The powerful national upside of net zero emissions 

Mar 15, 2021

Major countries and the private sector are embracing net zero as the growth opportunity of the future. With Australia increasingly isolated diplomatically and economically, Morrison is feeling the pressure.  

Scott Morrison’s recently stated goal “to reach net zero emissions as soon as possible, and preferably by 2050” comes at the beginning of possibly the most important year so far in the human response to climate change. However hard it may be for a leader whose previous climate interventions have included brandishing a lump of coal in Parliament, and who assumed the Prime Ministership partly because of climate policy division, Morrison now clearly recognises the need to shift his and Australia’s position.

Morrison has a full climate change diary

The most significant United Nations meeting on climate change since the 2015 Paris meeting is taking place in Glasgow this November. Prior to this, through the G7 and G20, a powerful international diplomatic and policy push for a more ambitious global climate response is now in full swing. With responsibility for economic, trade, energy and infrastructure policy, the collective efforts and decisions by Heads of State can be more significant than even the most successful UN meeting of environment Ministers.

The October G20 meeting in Rome has always been in Morrison’s diary, but with the UK now inviting Australia, South Korea and India to attend the G7 gathering in Cornwall in June, the Prime Minister knows he – as emperor – must have climate ‘policy clothes’. With all the members of the G7 committed to a green recovery and net zero by 2050 and developing clear plans to achieve it, to be taken seriously at the top table and avoid Australian exports being penalised, Morrison will need more than a commitment to gas and reducing the cost of technology.

The Prime Minister knows that Australia’s active and constructive participation at these meetings is vital to him not being embarrassed and isolated by his peers. He will remember only too well the mess that was Tony Abbott’s attempt to keep climate change off the agenda for the 2014 G20 meeting in Brisbane. As the weeks since his inauguration have shown, President Biden’s appetite to expend significant political capital on climate action is only growing. In former Secretary of State John Kerry, the new US President has appointed a special envoy on the climate crisis with immense international experience and commitment. It has led to Chinese President Xi re-appointing Minister Xie Zhenhua to an equivalent role.

Net zero is the global growth and jobs plan

As a former Treasurer, Morrison is surely also well across how global finance and investment is already flowing away from fossil fuels to clean investment, which has higher returnsGlobal investment in renewable energy has also held up through the COVID pandemic but fallen dramatically for fossil fuels.

This is the direct result of policies that have incentivised investment in clean technologies, including wind, solar and batteries, leading to a virtuous cycle of learning and cost reductions. In much of the world wind and solar are now more cost-competitive than coal, and deliver more jobs. Those in the Coalition and the Labor Party who believe there is sense in riding the tail of the high-carbon economy decline as long as possible seem blind to just how short and suddenly such tails can end.

Recognising the growth and jobs potential of net zero, there are concerted actions on multiple fronts this year to scale up and shift global private finance towards clean investments. Efforts such as The Climate Finance Leadership Initiative seek to convene the world’s largest banks and investment houses, including our own Macquarie Bank, to mobilise and scale capital for net zero. And with the former Governor of the Bank of England Mark Carney advising both the UN Secretary General and Boris Johnson, this is no hairshirt agenda.

Australia has managed major industry transition well in the past

With ‘net zero’ by 2050 now being the yardstick of serious climate policy, Australia committing to this target will send a clear and strong signal to the private sector to invest in increasingly competitive low-carbon solutions. Freed from the toxic smoke of the climate wars our political leaders will need to work on the suite of policies required to support and manage a low carbon economic transformation.

Crucially important will be managing the impact on workers and communities. Mining and coal remain significant employers, but they are far from what they once were. Of the 13.5 million jobs in Australia, only 35,000 are in the coal industry. Mining and coal now support around 190,000 jobs. A government serious about achieving net zero must be clear on the measures required to support these workers through the transition to a clean, digital and automated economy. Whether it is support for BHP workers when the mining giant left Newcastle in 1999, retraining workers previously employed in the Australian car industry, or protecting and repurposing forestry jobs under the 10 regional forests agreements, Australia has a record of managing previous transitions well.

The economic opportunity of net zero emissions is for Morrison to grasp

For Australia to embrace the structural transition to net zero emissions is a question both of political leadership and policy rigour. For Joe Biden, Boris Johnson, Yoshihide Suga, and Xi Jinping making net zero part of their economic and national purpose has been a bold strategic choice. It is how each is seeking to deliver economic growth, jobs and wider public value.

Although hard to see through the predictable political and economic infantilism of the National Party, committing to net zero by 2050 and developing the policies to achieve it is Morrison’s chance to lead an economic reform every bit as important as those of Hawke and Keating in the 1980s and his political mentor John Howard with the GST.

As with climate policy all were divisive issues hotly debated for years, resolved through bold leadership and now largely accepted and seen as world leading policy that has helped power Australian prosperity for decades.

Australia need not aspire to lead the world on net zero policy this year. But to play a constructive role on the international stage the Prime Minister knows he must reset the debate at home and commit to net zero. A sentence in a National Press Club speech is a start. We now await the detail.

This article was first published in The Mandarin and has been republished here at the request of the authors.

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