G7 summit shows Australia lags on global green competitiveness

While Germany, Italy and the United States will participate in the G7 summit as global leaders in green competitiveness, Australia will attend as a ‘green laggard’, according to a new global analysis published by Monash University

The report ‘Navigating the green transition: insights for the G7’ was compiled by  Dr Penny Mealy from SoDa Labs in the Monash Business School and Pia Andres of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.

Navigating the green transition: insights for the G7 details

Navigating the green transition: insights for the G7 presents an analysis of green competitiveness since 1995 of the 11 countries in the G7 Leaders’ Summit, and China.

Germany ranks first globally in terms of the range and number of technologically advanced green products known to be strong drivers of economic growth and development. 

Italy overtook the United States in the 2000s and currently occupies second place in the world rankings. Other leading nations include China, Japan and the United Kingdom.

Australia’s green competitiveness has declined over the past 20 years and it now barely ranks in the top 100 of 231 countries and territories that were assessed (ranked #96).

Australia is in the least favourable position to competitively export products with benefits environmentally cited with 12 green strengths compared to Canada’s 59 and China’s 153. 

“It’s heartbreaking to see Australia lagging other nations, when it really ought to be a leader,” Dr Mealy, Research Fellow within SoDa Labs in the Monash Business School and Research Associate at the University of Oxford, said.

“The writing has been on the wall for some time. Demand for emissions-intensive products is on the decline, and countries are now seeking to preferentially favour trade in green goods.”

How did Monash University reach these conclusions?

The authors used a new tool, the ‘Green Transition Navigator’, that was launched earlier this year and based on research published last year in the journal ‘Research Policy’.

The Green Transition Navigator maps strengths and opportunities in the green economy for 231 countries and territories.

The tool shows each country’s Green Complexity Index (GCI), which measures both the number and the complexity of green products that it is able to export competitively.

It also shows Green Complexity Potential (GCP), which measures the relative ease with which a country can be competitive in sophisticated green products and technologies.

Some existing green competitive strengths for Australia include electric signal, safety and traffic controls and rail/tramway construction materials, which are likely to be in greater demand as greater investments are made in cleaner modes of public transport. 

What is Australia’s competitive way forward?

When it comes to green potential opportunities, Australia has comparably low proximity to most of the green products used in this analysis.

Some relatively proximate opportunities include tamping machines and road rollers, which are used in recycling and solid waste treatment processes. The underlying data does not yet capture the ‘greenness’ of countries’ production processes.

For example, Australia’s strong potential to capture products such as ‘green’ steel, which is made from hydrogen rather than coal, is not yet accounted for. 

“China has rapidly increased its competitiveness in green products over the past 20 years and is now the world leader in exporting solar photovoltaic cells, fuel cells and electric soil heating apparatus, among other products,” Dr Mealy said. 

“Australia, on the other hand, has seen a significant decline in its green production capabilities over the past two decades and now lags behind many countries in terms of its capacity to competitively export products relevant to the green economy.”

“Its mission critical for Australia to proactively decarbonise production processes by investing in new productive capabilities that facilitate thriving in the green economy.” 

“Australia is endowed in renewable energy, and has a fairly decent record in green patenting, but its global export competitiveness is still underpinned by coal, gas and iron ore.”

Ms Andres said, “Our analysis shows that Germany has consistently held its position as a ‘green leader’, followed by Italy and the United States.”

“These countries currently have productive capabilities that allow them to competitively export a wide range of ‘complex’, or technologically sophisticated, green products.” 

“Competitiveness in green products allows countries to take advantage of the green transition.”

“Competitiveness in products with higher complexity is also important, as it has been shown to enhance countries’ overall economic growth and diversification prospects.”

Climate change and transition to net-zero have risen to the top of the agenda in many countries in recent years and will be an important topic of discussion at the G7 summit 2021.