A report released by the Climate Council says the lack of federal government climate policy exposes the nation to serious economic consequences – including tens of thousands of jobs at risk in New South Wales and Queensland – from carbon border tariffs.
The report called “Markets are moving: the economic costs of Australia’s climate inaction” was authored by Climate Councillor Nicki Hutley, a former partner at Deloitte Access Economics and chief economist at KPMG.
Ms Hutley said, “The world is responding to the climate crisis and carbon border tariffs are now inevitable. Australians will pay the price unless the federal government cuts our national carbon emissions in line with our major trading partners.
The European Union announced a Carbon Border Adjustment Mechanism in July 2021. Ms Hutley said the current modelling by economists at Victoria University shows Australia will experience a cut to our Gross Domestic Product (GDP) as a result. If South Korea, China and the Group of 7 follow suit, we would lose more than $4 billion in GDP and $12.5 billion in national income.
“Our modelling shows that Queensland and New South Wales will bear the brunt due to the dominance of targeted exports – particularly coal – in those states. Under the above scenario, Queensland is projected to lose more than 50,000 jobs and $10 billion in Gross State Product (GSP); and NSW around 20,000 jobs and more than $5 billion in GSP.
“The federal government should be getting out in front, and putting support for regions affected in place. The new, low-carbon economy is coming, and we urgently need a transition plan in place for Australian communities and workers”, said Ms Hutley.
Report identified these key findings
• The European Union’s CBAM is expected to be the first of many such schemes as countries seek to re-level the economic playing field on climate action. Such moves are being considered by Australia’s key trading partners.
• As one of the world’s heaviest per capita emitters, and an advanced economy, Australia is under increasing international pressure to use its natural advantages to cut emissions rapidly and deeply this decade and help the world reach net zero as quickly as possible.
• A growing number of countries have a carbon price which requires those responsible for creating emissions to pay for them. As such carbon prices continue to rise, the costs of failing to act will also rise.
• The costs of more frequent and severe climate-driven extreme weather events alone could rise to $94 billion per year in Australia by 2060 and $129 billion by 2100.
• Every day that the Australian Government delays climate action it is hurting households and businesses in missed economic opportunities and rising costs.
Ms Hutley said there were huge opportunities for investment in clean jobs and industries with modelling by Beyond Zero Emissions now estimating Australia could grow a new green export mix worth $333 billion per annum, almost triple the value of existing fossil fuel exports. Deloitte Access Economics’ modelling suggests support for a low carbon economy would add $680 billion in economic growth and 250,000 new jobs by 2070.
“We have the natural resources and the ingenuity to become a world leader in renewable energy, and in industries such as clean manufacturing, minerals processing and renewable hydrogen – bringing tens of thousands of jobs to the states and regions.
“Federal government action is long overdue. As a first step, we should match our key trading partners and at least halve emissions by 2030. In line with the science, the Climate Council recommends a 75% cut by 2030 on the way to zero by 2035.”
The Climate Council indicated the report’s findings are supported by the recent annual business survey of the Carbon Market Institute (CMI), whose members include Shell, BHP, Origin and AGL.
CMI CEO John Connor said, “An overwhelming majority of respondents in our survey – 81% – believe that carbon border adjustment mechanisms pose a ‘growing risk to the Australian economy”.
“Business is already leading the way on climate action, and our survey shows they want policy certainty and ambition, are waiting for the federal government to step up and embrace the opportunities of the transition to net zero.
“CMI calls on the federal government to back net-zero by 2050, at least halve emissions this decade, and tighten policies to guide decarbonisation investments like the government’s Safeguard Mechanism for major emitters”, said John Connor.