Zero by 2050 may not be so hard

Zero by 2050 may not be so hard

Biden is pushing for a quicker transition. Maybe Morrison would like us to do likewise, but how?

 

Prime Minister Scott Morrison has agreed to a target of ‘net zero’ greenhouse gas emissions for Australia “as soon as possible, and preferably by 2050” but has also said, reaching net zero “is no longer about if or when but, importantly, how”. He knows how fraught setting climate policy in Australian politics can be, and could be forgiven for thinking he can only dream of finding a powerful enough policy that all can agree upon. But is it really so difficult? 

Growing global consensus that the 2050 target is essential to have any chance of limiting warming to a bearable level, and the tipping points in earth’s climate system increasing the risk of runaway heating, make the quest for effective policy even more vital. 

More than 110 countries around the world, including most of our major trading partners, have pledged carbon neutrality by 2050 or soon after. The reasons for Australia’s hesitation are many and complex but are becoming increasingly irrelevant as pressure mounts. However, without a policy breakthrough little progress appears possible.

Looking at emissions reduction efforts to date let’s compare it to what’s needed to achieve net zero by 2050:

Australia’s baseline for reduction was set at our 2005 level, 628MtCO2-e, though emissions peaked in 2007, at 644Mt. From 2007 until 2013 we reduced our emissions an average of 16.7Mt per year, a rate which if maintained could have achieved net zero by 2046. 

With the change in Government in 2013 came a change in policies – from a ‘carbon tax’ to a ‘direct action’ approach. Emissions reduction slowed to an average 3.4Mt/yr for the following 6 years. Then in 2020 COVID saw it drop by 25.2Mt. Even assuming the COVID affected reduction could be maintained, the overall trend 2013-2020 was just 5.3Mt/yr.

To achieve net zero emissions by 2050 we need to reduce at an average rate of 16.8Mt/yr.

Perhaps those first 6 years of emissions reductions claimed some easy yards in this race, but even the current ground should be easy enough with renewable energy proving the cheapest option, and electric vehicles soon to be equally cost effective. But there will be tougher ground ahead. 

How do we achieve the three to five-fold improvement in emissions reduction we now need to get all the way down to zero by 2050? Energy and Emissions Reduction Minister Angus Taylor’s ‘Roadmap’ identifies most of the technologies we will need, but actively supports only a few of them, has a limited budget, and offers no time schedule. 

Much of the world is putting a price on carbon pollution, led by Europe. Even China is getting into the act, having recently put in place the world’s largest carbon market.

Leading economists and economies believe that gradually pricing carbon-emitting technologies out of the market is the best and easiest way to gain the speed we need. Australia’s price on carbon implemented a decade ago appeared to have had the right effect. History shows that the policy didn’t actually damage our economy. In fact it didn’t even seem to significantly change the already increasing retail cost of electricity at that time. 

The EU has increased its carbon price in recent years and European economists recognise they need to further increase it to drive more rapidly to net zero. They are concerned however that a rising price will impact the average citizen and disadvantage those least able to afford it.

Canada has hit on a good approach. They have implemented a cost neutral scheme in which the revenue raised by a carbon fee is returned directly to citizens as a climate dividend. This enables them to afford the rising price of carbon-intensive goods with the opportunity to save money by choosing increasingly cheaper low-carbon alternatives. 

Professors Holden and Dixon of UNSW have modelled a climate dividend  scheme for Australia. They show that with a $50/tonne price on carbon and an Australian climate dividend, a typical household of two adults and two children would receive around $2,600 per annum tax-free, more than compensating the estimated cost of living increases of $2,035 per annum. This would leave the average family $585 per annum better off, even before adjusting their consumption patterns.

An Australian climate dividend could be Scott Morrison’s dream policy. It rewards citizens for their contribution to decarbonising our economy, while giving investors and businesses the price signal they need to phase out of carbon-intensive activities and transition smoothly towards net zero. The dividend stimulates the economy and reduces the mounting costs imposed by climate change. It enables a price to be set on carbon pollution without it being a tax on Australians. It also means Australia can join the global race to zero and eliminate the threat of paying carbon tariffs on exports to the EU and other carbon pricing nations. 

This may be the elector-friendly, economy-boosting dream approach that our PM, and Australia, needs.

 

Tom Hunt & Rod Mitchell

Creating the political will for a liveable world