As Australia prepares to set its new Nationally Determined Contribution (NDC) under the Paris Agreement, the Business Council of Australia has released a new report, Australia 2035- Maximising Australia's Potential.
The BCA report examines the investment, enabling reforms and policy interventions required across a range of emissions reduction scenarios, from around a 50 per cent cut to around a 70+ per cent cut below 2005 levels by 2035.
- Scenario one passes through a 43 per cent reduction in 2030, to achieve around a 50 per cent reduction in 2035.
- Scenario two accelerates action to achieve around a 60 per cent reduction in 2035.
- Scenario three accelerates beyond scenario two to achieve around a 70+ per cent reduction in 2035.
"Ambitious but achievable targets with the right policies to deliver them are key to Australia's long-term competitiveness and prosperity," said Business Council Chief Executive Bran Black.
"This report is about making sure Australia has clarity on the steps it must take if it is to announce an ambitious but achievable 2035 target.
"We know that Australia's long-beleaguered approvals system, including the EPBC Act, is a massive handbrake on the transition and we urgently need that addressed to deliver more renewable energy projects."
Key insights from the report:
Investment scale: Achieving Australia's 2035 potential will require between $210 billion and $530 billion of new capital investment across the economy by 2035, depending on the level of ambition.
- This approach is based on current technology and cost assumptions, while noting future technology developments could impact these calculations.
Sector contributions: The bulk of reductions to 2035 come from electricity and energy, resources and industry, with important contributions from transport, buildings and agriculture.
- This assumes today's land sink capacity (which is at an historical high) as the limit over the next 10 years, however new technologies could unlock greater potential over time.
Jobs: A step-up to around a 60 per cent by 2035 reduction scenario would require an additional 59,000 workers by 2030 in electrical trades and engineering alone.
Building on Australia's potential
The BCA is committed to affordably and reliably achieving net zero by 2050 and supports the setting of ambitious but - importantly - achievable 2035 targets on the pathway there.
BCA members cover every part of the economy, from resources, energy, manufacturing and agriculture, to transport, technology, telecommunications, professional services, banking and health.
This report was developed with a bottom-up analysis and takes an investment approach based on current costs and technologies. It is focused on what business needs to do, with the right policies, to shift to a decarbonised economy.
It analyses the different emissions reduction scenarios and examines the policy levers needed across seven key sectors: electricity and energy, resources, transport, industry, buildings, agriculture, and land (land use, land use change and forestry). This report does not capture the longer-term costs of climate inaction or economic benefits of new investment, though the Business Council recognises these are critical inputs to the net zero challenge.
It finds that on the current policy course, Australia can achieve around a 50 per cent reduction by 2035 with progress on project approvals and the building of energy infrastructure.
From there the report highlights the different pathways required in order to deliver target ambition ranging from around 50 to around 70 per cent emissions reductions by 2035. Those pathways include fixing the EPBC Act, significant capital investment and further enabling reform. It also shows the higher the target, the greater the effort required.
Enablers critical to success
The extent to which these outcomes can be achieved depends on core policy levers, including:
- Permitting and social licence: streamlining regulatory approvals, including the EPBC, and securing community support, so major clean energy and infrastructure projects are not held back by long lead times.
- Closing the funding gap: unlocking the flow of private capital by providing durable and credible policy settings.
- Scaling a skilled workforce: rapidly expanding the trained workforce needed to build and maintain the infrastructure of the transition.
- Securing the supply of technology: accessing the latest emissions reduction technology.
- Coordination and collaboration: stabilising policy settings and improving coordination and transparency across value chains.
- Improving capital excellence: lifting productivity in the delivery of projects.
These policy enablers are critical across all scenarios and are essential to facilitating the change that is needed.
Getting this right is about balancing the need to build a stronger economy for future generations and ensuring Australian industry can continue to compete in a decarbonising global market.
Among the most important challenges and opportunities facing our nation is facilitating an orderly transition to net zero by 2050, that best serves our economy and our community. The choices we make now will have significant impact on our productivity growth, our competitiveness as a nation, and living standards now and into the future.
The BCA's analysis is designed to inform the national discussion on Australia's next NDC, ensuring ambition is matched with a clear, practical plan to deliver.
