The newly formed Climate Capital Forum – a coalition of financial experts, investors, philanthropists, industry bodies and NGOs – this week launched a policy roadmap detailing bold reforms to position Australia as a superpower in zero-emissions trade and investment.
Climate change is the single greatest threat to the Australian economy, and an existential challenge. Equally, our response to tackling climate change provides perhaps the greatest opportunity for investment, economic, export and employment growth that Australia has ever seen.
The key to this transformative, once in a century opportunity is rapid, strategic decarbonisation of the Australian economy, as we help drive the accelerating global energy transition and build our future prosperity.
This demands clear strategies and policies, and profound economic reform in Australia – a redesign and reindustrialisation of our economy and energy systems that facilitates critical metals and minerals value-adding pre-export, leverages our global competitive advantage in low-cost firmed renewable energy at world scale, onshores and expands manufacturing, electrifies everything, and creates innovative systems that support zero emissions partnerships with our trade partners.
Australia currently shares global laggard top-three fossil fuel exporter status with Russia and Saudi Arabia, and our export history is largely dig-and-ship.
But we are also the world’s largest exporter of lithium and iron ore, and the second largest for copper, with critical minerals demand forecast to grow exponentially this decade. We have trusted trade partner status in the greater Asia region and super-abundant renewable resources to power processing onshore.
As we leverage our competitive advantage in the new global clean energy economy, we also further our national and energy security – a need starkly illustrated by the fossil fuel energy price hyperinflation triggered by Russia’s war on Ukraine.
Other major nations are moving fast. The $US369bn Inflation Reduction Act (aka Climate Bill) is turbocharging the green revolution there, attracting unprecedented investment in renewables, minerals, batteries and electrification.
China continues its accelerating decarbonisation and clean energy and transport manufacturing supply chain programs, and has a decade’s headstart. This is a global technology and investment race. Australia’s world-scale renewables and resources give us an edge.
The Climate Capital Forum is calling for an ambitious federal emissions reduction target in line with the science to ensure a consistent market signal – 75% by 2035 (on 2005 levels) – which will bring the federal government in line with leading states, such as NSW’s 70% by 2035.
Key will be a ban on new fossil fuel projects and an end to fossil fuel subsidies, coupled with tax reform to ensure fossil fuel multinationals pay appropriate tax and royalties here, which could be reinvested in the energy transition.
We urge that the government complete its Safeguard Mechanism reform – which progressively cuts carbon pollution by Australia’s 215 highest-emitting companies – to include a high, credible lasting price on carbon, with emissions offsets a last resort.
An effective carbon price is the single most important market signal to catalyse decarbonisation and the capital shift to clean technology.
The full recommendations of the Chubb review into the Australian Carbon Credit Units should be adopted, including the establishment of an independent committee to oversee their integrity, and the abolition of bogus credits for “avoided deforestation”.
We should leverage our international partnerships via zero emissions trade agreements with China, EU, India, Indonesia, Japan, South Korea, and the US, while expanding existing agreements with Singapore and Japan, and work with our partners on a potential carbon border tariff to ensure Australian firms investing in reducing carbon aren’t disadvantaged.
The $1.9 billion federal Powering the Regions Fund, which supports decarbonisation of industry and creates new clean industries and jobs, should be restricted to zero emissions projects.
And we urge the government to establish a ‘Make Australia Make Again’ program. The fast-growing demand for renewable energy components, technology and infrastructure, batteries, EVs (passenger vehicles, trucks and mining equipment), EV charging, green hydrogen, ammonia, zinc and iron, lithium hydroxide and rare earths, integrated rooftop solar and behind-the-meter storage IT systems, and smart energy and emissions management systems sets the scene for Australia to play a major role regionally.
We call on the government to prioritise a national plan to electrify homes and communities, acting as guarantor for low income households, public and community housing; and enhance nationally the NatHERS and NABERS schemes, which measure buildings’ energy performance.
And we need urgent reform of the energy market to disrupt the old centralised model, enabling peer-to-peer, community-owned and distributed/decentralised energy solutions, and to boost private-public partnerships in renewables, storage and utilities.
There is a major opportunity for the Albanese government to introduce an Australian version of the US Inflation Reduction Act – enabling significant and sustained levels of dedicated federal funding to dramatically accelerate the energy transition and crowd-in private co-investment.
Our other recommendations include an expansion of the Future Fund’s investment mandate to prioritise zero emissions technologies; finance mechanisms that allow “patient”, risk-tolerant public capital to de-risk strategic opportunities for private capital investment in clean tech; and tax incentives for research, development and demonstration catalysing innovations in climate solutions, as in the US and California.
Our $3.3 trillion superannuation pool is a vital decarbonisation tool: we urge reform of APRA’s MySuper Heatmap to measure funds’ performance against a Paris-aligned benchmark, pivoting the MySuper default option to a lower-carbon index, requiring opt-in for higher carbon options.
We can’t repeat the mistakes of the past: the government should adopt a “nature positive” approach, prioritising effective assessment, avoidance and mitigation of the environmental impacts of renewables infrastructure, mining, processing and manufacturing. It is critical First Nations and regional communities are co-drivers of the transition and all climate solutions.
We can, and must, have a strong economy, a flourishing environment, a more just society, and a safe climate. The future awaits, and with the right economic and energy policy, is ours for the taking.
The Climate Capital Forum was initiated by Blair Palese, philanthropy director, Ethinvest. In addition to Ethinvest, signatories to the policy roadmap include: Climate Energy Finance, Smart Energy Council, Rewiring Australia (Saul Griffith) Australian Impact Investments, LAUTEC, NorthStar Impact Funds, Supercharge Australia, FutureSuper, and Stephen Pfeiffer, Climate donor and advocate.
Tim Buckley is director of Climate Energy Finance
