Spend on climate is not net zero

The one certainty in the net-zero transition is that it costs a lot of money today for outcomes that are poorly defined and may be felt only many years into the future.

Apart from the size of the bill, the striking feature of research that has found $9bn a year is committed to climate change and net-zero programs is the fact the list is far from exhaustive and how the priorities wax and wane with the political times.

The $9bn figure does not include another $6.8bn to subsidise electricity bills or the billions of dollars being spent by state governments. The current figure could potentially be dwarfed by liabilities that fall to government from the poorly defined Capacity Investment Scheme that will underwrite the profitability of large renewable energy projects that are likely to be overbuilt to make up for the fact they will not all produce energy all of the time.

As Institute of Public Affairs chief economist Adam Creighton found, there was a 15-fold increase in federal spending on climate programs across the past decade, making it one of the 20 most expensive federal government endeavours. While both Labor and Coalition governments have supported policies to achieve net zero by 2050, funding accelerated after the election of the Albanese government in 2022, from $1.7bn in the March 2022 budget to just more than $9bn in the most recent federal budget. Accompanying the rise in spending has been the creation of a plethora of new funds and programs. The obvious question to ask is whether taxpayers are getting value for the money they spend. Evidence for this is hard to find.

The nation’s greenhouse gas emissions have flatlined since 2020, and even rose slightly in the December quarter of 2024. Emissions from electricity production were up 2.2 per cent because of high demand and lower hydro generation. Transport emissions also rose 1.9 per cent as consumption of road diesel and domestic aviation fuel hit their highest levels on record. Australia is not alone in the poor return it gets from climate spending and there should be more transparency about what exactly is going on.

It is time for government to consolidate the true cost of the climate change response and to explain clearly why the benefit matches the cost. This is particularly so given that anything Australia does is likely to have little impact on what is a global problem. According to the scientific experts, whether we like it or not, greenhouse gas emissions hit a record high in 2024, with no sign they had peaked.