ”This is not just a challenge for future governments,” he said. ”It will also become a challenge for working families, because with a smaller proportion of Australians in the workforce, the size of the national economic pie will grow more slowly and, as a result, average family incomes will grow at a slower rate than we’ve become accustomed to.”

    The predictions, while dire, are slightly less pessimistic than those in the second such report, released by the then treasurer, Peter Costello, in April 2007. That projected there would be only 2.4 Australians of working age for every one over 65 by 2047, and a quarter of the population would be 65 or more by then.

    Mr Rudd said three sources could strengthen the economy – population, workforce participation and productivity growth.

    The report predicts the population will grow from 22 million now to 36 million by 2050. But Mr Rudd said with lower fertility rates and stable migration ratios, population policy would form only a small part of the solution. And even with lower barriers to women’s working, Treasury predicts workforce participation will fall from about 65 per cent now to about 60 per cent by 2050. This meant productivity growth would be central to generating economic growth, he said.

    Mr Rudd said the rate of productivity growth had hit 2 per cent in the 1990s, after the reforms of the Hawke-Keating governments. But in the past decade it dropped to 1.4 per cent.

    He said without a concerted effort to increase productivity, annual productivity growth would be only 1.6 per cent over 40 years. This meant annual economic growth would fall to 2.7 per cent, below the historical average of 3.3 per cent for the past 40 years.

    But, he said, a determined push could lift annual productivity growth to 2 per cent, which would raise average annual economic growth above 3 per cent. ”The high productivity path would result in our economy growing an extra 15 per cent by 2050,” Mr Rudd said.

    This would add about $570 billion to annual economic output in today’s dollar terms, leaving, on average, each person $16,000 a year better off.

    The director of Access Economics, Chris Richardson, said the speech was a ”scene-setter” for the coming Henry review of the tax system, which is expected to propose potentially unpopular changes. ”If you are going to convince people to do difficult stuff, you have to explain why,” he said.

    Mr Richardson said a 2 per cent productivity growth would be ”marvellous” but would require a unified government and Opposition committed to economic reform.

    ”I agree with the Government’s plans for achieving productivity growth. Things like education revolution, infrastructure are very important. But we have to pay for it.”

    with Jonathan Pearlman

  • Shell faces shareholder revolt over Canadian tar sands project

     

    Shell, which will hold its AGM in May, has been one of the lead companies in moves to develop oil reserves that are either mined or sucked out of the ground using expensive and energy-intensive techniques. BP and Total of France are also engaged in the sector.

    Shell has insisted that “unconventional” hydrocarbon sources such as tar sands are all justified to ensure that the world does not run out of oil too soon.

    But environmentalists have ­condemned their exploitation as “the biggest environmental crime in history” and said it must be stopped before it tips the planet over into runaway climate change.

    Al Gore, former US vice-president and Naomi Klein, the author and campaigner, urged the Canadian government to abandon its support for tar sands at the climate change talks in Copenhagen.

    Shell disputes the scale of the pollution but also says it will use carbon, capture and storage techniques to mitigate any negative impact. This argument has not stopped environmentalists – or shareholders – from opposing the plans.

    “Given Shell’s level of commitment to oil sands there is a greater obligation to shareholders to reassure how it would cope under a number of scenarios,” said Niall O’Shea, head of responsible investing at Co-operative Asset Management.

    “What if carbon capture and storage proves too costly in the oil sands? What if sustained high oil prices and carbon regulation lead to switching away from marginal, high-cost, high-carbon sources? And then there’s the cost of cleaning up the locality. Companies must be more rigorous and transparent with their investors,” he added.

    John Sauven, executive director of Greenpeace UK said he was pleased that the Co-op and other investors were putting the oil company on the spot.

    “The exploitation of the tar sands is an environmental scandal on a massive scale, and is set to become a campaign battleground for years to come,” he said.

    But Shell played down the significance of the shareholder rebellion over tar sands and pointed out this unconventional source represented less than 2.5% of total oil and gas production.

    “The resolution is basically a request for further information around the economics and other aspects of our oil sands operations. The resolution is submitted by shareholders representing some 0.15% of our total outstanding shares,” it said in a formal response.

    But Catherine Howarth, chief executive of FairPensions, which has ­coordinated shareholder opposition to the tar sands investments, described the move as ­historic. “All (shareholders) are united in ­registering concern with the risks involved in Canadian oil sands. We expect that Shell’s 2010 AGM could prove a ­watershed in the history of corporate accountability,” she said.