Unions demand Gillard-style carbon price despite emissions target warning

Labor has been warned a target of up to 75 per cent will hurt the viability of local industry, as the ACTU insists the Gillard government’s economy-wide carbon price was a success.

Australian Chamber of Commerce and Industry chief Andrew McKellar has warned the nation's next climate goal needs to be achievable.

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Australia’s biggest business body is warning an overly ambitious 2035 emissions reduction target will undermine the “productivity, competitiveness and viability” of local industry, as unions call for a Julia Gillard-style price on carbon to be reconsidered to lower the costs of hitting climate goals.

In a submission to the Productivity Commission’s five pillars inquiry that will inform debate at the Albanese government’s reform roundtable, the Australian Chamber of Commerce and Industry argued Labor’s 43 per cent 2030 target was “slipping out of reach” and warned the next climate goal needed to be realistic.

ACCI chief executive Andrew McKellar told The Australian a 2035 target of between 65 to 75 per cent being canvassed by the Climate Change Authority would be “exceedingly challenging” for business to endure.

“Anything in that range would be exceedingly challenging for the Australian economy,” Mr McKellar said. “We would see the risk with a target that was in that range, it probably would entail significant adjustment costs across the economy.”

The ACTU told the Productivity Commission that the Gillard government’s economy-wide carbon price was a success, declaring its implementation saw emissions fall, the economy grow and adversely impacted Australians compensated.

Arguing the safeguard mechanism was inefficient, the ACTU referenced a survey of Australian economists showing 86 per cent identified a carbon price as the most efficient way to reach net-zero by 2050.

“The Productivity Commission’s investigation of means to reduce the cost of meeting carbon targets should proceed from these premises, with the goal of internalising the externalities of carbon pollution in line with the principles of carbon pricing,” it says.

When asked if this meant the ACTU was pushing for an ­economy-wide carbon price and carbon tariffs, a spokesman said: “The ACTU has raised a broad range of policy proposals in response to the Productivity Commission’s five pillars inquiry”.

The ACTU is also pushing for the PC to investigate whether there are fossil fuel subsidies that can be eliminated. ACCI used its submission to reiterate its support for net-zero by 2050 but urged caution at the ambition of interim targets required under the Paris Agreement.

Labor set a target to lower emissions by 43 per cent of 2005 levels by 2030 when it was first elected in 2022, with a new 2035 target needed to be committed to ahead of COP 30 in Brazil in ­November.

ACTU secretary Sally McManus. Picture: AAP

Energy Minister Chris Bowen. Picture: AAP

While ACCI was among business groups that endorsed Labor’s 43 per cent target in 2022, corporate Australia has become increasingly sceptical of the government’s approach amid soaring electricity prices and flatlining emissions.

“It appears that achieving the nationally determined contribution for 2030 is becoming increasingly challenging and the target appears to be slipping out of reach,” ACCI’s submission says.

“Were the government to set a more ambitious 2035 NDC, ACCI would be greatly concerned about the impact on the productivity, competitiveness and viability of Australian businesses, as well as the cost to the taxpayer.”

The ACCI submission says the focus on emissions reduction should be on “market-based solutions” and “creating the right policy environment that encourages businesses to invest in the necessary technology”.

“This should focus on support and assistance, rather than unduly punishing businesses for failure to meet the government’s objective,” it says.

The CCA — led by former NSW Liberal Treasurer Matt Kean — has been assessing feedback on a proposed 2035 target of between 65 and 75 per cent, with unions and the Labor Environment Action Network pushing for a target above 70 per cent.

The Australian understands the CCA is yet to determine a target it will recommend to the government, with a decision to be made by September.

An Albanese government spokeswoman said “Australia is on track to meet our 2030 emissions reduction targets”.

“The government will announce an ambitious and achievable 2035 emissions reduction target that’s in the national interest and informed by the experts at the Climate Change Authority,” the spokeswoman said.

Climate Change and Energy Minister Chris Bowen last week travelled through Pacific nations as he sought to build support for Australia hosting COP31, with Labor’s 2035 target likely to be assessed against rival bidder ­Turkey.

“There’s never been a cop in the Pacific which is the region with the most at stake we would argue in climate change, and the small island developing states are really sort of split between the ­Pacific and the Caribbean,” Mr Bowen said last week.

“We think the Pacific has a huge amount to bring to the table. Australia as COP President would ensure that the Pacific’s issues are front and centre of the agenda with a big spotlight on them. You won’t get that in other cops around the world.”

Figures released by the climate change department in May showed carbon dioxide emissions rose by 0.05 per cent in 2024 to 446.4 million tonnes, equivalent to 27 per cent lower than in 2005.

This prompted energy expert Bruce Mountain to declare he did not think there was a chance the Albanese government would meet its 2030 commitment while MST Marquee analyst Saul Kavonic said the delay in the renewables rollout made the target “impossible to meet”.

However, Mr Bowen maintains the government is on track to meet its emissions commitment and target to generate 82 per cent of electricity from renewables by 2030.

Both ACCI and the ACTU are among groups pushing for regulatory approvals of energy projects to be fast tracked, in a move that puts a long-awaited revamp of environmental approvals in focus.

ACCI’s submission argued “clear time limits should be set for the approval of major projects to prevent extensive delays”.

“Simplifying and streamlining the regulatory architecture for major projects must be a priority if we are to attract the necessary investment in renewable energy and achieve the vital growth in emerging low emissions technology,” ACCI says.