Submission: Economic Modelling to support investible sector pathways

19 September 2023
IGCC has made a submission to the Climate Change Authority's consultation on economic modelling, to support its advice to Government for Australia’s 2035 Nationally Determined Contribution under the Paris Agreement.

IGCC broadly agrees with the modelling questions posed by the Climate Change Authority, but emphasises the need for physical climate change damages to be considered, to avoid stranded assets and maladaptation. Underlying assumptions and outputs should be broadly consistent with other major recognised transition pathways, such as those from the Network for Greening the Financial System (NGFS) and the IEA Net Zero scenario.

IGCC welcomes the use of both top-down and bottom-up models. Investors recognise that sector pathways will need to be developed using both a top-down macro perspective and a bottom-up (sub)sector, location- and technology-specific approach. Climate modelling should also consider how setting a target that is inconsistent with climate damages above 1.5C is likely to increase the cost of capital for Australian businesses, further increasing the economic costs of a slow decarbonisation pathway relative to more ambitious pathways.

Read the full submission here.