Environmental Industries Sector Profile -- Australia

1. Sector Overview Estimates of Australia’s environmental goods and services market vary however it has been reported as exceeding A$22 bill p.a. and growing at the rate of 7% per annum, the Australian environment industry plan targeting A$40 bill p.a. expenditure by 2011. Current employment in the industry is conservatively estimated at 150,000 people and growing rapidly, exports of goods (excluding services) are around A$2 bill p.a. and at least one third of environmental goods and services consumed locally are imported.

Over the last three years Australia has suffered a long-term disastrous drought which is being attributed to climate change. Key areas of climate change, water collection management and reuse, and desalination projects therefore have strong government support and funding - A$24 billion committed to water infrastructure in the past year by Australian governments, A$4 billion on climate change, and the Government’s "Action Agenda" targets $4 bill p.a. renewable energy technologies by 2010.

The breakdown in the historical expenditure is not very detailed however a large part of expenditure (approximately 25% each ) has traditionally been in water & wastewater treatment, and waste management, the balance spread over soil & groundwater protection and remediation, air pollution control & climate change measures, cleaner production & eco-efficiency, sustainable cities & green building, and environmental biotechnology.

Australia is a major generator of solid waste, among the top 10 in OECD, 54% disposed to landfill, and there is increasing interest and activity in waste management & recycling, waste to energy and in conversion of biomass into bioproducts including biofuels.

Biofuels as an alternative transport fuel is a growing and dynamic industry in Australia. The Australian Government has set a target of at least 350 mega litres (ML) of biofuels production by 2010. In addition, some State Governments are introducing ethanol-blend transport fuel mandates. The capacity for biofuels industry development in Australia is influenced by the comparative cost advantage to the world oil price, available supply of economic feedstock, investment in new or expanded plant and government policy.

Australia is far more dependent on coal for the production of electricity than most OECD countries, 94% coming from fossil fuels. Of the 6% share from renewable energy, major contributors are biomass in the form of bagasse (39%) used to generate electricity and steam, wood (39%) for home heating, hydro-electricity (21%) and solar (1%). Renewable energy contributes 11% to electricity generation, most from large-scale hydro-electric schemes.

Renewable energy is a significant element of Australia’s future energy needs, having a natural endowment of wind, solar, wave and land resources such as geothermal. Many Australian companies and agencies are world leaders in new technologies across the range of renewable resources e.g. thin-film solar cells, hybrid solar-wind-diesel remote area power supply (RAPS) systems and bio-energy. The Australian Government has a number of measures to support the renewable energy industry including a mandatory renewable energy target, a low emissions technology demonstration fund, a solar cities programme and funding for research, development and commercialisation of innovative renewable energy technologies. State governments have also introduced renewable energy targets and support technology development and demonstration through competitive funding programs.

Australia recently joined the Asia-Pacific Partnership on Clean Development and Climate to pursue technology solutions, and committed to introduce an emissions trading scheme, also increases in the renewable energy target which will result in major alternative energy project development. It is expected that the renewable energy share of energy mix will reach 20% by 2020. Australia is active in APEC and UNFCCC committees in the development and deployment of environmental technologies.

Australia has a well established and sophisticated environmental industry with strong growth and new players active in the emerging sectors. There are a number of major local companies active in the sector and some have expanded into overseas markets; Worley Parsons, Babcock & Brown, Sims, Transpacific, Visy, Thiess, Brambles, Transfield. The market has attracted many overseas companies including Suez, Veolia, URS, KBR, SKM, Parsons Brinckeroff and many others. Canadian companies established in Australia include Hatch, SNC-Lavalin, Golder, GL & V, with others such as Conporec, Trojan and Dynamotive partnering with local companies.

Australia ’s environmental industry has a reputation for excellence in environmental sciences, research and the development of innovative technologies and services. It has a sophisticated R & D network, led by CSIRO, a government research body employing 8000, which teams with industry in developing and commercialising technologies, and a number of government environmental action plans and public-private centres of excellence seeking solutions to specific problems. These organisations are keen to partner with overseas organisations on research and commercialisation and there are already a number of MOU’s established with Canadian partners. There is interest too in partnering in local or Canadian investment projects particularly in the emerging environmental and alternative energy sub-sectors.

2. Market and Sector Challenges (Strengths and Weaknesses)

Australian distribution and business practices are similar to those in Canada and there are no specific cultural barriers, and no trade restrictions or other non-tariff barriers exist. Australia has a FTA with the US and is part of an APEC group seeking reduction of trade barriers for environmental goods through the WTO.

A number of Canadian banks, accounting and legal experts and organisations are established in Australia and may be accessed via the Consulate or the Canadian-Australian Chamber of Commerce. There are a number of "Doing Business in Australia” publications to assist, examples may be viewed and downloaded at the following hotlinks.

There can therefore be excellent opportunities for Canadian firms to appoint distributors, form partnerships, manufacture under licence, and establish strategic alliances with Australians having similar interests, or complementary products and services. The Consulate can also assist in locating partners for technology transfers or investment.

In addition to the increasingly competitive local environmental industry there is strong competition from countries such as US, Germany, France, UK, Japan, and Scandinavia, these competitors being particularly well established in the water, waste and consulting industries. Nevertheless local companies and authorities have a healthy respect for Canadian companies and their technologies and a good reception is normally received. Canadian companies which have developed expertise, niche products, technologies and established markets in Canada often can do so readily in Australia. Several examples were provided in the preceding section.

See the full Market Report on the Canadian Trade Commissioner web site fro a complete breakdown of sub-sectors in the environmental business sector in Australia, as well as key contacts and other sources of information.

Extracts from Environmental Industries Sector Profile – Sydney, Australia, December 2008, Canadian Trade Commissioner Service

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