Australia's climate policies are "a decade behind" other rich nations, according to a United Nations investment official, leaving the country exposed to risks of a so-called "green paradox" when carbon emissions will have to make a precipitous retreat.
A phasing out of coal and other fossil fuels is the centrepiece of four recommended investor goals to be unveiled by the UN's Principles for Responsible Investment unit in New York on Thursday morning, eastern Australian time.
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"Investors have a huge, huge role to play on climate change," Ms Reynolds told Fairfax Media, citing their ability to influence the companies they own, including steering them away from fossil fuels to renewable energy. "This a really urgent issue."
While countries in Europe of all political persuasions were tackling the need to switch to a low-carbon future, the debate in Australia 10 years behind, she said.
"Australia keeps battling about the downsides and not the opportunities that could be available to the country in this transition," Ms Reynolds said.
Carbon price
The Abbott government's scrapping of a carbon price in 2014 - and the kryptonite reaction to another policy since - went against the global trend.
Some 40 nations had introduced some form of carbon pricing and major international investors were generally supportive, Ms Reynolds said.
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Josh Frydenberg, the environment and energy minister, said the Turnbull government won't support a carbon price: "The last time Australia had a price on carbon it was Labor's $15.4 billion carbon tax which was a disaster that sent electricity prices up and made us less competitive."
Pricing carbon, though, received support this week from European researchers who say putting a price on emissions would be a key method to avoid a "green paradox" that had implications for nations such as Australia.
'Nightmare scenario'
In a paper published in Nature Climate Change, the researchers looked at the possibility that fossil-fuel owners, in anticipation of future carbon curbs, would accelerate extraction rates to maximise profits - contrary to the object of those restrictions.
"Strong and timely signals" from climate policy-makers are necessary to counter the incentive to expand output of fossil fuels in the short term, they said.
Nico Bauer, a modeller from Germany's Potsdam Institute for Climate Impact Research and the paper's lead author, said Australia faced the "grass paradox" because of its fossil fuel wealth, including about 13 per cent of the world's coal reserves.
A "serious carbon price" would affect use of coal in Australia and promote faster take-up of renewable energy, Dr Bauer said.
Australia faced being "a victim of a blame game" if the Paris goal of a 2-degree warming limit is exceeded, a prospect that should serve to motivate climate action, he said, adding "the carbon price would be economically the most efficient instrument".
A delay also increased the likelihood of a "carbon bubble" emerging that would end up being popped rather than deflated if governments resorted to a "climate policy shock" to get emissions down to the required rate of reduction.
"This, however, is a kind of a nightmare scenario for financial regulators, because they figure out a financial crisis scenario and they fear something like a fossil-fuelled Lehman Brothers event," Dr Bauer said.
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