Cool down: action on climate change won't "ruin" the economy Media Release

Aug 03, 2007 - 5:27am

An objective look at the data on the economic impact of reducing greenhouse pollution shows that the greatest risk to jobs and the Australian economy lies in not acting now. All available economic research shows economic growth continues even with significant cuts to greenhouse pollution.

“It’s time to take a breath and look critically at the available economic data. As well as continued economic growth under various pollution reduction scenarios, research shows inaction now means more sudden and costly action later,” said Climate Institute Chief Executive John Connor.

Analysis of the Government’s ABARE modelling by the CSIRO’s Energy Futures Forum1 (see graph) which includes BHP Billiton, Rio Tinto, Westpac, WWF and ACOSS, show that strong economic growth is set to continue if we take action:

“Under all scenarios modelled, it is projected that both the Australian and world economies will continue to experience strong economic growth when carrying out greenhouse gas mitigation.”

The Australian Business Roundtable on Climate Change2 found GDP continues to grow 2.1% pa with early action and increases from $0.8 trillion in 2005 to $2 trillion in 2050. This occurs while Australia reduces emissions by 60% by 2050 (see graph).

“Critically, the lack of clear national greenhouse pollution targets and pricing is currently delaying investment and costing the Australian economy,” Mr Connor said.

As Westpac conclude in their recent submission to the Prime Minister’s Emission Trading Task Group3:

“Without a clearly articulated policy response to the issues associated with climate change, the nature or quantifiable impact of ‘climate risk exposure’ remains highly variable between companies and across industries. This is delaying or hampering required investment in next generation assets and increasing costs to the economy due to the higher risk premium required by investors in the absence of a policy setting.”

Similar concerns have been raised by the electricity industry, the Business Council of Australia and other Australian businesses.

“As our greenhouse pollution levels continue to rise, the country is building up a carbon debt. It is inevitable that we will have to pay this bill and the sooner we start making payments the less interest and cost we will pay later,” Mr Connor said.  

Last year, the Australian Business Roundtable on Climate Change concluded delaying action “may lead to a major disruptive shock to the Australian economy”, result in 250,000 fewer jobs being created by 2050 and that future electricity price rises could be three times higher than if early action scenario was taken.

“We need a national plan that cuts greenhouse pollution, sets targets, switches Australia to clean energy and manages the transition to a low carbon economy.” Said Mr Connor.

Figure 1: Business Roundtable/CSIRO - Economic growth with 60% reductions by 2050 (numbers in graph represent GDP per person (i.e. $88,000 in 2052)

Figure 2. CSIRO/ABARE –Economic growth with up to 45% reductions by 2050

1 CSIRO (2006), The heat is on, Report from the Energy Futures Forum, Canberra.
2 Australian Business Roundtable on Climate Change (2006), Business Case for Early Action.
3 Westpac Banking Corporation Submission -2007, Prime Minister’s Task Group on Emissions Trading.

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