Central to achieving the targets of the Climate Compact is the urgent task of transitioning our electricity generation to renewable supply. The electricity sector is at once Australia’s largest emitting sector, accounting for 32.4% of emissions in 2021, while also being the enabler for reducing emissions in most other sectors. The infrastructure planning and market design are already done for modernising the National Electricity Market for this transition, and investors are at the starting blocks. The Climate Compact must resolve the fastest possible transition pathway while protecting prices and energy security. The Grattan Institute has demonstrated that we can achieve 100% net zero emissions in electricity supply by 2040 with assured reliability and at little extra cost, drawing on 90% renewables and a 10% reserve of dispatch-able gas generation offset by carbon credits. Recent industry decisions and proposals, subsequent to the Grattan modelling, suggest it may be possible to accelerate the transition with all coal fired generation phased out by 2030 or shortly thereafter, and supply moving faster towards 100% net zero emissions. In the likely event that a residual gas supply is maintained to assure reliability at least cost, this must be fully offset by high integrity carbon credits.
Light vehicles account for a further 11% of Australia’s greenhouse emissions. The technologies are already commercially available for electrifying the light vehicle fleet and the Climate Compact must consider this an immediate priority. Standards, charging infrastructure and fleet procurement strategies must be enacted now to eliminate light vehicle emissions as quickly as possible. Further measures may focus on reducing the price of electric vehicles. The Grattan Car Plan exemplifies how we could see all new light vehicle sales being zero emission vehicles by 2035. The Compact must consider all cost-effective options with a view to bringing this target forward.
At the heart of the Climate Compact must be the vision for Australia’s economic future: whether to prosper in the post-carbon global economy or perish with the legacy of fossil fuels. The choice cuts to where we direct our public subsidies and where private investment flows. It bears on the energy, leadership and funding we direct to sponsoring green technologies and industries. It should anticipate the enormous export potential for Australia in the greening of the global economy, well rehearsed in reports that include Sunshot: Australia’s opportunity to create 395,000 clean export jobs (jointly commissioned to Accenture by the ACF, ACTU, BCA and WWF) and Achieving a net zero economy (BCA). The Compact would do well to take these reports, including policy measures they commend, as departure points for its negotiations.
The Climate Compact must bring an end to public subsidy for, and further expansion of, Australia’s exports of fossil fuels and ores. While Australia accounts directly for 1% of global emissions, the burning of our exported fuels and the smelting of our exported ores accounts for another 4% of global emissions. These consequential emissions are, under the Paris Agreement, the responsibility of the importing countries, but Australia can choose to shape its exports to help arrest climate warming. Professor Paul Burke and his colleagues have shown that, drawing on 2% of the land mass, Australia has the potential in solar and wind power to fully substitute green energy, green steel and green aluminium for our existing exports of fossil fuels and ores. This would very significantly raise the value of our commodity exports through value-adding prior to shipment, while reducing global emissions by a full four percentage points - or by five percentage points when counting our own domestic emissions.
In the hard-to-abate sectors, solutions will come, but not always fast enough to meet our emissions reduction targets. Carbon credits will be necessary to offset the emissions which continue during the transition. Professors Andrew Macintosh and Donald Butler have raised serious questions about the integrity of Australian Carbon Credit Units funded by the Climate Solutions Fund and approved by the Clean Energy Regulator. These concerns must be addressed in the context of the Climate Compact to ensure that credits reflect genuine emissions reduction and are appropriately valued. More broadly, the Compact must agree on a strategy to arrest deforestation, and support landholders in sustainable reforestation. The World Wildlife Fund’s Towards Two Billion Trees points to the urgency, scale and dimensions of this task.