Pre-Conference Workshops
Date: Tuesday 6 February 2024
Location: Crawford School of Public Policy, ANU
Capacity for the workshops is limited - please register early to secure your place.
WORKSHOP 1: Australia’s net zero trajectory – exploring the economic implications
Conveners: Stuart Whitten, CSIRO; Rebecca Cassells, The Treasury, Australian Government; and Professor Frank Jotzo, The Australian National University
Time: 8:30am welcome tea and coffee, workshop: 9:00am - 5:00pm
In-person only
In-person only
Workshop overview
There is no greater challenge for the applied economics profession in Australia than supporting the transition to net zero emissions. The structure of Australia’s economy and especially our electricity sector, our geographic context which influences both our energy footprint and future options, and the legacies of decisions past and present all influence the paths Australia has available to support the two aspects of a net zero economy – to decarbonize the economy on the one hand, and to develop a negative emissions economy on the other. This workshop will focus on the overall challenge of achieving net zero for Australia; with focused sessions on the electricity sector, and regional challenges and opportunities facing the nation.
The objectives of this workshop are to:
- Explore the state of knowledge and key aspects of a net zero transition for Australia encompassing the interaction with global targets and achievements to date, economic implications, and similarities and differences to our near neighbours.
- Explore the decarbonization challenges in the Australian electricity sector alongside the implications for demand from electrification of other current energy sources.
- Explore the regional opportunities and challenges of delivering net zero for Australia, and a lesser extent the region.
- Engage in a timely discussion of the key policy challenges as Australia grapples with reaching net zero.
The workshop will be timely for the many policy and analytical professionals who are grappling with understanding the scale and implications of the net zero transition for Australia.
Attendees will have the opportunity to hear a diverse set of perspectives on the economic implications of a net zero transition in Australia, engage with presenters in panel sessions, and to leave with an understanding of the practical and policy challenges across the economy of achieving net zero emissions in Australia. It is our hope that participants will leave better informed to consider and contribute to urgent debates around the speed of transition, including the next Nationally Determined Contribution target for 2035, and the sectoral pathways in development by the Australian Government.
This workshop is for you if you are:
- A professional supporting policy development in state and national governments and want to know more about where your work fits in the bigger picture
- A consultant keen to understand the net zero state of play
- A stakeholder keen to identify sectoral challenges and opportunities
- A researcher wanting to identify the applied research needs to support a net zero transition
| SESSION 1: Setting the scene: What a net zero transition means for the Australian economy | |
|---|---|
| Global net zero framing and considerations | Frank Jotzo, ANU Professor of environmental economics and climate change economics |
| What does a net zero pathway look like for Australia | George Verikios, CSIRO Net Zero Pathways Initiative Lead BI (IEA modelling of a net zero pathway for Australia) |
| Key Net Zero Transition Challenges for the Australian Economy | Alex Heath, Head of Climate and Energy Division. Australian Government Treasury |
| SESSION 2: Transitioning our electricity and energy systems | |
|---|---|
| Scale and timing of the electricity transition challenge for Australia | Luke Reedman, Lead – Energy Transition Pathways, CSIRO Energy |
| What role for Hydrogen in Australia’s future energy sector? | Fiona Beck – ANU Project convenor, ANU Grand Challenge: Zero-Carbon Energy for the Asia-Pacific |
| What role for Bioenergy in Australia? | Mengyu Li, University of Sydney, Integrated Sustainability Analysis, Faculty of Science |
| SESSION 3: The Net Zero transition in Australian regions and sectors | |
|---|---|
| What do net zero pathways mean for land use in Australia | Ray Marcos Martinez, CSIRO Net Zero Pathways research Land Use Stream Lead |
| Regional net zero transition implications for Victoria | Martin Jones, Technical lead for economics and energy in Climate Action Policy, Victorian Government |
| The role of Renewable energy precincts in transition | Chris Briggs, UTS |
| Sectoral implications of a net zero transition for Australia | Anna Skarbek, Climate Works |
| SESSION 4: Economic policy and the net zero economy | |
|---|---|
| What are the critical ‘hard to achieve’ policy challenges facing Australia from your perspective |
Kath Rowley, DCCEEW Erwin Jackson, Investor Group on Climate Change, Jee Karunarathna, Net Zero Economy Agency |
Each session will comprise a mix of applied researchers presenting analytical results and policy makers who will explore the policy challenges and in some instances the policy responses. The intent is to generate a more active discussion amongst all participants (research presenters, panel contributors, audience).
WORKSHOP 2: Natural Capital: State of Play and Future Challenges
Convenor: Grant Leslie, Balmoral Group, Sydney, Australia
Time: 8:30am welcome tea and coffee; workshop 9:00am- 4:00pm
In-person only
Workshop overview
Natural capital is now at the forefront of policy thinking, with nature repair markets, natural capital investment, environmental finance and natural capital accounting on the policy agenda in various jurisdictions. The Dasgupta Review highlighted the value of nature to society, as well as the risks associated with continued degradation. Most recently, the Task Force for Nature-related Financial Disclosure (TNFD) has released its final guidelines, and governments across the country are considering their responses.
The aim of this workshop is to bring together experts and leaders to tackle the key issues and challenges in this critical set of areas concerned with natural capital.
The topics covered will include: the potential role and scope for private investment via voluntary markets; issues in market design, including appropriate and effective governance and regulation; interjurisdictional issues; the nature of property rights and financial instruments; the potential impact of rolling out TNFD; and the importance of data, metrics and natural capital accounting protocols. These topics contain within them significant challenges, which will be raised and addressed throughout the workshop, including understanding the drivers of private demand for nature investments; the collection, management, and integration of major data sets; and the critical issues of ensuring integrity and avoiding major greenwashing. For natural capital approaches to result in a significant positive change, a careful and coordinated approach bringing together specialist researchers, policy professionals, sectoral representatives, and practitioners in multiple areas (such as environmental finance and corporate sustainability) will be required, and this workshop will be an early step in this process.
This workshop will be relevant to researchers in environmental economics, environmental valuation, natural capital accounting, and market design, as well as to professionals in the environmental finance sector, ecological/environmental consultants, farm sector representatives and government policymakers and advisors.
Workshop format and presenters
Grant Leslie of Balmoral Group will chair this workshop, including providing an opening context-setting address. The rest of the day will be a mix of presentations and panel discussions on across the key workshop topics.
Speakers and panellists will include:
- John Rolfe (Central Queensland University): Environmental valuation and environmental markets.
- David Pannell (University of Western Australia): Property rights in nature markets.
- Karel Nolles (Aton): State of play in environmental markets and finance based on his experience in green banking and consulting, with particular reference to critical data management and governance issues.
- Liz Heagney (Farming for the Future / Aton): Natural capital in productive systems.
- Valerie Seidel (Balmoral Group): An international perspective on natural capital initiatives.
- Gillian Mayne (Department of Environment and Science, Queensland Government): Current natural capital actions and programs in Queensland, Australia.
- Megan Evans (University of NSW) and Andrew MacIntosh (Australian National University): Critical perspectives on nature markets and the use of offsets in environmental policy.
- Michael Vardon (ANU, Fenner School of Environment and Society); Natural Capital Accounting.
WORKSHOP 3: Real Options for Adaptation and Resilience (ROAR): New software for real options analysis
Convenors: Tim Capon and Greg Hertzler, CSIRO, Canberra, Australia
Time: 8:30am welcome tea and coffee, workshop: 9:00am – 3:30pm
In-person only
Workshop overview
The workshop will provide an interactive introduction to the Real Options for Adaptation and Resilience (ROAR) software in Excel, R, and R Shiny. Real options analysis evaluates the trade-offs between acting now versus retaining the flexibility to act later. It can be applied to a range of research topics and applications relevant to agriculture and the environment such as climate adaptation, the adoption of new technologies, and the resilience of alternative agricultural production systems. The workshop will demonstrate how to use the ROAR software which provides tools for a) estimating stochastic processes, b) for calculating option values, state decision thresholds and the expected times to reach biophysical or decision thresholds, and c) for analysing sequences of decisions, and the resilience of ecological or agricultural systems. Representative examples and case studies will be used to help participants relate their research or policy questions to the analytical framework.
Although many people understand the importance of option values in agricultural and environmental economic contexts, they have been unable to apply real options concepts without specialised expertise. This workshop aims to make the application of real options more accessible to AARES members by providing training in the new Real Options for Adaptation and Resilience (ROAR) software. This software will help support a community of practice that further develops and applies these concepts across a range of research and policy contexts.
The workshop has three overall objectives:
- To help build a community of practice among applied economists and scientists in real options analysis.
- To identify problems that researchers wish to solve and guide them in the methods and tools to solve them.
- To get feedback from workshop participants to enhance the community of practice, methods of analysis, software, and documentation.
The workshop is relevant to people interested in understanding how the value of flexibility under risk and uncertainty affects the adoption of new agricultural or environmental management approaches and people interested in learning how to model and measure aspects of resilient systems. Participants will learn how to solve real options problems using the ROAR software. No background knowledge of real options analysis is required, although this workshop would be well-suited to people with some experience modelling using Excel or the R statistical software. This workshop is ideal for postgraduate students who already have, or can generate, time series that represent how biophysical or economic outcomes are affected by variability in prices, temperatures, etc., and wish to analyse scenarios of ‘with’ versus ‘without’ some new technology or practice. For example, users of APSIM or other models can learn how to estimate option values for new agricultural approaches, the likelihood of adoption, or the resilience of new approaches under alternative climate scenarios.
Workshop format and presenters
The workshop will include a mix of presentations, experience interacting with the ROAR software, and discussions about case study applications to agricultural and environmental research problems.
- Tim Capon will introduce the types of research problems the ROAR software can help to solve, demonstrate recent applications of the ROAR software to climate adaptation and agroforestry, and guide discussion about future applications and extensions to this analytical approach.
- Greg Hertzler will introduce the theoretical concepts behind the real options approach and demonstrate how the new software calculates option values, how to use expected times and probabilities for switches between different agricultural production regimes to investigate adoption decisions and the resilience of agricultural and ecological systems to endogenous perturbations or adverse shocks.
The workshop will be roughly structured as follows:
- Introduction to real options: What is real options analysis and how can it be applied to analyse adoption problems and the resilience of agricultural and environmental systems? The introduction will cover the workshop aims and outcomes, including the relevance of the approach to research and policy, identifying the types of relevant problem, and the relationship between the real options analysis workflow and benefit-cost analysis. Examples of research and policy problems in agricultural and environmental contexts will be used to introduce the analytical framework, including climate adaptation in agriculture based on Sanderson et al.’s (2015) wheat-sheep example, and the analysis of resilience building on Grafton et al. (2019) and related concepts.
- Introducing the software: A combination of R Shiny and PowerPoint presentations will be used to show how the ROAR software relates to the elements of the real options analytical framework. An outline of the analytical framework will be used to show how using the expected time to a decision threshold can help us analyse how the value of flexibility affects adoption and resilience.
- Software demonstration: Interactive with demonstrations of the software in Excel, R, and R Shiny. This session will show how ROAR can help answer a range of questions, such as:
- “What is the expected time until reaching a biophysical threshold?” by estimating the distribution of times until reaching this threshold.
- “What is the value of a new technology (e.g., drought-tolerant wheat variety) worth to a farmer even if they don’t immediately choose to adopt it?” by estimating the value of having the option to adopt a new crop variety.
- “What is the expected time until a decision-maker adopts a new approach?” by estimating the state decision threshold value and the distribution of times until reaching this threshold.
- “How likely are they to adopt the new technology in the next 5 years?” by looking at the distribution of times for the probability of adoption within 5 years.
- “Is agricultural production more resilient with this new technology?” by comparing scenarios with and without a new technology in terms of the expected time until reaching decision thresholds to switch to the next best alternative form of agricultural production.
- Discussion of applications: A guided discussion of applications of the approach, including providing participants with opportunities to follow up with workshop convenors after the conference.
