Circa 60 per cent: business’s cautious carbon target olive branch
Business leaders are expected to cautiously back a 2035 emissions reduction target if it has a lower range of about 60 per cent, ahead of its release on Thursday.
Business leaders are expected to cautiously back a 2035 emissions-reduction target if it has a lower range of about 60 per cent, as Anthony Albanese chairs a cabinet meeting in Sydney to decide Australia’s next major commitment under the Paris Agreement.
With the 2035 target expected to be unveiled after a cabinet meeting on Thursday, Jim Chalmers said the goal would be “responsible and orderly and considered” while Climate Change and Energy Minister Chris Bowen said it would be “ambitious and achievable”.
The considered language from the leading government figures on Wednesday comes as Labor faces pressure from its left flank to adopt a target of more than 70 per cent below 2005 levels to avoid the doomsday predictions in the National Climate Risk Assessment.
A senior government source played down the pressure from the climate and environmental groups over the 2035 target, arguing Labor would avoid being “radical revolutionaries” in an aim to win over middle Australia.
Amid a global slowdown on climate action, a senior Labor MP said the government was cognisant of the potential costs of setting a target that was too far ahead of comparable nations.
But there is significant support for a high target within Labor’s caucus, with the Prime Minister likely to face internal pressure over any target that falls below 65 per cent.
While unions, climate groups and the Labor Environment Action Network are backing a target of 70 per cent or higher, The Australian understands business groups are hopeful the bottom end of the target will be about 60 per cent. Several business sources said a 60 per cent target would be difficult to achieve, but would be at a level industry could work with, as long as there was a clear plan on how to get there.
The Australian understands some business figures have told the Albanese government a 57 per cent target would be achievable.
Council of Small Business Organisations Australia chairman Matthew Addison said he would not be supportive of a target that put up the price of energy.
“The cost of all energy is hurting small business,” Mr Addison said. “So if the 2035 emissions targets mean that the cost of energy is going to go up while we achieve those targets, it is going to put more pressure on small business.”
Some industry sources say they expect the government to flag an expansion of the safeguard mechanism with a carbon tariff to even the playing field for businesses against international competitors with low climate constraints.
The government deliberations come as Sussan Ley is under growing internal pressure to dump a commitment to net-zero emissions by 2050, driven by conservative frontbencher Andrew Hastie’s threat to quit the shadow ministry if the Coalition retains the goal.
The Opposition Leader said on Wednesday: “We will not have net zero at any cost. Because the cost can be too high, and right now it looks like the cost is too high when you consider what this government is about to do with its Paris targets,” she said.
The Climate Change Authority provided its advice on a target to Mr Bowen last Friday. The Prime Minister will use the target to showcase Australia’s climate credentials at UN meetings in New York next week as he lobbies to host the COP31 summit next year.
The CCA consulted on a target between 65 and 75 per cent but its recommendation to Mr Bowen does not have to be in this range, with sources playing down the prospect of a target above 70 per cent.
The Business Council of Australia released modelling this month claiming a 70 per cent target would cost more than $500bn in capital expenditure, while the Australian Chamber of Commerce and Industry has warned against a target within the range on which the CCA consulted.
Most experts say Labor is not on track to meet its 2030 target to lower emissions by 43 per cent of 2005 levels. The Australian revealed on Wednesday that increasing emissions in Western Australia are the largest contributor to the problem.
The Treasurer and Mr Bowen were in Brisbane on Wednesday talking up a $1.1bn commitment to build Australia’s own biofuels refinery industry, which would replace almost 20 per cent of imports by 2040.
Dr Chalmers said the government’s 2035 target would be good for the economy and good for the environment. “It will meet our obligations to future generations as well,” he said. “We know that net zero is a huge economic opportunity for Australia.”
Climateworks Centre head of Australia programs Erwin Jackson said the Albanese government should not be deterred from setting an ambitious target despite other nations watering down its commitments.
He said a 2035 target above 60 per cent would be higher than most countries, but below Britain.
“It certainly wouldn’t match Canada or New Zealand – theirs is much lower,” he said.
“But I think the core point is that Australia is not Canada or New Zealand. Canada already gets most of its electricity from renewable energy sources; most of New Zealand’s emissions come from the agricultural sector. So what that means is they have less emission reduction opportunities than what Australia has.
“Countries that position themselves early for the transition to net zero reap the biggest economic benefits. They also avoid the economic damages that come from delaying action.”
Mr Jackson said the election of Donald Trump as US President has been “disruptive and distractive” but climate action was being driven by economics.
With the electricity sector key for hitting the 2030 target, Mr Jackson said there would need to be deeper emission cuts from industry and the transport sector to hit a 2035 target.
Canada’s 2035 target is to reduce emissions by 45-50 per cent below 2005 levels by 2035, building on the 2030 target of 40-45 per cent below 2005 levels.
But Prime Minister Mark Carney would not say last week whether Canada would meet its climate goals under the Paris agreement by 2030 or whether he would reduce the target for 2035.
In his first week as Prime Minister, Mr Carney scrapped Canada’s carbon tax having vowed to kill it off during the election.
He had previously supported a carbon pricing scheme, but said during his bid for the Liberal leadership, that the current policy had become “too divisive”.
New Zealand’s 2035 target is 51-55 per cent below 2005 levels and has a higher percentage of emissions from agriculture.
Britain’s target is to reduce greenhouse gases by 81 per cent of 1990 levels by 2035, but Labour Prime Minister Keir Starmer is facing pressure to dump net zero from right-wing parties including the Conservatives and Nigel Farage’s Reform UK.
While many nations are yet to unveil 2035 emissions targets, Japan’s is to reduce emissions by 60 per cent of 2013 levels while China’s is to lower emissions by 30 per cent compared with 2023.
The European Union is expected to commit to a 2030 target of lowering emissions by between 66 and 72 per cent of 1990 levels.
The $100bn industry super fund HESTA issued a demand for an ambitious 2035 emissions-reduction target after the release of the National Climate Risk Assessment.
“We are at a critical juncture, with the report highlighting the clear and urgent case for action,” HESTA chief executive Debby Blakey said. “A strong target will provide investors and businesses with confidence and certainty to invest in Australia’s net-zero transition and can help unlock billions in long-term investment.
“We believe a strong target is an important step to encourage companies to invest in an orderly transition of their businesses. This supports a resilient economy, which is in the long-term financial interest of our members.”
ADDITIONAL REPORTING: Perry Williams, Lily McCaffrey
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