A new report produced by experts from the University of Melbourne, the Australian National University and SGS Economics and Planning has found that building clean, sustainable power sources would save the Australian economy hundreds of billions of dollars when compared to current policies.
The report, Australia’s Clean Economy Future: Costs and Benefits, outlines that transitioning to a clean economy and reducing emissions would save the Australian economy $549 billion over the next decade, while providing a number of social and environmental benefits. In the longer term, the potential savings to taxpayers are even more significant.
Maintaining the current route – heading towards a four-degree increase in global temperatures by 2100 – would cost the economy $762 billion by 2050, blowing out to more than $5 trillion by the beginning of the next decade.
In contrast, the report finds reducing emissions to zero by 2050 in alignment with the Paris Climate Agreement would cost $35.5 billion and deliver substantial economic and social benefits such as lower risks of doing business, higher agricultural productivity, improved air quality and better biodiversity.
One of the report’s lead authors, Professor Tom Kompas from the University of Melbourne, commented that the costs of emissions reduction are tiny relative to the damages that would be avoided from climate change as a result of the transition from fossil fuels to renewable energy.
“Our work shows that meeting the Paris target of a 26 per cent reduction in emissions by 2030 would result in a 0.14 per cent fall in Australia’s cumulative GDP from 2019 to 2030 of $35.5 billion,” he said.
“On the other hand, the potential damages from climate change over the same period with current global and Australian policy would result in more than $584 billion in losses from infrastructure damage and losses in agricultural and labour productivity.”
“The cost of renewable energy is falling very fast and we need to take advantage of this, putting price instruments or renewable targets in place to reap lower costs for electricity,” Professor Kompas stated.
Co-author, Ellen Witte, from SGS Economics and Planning says transitioning to a low-carbon economy ‘makes complete sense’.
“It helps curb emissions, but it also helps Australia compete globally – which may surprise some people. Global investors are increasingly looking to invest in renewables. Exceptional latent opportunities for renewables exist in Australia and they are seen as a low-risk investment.”
“Governments and businesses can drive the transition to a low carbon economy by managing climate-related financial risks and prioritising renewable energy generation, transport electrification and sector-specific options for agriculture and transport,” Ms Witte said.