(AU) Net Zero Emissions By 2050 Push Is On, Whether The Federal Government Follows Or Not

ABC News - Rachel Pupazzoni

Energy Australia and AGL both say they are on track to be carbon neutral by 2050. (ABC Gippsland: Jarrod Whittaker)

Key points Central banks warn that failing to reach net zero could wipe 25pc off GDP by the end of the century Energy giant AGL and super fund Hesta are both pursuing the goal of net zero emissions by 2050 The Federal Government says it is committed to net zero emissions "in the second half of the century"

The chorus from the business and finance community aligning itself with a net zero carbon emissions target by 2050 is reaching a crescendo.

The Reserve Bank of Australia and 65 of its peers recently released a report, warning that failing to slash emissions to zero could wipe 25 per cent off global GDP by the end of the century.

"If we ignore the risks, the potential economic costs and financial risks that we see could be catastrophic," said Sarah Breeden, the author of the Network for Greening the Financial System report and executive director for UK Deposit Takers Supervision at the Bank of England.

In its modelling, the central bankers' report said if emissions reductions schemes were implemented now and became more aggressive over time, the hit to GDP could be reduced to closer to 4 per cent by 2070.

"If we act now, there is a good chance that we might keep global warming to well below 2 degrees [Celsius]," Ms Breeden said.

The warning from the world's top bankers is being echoed by the business community.


The risk of hitting an economic wall (Rachel Pupazzoni)

Big emitters target zero

Australia's largest and oldest energy provider, and the country's biggest carbon emitter, AGL Energy, has set a net zero emissions target by 2050 and it is tying its executives' long-term bonuses to that goal.

"For executives to access that long-term bonus scheme they have to both be profitable, invest profitably and get there in a more sustainable way," AGL's chief executive Brett Redman told The Business.

"So, this is about a set of goals that are about being profitable and reducing carbon, not profitable or reducing carbon."

Its customers will also be able to offset emissions from the power they buy.

"Every time a customer buys electricity from us, they'll have the option to take up a carbon-neutral product with it and, by 30 June next year, it's going to be company policy that every product and service you buy from AGL will come with a carbon-neutral option."

The Australian Energy Council, which represents 24 major electricity and downstream natural gas businesses, including AGL, has also pinned its stripes to net zero emissions by 2050.

"Our members have long accepted the science of climate change and the need to decarbonise the economy," said AEC chief executive Sarah McNamara.

The AEC is calling for clear direction about a path to reach that goal.

"We have consistently argued for well-designed, market-based and stable national policy settings around which our members can invest."

Government targeting net zero after 2050

Energy and Emissions Reduction Minister Angus Taylor was not available for an interview, but his office issued a statement reaffirming the Federal Government's climate change policy.

"The Government has a very clear 2030 emissions reduction target and we have a joint global commitment through the Paris agreement to deliver net zero emissions in the second half of the century," the statement read.

"The Government's technology investment roadmap will play an important role in reducing emissions, creating new jobs and supporting Australia's COVID-19 economic recovery."

One of Australia's biggest industry super funds, Hesta, will cut the carbon emissions in its investment portfolio by 33 per cent by 2030, with a target to reach net zero by 2050.

The head of the $52 billion fund, Debby Blakey, said it was about managing the risks of climate change while delivering returns for members.

Hesta chief executive Debby Blakey says her fund needs "policy certainty" to guide its long-term investments. (Supplied: Hesta)

"Climate change is a very real risk, a material financial risk, and it needs urgent action," she said.

"We would like to see more certainty in terms of Federal Government policy.

"That's important for a fund like Hesta because government is an enabler of the environment that we invest in, and if we're going to invest in long-term investments that support that transition to a low carbon economy, it's incredibly important that we have policy certainty."

Big emitters face small returns

Even without a government-mandated price on carbon emissions in Australia, energy companies have not been delivering for shareholders.

An examination of stock market performance by The Australia Institute, supplied exclusively to The Business, reveals the energy sector was the worst performer in the Australian stock market since 2010.

"Fossil fuels have not only damaged the climate over the last decade, but have damaged most Australians' superannuation savings," said Richie Merzian, director of the institute's climate and energy program.

"If you had invested $100 in the energy sector, which is fossil fuel company-dominated, at the start of the decade, you'd have $104 at the start of this year."

Its calculations show that investing that same $100 in an ASX 300 company that was not an energy stock would have delivered an average return of $237.

Energy has underperformed every other sector of the ASX 300 since 2010. (Supplied: The Australia Institute/S&P data)

In the first quarter of this year, when the coronavirus crisis saw markets crash in late March, Australian energy stocks lost twice as much value as the broader ASX 300.

Energy stocks were hit twice as hard during the coronavirus crash in the first three months of 2020. (Supplied: The Australia Institute)

"It would come as a surprise to most Australians, who are exposed to indexed funds through their superannuation, they would have had a hit to it because of these fossil fuel companies," said Mr Merzian.

"Many large superannuation companies and a growing number of banks are all divesting."

Lighting the city green

The council running the heart of Australia's biggest city has joined the net zero by 2050 movement.

The City of Sydney's buildings and infrastructure are now entirely run on renewable electricity.

Sydney Lord Mayor Clover Moore says the city will save $500,000 a year through its new renewable energy contracts. (ABC News: John Gunn)

"We'll be reducing our emissions by 20,000 tonnes — it's equivalent to 8,000 local households," said Lord Mayor Clover Moore.

The power is being sourced from solar and windfarms in regional New South Wales.

"While we're making a really significant contribution to reducing emissions and addressing climate change, we're also providing jobs in regional NSW, which is helping with that transition away from coal to renewable electricity," she added.

Ms Moore said cutting carbon was not just about pollution.

"There is so much evidence there now to show that it would be in the interest of not just environmentally but also economically."

She said the 10-year electricity supply contract would save ratepayers $500,000 a year, every year of the contract.

She is imploring all levels of government to make similar changes.

"It's really important that we move beyond the talk and into the action, whether it's changing our street lights, changing your fleet, or changing your buildings — these are all things that different levels of government can take action on," she said.

Links
10 years of climate policy inertia

Gas-fired path to COVID recovery?