National Press Club Address: Realising Australia’s economic and climate opportunities

In their address to the National Press Club, Superpower Institute directors Ross Garnaut and Rod Sims seek to dramatically change the narrative around climate and economic policy. Without a change in narrative, Australia will continue to underperform on both the economy and climate change. They explain why climate policy belongs at the heart of macroeconomic, productivity and budget policy. Further, if Australia maximises its contribution to global net zero this will be an economic plus for Australia, not a drag.

Australia is the world’s largest exporter of LNG and coal taken together. Many focus on the costs of losing what has been our large comparative advantage in these commodities. But Australia has the world’s best combinations of wind and solar energy resources and complementary resources to use them. It has enormous sources of biomass relative to population and economic size for a zero-emissions chemical industry. The transition to net zero flips the economics. In a net zero world it will now make sense for a high proportion of the minerals and other products that are currently processed overseas, with large carbon emissions, to be processed in Australia using our huge renewable energy resources and biomass potential.

Australia’s economic advantages relative to the rest of the world are so significant that their large-scale utilisation would materially improve the prospects of achieving the world’s climate objectives. In addition to our over 1% of world emissions now in Australia we could remove around another 6-9% of global emissions that other countries will find very difficult to abate. Processing our iron ore into green iron in Australia would alone reduce world emissions by 3%. Australia covers about 5% of the earth’s land surface; supplying about 6-9% of the world’s renewable energy is no stretch given our abundant solar, wind and land resources.

With the right climate and economic policies Australia can:

• Significantly boost its productivity, economic growth and prosperity,
• Have continuing full employment,
• Have more equal incomes,
• Improve its budget, which can allow more social spending, protect us from international shocks and keep us internationally competitive and
• Have much lower electricity prices.

Australia currently, however, faces rising unemployment, stagnant productivity and a fall in the living standards of most Australians.

Most important, and for the first time, they will outline the appropriate policies to achieve all of the above.

Such policies will:

• Address the important and difficult issues that will arise from the Governments recent announcements on the Capacity Investment Scheme for the electricity sector,
• Facilitate the necessary and massive investment that needs to be made in green energy-intensive exports, which current policies fail to do,
• Outline how best to deal with Australia’s continuing export of coal and gas, which is an issue that divides Australia and currently has no direction,
• Provide the correct response by Australia to the US Inflation Reduction Act,
• Allow Australia to be a large beneficiary of the EC’s Carbon Border Adjustment Mechanism,
• Untangle the current confusion with trade policy in Australia and around the world, and
• See electricity prices fall significantly for Australian households.