Business lobby calls for weak 2035 emissions target, even as key members warn of climate calamity

Australia’s biggest business lobby group has issued a call for the federal government to set a weak 2035 emissions reduction target, despite some of its own key member organisations aiming for net zero by that date and warning of “climate-driven market failure.”

Australia is overdue to set its next Nationally Determined Contribution under the Paris Agreement in 2025 – an emissions reduction target for 2035 that will sit somewhere between the 2030 target of 43% below 2005 and the ultimate goal of net zero emissions by 2050.

In a submission to the Productivity Commission, the Australian Chamber of Commerce and Industry (ACCI) has warned against aiming too high on the 2035 target, when it says the 2030 target is “becoming increasingly challenging” and “slipping out of reach.”

“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 submission says.

“ACCI contend that the 2035 NDC should be set at a level that is realistic, reasonable and achievable without imposing overly tight constraints and excessively high costs on Australian business or the taxpayer.”

Under the terms of the Paris Agreement, Australia had been expected to set a 2035 emissions target by the end of 2024.

Part of the delay has been waiting for the advice from the Climate Change Authority (CCA), which has in turn been waiting to factor in the outcomes of the Australian election in May and the fallout from the change of government in the US at the end of 2024.

The absolute baseline guidance for 2035 targets is that they should align with limiting warming to 1.5°C, but they are also expected to factor in a country’s “fair share” of the global effort and ramp up ambition enough to put the world well on track to reach net zero by 2050.

For example, the Victorian government has set a state 2035 target of 75-80% below 2005 levels. The UK’s 2035 NDC target, announced at COP29 in November 2024, is to reduce all greenhouse gas emissions by at least 81% on 1990 levels.

Last year, the CCA CEO Brad Archer said evidence was indicating a target for Australia in the range of 65% to 75% below 2005 levels would be ambitious, “but could be achievable if additional action is taken by governments, business, investors and households.”

But according to a report in The Australian on Tuesday ACCI chief Andrew McKellar says such a target would be “exceedingly challenging” for business to endure.

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

But as the Australian Conservation Foundation (ACF) points out, an outcome that would entail much more significant adjustment costs across the economy – and on many other devastating levels – is dangerous global warming.

“Continuing on a linear, business-as-usual trajectory will condemn Australians – including Australian industry – to a world of rolling climate disasters,” ACF climate and energy program manager Gavan McFadzean said on Tuesday in a statement challenging the ACCI’s claims.

“Yes, there are challenges in rapidly shifting to an economy powered by clean energy, but they are nothing compared with the challenges of living in a world that is 3° hotter. 

“To give Australians and our environment the best chance of holding global warming at the safest levels now possible, Australia really should aim for net zero by 2035, but no less than 80%.”

Certainly, it’s difficult to see how the ACCI’s position on emissions reduction could be supported by the whole of its membership base, which includes a number of organisations at the very front line in the battle against climate change.

Among these are Eco Tourism Australia, the Queensland Tourism Industry Council, and Bunnings Warehouse, which just won Clean Energy Finance Corporation support to install solar more and electric vehicle chargers, despite having already reached a target of 100 per cent renewables.

Also on the members list are some of Australia’s biggest insurers and representative body, the Insurance Council of Australia, which in December last year released the third edition of its “award-winning Climate Change Roadmap, outlining the industry’s continued commitment to achieving net-zero.”

According to ICA, the 2024 update includes member survey results which found that 50 per cent of respondents are aiming for 2030 operational net-zero targets. The survey also found that 63 per cent have linked climate metrics to executive pay.

“The roadmap highlights steps the industry has taken to prepare for mandatory climate disclosure requirements that are coming into force nationally for most major Australian businesses in early 2025,” the ICA says.

“More than half of survey respondents have already been subject to these requirements in other jurisdictions.”

Major global insurer Allianz, another member of the ACCI and a representative of its business leaders council, in April warned that the climate crisis was on track to destroy capitalism, itself.

“We are fast approaching temperature levels – 1.5°C, 2°C, 3°C – where insurers will no longer be able to offer coverage for many of these risks,” said Günther Thallinger, who is on the board of Allianz SE and the former CEO of Allianz Investment Management.

“The economic value of entire regions – coastal, arid, wildfire-prone – will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.

“The good news,” Thallinger adds, “is we already have the technologies to switch from fossil combustion to zero-emission energy. The only thing missing is speed and scale. This is about saving the conditions under which markets, finance, and civilisation itself can continue to operate.”

The bad news, it might be said, is that there are still so many major lobby groups like the ACCI, using their power to slow climate action down. Although the ACF is hoping that a more resolute federal government, on the well-considered advice of the independent CCA, might put an end to that.

“With huge opportunities in renewable exports and manufacturing, and more frequent and extreme weather events already impacting the Australian economy, the days of Australian business being a drag on climate ambition are over,” McFadzean says.

“High emissions economies like Australia will be left behind in the rapidly growing clean energy trade unless we have a strong 2035 target and the net zero plan to get there.

“A strong science based 2035 emissions reduction target will keep Australians safer from the impacts of climate change and send a strong market signal that drives investment in the clean energy tech and manufacturing industries to transition our domestic economy and exports.”