Last week, the New York Climate Week made clear that there is no slowing down on climate action. And as the globe accelerates towards net-zero, Australia is in a unique position. Being rich in mineral and renewable resources means we can gain from the next major economic transition - but only if we play our cards right.
Deloitte Access Economics, together with NAB, have released the second phase of the All Systems Go series. Focused on the opportunity above net-zero by setting up our domestic industries for green success (Figure 1), the analysis shows that Australia must decarbonise quickly, by investing in low emissions technology and industries now. If we do, then Australia can secure an estimated $435 billion opportunity from competitively trading in global decarbonisation by 2050.
Figure 1: All systems go - modelled scenario pathways
Source: NAB, Deloitte Access Economics
Historically, Australia’s prosperity has been reliant on emissions-intensive natural resources. This means a significant restructure of our economy is needed in a decarbonised world, which will be relatively expensive (particularly as our current industrial base isn’t very competitive). If Australia achieves ‘today’s net-zero’ scenario targets, exports could decline by $270 billion by 2050. That’s because meeting targets is the bare minimum, and how Australia meets targets matters.
Australia can turn a declining export outlook into an increase in economy-wide export opportunities of $255 billion by competitively decarbonising. Australia can increase our competitiveness in renewable energy manufacturing and drive growth in alternative exports beyond traditional mining. To achieve this, the nation must quickly replace high-emissions activities with low-emissions ones.
Capital investment will be key to mobilising our decarbonisation effort with a large proportion of our clean energy investment to come from overseas. The Australian economy must position itself as an attractive destination for foreign investors. Australia should coordinate the attraction of this capital alongside trading partners, to achieve mutually beneficial outcomes, where possible.
Australia has many elements of what the world needs to meet global climate commitments, but the challenge is to ensure the world can buy it from us. For Australia to seize the external opportunities offered by surging demand for low-emissions goods, all economic systems must decarbonise and position themselves to best capture growing global demand. Our energy, mobility, materials manufacturing, and food and land use system must work in tandem towards the common goal.
Australia must pivot our domestic policy, focus on the right demand settings, and expand activity across new green industrial supply. Federal, State and Local governments must act quickly to shift industry towards these objectives and away from fossil fuels.
Read more in the full report, All systems go: Powering ahead.
This newsletter was distributed on 26th September 2023. For any questions/comments on this week's newsletter, please contact our authors:
This blog was co-authored by Luc Redman, Graduate Economist at Deloitte Access Economics.
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