Business welcomes PM's climate optimism, urges faster action

Business groups have welcomed the Prime Minister's increasing optimism on climate action as they continue to call for a commitment to net-zero greenhouse gas emissions by 2050.

Scott Morrison told the Business Council of Australia on Thursday he hoped Australia could ditch the use of controversial "carryover credits" and still meet its commitment under the Paris Agreement to reduce greenhouse emissions by at least 26 per cent by 2030.

Prime Minister Scott Morrison.Credit: Joe Armao

"I have always said we will only use carryover to the extent required. My ambition is that we will not need them and we are working to this as our goal," Mr Morrison said. "I hope to have more to say about this before the end of the year as we update our emissions projections to take into account new policies and measures."

Australia is the only country that has said it intends to use carryover credits – accrued by beating emissions reduction targets under the soon-to-expire Kyoto Protocol – to achieve its Paris target. Under its emissions reduction trajectory, Australia would need to draw on 411 mega-tonnes of carryover credits.

Opponents of their use argue it goes against the spirit of the Paris accord and more ambition is needed to achieve its ultimate goal of limiting global warming to 1.5° Celsius.

Three of Australia's biggest industry groups back economy-wide targets for net-zero greenhouse emissions by 2050.

The Morrison government has said it can meet its Paris target by achieving net-zero emissions sometime in the second half of this century through encouraging industry to use low-emissions technology.

Business Council of Australia chief executive Jennifer Westacott said the group agreed Australia should aspire to meet its emissions targets without the use of carryover credits.

Innes Willox, chief executive of national employer organisation Ai Group, said "carryover credits have been controversial and are best not relied on".

"We look forward to the announcement of a long-term strategy next year – hopefully one that lays out directions towards net-zero emissions by 2050," Mr Willox said.

The Australian Energy Council members generate and sell the majority of the country's electricity in Australia and are among the biggest investors in renewable energy. Chief executive Sarah McNamara called for government to go further, arguing that "all sectors of industry need a target date and a policy that would assist the achievement of it".

"A guiding policy framework and timeline is critical to industry's ability to reduce emissions at the lowest cost to households and the economy," Ms McNamara said.

Climate Council chief executive Amanda McKenzie said it was a "very welcome shift in language from the Prime Minister" and called on the federal government to lift its ambition to the level of the states.

All states and territories have set net-zero 2050 targets and NSW and Victoria have each recently announced major emissions reduction policies.

"The states have very impressive climate and energy commitments. If Australia's emissions reduction trajectory has changed to meeting the Paris goal, it will be thanks in large part to them," Ms McKenzie said. "The federal government has an opportunity to ramp up policy and make sure emissions reduction grows beyond energy and across all sectors of the economy."

Kyoto credits explained

• Australia's carryover credits come from its participation in an international climate agreement to reduce carbon emissions and curb global warming, known as the Kyoto Protocol.
• The credits are the amount Australia exceeded its emissions reduction target for the first Kyoto period (2008-12) and the projected overachievement for Kyoto 2 (2013-2020). The latest calculation is 128 million tonnes of greenhouse gas for Kyoto 1 and about 280 million tonnes for Kyoto 2.
• The Morrison government is counting the surplus towards Australia's commitment to the 2015 international agreement, the Paris accord, where Australia pledged to cut 2005-level emissions by 26-28 per cent by 2030.
• Australia played hardball in negations over Kyoto targets. It was one of three nations - along with Norway and Iceland - permitted to increase its 1990 emissions by 2020 and was permitted to count savings from reduced land clearing, which has supplied almost all Australia's Kyoto "over-achievement".
• Taken from 1990 to 2012 Australia's emissions from industry grew by about 28 per cent, but the reduction in emissions generated by land-clearing restrictions dragged Australia's emissions below the 8 per cent increase permitted.