Big business backs 75 pct emissions target as report claims it could boost GDP by $370 billion

Some of Australia’s largest and most powerful businesses are calling on the federal government to commit the country to a 2035 emissions reduction target of 75 per cent, with new research published this week showing it could add an additional $370 billion to the country’s GDP.

More than 350 businesses including Atlassian, Ikea and Canva have signed an open letter calling on the government to commit to an interim target of at least a 75 per cent reduction to emissions by 2035.

The target is Australia’s next Nationally Determined Contribution, as required under the Paris Agreement, a decision on which has been delayed to take into account advice from the Climate Change Authority (CCA).

The CCA is expected to recommend a target in the range of 65 and 75 per cent, which Brad Archer, CEO of the CCA, said in early 2024 would be “ambitious” but “achievable and sustainable if additional action is taken by governments, business, investors, and households.”

The most recent Resolve Political Monitor showed that 44 per cent of voters supported reducing Australia’s carbon emissions by between 65 and 75 per cent by 2035, which would be a significant increase on the existing 43 per cent reduction by 2030.

This week’s new scenario analysis by Deloitte Access Economics – prepared for ethical investment and superannuation company Future Group and mining giant Fortescue – also makes the case for a 75 per cent target, arguing it will unlock “enormous economic opportunity” including an additional $370 billion in Australia’s gross domestic product (GDP) compared to a business-as-usual approach.

“The modelling shows that achieving a 75 per cent target could unlock an additional $370 billion in GDP by 2035 – a per capita GDP increase of over $10,000 – compared to a business-as-usual approach,” said Dino Otranto, CEO of Fortescue Metals.

“A science-based target will deliver a larger, more productive and more prosperous economy in the 2030s and beyond, compared to a lower target.”

The figures show also that a 75 per cent target unlocks support for an additional 69,000 jobs by 2035.

Even when compared to the still ambitious 65 per cent target, a 75 per cent target would pave the way for an additional $20 billion per year through to 2035 and increase the competitiveness of Australia’s exports, raising export revenues by $190 billion over the period to 2050.

“Australia is in a race to secure the global capital required to establish green industries,” said Pradeep Philip, lead partner with Deloitte Access Economics.

“Setting a lower target today comes at the cost of lower business investment than would otherwise be the case.

“Achieving a strong target creates the foundation for Australia’s economy to grow and compete in a decarbonised world, driving investment, innovation and industries for growth. Getting these foundations right with a 75% target can drive, in today’s dollars, $190 billion more exports by mid-century.”

The findings of the scenario analysis are backed by a campaign recently launched by Future Group on behalf of Australian businesses calling on the government to commit to a 75 per cent emissions reduction target.

The campaign, Business for 75, represents a coalition of business leaders across Australia led by Future Group and Fortescue and includes company names such as Atlassian, Ikea Australia, Volvo Group Australia, and Ben & Jerry’s – all of whom have signed the open letter calling on the government to commit to a 75 per cent reduction.

“As the world decarbonises, Australia holds a winning hand: abundant land, affordable renewable energy, critical minerals, and a skilled workforce,” said Simon Sheikh, CEO of Future Group.

“With these strengths, we can build a future made in Australia—powered by clean energy, advanced manufacturing, and secure, well-paid jobs in our regions. But ambition must come first.

“A strong 2035 target will send a clear signal to investors, industry and our global partners that Australia is serious about net zero—and ready to play ball in the industries of tomorrow.” 

So far, nearly 400 companies have signed on to the open letter.

“Australian businesses know that a strong target will provide the clarity, credibility and confidence needed to attract large-scale investment in building new renewable energy generation, new green industries and new technologies,” said Martin Merrick, CEO of Volvo Group Australia.

“This target is not just what Australians need – it’s what Australians deserve, and an essential step in taking the bold, necessary action we need to address the climate crisis,” Ben & Jerry’s activism manager Hilary McAllister.

“Through campaigns such as This Is Our Whirled, Save Southern Sea and Unfudge our Future, Ben and Jerry’s has long advocated for progressive environmental policy, informed by scientific targets.