Our Transition to Net Zero Won’t Be Fair By Accident
Australia’s transition away from fossil fuels and towards a clean, renewable energy future is happening now.
But as we begin this journey, we have an important choice to make for the people who’ve been keeping the lights on in Australia for decades.
Do we take control of the change, and build a bridge to the future for those workers and communities currently employed in high-carbon industries like coal?
Or do we just leave it to chance, hoping global forces and luck will take care of these people and their families?
The choice we make now will shape the lives and livelihoods of millions of Australians for decades to come.
That is why we need an independent statutory National Energy Transition Authority to protect and empower workers and communities.
The National Energy Transition Authority would:
- Ensure energy workers affected by the transition get access to high quality, secure, and safe jobs in new industries.
- Develop and fund long-term plans to diversify the economies of traditional energy regions and leverage their comparative advantage in new industries; from renewables to low carbon manufacturing and more.
- Create the training courses and educational institutions that will prepare the workforce to participate fully in that new, diversified economy.
For this transformation to succeed, we must share the benefits of our transition to a clean energy economy. We cannot afford to leave workers and communities behind.
That’s why the Investor Group on Climate Change, representing more than 7.5 million Australian beneficiaries, is calling on the Federal Government to establish a independent statutory National ETA in this year’s Budget.
IGCC’s Long Campaign For a Transition Authority
As the custodians of trillions of dollars in retirement funds, institutional investors have a fiduciary duty to deliver long-term, sustainable returns for their beneficiaries. Due to the systemic nature of climate change, unless it is addressed in an orderly and just way, the long-term retirement savings of millions of Australians are under threat.
Australia has the potential to be a prosperous and vibrant economy in a net zero emissions world. There are export opportunities which will be driven by increasing demand for existing and new products, including green steel and aluminium, green hydrogen, many raw materials critical to the energy transition and a skilled workforce capable of supporting a global net zero economy.
While the transition to net zero emissions offers an enormous opportunity to Australia, it also presents significant risk. Australia’s economy is relatively emissions intensive and has higher carbon exposures than other major markets.
A failure to implement strategies for a just transition with measurable outcomes would also erode public and investor confidence in national climate policy directions. To promote investment, social equity and maintain public support, the cost and benefits of the transition need to shared equitability.
A National Transition Authority will fill a critical coordination and planning gap and support institutional investors to fulfil the responsibilities outlined above as active partners with government and other stakeholders.
Given these considerations, IGCC has advocated for a National Transition Authority for many years. The policy recommendations below are included in our detailed 3-year policy priorities, released in September 2022. The need for a coordinated response to promote just and equitable outcomes extends to addressing acute and chronic physical impacts of climate change.
Policy recommendations across jurisdictions
Governments establish concurrent national and regional transition authorities to support a just and orderly transition. To maximise investment opportunities and social benefits for affected sectors and communities, the remits of these authorities should include:
- an expert national advisory body that advises the federal government on the transition
- formal engagement with key stakeholders, including the finance sector, on their roles in the just transition
- development of a just transition framework to underpin local development of regionally specific just transition plans
- alignment of the just transition framework to other policies, including those on regional development, skill development and training, and climate change.
Regional transition authorities should immediately support localised transition planning processes in key fossil fuel production regions as a matter of priority (e.g., Upper Hunter, Latrobe Valley, Bowen Basin), given their immediate exposure to transition risks.
Efficient coordination will require action from federal, state, territory and local governments.
Further detail is available in IGCC’s 2022 Submission to Senate inquiry on the National Energy Transition Authority Bill.
IGCC Research: Empowering Communities – July 2021
How investors can support an equitable transition to net zero
Investors will play an important role in a just transition to net zero emissions. This report highlights the challenges and opportunities for Australian communities economically tied to fossil fuel industries.
The report includes:
- An assessment of energy markets
- The increasing action from financial organisations to address climate-
related risk and opportunities.
- The dynamics of fossil fuel sectors under different climate scenarios,
including orderly and delayed transition pathways.
Under the right conditions, investors can contribute to a just and equitable transition, particularly via their stewardship and capital deployment. Decarbonising the energy sector provides an immediate example.
About The Investor Group on Climate Change
The Investor Group on Climate Change (IGCC) is a collaboration of Australian and New Zealand institutional investors focused on the impact of climate change on investments.
IGCC represents investors with more than $3 trillion in local funds under management, and more than $30 trillion in AUM around the world.
IGCC members are fiduciaries for more than 7.5 million people in Australia and New Zealand.
We are a not-for-profit organisation. Our work is funded by members’ fees, philanthropy, partnerships, and sponsorship from supporters who understand the power of capital to support climate action.