Big investors call for zero emissions target, and a plan to get there

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Big investors call for a plan to reach zero emissions by 2050 at the latest. “More can and must be done,” they say.

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Leading investors are calling for Australia to get serious about putting together a plan to achieve zero emissions by 2050 at the latest, warning that the country faces serious finance and economic risks without one.

The Investor Group on Climate Change, which represents institutional investors with total funds under management of more than $2 trillion in Australia and New Zealand, is calling for a carbon price to be returned, and the Australian Energy Market Operator’s Integrated System Plan to be updated to include a zero emissions target.

The policy position paper came out on the same day as the Greens unveiled their own policy to achieve 100 per cent renewables by 2030, and economy wide “negative zero” emissions by 2040. The big investors are not quite so ambitious, but not noticeably different. Both want a transition plan built around the ISP.

The IGCC target aims for net zero emissions by 2050 “at the latest”, and many climate analysts say the real implications of the 1.5°C target included in the Paris climate treaty suggests a broad “zero emissions’ in the early 2040s.

Either way, the country is currently heading in the opposite direction, as the graph at the top of this story illustrates, and investors – along with regulators such as APRA and the RBA – are saying this is putting great risk on to the economy.

“We know that climate change is a systematic risk to investment returns, financial stability, communities and the economy,” says Emma Herd, the CEO of the IGCC. “The decisions we make today will have a material impact on the retirement savings of millions of Australians and New Zealanders.

“Institutional investors are investing in zero carbon solutions and engaging with companies they invest in to ask them to do the same. Financial regulators expect industry to be managing for climate risks. Governments now need to do their part in delivering a net zero emissions and resilient economy.”

  • The broad list of policy requirements focus on making targets long-term and Paris aligned – and that does not mean the down-payments made in Paris itself, but commitment that recognise the aspirational target of limiting warming to 1.5°C, or close to it.

    That means Australia should develop 2050 economy-wide strategies to achieve net zero emissions, by the end of 2020. This should establish a road-map for all sectors of the economy to contribute to achieving the overall emissions goal.

    The COAG Energy Council should implement a market-based emissions reduction policy in the National Electricity Laws to achieve net zero emissions in the electricity sector by 2050.

    Australia should also update its Safeguard Mechanism to become a baseline and credit emissions trading scheme (effectively a carbon price) and targets are set to align with the objectives of the Paris Agreement.

    The Clean Energy Finance Corporation (CEFC) should also mandate activities hat ensure public finance vehicles “crowd in” and accelerate private sector investment in climate change solutions.

    And the investors say independent statutory economic transition authorities are created to plan for an orderly transition, including orderly fossil fuel plant closure and community transition planning. and the development of labour adjustment packages for communities impacted by the transition from fossil fuels and physical climate change itself.

    (Indeed, it looks for all the world like the Greens climate and energy policy also unveiled on ThursdayOnly the target dates are different).

    “More can and must be done,” the IGCC document says.

    “This will not be easy, but it is necessary. Institutional investors can drive signi cant change across the investment chain and the economy to ensure our members retire with dignity. However, there also has to be a partnership with government on this journey.

    “The policies outlined in this document are critical first steps to managing the substantial risks of climate change. They will also unlock multi- billion dollar investments in economic revitalisation and zero carbon modernisation.”

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