Thinking | 27 October 2021

Australia’s pathway from Glasgow to 2050

By Meg Lee

Prime Minister Scott Morrison yesterday released the Federal Government’s plan that it will take to the Glasgow Conference of the Parties, starting on 31 October, to demonstrate how Australia will achieve its newly announced commitment to net zero carbon emissions by 2050. The plan has been quickly criticised by various players[1] for being short on detail and too reliant on technological solutions as well as for failing to tighten 2030 targets. We take a look at what was included in the package and the implications for Australian industries.

How will net zero be achieved by 2050?

The plan is based on five key principles that include principles such as ‘Technology not taxes’ and ‘Expand choices, not mandates’. As such, the plan does not involve any mandated actions and will not include any new carbon tax or legislated emissions reductions.

In simple terms, the plan breaks down how Australia will achieve a 100% reduction in emissions in percentages dedicated to different categories as set out on the plan extracted below:

Graph_How will we reach net zero3

The plan relies upon 20% reduction (from 2005 levels) having already been achieved (that is, our Paris commitments achieved largely through ceasing land clearance), 10-20% from carbon offsets and a significant proportion of 60-70% from technology (40% from the Technology Investment Roadmap, 15% from so-called global technology trends, 15% from further technology breakthroughs).

The technology focus is apparently based on modelling (that has not yet been released) which shows that Australia’s economy will continue to grow, with the plan expected to increase our national income per person by almost $2000 in 2050, compared with no policy action. In contrast, the modelling apparently shows that if we fail to unlock new technologies, then net zero by 2050 is only achievable for Australia at much higher marginal costs (about $100 to $170 per tonne CO₂-e) and with heavy reliance on carbon offsets from Australia’s productive agricultural land or from overseas[2].

What industries will be impacted?

An obvious omission in the categories for reductions is that there is no percentage allocated to any mandatory ceasing of the burning of fossil fuels as such. In this regard the plan notes:

While emissions-intensive exports like coal and gas will face global headwinds in the long term, there will be demand for these exports for many years to come. This gives Australia time to future-proof our economy and workforce, including establishing new industries like clean hydrogen production[3].

The plan unashamedly states ‘what it is not’. It states that it will not shut down coal or gas production or exports. It will not cost jobs – not in farming, mining or gas. And it will not increase energy bills.

Whether these ‘non-commitments’ are realistic or not remains to be seen. And while the Government may state that it will not mandate any of these things, industry may yet take voluntary steps or be forced to do so due to a lack of social licence and inability to obtain project approvals through the Courts, or inability to obtain funding due to international pressures on capital markets.

The modelling is based on reductions from the following industry sectors by 2050[4]:

  • industrial, manufacturing and mining emissions reduced to 140 Mt CO₂-e (a reduction of almost 20% on 2005 levels);
  • agriculture emissions will be reduced to 55 Mt CO₂-e (36% reduction on 2005 levels); and
  • transport emissions will be reduced to 39 Mt CO₂-e (more than 50% reduction on 2005 levels).

What are the technologies of focus?

The plan sets out the areas of focus for investment in technology including: clean hydrogen, low-cost solar, energy storage, low emission steel and aluminium, carbon capture and storage and soil carbon. It also proposes a focus on emerging technologies such as livestock feed to reduce methane emissions from cattle.

Some of the key funding commitments included relating to new technologies are:

  • $464 million for clean hydrogen industrial hubs as part of a $1.2 billion commitment to developing a new hydrogen industry;
  • $2 billion loan facility for minerals projects;
  • $300 million for carbon capture and storage, including proposed hubs to develop shared infrastructure between large CO2 emitters; and
  • $1 billion investment in a new recycling modernisation fund that includes a waste export ban and a proposal to divert 10 million tonnes of waste from landfill by 2030.

The plan also seeks to reassure regional Australia, stating that there will be ‘record investments’ in transport and digital infrastructure, agriculture, resources and manufacturing and in expanding trade opportunities for regional exporters. It also states that the Government will invest in preparing for the implications of climate change, including through future drought funding, greater disaster resilience and affordable insurance for Northern Australia.

The plan also includes a focus on opportunities in new markets such as exporting lower emissions fuels such as LNG and uranium, as well as investment in opportunities for low emissions manufacturing and clean energy equipment and services.

In addition, the plan includes a proposal to establish a ‘high integrity’ Indo-Pacific Carbon Offset Scheme.

Are there any revised 2030 targets?

Importantly, in the context of the Glasgow negotiations, the Prime Minister has stated that there is no proposal (that has been endorsed by the National Party) to change Australia’s previously committed 2030 targets. This will be a sticking point, and potentially an embarrassment for Australia at Glasgow, as one of the key aims and stated positions of many of the parties is to bring forward earlier and tighter reductions to 2030 on the basis of the recent IPCC’s Sixth Assessment Report findings.

However, as Anna Skarbek from ClimateWorks explains:

Not only does our work show the federal government has plenty of room to increase ambition but can capitalise on the existing commitments from states and territories, which would already achieve 2030 reductions of 37-42 per cent – well above Australia’s existing target, and still below what’s needed to achieve the Paris agreement goals.[6]

The importance of the actions and commitments by States and Territories is somewhat recognised in the plan, as it includes a focus on aligning these efforts through bilateral agreements, energy market reform and energy efficiency programs.

Where to from here?

On one view, the work of Glasgow has been in the lead up and the pressure exerted on nations such as Australia to commit to the net zero by 2050 target prior to arrival at the conference. The pressure has indeed been significant and the commitment of the Australian Government to net zero is no small feat given the turbulent politics in Australia (and the loss of several Prime Ministers over climate policies) over the past decade. Nevertheless, we will be watching progress and outcomes in Glasgow with interest and will report further.


[1] For example, the Climate Council: 'Half baked: net zero announcement missing rapid emission-cuts' and see also commentary from the Greens;
[2] See full plan at pdf p.36;
[3] See summary plan at p.12;
[4] See full plan at pdf p.37;
[5] ClimateWorks statement on the federal government’s net zero by 2050 announcement.

Contact

Related industries

Related practices

You might be also interested in...

Tax | 14 Oct 2021

Silence broken on new Victorian Windfall Gains Tax and Build-to-Rent measures

The hot button issues in the Victorian property industry right now are the Victorian Government’s latest Build-to Rent announcements and the controversial Windfall Gains Tax. With the draft legislation now released, the wait is finally over.

Environment | 23 Aug 2021

Federal Court expands scope of activities associated with coal mining projects caught by water trigger under the EPBC Act

A recent decision by the Federal Court has broadened the types of resource projects that may be caught by the water trigger provisions under the Environment Protection and Biodiversity Conservation Act 1999.