Report says $550b saving for Aust economy from carbon emissions cut

A new report finds reducing carbon emissions to stem the impact of damaging climate change would benefit the Australian economy by $550b by 2030.

Described as the first comparison of the costs of emission reduction relative to the potential damages from climate change under current policy settings, the report by the Melbourne Sustainable Societies Institute (MSSI) at the University of Melbourne finds Australia is on track for $535 billion in economic damage within a decade, if global emissions continue at their current rate.

The cost, growing to more than $5 trillion in cumulative damages by 2100, can be avoided with a “negligible” impact on GDP of 0.14 per cent, estimated at $35.5 billion from 2019 to 2030.

MSSI compared the cost of damages from climate change, with the cost of reducing emissions from the recent Climate Council Report for economic damages under current or continued increases in emissions.

The report’s authors said the costs were conservative and excluded the bulk of the impact from floods and bushfires, pollution, damage to environmental assets and biodiversity losses.

“Overall, the costs of emissions reduction are far less than the damages of inaction, even with modelling underestimating damages from climate change and overestimating the costs of emissions reduction,” the report said.

Its release came a day after the latest federal government data showed Australia’s greenhouse gas emissions rose by 0.8 per cent in the December quarter, and had a 0.7 per cent rise from the same time last year.

Considering options available to state governments, specifically Queensland and Victoria, the report presented a high-level business case based on emission management schemes, the promotion of emissions reduction in agriculture, energy-efficient building development and the rapid electrification of transport.

It calls for states and territories to increase renewable power generation as a priority, alongside state-based emissions management schemes for the energy sector.

The transition would spark new employment opportunities through “drastic change” in transport, agriculture and land use.

A cost-benefit analysis finds the options would lead to a reduction in greenhouse gas emissions over a business-as-usual scenario of 627 million tonnes from 2020 to 2075, coming at a cost of $3.6 billion.

Indicative potential damages from the status quo add up to $115 billion for Victoria and $171 billion for Queensland by 2030.

The net present benefit is $16.2 billion, at a discount rate of seven per cent, and found even when the benefit of reduced emissions was excluded, the transition to a low-carbon economy would generate benefits outweighing the costs at 2.8 to one.

Authors Professor Tom Kompas, Dr Marcia Keegan and Ellen Witte found the change would present Australia with a sound economic development, where “the economic benefits of a transition to a clean economy easily outweigh the costs”.

The cost of doing nothing to reduce carbon emissions included the loss of international competitiveness for the Australian economy, reduced agricultural and labour productivity, loss of arable land due to sea level rise, negative health impacts and lost infrastructure.

The report warned of devastating impacts to the natural environment, human livelihood and resources.

“Governments that transition to a clean economy are strengthening their economic competitiveness,” the report said.

“The global business community is less likely to invest in economies that do not address climate-related risks.

“Australia cannot afford to be viewed as a high-risk investment location.

“Businesses and governments that understand and plan for their climate-related financial risks and disclose their efforts to address these risks and opportunities, will have a healthier risk profile.”

It recommended detailed regional economic analysis of policy options, a boost to renewable power generation and use, and state-based emissions management schemes around the country.