Ambitious climate targets must not undermine growth

UN climate chief Simon Stiell’s warning that mega-droughts will make fresh fruit and vegetables a once-a-year treat is the kind of doomsday prophecy that can be counter-productive to a clear-headed debate on Australia’s energy transition. The public has heard such extremism before. In 2004, climate alarmist Tim Flannery predicted that lack of water would turn Perth into the 21st century’s first ghost metropolis. Fourteen years later, drenching rains filled its biggest dam to overflowing.

On Monday, Mr Stiell, who served as a senior minister in the government of Grenada from 2013 to 2022, spoke at a Smart Energy Council event in Sydney. He urged Anthony Albanese not to settle for “what’s easy” but to go big on Australia’s emissions target or face “letting the world overheat”. As the world’s 14th-highest emitter, according to the CSIRO, Australia contributes just over 1 per cent of global emissions. But as one of the world’s largest exporters of fossil fuels the issue has major economic implications. These must be faced. And Mr Stiell’s speech came at a time of competing and intense pressures for politicians and industry.

In their eagerness to beat Turkey to secure hosting rights to next year’s COP31 climate conference, alongside Pacific Island neighbours threatened by rising seas, the Prime Minister and Climate Change Minister Chris Bowen know that Australia needs to step up with an ambitious target for Mr Albanese to take to the UN General Assembly in September. An overly ambitious target that would be seen to cause deindustrialisation would add momentum to the efforts of former Nationals leaders Barnaby Joyce and Michael McCormack, who are campaigning against the target of net zero by 2050.

Mr Albanese and the government also need the upcoming productivity roundtable to succeed in finding a policy pathway to lift productivity and living standards. The Climate Change Authority has previously said it was considering a 2035 emissions reduction target of between 65 and 75 per cent below 2005 levels – a big increase on Australia’s existing pledge to reduce emissions by 43 per cent below 2005 levels by the end of the decade. But business groups remain wary of the CCA’s suggested option, with Australian Chamber of Commerce and Industry boss Andrew McKellar warning that a target of 65 to 75 per cent would be “exceedingly challenging” for the private sector to achieve.

Whatever energy policy changes are enacted, higher power prices are a potent political issue. Federal and state taxpayers cannot subsidise them indefinitely. As it considers all factors, the government should be guided by two imperatives: the economy, and technology, which is the only affordable pathway to lower emissions and improved prosperity. Rather than portraying itself as a world leader in climate action, the Albanese government should not forget the goal of its productivity roundtable – to boost Australians’ living standards. Affordable, reliable energy is central to that goal.

Mr Stiell, a true believer in radical climate action, presents an economic case that is at odds with orthodoxy and needs careful scrutiny by Treasury and objective experts. Doubling down on clean energy is an economic no-brainer, he claims, and failure to do so could cause a $6.8 trillion GDP loss by 2050, with living standards to fall by more than $7000 per person per year. Extreme weather would destabilise the nation and the neighbourhood, threatening security. Half measures, Mr Stiell warns, will destroy property and infrastructure, hammer households, bankrupt regions, and punch holes in public budgets.

In its upcoming 2035 target and policies, guided by economics and technological reality, the government cannot hope to please climate activists, net zero sceptics and UN officials at the one time – or any of them, necessarily. Its task is to be responsible and pragmatic, putting the national interest first.