Four years ago in December 2015, every member of the United
Nations met in Paris and agreed to hold global temperature increases to
2°C, and as close as possible to 1.5°C.
The bad news is that four years on the best that we can hope for is
holding global increases to around 1.75°C. We can only do that if the
world moves decisively towards zero net emissions by the middle of the
century.
A failure to act here, accompanied by similar paralysis in other
countries, would see our grandchildren living with temperature increases
of
around 4°C this century, and more beyond.
I have spent my life on the positive end of discussion of Australian
domestic and international policy questions. But if effective global
action on climate change fails, I fear the challenge would be beyond
contemporary Australia. I fear that things would fall apart.
There is reason to hope
It’s not all bad news.
What we know today about the effect of increased concentrations of
greenhouse gases broadly confirms the conclusions I drew from available
research in previous climate change reviews
in 2008 and
2011. I conducted these for, respectively, state and Commonwealth governments, and a federal cross-parliamentary committee.
But these reviews greatly overestimated the cost of meeting ambitious reduction targets.
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| The Yallourn coal-fired power station in the Latrobe Valley, Victoria. David Crosling/AAP |
There has been an extraordinary
fall in the cost of equipment
for solar and wind energy, and of technologies to store renewable
energy to even out supply. Per person, Australia has natural resources
for renewable energy superior to any other developed country and far
superior to our customers in northeast Asia.
Australia is by far the world’s largest exporter of iron ore and
aluminium ores. In the main they are processed overseas, but in the
post-carbon world we will be best positioned to turn them into
zero-emission iron and aluminium.
In such a world, there will be no economic sense in any aluminium or
iron smelting in Japan or Korea, not much in Indonesia, and enough to
cover only a modest part of domestic demand in China and India. The
European commitment to early achievement of net-zero emissions opens a
large opportunity there as well.
Converting one quarter of Australian iron oxide and half of aluminium
oxide exports to metal would add more value and jobs than current coal
and gas combined.
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| Australia’s vast wind and solar energy resources mean it is well-placed to export industrial products in a low-carbon global economy. Flickr |
A natural supplier to the world’s industry
With abundant low-cost electricity, Australia could grow into a major
global producer of minerals needed in the post-carbon world such as
lithium, titanium, vanadium, nickel, cobalt and copper. It could also
become the natural supplier of pure silicon, produced from sand or
quartz, for which there is fast-increasing global demand.
Other new zero-emissions industrial products will require little more
than globally competitive electricity to create. These include ammonia,
exportable hydrogen and electricity transmitted by high-voltage cables to and through Indonesia and Singapore to the Asian mainland.
Australia’s exceptional endowment of forests and woodlands gives it
an advantage in biological raw materials for industrial processes. And
there’s an immense opportunity for capturing and sequestering, at
relatively low cost, atmospheric carbon in soils, pastures, woodlands,
forests and plantations.
Modelling conducted for my first report suggested that Australia
would import emissions reduction credits, however today I expect
Australia to cut domestic emissions to the point that it
sells excess credits to other nations.
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| Tall white gum trees in northern Tasmania. Australia has huge potential to store more carbon in forests and woodlands. BARBARA WALTON/EPA |
The transition is an economic winner
Technologies to produce and store zero-emissions energy and sequester
carbon in the landscape are highly capital-intensive. They have
therefore benefited exceptionally from the historic fall in global
interest rates over the past decade. This has reduced the cost of
transition to zero emissions, accentuating Australia’s advantage.
In 2008 the comprehensive modelling undertaken for the Garnaut Review
suggested the transition would entail a noticeable (but manageable)
sacrifice of Australian income in the first half of this century,
followed by gains that would grow late into the second half of this
century and beyond.
Today, calculations using similar techniques would give different
results. Australia playing its full part in effective global efforts to
hold warming to 2°C or lower would show economic gains instead of losses
in early decades, followed by much bigger gains later on.
If Australia is to realise its immense opportunity in a zero-carbon
world, it will need a different policy framework. But we can make a
strong start even with the incomplete and weak policies and commitments
we have. Policies to help complete the transition can be built in a
political environment that has been changed by early success.
Three crucial steps
Three early policy developments are needed. None contradicts established federal government policy.
First, the regulatory system has to focus strongly on the
security and reliability of electricity supplies, as it comes to be drawn almost exclusively from intermittent renewable sources.
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| A high-voltage electricity transmission tower in the Brisbane central business district. Darren England/AAP |
Second, the government must support transformation of the
power transmission system
to allow a huge expansion of supply from regions with high-quality
renewable energy resources not near existing transmission cables. This
is likely to require new mechanisms to support private initiatives.
Third, the Commonwealth could secure a globally competitive cost of
capital by underwriting new investment in reliable (or “firmed”)
renewable electricity. This was a recommendation by the Australian
Competition and Consumer Commission’s
retail electricity price inquiry, and has been adopted by the Morrison government.
We must get with the Paris program
For other countries to import large volumes of low-emission products
from us, we will have to accept and be seen as delivering on emissions
reduction targets consistent with the Paris objectives.
Paris requires net-zero emissions by mid-century. Developed countries
have to reach zero emissions before then, so their interim targets have
to represent credible steps towards that conclusion.
Japan, Korea, the European Union and the United Kingdom are the
natural early markets for zero-emissions steel, aluminum and other
products. China will be critically important. Indonesia and India and
their neighbours in southeast and south Asia will sustain Australian
exports of low-emissions products deep into the future.
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| An electric car being charged. Australia has good supplies of lithium, used in electric vehicle batteries. Ian Langsdon/EPA |
For the European Union, reliance on Australian exports of
zero-emissions products would only follow assessments that we were
making acceptable contributions to the global mitigation effort.
We will not get to that place in one step, or soon. But likely
European restrictions on imports of high-carbon products, which will
exempt those made with low emissions, will allow us a good shot.
Movement will come gradually, initially with public support for
innovation; then suddenly, as business and government leaders realise
the magnitude of the Australian opportunity, and as humanity enters the
last rush to avoid being overwhelmed by the rising costs of climate
change.
The pace will be governed by progress in decarbonisation globally.
That will suit us, as our new strengths in the zero-carbon world grow
with the retreat of the old. We have an unparalleled opportunity. We are
more than capable of grabbing it.
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