Australia’s emissions are not on track to hit net zero by 2050, despite the latest projections showing we will do better than our existing 2030 target. A suite of policy actions taken today could bend that curve in the right direction and complement the government’s focus on technology development.
The Prime Minister’s commitment to the net zero target is a major step towards a ceasefire in Australia’s protracted climate war. Together with Angus Taylor, the Minister for Industry, Energy and Emissions Reduction, he announced Australia’s Long-term Emissions Reduction Plan. This is also an important step, building on the government’s Technology Investment Roadmap to ensure that we will have the zero-emissions technologies necessary to meet the target.
But a credible Emissions Reduction Plan must be about more than technology.
The first is to implement sector-based policies to reduce emissions now, where the technologies and actions are clear, and the costs are modest (or even negative) and justified by the benefits. These policies include a cap on vehicle emissions; bigger roles for current policies – the Emissions Reduction Fund, the Safeguard Mechanism, and energy efficiency obligations; more investment in the electricity grid; and better integration of state renewable electricity schemes.
These actions do not have to wait for technology development and do not require new carbon prices or new taxes.
The second is to expand focused funding support for research and development to drive down the costs of technologies such as hydrogen electrolysers, fuel cells and green steel which we know can reduce emissions but now cost too much. Then there are the technologies that we need to bring forward quickly for sectors where there are no clear solutions.
The Technology Investment Roadmap identifies priority areas such as cement manufacturing and cattle feed supplements. Deep storage to support a high-renewables electricity grid is a particularly important challenge.
The third is policy design and evolution. The sector-based policies should be market-based for efficient and effective sharing, within and between sectors, of the effort required to reach net zero. Governments should also ensure that such policies can be scaled up as circumstances change.
As momentum increases and the results of technology development emerge, new policies will be necessary. This is because the scale of incentives will be beyond any government’s budget, and in many areas the green version will cost more than the black. Adding carbon capture and storage to a manufacturing or mining process, converting electricity to hydrogen and back again, and removing carbon dioxide from the atmosphere will all be costly. Technology development and efficient markets can minimise these costs but cannot eliminate them. Indeed, the government’s Emissions Reduction Plan recognises that there will likely be costs paid via voluntary incentives and buying offsets.
The choice is not between technology and taxes. It is a choice between who pays and how much. The cost to reach net zero can be paid by taxpayers via governments or more directly by businesses and consumers. How much we pay can be minimised if the policies are market-based.
The Prime Minister has recognised that his government is responding to international movements over which Australia has little control, but from which we can extract great advantage. Governments cannot prevent change. They should resist propping up companies uncompetitive in a net-zero global economy. They should focus on attracting investment to industries that will capitalise on Australia’s advantages in this world. And they should work in a targeted way to help communities attract new industries or re-focus old ones.
These practical steps could deliver steadily reducing emissions across the economy well into the 2030s, and real momentum towards net zero by 2050. To give this framework substance, the federal government should commission the Climate Change Authority to monitor and report on progress, with recommendations as required.
Getting to net zero will be arguably the biggest economic transformation Australia has seen outside of wartime. It cannot be achieved by governments alone – it requires technologies, policies and markets working together.
Action today is crucial to create momentum and to avoid locking in emissions for decades to come. Governments have set the objective; they now need to commit to and implement the practical, no-regrets policies that can head Australia in the right direction.
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