The Federal Government’s release of its emissions trading green paper signals that Australia is prepared to change from its past stance of environmental vandal to a new, if somewhat reluctant, status of a reformed drunk needing the weekly AA meetings provided by an ETS to maintain its reforming zeal.

The green paper spares regional areas the initial financial blows from the ETS by initially shielding agricultural activities, land clearing and forestry activities. Regional industries should use this period of grace to embrace global environmental realities and develop the production niches that give them global advantages in affluent markets, where carbon neutrality reeks of virtue, and might one day return a market premium.

Leadership by regional industries and local governments will separate the wheat from the chaff in the global race for carbon accreditation where goods and services with a low carbon content and therefore environmental impact, will attract investment and the new breed of environmental entrepreneurs.

However recent press headlines report a long list of carbon dole bludgers, industries whose King Canute-like CEO’s held back the greenhouse tide for a decade or so, but now seem to require billion dollar lifebuoys so they can stay afloat. Insightful regions would be wise to let these CEOs float out to sea, but stream their trained workers towards the low carbon industries of the future. The stone age did not pass because of a market shortage of stones. Protecting these dumb and dirty industries will inevitably cause a sharper and more painful transition down the line.

The Government’s philosophical reluctance to not pick winners, but to invest $500 million in carbon capture and storage, belies the thermodynamic and engineering nightmare that this technology promises, if successful deployment is to happen. This complex legal and engineering nightmare is seemingly embraced by a nation lacking the intellectual acumen and project management skills to provide Melbourne an integrated transport ticketing system, without budget and time over runs of several orders of magnitude. This carbon capture dreaming is equivalent to a NASA moon shot.

By contrast renewable energy sources are here and they promise truckloads of financial and employment opportunities for much of regional Australia. The sunshine, moderate wind resources and relatively cheap flat land could locate solar thermal arrays and forests of wind turbines far from the NIMBY sensibilities of the urban elites, but close enough to the major nodes of electricity demand.

When Australia eventually gets past the shock of today’s petrol prices, it may realise that the real challenge is to produce transport fuels that are carbon neutral. This can only be achieved in a physical sense by growing vast areas of wood on cleared farmland, and converting wood to bio-alcohols through thermochemical conversion processes. Current biofuel systems that convert sugar cane and grain to ethanol offer a short term bridge, but can never give the volumes and carbon savings that the second generation processes based on wood can.

Regional areas can also use wood to generate bio-electricity and heat services. Some towns now heat their swimming pools with wood offcuts. Home space and water heating generally can get to a near carbon-neutral position if fuelled with locally grown wood. Thus regions have opportunities to help their household transition towards low carbon lifestyles, but only if they think ‘big picture’ and act aggressively to build the infrastructure, grow the fuels and develop the rewards of local employment and financial activity.

Human capital in regions will be sorely pressed to underpin the new low-carbon carbon economy because it relies on good skills in maths, engineering, chemistry and systems thinking. Australia’s transition to a rock gouging economy has left it poorly prepared for the environmental realities of the 21st century. Regional universities could be central to the low carbon transition but only if they re-engage with basic sciences and work in close partnership with regional industries.

It’s not long till the promised ETS starts to throttle the windpipe of many of Australia’s agricultural sectors particularly through the methane budgets of livestock production and the nitrous oxide emissions from fertiliser application. Proper accounting methods will reveal these realities on supermarket shelves and export consignment labels. We can’t hide behind the politician’s skirts forever.

Wise regions will embrace the future aggressively and fuel their own prosperity by seeking partners for the widescale deployment of renewable electricity infrastructure, and development of carbon neutral production systems for transport fuels. The ETS is nearly here and the future is in our own hands.

Barney Foran is a leading Australian futures analyst  who retired from CSIRO in 2005. He is now an adjunct research fellow at Charles Sturt University’s Institute for Land, Water and Society in Albury.