Adapting to change is in Australia’s DNA. Australia is a resilient and resourceful nation that has adapted and responded to the challenges of a harsh but bountiful country.
Shouting at the climate won’t make it go away. As federal Treasurer Josh Frydenberg remarked, the climate has no postcode – it is not an arcane debate between the city and the bush.
Nor does it recognise geographical boundaries or international borders.
As Frydenberg noted, private financiers and investors have already committed significant funds to back corporations able to drive and accelerate progress towards a low carbon future. Companies can achieve green growth through serving new and growing markets created by the low carbon transition.
On the flipside, financiers, insurers and investors are increasingly making choices to deny their funds to those at risk of not being able or willing to adapt to climate change. For them, it is a question of risk and future returns.
The numbers and global commitments towards the green economy are eye-watering. According to The Economist, Bloomberg, and the World Bank, $US178 billion ($243 billion) of capital flowed into green investment funds in the first quarter of 2021; $US1 trillion of public and private investments will be deployed under the EU’s Green New Deal by 2030; and $US5 trillion in low carbon investments by 2030 are proposed under the Biden Climate and Environmental Justice proposal (with $US1.7 trillion coming from US federal funding).
The actions and commitments of Australia’s trading partners to net zero targets by 2050 underlines the need for Australia to commit to an inspiring and transformative road map that provides the catalyst for green, clean and innovative technologies.
Australia is late to the party, with 68 per cent of the global economy (by GDP) and more than 80 per cent of our trading partners already committing to net zero.
The folly of the debate in Australia is we have seen climate change as an environmental issue at odds with economic growth.
As policymakers thrash it out, business is already acting, and businesses we haven’t usually associated with this debate – miners and farmers – are adopting climate change action.
The reality is simple. First, inaction on climate change will slow the economy and cost jobs, period.
Second, meaningful and co-ordinated action on climate change will boost growth and jobs.
Third, regional Australia stands to gain more jobs and more income as investment flows drive new investment in our regions and create the new platform for Australia as an energy superpower.
Fourth, with the rest of the world shifting, Australian exports will be hit hard if we don’t make the transition now, especially given the $US47 trillion upside for economic growth over the next five years in the Asia Pacific if the world and our region acts on climate change. That is a dividend into which Australia needs to play to secure jobs and growth.
The next wave of innovation will be around the move to the green economy, with the energy and industrial sectors at the heart of the change. If done well, the green economy evolution will present enormous opportunity and growth.
Australia needs to build a national mindset which is prepared and ready for the change, fosters innovation and diversity, and builds new and adaptable skills.
We need to improve our connections, across industries and adjacencies within Australia and with other countries. Adopting and embracing an entrepreneurial spirit is key to create a future-focused economy.
The opportunity for Australia is to embrace a net zero road map to 2050 and an ambitious target by 2030 now.
Governments have a responsibility to protect their citizens and the sovereignty of their country. This includes the challenge that a changing climate presents to Australia, our region, and the global community.
Setting ambitions and targets will be central to the focus of COP26 in Glasgow, with Australia’s voice key to a meaningful and actionable road map to net zero.
Michael Rath is Deloitte’s National and Asia Pacific Power, Utilities and Renewables lead partner.
Pradeep Philip is the head of Deloitte Access Economics.