The Decarbonised Economy
James Ardouin
Last Tuesday, all across Australia, thousands of people tuned in to watch our federal Treasurer, the Hon. Josh Frydenberg MP, hand down the 2020 Budget. It is not controversial to observe that this past year has been the hardest for many in living memory; first came the bushfires, then the COVID-19 crisis. For all of us this has been a rough departure from the collective optimism of our generation when we marched for action on climate change.
What we do now will echo into the future. It is essential that policy-makers act decisively now to lower emissions whilst preserving the economic infrastructure necessary for our nation’s prosperity. I put it to all those who still believe in taking action on climate change, to raise the flag once more. An economic recovery must also be an environmental recovery.
The international community has recognised the imminence of this issue. China, the world’s greatest carbon emitter, has made the decision to set a net zero target by 2060. This move has been mirrored by presidential candidate, Joe Biden, who has committed to taking the United States to net zero emissions by 2050. This is to say nothing of the leadership exhibited by countries such as the United Kingdom, Germany and France. These moves have been mirrored in the private sector by corporations such as Schroders, Blackrock, and the Big Four banks, all of which recognise that climate change is endogenous to investment risk. Additionally, our national regulator, APRA, has stated that climate-related investment risk is “material, foreseeable and actionable now.”
At the launch of the think tank Youth for Conservation (Y4C) last week, NSW Energy and Environment Minister, the Hon. Matt Kean MP, said: “Decarbonising our economy is not just about decarbonising the electricity system it’s about finding new ways of running our entire economy. And we have to do that in a way that maintains and enhances our way of life and leaves no one behind. Australia can win from decarbonisation. Now there is no better place on earth to prosper from global efforts to reduce our emissions. Australia is blessed with some of the best renewable resources in the world. We can be a clean energy superpower and help the rest of the world reduce our emissions… So those people arguing for coal or nuclear or for gas, they're actually arguing more expensive, dirtier forms of energy.”
Unfortunately, these economically sound observations appear to be muffled by his colleagues in Canberra, with the federal government announcing $52.9m for the expansion of our domestic gas industry coupled with an additional $10.9m for complementary infrastructure in the 2020 Budget. The federal Minister for Energy and Emissions Reduction, the Hon. Angus Taylor MP, defended this move by arguing that over 225,000 jobs rely on gas, particularly in our ailing manufacturing sector. Whilst these arguments have merit they are not without criticisms, particularly on the perceived weaknesses of the report recommending investment in addition to superior capital efficiency of pumped hydro and solar compared to Combined Cycle Natural Gas. Among these critics, institutions such as the Australian Industry Group, have responded by calling for a $500 million investment to help small businesses and households make the transition award from gas.
Y4C recognises and endorses the earlier statements of the Hon. Matt Kean MP, that the process of decarbonisation must result in an economic overhaul. Policy-makers must prioritise the rapid development and future integration of technologies with significant and tangible benefits such as hydrogen, solar PV, batteries and pumped hydro. Additionally, AEMO Integrated System Plan modelled a forecasted $11 billion in economic benefits through several proposed augmentations of the National Energy Market. However, it is also important to provide certainty and social mobility for our steel workers in areas such as Port Kembla, our miners in the Hunter Valley, and technicians around Lake Macquarie.
These communities cannot be left behind as we embrace our nation’s economic future. A jobs recovery must also be a climate recovery.
Earlier this year, a report by EY in conjunction with the WWF found that over 100,000 jobs could be created by a renewables-led recovery, with a large proportion of these jobs being compatible with the transferable skills of our current workforce engaged in high-carbon intensive industries.
It is regrettable that policy in this area has for so long been plagued by ultra-partisanship. What’s become clear to me, and all those in Y4C, is that policy-makers should ignore the illogical rhetoric of ideologues on both wings of politics and instead be guided by the scientific and economic consensus. Our representatives must work alongside each other and with business, workers, and households to create the future opportunities which will power Australia’s economic recovery.
Consequently, each of us is left with a choice: we can choose to address the environmental crises we are currently witnessing by addressing it at our workplaces, in our universities, with our friends, and around our dinner tables with family; Or we can choose not to. Either we choose to take our future into our own hands, or we step back and allow extremists to flourish in this space.
Before making that choice, I urge you all to remember one salient fact: as a collective, our voice is powerful and cannot be ignored, and together we can build the prosperous future that is emerging on the horizon.