Bank chiefs’ warning on net zero targets
Australia's biggest banks have warned achieving net zero by 2050 will be ‘challenging and bumpy’ amid concerns over power prices and slow project approvals.
The chief executives of two of Australia’s biggest banks have raised concerns over the Albanese government’s net zero 2050 targets, saying that meeting the goal would be “very challenging,” and the energy transition was held back by negativity, dogma and approvals that are taking an unhealthily long time.
Hitting the target should also not come at the “cost of dependability and reliability”, or higher power prices, which have risen 23 per cent in the past year.
The reality check comes as Climate Change Minister Chris Bowen sells the net zero target at the annual climate COP summit in Brazil where he is pushing ahead with Australia’s bid to win hosting rights.
Commonwealth Bank chief Matt Comyn said the road to net zero is going to be “challenging and bumpy”.
“I think there’s a lot of potential outcomes, and not all of them as positive as each other. I think it’s very challenging,” Mr Comyn told a parliamentary economics committee on Tuesday.
Asked directly whether Australia will achieve net zero by 2050, Mr Comyn says he will “defer to the experts”, prompting laughter in the room.
“I think clearly, this is a global challenge that’s going to rely on a lot of long term co-ordination,” he said.
As the boss of Australia’s largest bank and residential home lender, Mr Comyn also thought the Albanese government’s housing target of 1.2m new homes by 2029 was “stretching” it, but aspirational.
Westpac chief executive Anthony Miller, who also fronted politicians in Canberra on Tuesday to discuss his bank’s support for lending to gas projects, said he saw challenges in achieving the net zero target, dramatically dropped by the Coalition last week.
“The discussion around the transition is one that sometimes seems to be consumed by negativity and dogma and worries,” Mr Miller said.
“It cannot be at the cost of dependability and reliability, and it should not be such that the power price is more expensive going forward,” he said, noting that net zero by 2050 was still within reach for the country “if we go for it”.
However. the risks, he said, were also around slow planning approvals for key renewable energy projects.
“I think one of the things that we need to definitely take ownership of … is that some of the processes for approval are taking longer than might be healthy,” Mr Miller said.
“That’s obviously getting in the way of the transition. The current settings are, in terms of the pace at which we want to transition, somewhat at risk if we don’t see faster approvals and more projects moving to deliver and ensure the country gets to its target state,” he said.
Westpac is now the largest renewable financier in the Australian marketplace, with 89 per cent of all the money that the bank lends to power generation in Australia going to renewables.
Mr Miller said the transition was a “potentially significant moments for the country”, and that the bank had been managing down its lending to coal to the point where it now has no exposure to thermal coal mining anywhere in the world.
“We are actively working with those customers who have coal-powered power stations in terms of the transition.”
There have been a variety of views on the achievability of renewable energy targets
In September, the chief executive of one of Australia’s biggest energy users, Telstra’s Vicki Brady, said the country needed to “think about the timelines”.
“This transition, it’s hard, not just for us, but for most countries around the world. Trying to get that balance of resilient, reliable energy at the right prices in a green way through this transition, I think it’s one of the most complex issues as a country that we’re having to face,” she said.
Following, the Liberals dumping of their net zero policy last week, Michael Hintze, one of Australia’s richest billionaire financiers and donor to conservative parties, said it was a smart move.
“Net zero was too aspirational, it wasn’t practical. It was an empty target,” he said.
In September, Labor set a new, more ambitious emissions reduction target of 62-70 per cent below 2005 levels by 2035, a significant increase from the previous 2030 target.
On Tuesday, the NSW Liberals stuck to their net zero by 2050 target after polling indicated limited electoral success without a credible emissions reduction policy.
Australia and New Zealand Banking Group’s new chief executive Nuno Matos and National Australia Bank boss Andrew Irvine will appear before the committee on Wednesday.
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