“Now that the target range is released, the government needs to focus on the policies that will get us to the top end. That’s the difference between achievable and ambitious”, said IGCC CEO Rebecca Mikula-Wright.
Institutional investors have the capital to help Australia reach the upper end of the emissions reduction target range and urge the government to develop the policies needed to help the economy reach 70%.
The opportunity of a $2.2 trillion boost to the economy by 2050 if Australia claims its status as renewable energy superpower is the future we should now work towards.
Investors will be encouraged by the government’s commitments for new support via the National Reconstruction Fund, the Clean Energy Finance Corporation, clean fuels, EV charging, and household energy performance.
However, the uncertainty brought on by the wide range increases the need for rigour and ambition in the sector plans.
While the target is important, it’s the detail in the sector decarbonisation plans that could give investors the most useful and actionable information that allows them to allocate capital with confidence.
The sector plans released today are a starting point, but more ambitious and new policies will be needed to get investment flowing into the Australian businesses and projects that can create jobs, growth and export income as we reduce emissions.
The first priorities for the government should be:
- Maximise energy efficiency and electrification in sectors where the technology exists today, especially transport and buildings. That means ramping up the New Vehicle Efficiency Standard over time and a stronger push to phase out fossil gas in Australian homes.
- Significantly increase the ambition of existing mechanisms, especially the Safeguard Mechanism, to cover more industrial facilities and expand to other sectors including electricity generators and heavy vehicles where there is no current policy.
- Grow Australia’s low carbon exports of green commodities with new initiatives, including the introduction of a border carbon adjustment and support to de-risk new manufacturing capability for commodities like green iron. Treasury forecasts green exports could generate up to $178 billion in 2050.
- Phase out fossil fuel use, remove subsidies, and eliminate fugitive emissions from coal and gas mining.
Internally-focussed policies should be matched with measures to maximise export opportunities, replacing fossil fuel sales which are dangerously exposed to trading partners’ moves to reduce emissions.
Quote from Rebecca Mikula-Wright
“The opportunity lies in an economy with 70% emissions reductions by 2035 and up to $178 billion in sustainable exports by 2050, but business as usual won’t do the job.
“The wide range in the target doesn’t help with investor certainty, so investors will be looking at what’s in the plans now, and how they develop, to get the confidence they need to deploy capital.
“Investors to have the capital to help Australia reach and exceed the government’s baseline scenario of 5.1 million new jobs and a $2.2 trillion bigger economy, but it’s the plans that will attract investment in the competitive global capital market.”