Business issues $530bn warning to Labor on 2035 emissions target
Corporate Australia has calculated the eye-watering price tag of a 70 per cent cut, with new targets set to be unveiled within weeks.
Anthony Albanese and Chris Bowen have been warned by Australia’s largest employers that cutting emissions by 70 per cent or more would carry a price tag of up to $530bn in capital investment, as business leaders refuse to provide cover for Labor’s higher climate targets.
Ahead of the Prime Minister and the Climate Change and Energy Minister unveiling a 2035 emissions-reduction target in the next fortnight, a Business Council of Australia report reveals the government is facing extreme financial, workforce and delivery pressures to land the net-zero transition.
With the government under pressure to hit its existing 43 per cent emissions-reduction and 82 per cent renewables targets by 2030, the BCA has modelled three scenarios highlighting the need for massive investment and faster approvals to achieve higher climate targets.
The report, Australia 2035 – Maximising Our Potential, which does not include broader economic impacts of Labor’s climate-change targets and net-zero transition, shows a 50 per cent emissions-reduction goal compared with 2005 levels would cost between $210bn and $300bn in new capital investment.
To reduce emissions by 60 per cent over the next decade, investment costs would rise to between $395bn and $480bn. A target of 70 per cent or higher would drive up investment costs to a range of $435bn to $530bn.
The BCA, which represents the nation’s biggest banks, miners, retailers and tech firms including Woolworths, Wesfarmers, BHP, CBA, ANZ, Telstra and Qantas, has also warned that emissions and renewables targets will likely fall short unless governments speed up approvals and overhaul the Environment Protection and Biodiversity Conservation Act.
Environment Minister Murray Watt, who has been tasked by Mr Albanese with the EPBC reforms, last week told The Australian the country could not achieve its 2030 emissions-reduction and renewables targets without slashing green tape.
After the government’s economic reform roundtable last month secured consensus around removing duplication between jurisdictions to accelerate clean-energy project approvals, Senator Watt said: “I definitely think for us to hit our emissions and renewables targets, we need change to our environmental laws.”
In addition to financial costs, the BCA report said an additional 59,000 electrical trade and engineering workers would be needed by 2030 to achieve a 60 per cent emissions reduction target within a decade.
Before the 2022 election, the BCA endorsed a 2030 emissions reduction target of 46 to 50 per cent, which was higher than the 43 per cent target adopted by Mr Albanese and Mr Bowen.
In contrast to the 2021 BCA report, which talked up a net-zero transition reaping an “economic dividend of $890bn and 195,000 jobs over the next 50 years”, the peak industry group’s report released on Thursday does not recommend a preferred 2035 target.
After being berated by business leaders at the BCA’s annual dinner last year, Mr Albanese is expected to walk into a less hostile room when he again delivers the keynote speech on Monday.
In the wake of Labor winning 94 seats and a second term at the May 3 election, The Australian understands the BCA will pledge to work constructively with the Prime Minister on lifting productivity, economic growth and investment, while voicing concerns about the government’s industrial relations laws and failure to cut red tape faster.
Ahead of Mr Albanese and Mr Bowen travelling to New York for the UN general assembly and Climate Week later this month, the government will release a series of climate change reports and targets over the next two weeks. These include the 2035 target, an updated plan for net zero by 2050 and a climate-risk assessment, which paints a grim picture and includes government modelling outlining the cost of climate change inaction.
Under Paris Agreement rules, the Albanese government must lodge its Nationally Determined Contribution, including a 2035 emissions-reduction target, with the UN Framework Convention on Climate Change secretariat by the end of September.
The Climate Change Authority, led by former NSW Liberal treasurer Matt Kean, has been considering a band of 65 to 75 per cent in its 2035 advice to the government. The Albanese government stalled an earlier announcement on a 2035 target after granting the CCA more time to prepare its advice following the election of Donald Trump.
The Australian understands the government could opt for a range at the lower end of that band, potentially between 65 and 67 per cent, rather than a specific number. While Mr Albanese legislated the targets for 43 per cent emissions reduction by 2030 and net zero by 2050, which he took to the 2022 election, the government has not committed to legislating the new 2035 target.
BCA chief executive Bran Black said “ambitious but achievable targets with the right policies to deliver them are key to Australia’s long-term competitiveness and prosperity”. Mr Black said the BCA’s report was designed to make sure “Australia has clarity on the steps it must take if it is to announce an ambitious but achievable 2035 target”.
“We know that Australia’s long-beleaguered approvals system, including the EPBC Act, is a massive handbrake on the transition and we urgently need that addressed to deliver more renewable energy projects,” Mr Black said.
Mr Bowen said on Thursday the 2035 target would be both “ambitious and achievable”. In an interview with The Australian this week, he said he sought to be “in good company around the world … I don’t seek any more records when it comes to a target, I seek a target which is sensible in the national interest”.
The BCA, which did not model costs of climate inaction or GDP benefits from new investment, says “the transition represents both challenges and opportunities at the household level”. These include “the cost and reliability of energy, on the way we use our land, on our patterns and modes of travel, on existing and new product choices, on the type and quality of jobs and on the wages received for doing those jobs”.
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