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The Business Council of Australia (BCA) says an ambitious reduction in greenhouse gas emissions would require an investment of half a trillion dollars, ahead of the government’s impending deadline for its own 2035 target announcement.
In a report released on Friday, the BCA warns Australia could need up to $530 billion in capital investment, an additional 59,000 workers in the electrical trades and engineering sectors, and major reforms of policies to streamline approvals for renewable energy projects to cut carbon emissions above 70 per cent by 2035. This was the most ambitious of the three scenarios modelled by the report.
While the government has not revealed the exact percentage it wants to reduce emissions by, the Coalition is warning that a 70 per cent reduction would be very expensive for taxpayers, while the Greens have previously said anything less than 71 per cent would be a step backwards.
BCA chief executive Bran Black told ABC Radio on Friday: “Essentially, what we’re doing is trying to make sure that Australia’s got the clarity it needs on the steps that it would be required to take if it’s to announce an ambitious but also achievable target.”
Putting a dollar figure on reducing emissions
The report modelled three scenarios for how Australia can reduce its greenhouse gas emissions to differing degrees via investment, reforms, and policy interventions. The least ambitious scenario, a 50 per cent reduction by 2035, involved an investment cost between $210 billion and $300 billion.
The most ambitious scenario, 70 per cent plus reduction, was in line with the Climate Change Authority’s draft advice to the government, which recommended a 65 to 75 per cent reduction from 2005 levels.
According to the BCA, this would incur a net transition cost of between $435 billion and $530 billion.
The group refrained from endorsing any particular scenarios.
Responding to the BCA report, Opposition environment spokesperson Angie Bell told ABC radio on Friday: “These are enormous numbers.”
“What really has been highlighted today and taxpayers should be aware, a 210 billion cost to the taxpayer or possibly even up to 530 billion dollars,” she said.
Mark Ogge, principal adviser at the Australia Institute, who specialises in the gas industry and impacts of climate change, said the figure, while high, is not a price tag but an investment.
“It’s not something the Australian public would have to wear. It’s an investment in the economy. We already have enormous investment in the Australian economy, it’s just that we’re putting into the wrong things that don’t help Australia,” Ogge said.
Greg Bourne, a councillor with the Climate Council, said the number is reasonable for the amount of structural change needed.
“I personally don’t believe it’s a tough pitch,” he commented.
“You can look at these things as ‘it’s a cost, oh my god’, but you can flip it around and think, ‘hang on,’ this is an investment in new technologies, in new businesses. It is actually value adding to our GDP as we go forward,” Bourne said.
Ogge and Bourne emphasize that the report doesn’t account for the financial implications of ignoring climate change.
Government deadline looms
The government will announce its 2035 target by mid-September as part of its commitment to the Paris Agreement. The agreement, which was adopted by 195 countries to help collectively reduce global warming, requires countries to set targets every five years.
In its preliminary advice last year, the Climate Change Authority (CCA) — an independent advisory body on emissions targets — said a cut of 65 to 75 per cent would be ambitious but achievable with stronger action, setting the benchmark for its final recommendations to government.
The CCA indicated that achieving a 75 percent reduction target is essential to keep global warming within a 1.5-degree limit.
By mid-September, Climate Change Minister Chris Bowen is expected to unveil Australia’s Nationally Determined Contribution. Source: AAP / Mick Tsikas
Bowen told ABC News on Thursday that Australia’s target will be “ambitious” and “achievable”.
“You can have a very high target which I couldn’t explain to the Australian people how we’re going to achieve it, or we could have a very low target which would just be business as usual, doesn’t really drive further innovation, further investment, further policies,” he said.
Ogge said the September deadline is an opportunity for Australia to “lift its ambition”.
“The more ambitious a target, the better it will be for Australia’s economy, the better it will be for jobs, investment and the climate.
Meanwhile, Bell said while the Coalition was yet to do modelling of its own, they are “working methodically through the process of reviewing our emissions and energy policy, which I think is what we owe the Australian people”.
