Corporate Australia is poised to unleash a wave of green investments to tap the recent boost in global climate goals, but the chance to compete with the world may close before the country upgrades its relatively modest emissions reduction targets.
“The window making those investments (in low emissions technology), such that you can maximise your return, is narrowing,” Mathew Nelson, the Oceania head of sustainability at major global advisory Ernst & Young, said.
Australian agriculture is moving ahead of government to tap export opportunities for low-carbon produce. Credit:AP
A new wave of climate policy uncertainty has emerged with the elevation of Barnaby Joyce to leader of the National Party. The head of the junior Coalition partner rose to prominence on a platform of scepticism about climate targets.
It remains unclear if the federal government will follow the lead of its major trading partners like the US, UK, Japan, and Korea in adopting more ambitious goals.
Australia is committed to reduce emissions by 26 to 28 per cent by 2030, with no set deadline to reach net zero. Most developed nations are committed to net zero by at least 2050 and reduce emissions by 50 per cent or more by 2030.
Mr Nelson said the Biden presidency in the US had accelerated global climate action, which was providing businesses with the certainty needed to increase investments in clean-energy technology.
He cautioned that there will be winners and losers in the transition. The winners would be companies that make the right investments early, he said, while the losers would be those left with assets that are no longer viable because they had failed to move quickly enough.
“In Australia, making sure we have the certainty around the outlook that will support investments that will enable people to put money into technologies as required … is important,” he said. “If we don’t get on top of this we may lose any competitive advantage we may have in looking to develop, innovate and create the solutions that will be part of the critical decades; the 2030 and 2040s.”
The federal government’s emission reduction policy is driven by its technology roadmap, which has prioritised public investment to drive down costs of low emissions technology – focused on hydrogen, “green” steel and aluminium, battery storage, and soil carbon sequestration on farmland.
However, policy experts say new technology is not enough on its own. Anna Skarbek, chief executive of the ClimateWorks think tank said in April that without deadlines, businesses will seek economic gains by being the last, rather than the first, to adopt new technology.
“There’s a first mover’s chicken and egg dance and there’s a disincentive to move first,” Ms Skarbek said. “It costs more to use new technology the first time, and a lot less when it’s been done a lot.”
US President Joe Biden was elected in November pledging an economy-wide deadline to reach net zero greenhouse emissions by 2050. In February, as part of that goal, he committed to convert his federal government’s fleet of 650,000 vehicles to electric cars. The policy was a catalyst for General Motors which announced in the same week it would stop making petrol commuter vehicles by 2035. The company claims its commitment to reach net-zero emissions by 2040 can jumpstart the US’ beleaguered auto industry.
Australian agriculture is under the most pressure to maintain its advantages in a competitive global market, with more than 70 per cent of the sector’s output being exported.
Reserve Bank governor Philip Lowe said in June that “Australian agriculture has a tremendous opportunity” due to the appetite of international investors for low emissions produce.
“Increasingly overseas investors are asking about the carbon content of production and that’s a trend that’s only going to continue,” Dr Lowe said.
The farm sector is moving to grasp the opportunities and avoid being locked out of markets willing to pay premiums for low emissions produce. The National Farmers’ Federation has set a target for net-zero emissions by 2050. The red meat sector set a goal in 2017 to reach net zero by 2030, cropping has committed to set a 2030 target soon, and the pork industry aims to go beyond carbon neutrality as soon as 2025.
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