Morrison government on the hard road to net zero by 2050

Australia will have to significantly ramp up its carbon emission reductions if it wants to reach net zero emissions by 2050, according to energy experts.
  1. Australia will have to significantly ramp up its carbon emission reductions if it wants to reach net zero emissions by 2050, according to energy experts.

    While Prime Minister Scott Morrison has given in-principle support to net carbon emissions by the middle of the century – a commitment made by a raft of other countries including Britain and the United States – the Coalition government has so far stopped short of formally signing up to the pledge ahead of international climate talks later this year.

    Morrison is attempting to navigate a delicate balancing act between appeasing the global community that wants Australia to take more action on climate change and averting a revolt among National Party MPs who believe coal still has a strong role to play in the nation’s energy mix.

    Morrison and federal Energy Minister Angus Taylor, who last week announced $500 million for new low-emission technologies such as hydrogen and carbon capture and storage, said Australia was “on track” to meet its 2030 emissions reduction target.

    Under the deal, Australia has promised to reduce its carbon emissions by 26 to 28 per cent on 2005 levels by 2030.

    Due to the hard work done by the electricity sector – which is the biggest emitter of carbon – Australia only needs to reduce its emissions by 56 million tonnes to 123 million tonnes over the next nine years to reach the 2030 target.

    Taylor said long-term modelling would be released later this year ahead of international climate talks in Glasgow.

    “We obviously want to get to net zero 2050 and get there as soon as possible,” Taylor told The Australian Financial Review.

    “There are hard challenges in net zero the world is going to have to engage with, and we will have more to say about that later this year.”

    Rather than forcing big polluters to cut their carbon emissions to reach targets, the Morrison government is hoping technology can help reach those goals.

    But the hard work is only just beginning after 2030 if Australia genuinely wants to reach net zero emissions by 2050, according to Grattan Institute energy program director Tony Wood.

    “We used to have 20 per cent renewables target by 2020, then we had 26 to 28 per cent by 2030, now net zero by 2050 is the new mantra,” Wood told The Australian Financial Review.

    “What it literally means is every tonne of carbon dioxide that has gone into the atmosphere has to be matched by a tonne you take out of the atmosphere.

    “And there are very few things you can do to take CO2 emissions out of the atmosphere.”

    Wood said he had no doubt Australia could reach the 2030 emissions reduction target, with an average abatement of about 3.5 million tonnes required each year to the end of the decade.

    But if you draw a line from 2030 to 2050, Australia would need to increase its emissions reduction at the rate of about 24 million tonnes a year every year to reach the end goal, he said.

    Other modelling showed Australia would need to increase its carbon emissions reduction to 45 per cent by 2030 to reach net zero emissions by about 2045.

    While the 2030 target has been heavily modelled in terms of emissions, the 2050 target has been a bit far off into the horizon.

    “This is not an easy task. We’ve been able to reduce emissions in the electricity sector,” Wood said.

    “It will not get any easier until we drive down the costs of technology. Morrison has ducked and weaved on this issue because of the National Party. But if he can continue to find a credible path good luck to him. It won’t be easy.”

    Wood said the Morrison government had abandoned any attempt to introduce a national mechanism, such as the aborted National Energy Guarantee proposed by former prime minister Malcolm Turnbull, to help provide a signal or an incentive to reduce emissions.

    Under the Morrison government’s technology approach, it will be up to the private sector to do the heavy lifting themselves to move to the net zero emissions by 2050 goal.

    Apart from the electricity sector, there are no constraints on carbon emissions in the LNG, transport, agricultural production or industrial emissions.

    The $2 billion Emissions Reduction Fund – which was rebadged the Climate Solutions Fund – pays companies to reduce emissions via auctions several times a year. It is seen as one way to make inroads into the agricultural and industrial sectors.

    The Morrison government also has the framework to tighten emissions, through its so-called safeguard mechanism – which directly affects more than 200 of Australia’s largest industrial emitters – but it has yet to reduce the emission baselines to force companies to change their behaviour and reduce emissions.

    “We have a long way to go to deal with these hard ones,” Wood said.

    “If we’re serious about net zero, you’ve got to do everything you can to drive down emissions and then whatever is left you have to do through offsets.

    “But you can’t offset your way to zero. So you should leave those offsets to the most difficult things.”

    Carbon consultancy RepuTex director Hugh Grossman said the “elephant in the room” was the policy mechanism that would drive the push to net zero by 2050.

    “The target is one thing, but the policy to curb emissions growth is the key issue. And that’s where the safeguard mechanism comes into play,” he said.

    “The government has not tightened the baselines on the mechanism, if anything it’s relaxed them. At the moment, they [the big emitters] have been given a green light to grow their emissions, and they are and they will.”

    Grossman said there needed to be a “carrot and stick approach” to reach the 2030 target.

    “You can set a 2050 target but ultimately you need to set a cap and make that target binding for industry,” he said.

    RepuTex modelling found a move to net zero emissions by 2050 would require the 203 large emitters to start reducing their output from 2022 to 2025 by between 2 per cent and 17 per cent by 2030.

    Investor Group on Climate Change policy director Erwin Jackson said companies had already started to factor in the net zero goal by 2050 into their investments.

    But they were worried it would not be a smooth transition in Australia, which appears reluctant to embrace the target which has been adopted by other countries.

    While Jackson said it was a promising development to see the two major parties move closer on climate policy – after a decade of policy conflict – there was little doubt Australia needed to increase its emission reduction targets – sooner rather than later – to achieve the 2050 goal.

    “That’s one of the core issues that concerns investors. We have large institutional investors already factoring in to their forward forecasts for economic growth, a scenario where the transition to net zero emissions is a disruptive one – where it’s delayed or not managed well,” he said.

    “That’s the assumption that investors are starting to make. You need to have clarity. Moving from 26 to 28 per cent in 10 years is a lot different than going to 50 per cent reduction in 15 years [by 2035].”

    There is an expectation Australia will take a stronger emissions reduction target and formally commit to net zero by 2050 before the year’s end.

    Taylor said the federal government was keen to encourage companies to help reach carbon emissions, rather than punish them with a carbon tax.

    “The other pathway is technology and that’s what’s worked. Our approach in the short term is carrots, not stick,” he said.

    “We have no plans to impose a carbon tax, and we will not.”

    Source: Financial Review