In a wide-ranging review of Australia’s economic policies and position by the OECD, climate change action was one of the four priority sets of recommendations. Australia can return to sustained growth, future-proof the economy and benefit from global decarbonisation – but it will take urgent action underpinned by a sustained and coordinated national strategy.
Emissions are declining, but nowhere near fast enough. That’s the summary from the new OECD Survey, which confirms Australia’s current federal policies around decarbonisation will fall short of even a baseline target of net zero by 2050. There are two key thrusts to the OECD’s assessment of our economic and decarbonisation future.
The first is around opportunity.
The survey points out that, as the global transition to a low carbon economy speeds up, Australia is uniquely placed to benefit. We have enormous wind and solar resources, extensive ocean access for exporting and a highly trained workforce. Climateworks’ Decarbonisation Futures report, released at the start of the pandemic, shows that, on the ‘other side of the pandemic’, the ‘rapid progress and plummeting cost of green technology provides an unprecedented opportunity for Australia to move to a net zero emissions economy.’ Its scenarios show that Australia can reduce emissions in line with limiting the temperature rise to 2 degrees – and importantly, given the difference 0.5 degrees makes, if governments, businesses and individuals go ‘all-in’, a 1.5 degree limit could be within reach.
Decarbonisation Futures confirms this will require action at ‘every level of government’ – as well as at the business and individual level – all supporting technology, development, demonstration and deployment. Through rapid, ambitious action, Australia can jump on the opportunities decarbonisation presents to the economy, society and environment – or risk getting left behind.
The OECD articulates the critical and immediate importance of implementing a ‘coherent and coordinated national strategy that defines clear goals and corresponding policy settings for the path to achieving net zero emissions.’ Climateworks 2020 report Recover and Reduce, illustrates how governments can assist our effective recovery by laying the foundations for a globally competitive economy in the future, ‘…providing support for infant industries that capture untapped state and territory comparative and competitive advantages. These advantages include established mining and primary industry sectors, abundant available land, renewable energy resources such as wind and sun, and well established education and research capabilities.’ The report also identifies opportunities to develop nascent low-carbon industries including lithium battery manufacturing, cobalt production, low-carbon steel, circular economy industries, renewable hydrogen and ammonia, biofuels, and anti-methane livestock solutions – industries with an estimated value of over $500 billion and a potential to generate over 400,000 jobs by 2050. The OECD Survey highlights that this will not happen without Federal Government support.
As well as supporting new technologies and industries, Australia can immediately accelerate the deployment of mature zero-emissions solutions, including renewable energy and more efficient equipment in sectors such as electricity, transport and buildings. Even within heavy industry, the Australian Industry Energy Transitions Initiative Phase 1 Report shows that existing and emerging technology solutions can address almost all emissions across industry supply chains: ‘Early uptake and effective integration of renewable electricity, electrification and green hydrogen can help achieve competitive costs for reliable decarbonised energy, and allow Australia to remain an energy and commodity export powerhouse.’
Nobody denies that decarbonisation is a big task. However, history shows that rapid adoption of technology, policy and social innovations can result in change much faster than has been conservatively assumed.
The second thrust of the OECD Survey is around risk. What if Australia doesn’t ramp up its decarbonisation action quickly or strongly enough?
With a low carbon global economy now inevitable, Australia not only risks missing out on new opportunities, but key exports will decline. As the OECD findings were released, Bloomberg Green reported on Australia’s Reserve Bank Governor Phillip Lowe’s statement that policymakers and investors around the world are focused on Australia’s climate policy going forward. ‘It’s important we have a positive story to sell there because if we don’t, and [an investor climate filter] is applied and people don’t like what they see, the cost of capital for Australia will go up, it will be more difficult for firms to raise funds and when they do, they’ll pay more. Australia has some particular advantages here and we need to be in a position where global investors can see those advantages.’
With time of the essence, our Federal Government has a number of forums in the diary where this level of commitment and action could be launched. First, it has promised a long-term emissions reduction strategy. The OECD Survey says it’s the time for Australia’s government to announce, ‘…a more coordinated, ambitious and stable climate change policy that defines clear goals and corresponding policy actions to achieve their goal.’ The second key diary date is of course, Glasgow, where the UN COP26 Climate Change Conference will be held this November. Countries will be expected to significantly ramp up their commitments, and Australia will be in the spotlight.
Published in the global context of ongoing pandemic challenges and the ongoing importance of economic stimulus, the findings of the OECD Survey are confirmation of the further action on climate needed in Australia and the strong case for it.