On carbon tax eve, how is the health system placed?

As Australia moves to begin pricing carbon emissions, the health sector needs to step up and engage in the climate change debate, according to Prue Power, CEO, Australian Healthcare & Hospitals Association (AHHA).

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How well prepared is the Australian health system for dealing with climate change?

Prue Power writes:

It may surprise many to know that the health sector is responsible for seven per cent of carbon emissions from all buildings in Australia. [1]

I was surprised to learn this recently – I wouldn’t have slotted hospitals and health services as being big carbon emitters.

In the scheme of things they are not – energy used by buildings (both residential and commercial) accounts for around 20 per cent of our greenhouse gas emissions in total, so seven per cent of that 20 per cent is a relatively small slice of the overall carbon pie. But by no means is it an insignificant one. [2]

Hospitals are high-energy intensity buildings – a factor of both the energy-intensive equipment that they use (such as diagnostic imaging and operating theatre equipment), and the fact that they operate 24 hours a day, 365 days per year.[3]

According to one estimate, on average a hospital requires at least twice as much energy per square metre as an office building.[4]

It is timely to think about the health sector’s carbon footprint, and about how well prepared we are to deal with the impacts of climate change over coming years and decades. This is why the AHHA has recently joined the Global Green and Healthy Hospitals Network, a global network dedicated to reducing the health sector’s ecological footprint, and promoting public environmental health.

Healthcare services and hospitals will not be directly affected by the carbon tax which comes into effect from 1 July, though they may experience some indirect flow-on costs, in the form of higher energy prices.

It is difficult to say precisely what the impact of higher energy costs on hospital budgets will be, though it is possible to say that energy costs make up only a very small component of hospital budgets. In a very small sample of major metropolitan hospitals in Victoria and Queensland analysed by the AHHA, energy costs made up approximately 0.79 per cent of total recurrent/operating costs. Any increase in energy costs will therefore have only a marginal impact on overall operating costs.

Even on a 10 per cent increase in energy costs scenario (the amount the Commonwealth Treasury expects household electricity costs to rise), the average increase in total operating costs would be 0.08 per cent.

Nonetheless, in multi-billion dollar state public hospital budgets, a 0.08 per cent increase can mean several million dollars. The Commonwealth argues though, that both current and future hospital financing arrangements effectively have in-built compensatory arrangements which should negate any impact – because current funding for public hospital services provided by the Commonwealth is indexed taking into account changes in health prices (including operating costs) year on year. And from 2014-15, the Commonwealth will begin to increase its funding contribution to 50 per cent of the efficient growth in hospital costs, which will also incorporate increases in hospitals’ operating costs (see these reports in the Herald Sun and The Daily Telegraph).[5]

Improve energy efficiency

In any case, there is significant scope for the sector to improve its energy efficiency and reduce its carbon footprint – through small measures such as installing energy efficient lighting and switching off lights and equipment when not required, as many hospitals are already doing.

Greater energy efficiency should also be built into new hospital infrastructure – particularly given the large number of major hospital and health service infrastructure projects funded by the Australian Government over the last few years which are now underway around the country.

Of course, the health sector also has a much broader interest in the climate change debate: the impacts of climate change on human health.

There has been relatively little public discussion about this important aspect of the climate change debate in Australia, but the consequences will be significant.

Health impacts may rival those of tobacco

Climate experts now agree that the health impacts of climate change, such as the spread of infectious diseases, and illness and fatalities related to severe weather events, are significant, and pose a huge threat for the future.[6] A recently published academic article suggests that in the medium and long term, climate change could constitute a health crisis at least as wide-ranging as that currently caused by tobacco.[7]

The most vulnerable members of the community will be most at risk: in Australia, this means the very old, the very young, people with chronic disease, people in communities with low socioeconomic status, and Indigenous communities.[8] Around the world, unmitigated climate change risks entrenching global health inequalities between rich and poor countries.[9]

Given the significant health impacts of climate change, reducing carbon emissions will therefore have health benefits for the population.[10]

For example, according to a report from the European Health and Environment Alliance and Health Care Without Harm Europe, European Union countries could reap additional health and productivity benefits of up to €30.5 billion per year by increasing its greenhouse emissions reduction target from 20 per cent (from 1990 levels) to a 30 per cent reduction in domestic or internal emissions by the year 2020. This is in addition to the very significant benefits which will accrue from moving to the current 20 per cent target by 2020.

While more extensive economic modelling on the health impacts of climate change has not been done in Australia, it is reasonable to assume that the general findings of the European study will apply: that is, there are considerable health and productivity gains to be made from reducing carbon emissions and the health impacts of carbon pollution – and that these are likely to run into the billions of dollars, particularly when projected over the next 50 and 100 years.

It is also worth noting also that some policies aimed at reducing carbon emissions can have other health benefits (and potentially vice versa): for instance, encouraging (and providing the infrastructure to enable) people using their cars less to reduce carbon pollution by walking or cycling will also have health benefits, through greater physical activity and improved fitness.

While the health benefits of acting on climate change are clear-cut, opinions differ as to how prepared the health system itself is for the broader challenges that the changing climate and warmer temperatures will present.

According to the Climate and Health Alliance (CAHA) –  not very. CAHA argues that the Australian health sector is ill prepared for the risks posed to health by climate change, and that health protection has been overlooked in Australia’s climate adaptation approach.[11] CAHA and other groups including the AMA have called for the development of a National Strategy for Health and Climate Change.

As Australia moves to begin pricing carbon emissions, the health sector has an important role to play in the climate change debate – both through reducing its own carbon footprint, through promoting climate policies which will reduce the impacts of climate change on human health, and through ensuring the preparedness of the health system for the challenges to it that climate change and warmer temperatures will bring.

•  Prue Power AM is the Executive Director of the Australian Healthcare and Hospitals Association (AHHA). The AHHA is forming a network of individuals and organisations interested in hospitals/healthcare and climate change issues. In conjunction with the Climate and Health Alliance, the AHHA is also holding a Policy Think Tank on these issues in Sydney on August 22, featuring Dr Peter Orris, from the University of Illinois Hospital and Health Science System and senior Advisor to Health Care Without Harm (HCWH). If you are interested in being part of these activities please see here.

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And more reading and listening…

Meanwhile, the community centre is turning its attention to the issue, conducting what it claims as the “world’s first national survey on climate change and the community sector.

ACOSS says the community welfare sector’s client base – people experiencing poverty and disadvantage – is the most vulnerable to climate change and extreme weather impacts of any group in Australia.

It says:

“As climate change worsens the impacts of extreme weather events, more people will turn to our sector for all types of assistance – in times of crisis and beyond. Yet, we lack a comprehensive understanding of whether the sector itself is well prepared to cope with these impacts.

This is also a large gap in the knowledge across the globe. This information gap needs to be urgently addressed so that we can ensure our own resilience to negative climate change and extreme weather impacts, help to foster resilience within client groups and the community, and provide solutions to governments at all levels as they seek to develop national, local and regional responses to climate change and extreme weather events.”

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Injecting some calm analysis into the debate

If you didn’t catch it, it’s worth taking time to listen to this Radio National interview from last night with Professor Ross Garnaut, Vice-Chancellor’s Fellow and Professorial Fellow in Economics at The University of Melbourne, Distinguished Professor of Economics at The Australian National University, and the government’s former climate adviser.

Update, July 2: And more from Ross Garnaut in this Q and A at The Conversation.

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Which companies will pay the tax?

Business Spectator has the list of companies that will be directly affected by the tax, broken down on an industry basis. (This link was added after initial publication of this post).

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References for Prue Power’s article