Australian Industry Group calls for deeper climate cuts, coal exit plan

The Australian Industry Group has laid out its pre-election priorities, calling for more ambitious climate cuts and a stronger plan on the retirement of coal-powered plants.

Australia’s political parties must hike their emission reduction goals and better plan for the exit of coal, the Ai Group said.

The winner of a looming federal election should look to nearly double Australia’s emissions reduction target by 2030 and develop a national strategy to deal with coal exiting the power grid faster than expected, a major business group said.

The Australian Industry Group, which represents 60,000 businesses, has told politicians the nation’s current goal for cutting pollution should be extended to 50 per cent by 2030 to ensure the country does not slip behind its main international trading partners to meet mid-century net zero targets.

Australia’s current “2030 emissions goals should deepen in order to reach the 2050 goal, support needed investment and deployment, and keep pace with our international partners and commitments,” Ai Group chief executive Innes Willox said.

“While there is no one best number, roughly halving emissions by 2030 would put Australia in the mainstream of advanced economies.”

Scott Morrison has committed the country to net zero emissions by 2050 but has not budged on lifting its 2030 goal for a 26-28 per cent reduction on 2005 levels, although government forecasts show it expects to reach a 35 per cent cut by that time due to more renewables coming online and low emissions technologies.

Labor has opted for a 43 per cent cut by the end of this decade if it wins at the next election, expected in May.

The Business Council, representing many of the country’s biggest emitters, in October said Australia should almost double its 2030 emissions reduction target to between 46 and 50 per cent to achieve net zero by 2050, citing modelling showing the shift to a clean economy would boost GDP by $890bn and add 195,000 jobs over the next five decades.

The Ai Group’s demands for greater ambition forms part of its pre-election policy statement on energy and climate, two areas that have at times proven treacherous for both major political parties.

Ai Group chief executive Innes Willox.

It also called for the Climate Change Authority, chaired by Grant King, to manage a process to put the more ambitious targets in place.

“Updated 2030 goals and an updated long-term emissions strategy are particularly important to develop through deep consultation and transparency. The Climate Change Authority should be asked to co-ordinate a public process to provide advice on these matters to inform decisions by the end of 2022,” Mr Willox added.

The issue of coal-fired power retiring from the power grid faster than expected this decade, as renewable energy routs the economics of the fossil fuel, also needed to be carefully handled with greater cohesion between states and the federal government, he said.

A pledge by Mike Cannon-Brookes and Brookfield to close AGL Energy’s coal plants more than a decade earlier than ­planned if they win control in a takeover bid has sparked a fractious debate, with Energy Minister Angus Taylor warning an disorderly exit could threaten power security and ­prices.

“Australia’s former competitive advantage in carbon-intensive energy is gone. Building a new advantage in clean energy is achievable but demands coherent and efficient action,” Mr Willox said. “Coal generator closures will accelerate and variable renewables will increasingly dominate supply. This transition will not be straightforward or easy, but it can and must be managed effectively, avoiding negative impacts on price, security and reliability.

“The federal government can play an important role in bringing stakeholders together, encouraging national consistency, and ensuring reforms are coherent with the economy-wide goals of energy advantage and net zero emissions.”

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A mechanism that would pay coal generators to guarantee enough back-up capacity is available in the grid has previously been floated, and the Ai Group said there needed to be a deeper debate over the policy to ensure it delivered the right result for energy users and the industry.

“Governments no longer seem confident that the existing electricity market design can drive necessary investment, and their consequent interventions further impact purely private activity,” he said.

“A new settlement on resource adequacy mechanisms is needed that commands broad consensus and provides greater stability.”

More than $10bn of electricity transmission projects are needed this decade so new supplies of solar and wind can reach users and Ai Group said government could play a role through financial guarantees. It proposes “using the public balance sheet to speed transmission development and protect energy users from excessive cost and risk”.

Ai Group also called for safeguards to ensure enough gas is available for domestic users.