10/10/2021

(AU AFR) Australia’s Business Leaders Tell PM How To Hit Net Zero By 2050

AFR - Phillip Coorey | Jacob Greber

More than 130 of Australia’s biggest companies have told the federal government a strategy to reach net zero by 2050 not only makes environmental sense but could grow jobs and the economy in the process.

As the Prime Minister enters a critical 10 days trying to negotiate a deal with the Nationals ahead of the COP26 climate talks in Glasgow, the Business Council of Australia has provided ammunition for his case with its own technology road map detailing how to hit the target and achieve far deeper cuts by 2030 than are currently targeted.

Business Council of Australia president Tim Reed says climate change needs solutions, not more endless debate. Alex Ellinghausen
The plan, underpinned by modelling by Deloitte Access Economics, estimates that if every sector of the economy plays a role, the economy could grow $890 billion bigger than otherwise in today’s dollars in the 50 years to 2070.

Rather than jobs being destroyed, the modelling says a modest 195,000 net jobs would also be created over the next 50 years

BCA president Tim Reed said the bulk of the economic dividend would be realised in the regions.

Before the last election, the BCA described Labor’s 2030 target of a 45 per cent emissions cut over 2005 levels as “economy wrecking”.

But its modelling shows that, based on current available technology, it is both “pragmatic and ambitious” to reduce emissions by between 46 per cent and 50 per cent over 2005 levels by 2030.

While the 2030 targets are optimal, the BCA setting an early ambitious target will speed up investment in new technology and make the task easier over the longer term.


BCA chief executive Jennifer Westacott said the exercise was to show net zero could be done, even if the requisite technologies had not all been developed.

“The fundamental question is how do we get to net zero by 2050, that’s what we tried to do,” she said.

The BCA modelling, which the organisation says is supported by its membership, is led by business investment which would be driven by an expanded and enhanced safeguard mechanism requiring more of Australia’s biggest polluters to pay for their emissions by removing a technical exemption.

This would be done by reducing the eligibility threshold for emitters from 100,000 tonnes of carbon dioxide a year to 25,000 tonnes. There would be support for internationally exposed, emissions-intensive sectors, just as was originally proposed more than a decade ago when Labor tried to tackle climate change.

Technology-based reductions

 Fledgling technologies including hydrogen and carbon capture and storage would be needed for the plan to work.

Scott Morrison is currently negotiating with Nationals leader Barnaby Joyce a technology-based deal to achieve net zero by 2050, to be announced before next month’s Glasgow climate change summit.

It is also likely the government, based on current projections, will unveil a 2030 emissions reduction target higher than the current 26 per cent to 28 per cent. The new target is expected to be in the mid-30s.

The BCA strategy says the electricity sector would have to make the biggest contribution to its 2030 target with 61 per cent of emissions reductions. This would require a four-fold increase in the uptake of renewable energy this decade, enough to generate an extra 30 gigawatts at an investment cost of $50 billion.

This would result in clean energy constituting 85 per cent of the mix by 2030, and 99 per cent by 2040 and 2050.

Industry, transport and agriculture

 The next biggest contribution would be made by the industry sector, which would account for 24 per cent of the overall emissions reductions. These reductions would be achieved through such measures as moving from diesel to gas and renewables, and adopting carbon capture and storage.

Transport would contribute a 10 per cent reduction in nationwide emissions through heavy investment in electric vehicles.

The BCA plan calls for 22 per cent of cars to be electric by 2030, up from the government’s current target of 7 per cent. As well, 10 per cent of trucks would be hydrogen-fuelled by 2030.

The agriculture and land sectors, which the Nationals have demanded be exempt from the net zero plan, would contribute 5 per cent of reductions, but largely through offset measures. Some measures, such a methane supplements and fertiliser management, would be highly dependent on the commercial viability of technologies still in their infancy.

As for the BCA’s membership, “overwhelmingly they see this as an opportunity”.

Global rules for risk disclosures

 Separately, as pressure builds on government over climate change, a group representing more than two-thirds of Australia’s investment industry and over $100 trillion in assets under management globally is pressing Treasurer Josh Frydenberg and Reserve Bank of Australia governor Philip Lowe to work with their most powerful counterparts on creating consistent global rules for climate risk disclosures.

To avoid a mishmash of national rules and standards, the investors group wants Mr Frydenberg and Dr Lowe to use next week’s Group of 20 central bankers and finance ministers meeting, hosted by Italy, to join global efforts for common transparency rules.

Australia should phase in by 2024 economy-wide rules set out by the global Task Force for Climate-Related Financial Disclosure.

“Without an international approach and commitments from nations to integrate and build on international baseline standards in domestic legal frameworks, we risk market fragmentation that could impede the flow of global capital,” said Erwin Jackson, director of policy at the Investor Group on Climate Change.

A letter penned by the group was sent to the government and central bank two weeks after Mr Frydenberg backed the push to net zero by 2050 with a warning that “markets are moving” towards a lower-emissions future.

“It’s a long-term shift, not a short-term shock” he said at the time. “Trillions of dollars are being mobilised globally in support of the transition.”

Australia’s official debt agency, the Australian Office of Financial Management, says around a third of its recent meetings with domestic and offshore investors have included discussions about Australia’s environmental and climate-related promises.

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