Governments need to act now to curb industrial emissions if they want to achieve net zero by 2050, according to a new Grattan Institute report.
Towards net zero: practical policies to reduce industrial emissions, is the second in a series of Grattan reports examining practical ways to cut emissions across the economy. This report identifies actions that are available right now and calls on governments to put policies in place to encourage them.
The industrial sector is responsible for 30 per cent of Australia’s emissions, and 80 per cent of this comes from just 194 large facilities. Curbing emissions from these facilities will have a material impact on the likelihood of reaching net zero emissions by 2050.
The Commonwealth’s existing Safeguard Mechanism sets baselines for big industrial emitters. It should be modified and extended. Existing facilities should be encouraged to reduce their emissions using technologies that are available now. New and replacement facilities should meet emissions benchmarks substantially better than existing ones.
‘Just about every capital investment decision the industrial sector makes from now on will have repercussions for emissions in coming decades,’ says the report lead author, Grattan Institute’s Energy and Climate Change Program Director Tony Wood. ‘Governments need to send the right signals so these decisions don’t lock in emissions.
‘The climate clock is ticking. We can’t wait around for an economy-wide carbon price, even if that is the most efficient solution. This report identifies sector-specific policies Australia should implement to set us on the path to net zero.’
State governments should expand energy savings schemes to encourage emissions improvements across thousands of smaller industrial facilities. These energy savings schemes are already successful at reducing energy use and emissions in the residential and commercial sectors.
The federal government should establish an Industrial Transformation Future Fund to support low- and zero-emissions industrial asset replacements from the 2030s onwards.
‘Net zero by 2050 is a tough target,’ says Mr Wood. ‘It requires an unprecedented pace of asset replacement and renewal, starting now. Our series shows how we can start reducing emissions with practical proposals that could be adopted by both sides of politics.’
Note to editors:
In the lead-up to the international climate conference to be held in Glasgow in November 2021, Grattan Institute is publishing a series of five reports identifying the options for practical emissions reductions in key sectors. This report – on industrial emissions – is the second in the series. The first report, on transport emissions, was published in July 2021, and can be viewed on Grattan’s website. Subsequent reports will cover agriculture and land management, offsets, and electricity.
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