An analysis by Deloitte Access Economics, a consultancy firm, found that Australia’s economy will either suffer or benefit – the outcome depends on whether its government addresses the climate crisis.
If climate issues go unchecked, there will be 880,000 fewer jobs, and the economy will be 6% smaller with $3.4tn in opportunities lost over the next 50 years. On the other hand, if policies promote net-zero emissions by 2050 and are consistent with keeping global warming to 1.5°C, then 250,000 jobs would be created, and the economy would expand by 2.6% with $680bn earned.
These findings debunk the assumptions that the economy would keep growing if there are unconstrained emissions and that transitioning to a decarbonized society is too expensive.
If the climate crisis is not addressed, Australia could suffer an economic hit equal to that of the coronavirus pandemic yearly by 2050. An estimated 30% of national income and 30% of employed citizens are vulnerable to economic disruptions.
Chris Richardson, Deloitte Australia’s chief economist, said:
The experience of COVID-19 showed the cost of overlooking catastrophic risks. It’s an urgent wake-up call for us to get ahead of that other big risk: climate change. Australians need policy and regulatory reform that modernizes our economy and unleashes business investment. The benefits of acting are huge, but we are fast running out of opportunity.
He recommends the best way to take on the climate challenge is through market mechanisms – such as supporting innovation in advanced manufacturing, mining new minerals for technologies, and investing in upgrading and replacing infrastructure.
The report is the latest push for the government to put more effort into a green recovery that sets up the economy for an inevitable transition to zero emissions. It isn’t the first to show how the cost of waiting would be greater than taking action now. The AiGroup recently urged the Coalition to spend a minimum of $3.3bn on renewable energy or face an expensive rise in climate-related impacts and risks.
Meanwhile, the Investor Group on Climate Change modeled what would happen if Australia does, or doesn’t, move towards a net-zero emissions economy. It found that if nothing is done, $43bn worth of investments would be lost over the next five years, and $250bn by 2050. But if the government does act, it would unlock a $63bn investment boom over the next five years and $250bn by 2050.
Pradeep Philip, the new report’s lead author, said:
Reaching net zero emissions by 2050 – a target the Morrison government has rejected, but that is backed by the European Union, Britain, Japan, South Korea, and Canada– to limit global heating to 1.5C above pre-industrial levels, and certainly no greater than 2C, is an economic necessity.
Whatever Australia does or doesn’t do, the global warming which has already taken place will hurt our lives and livelihoods. This cost is locked in – it is the cost of delay. There isn’t a ‘no-cost’ option, so if we could take action today to prevent the next great recession from climate change, why wouldn’t we? There will be costs and some losers in a transition to net-zero emissions, but we’ll all be losers if we fail to act.
The IPCC warns that every country needs to reach net-zero by mid-century to limit global warming to 1.5°C. It’s also necessary to curb climate change. However, to do so requires immediate action over the next decade. Global emissions have to drop to 45% less than 2010 levels by 2030.
