How Australia can build momentum towards net zero by 2050

Australia has committed to delivering a long-term emissions reduction strategy to the international climate conference in Glasgow in November. The federal government and opposition and all states and territories have agreed on a long-term net zero target (although, for the federal government, a 2050 target year remains only a preference). These governments, as with most industry, have yet to implement policies to meet such a target.

Achieving net-zero emissions is a major task for any economy and especially for an emissions-intensive economy such as Australia’s.

If we meet our current 2030 target, average annual emissions reductions since 2005 will have been 6 million tonnes. Achieving net-zero by 2050 means average annual reductions of 23 million tonnes every year for the next 20 years, net of offsets. From an environmental impact perspective, it is the cumulative total of these emissions – our carbon budget – that matters.

Australia can choose between three different pathways to net zero.

First, we could continue along the current path beyond 2030, and then set out to achieve a dramatic transformation. This would require either an extraordinarily rapid turnover of the country’s asset base with newly emerged, transformative technologies, or an industrial shutdown across multiple sectors. Either way would mean great financial and social disruption.

Second, we could make major emissions reductions across the economy much sooner. This is likely to be a high-cost pathway because, in some sectors, we would have to deploy technologies that are relatively immature, technically and/or commercially.

The priority is to begin now to bend the emissions trajectory downwards, particularly in those sectors where it is still rising.

Third, we could recognise the risk that an even earlier net zero target emerges because of the accumulating impacts of a changing climate. And if we achieve breakthroughs from our support for technology development, we will want to adopt them for domestic reductions.

We will also want to exploit the export opportunities that could emerge if such breakthroughs enable Australia to turn a comparative renewable energy resource advantage into a globally competitive advantage.

In the face of much uncertainty, the most prudent pathway to follow is the last of the three. We should spend neither too much nor too little of our emissions budget in the next few years, but ensure we create momentum now while allowing the option to speed up later as future developments unfold.

The path to net zero is unlikely to be straight, but a clear line of sight would provide guidance for periodic adjustments to avoid disruptive change. Disruptive change has major consequences for jobs, assets, communities, and livelihoods. A steady, well-communicated trajectory gives investors, companies and workers to time to plan and adjust.

This remains a daunting, but necessary, task. As with all such tasks, the best approach is to tackle it directly, in small chunks, to create and build momentum that becomes self-sustaining.

The priority is to begin now to bend the emissions trajectory downwards, particularly in those sectors where it is still rising. In every sector, there are known, relatively low-cost technologies that we can begin to deploy through practical policy initiatives.

Everything we do now to lower emissions buys time later: time for technologies to develop, for workers to retrain and find new jobs, for investors to adjust their portfolios, and for companies to change their practices.

Over the next five months, Grattan Institute will publish a series of reports assessing each of the key sectors of the economy that contribute to emissions. The reports will cover transport, industrial emissions, agriculture and land use, offsets, and electricity.

Each report will analyse emissions sources, emission reduction technologies, and the technological and economic barriers. And each will include sector-specific recommendations for practical actions: what governments should do now, what technologies require focused commercial development, and what research is required into more nascent technologies.

The series will build on what we have and know now, rather than start over. This includes the federal government’s Climate Solutions Fund, Safeguard Mechanism, and Technology Investment Roadmap, and related state government policies supporting the electricity sector transition and sustainable transport.

Unfortunately, an economy-wide price on emissions to deliver net zero by 2050 is not on Australia’s political agenda. But a practical, sector-based approach is possible and could be adopted by both sides of politics without compromising their current policy positions or desire for political differentiation.