The Albanese government would need up to $530bn worth of capital investment and a potential curbing of coal and gas exports to achieve a 2035 emissions target of 70% or more, according to new modelling commissioned by the Business Council of Australia.
The Climate Change Authority – the commonwealth’s advisory body on emissions targets – is due to hand the government its recommendation on a 2035 target within days.
The business lobby group has chosen not to advocate for a specific target, as the new Andrew Forrest-backed coalition of 500 companies has done with its call for a 75% cut, instead commissioning consultancy firm McKinsey to model the scale of capital investment required to achieve three emissions reduction pathways out to 2035: a cut of roughly 50%, roughly 60% and 70% plus.
Significantly, the modelling does not factor in the cost of not acting on the climate crisis, nor does it measure the economic benefits of new investment.
The Climate Change Authority’s preliminary advice suggested a range between 65% and 75% would be ambitious but achievable, setting the expectations for what would ultimately be recommended to the government.
Political and industry insiders expect the Matt Kean-chaired authority to similarly propose a target range in its final advice. Cabinet is expected to sign off on a 2035 before Anthony Albanese attends the UN general assembly leaders’ summit in New York later this month.
The Business Council’s report, to be released on Friday, found that if the government implemented its existing policies and hit its 43% goal by the end of the decade then it could reach roughly 50% by 2035.
The first scenario would require between $210bn and $300bn in total investment across the public and private sector.
Substantially greater sums of spending, significant policy changes and a much larger green industry workforce would be needed in the two higher scenarios, which more closely align with what the Climate Change Authority is tipped to recommend.
According to the modelling, achieving about 60% would require between $395bn and $480bn worth of capital investment while up to $530bn would be needed to exceed 70%.
The most ambitious scenario assumes the electricity sector would run on 90% renewables by 2035 on the back of record rates of construction of new wind, transmission and gas capacity.
The scenario accounts for a possible reduction in thermal coal and LNG exports, causing a loss in the value of Australia’s exports of between $100bn and $150bn each year.
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The Business Council of Australia chief executive, Bran Black, said the modelling was designed to provide “clarity” on what would be required to achieve a 2035 target.
“Ambitious but achievable targets with the right policies to deliver them are key to Australia’s long-term competitiveness and prosperity,” Black said.
Black singled out the Environment Protection and Biodiversity Conservation Act as a major “handbrake” on the energy transition, reiterating calls for urgent changes to speed-up project approvals.
The Business Council, whose members include BHP, Santos and Rio, has long been an influential voice in the climate debate and its position on the 2035 target has been highly anticipated among industry and environmentalists.
The group’s position on climate targets has shifted over the past decade.
After attacking as “economy wrecking” the 45% 2030 emissions target that Bill Shorten took to the 2019 election, it threw its support behind a cut of up to 50% ahead of the Glasgow climate summit in 2021.
