Hot But Not Bothered: Global Climate Shift Gets Chilly Reception Down Under

Alexander McManis | Climate Change & Energy Security Fellow

Australia has long been an outlier on climate change. While it contributes only about one per cent of global emissions, it has the third-highest emissions per capita. Australia’s Paris Agreement target to reduce its greenhouse gas emissions by 26-28% compared to 2005 levels by 2030 is significantly smaller than what other countries agreed to. That lack of ambition has become harder to justify.


Over the last two months, three of Asia's largest economies have made significant climate policy announcements. In September, China, the world's largest greenhouse gas emitter, announced it would reach net-zero emissions by 2060. That was closely followed in October with Japan and South Korea both announcing they would reach net-zero emissions by 2050, a commitment that will be matched by the incoming Biden administration in the US. Australia is looking more alone than ever in its refusal to embrace a mid-century target, and is about to come under increasing economic and diplomatic pressure to change its climate policies.


Diplomatic Pressure


Australia is running out of friends when it comes to climate change. It was criticised at last year's Pacific Forum for blocking communique language that proposed ending coal mining. Australia was in the firing line again last December after it played an obstructionist role at COP25 in Madrid, trying to weaken global carbon market rules to allow it to use Kyoto carry-over credits.


The United Kingdom, usually a close ally of Australia, has been ramping up the pressure on Australia ahead of the COP26 summit in Glasgow next year. The British High Commissioner met with Australia's foreign and energy ministers in 2019, lobbying Australia to increase its emissions reductions target. British Prime Minister Boris Johnson then raised the net-zero target in a phone call with Australian Prime Minister Scott Morrison last month, encouraging him to take “bold action” on climate change. This was the most public example of diplomatic pressure on Australia yet, and forced Morrison to answer uncomfortable questions about his unambitious policies.


Australia may face even sterner criticism from the incoming Biden administration. Australia has benefited from the US' dismissive attitude to climate change under President Trump. Much of Australia’s focus on energy and reliance on new technological advancements mimics the White House’s recent approach. It is unlikely to impress a President Biden. The Biden administration plans to "use every tool of American foreign policy to push the rest of the world to raise their ambitions." While he did not raise the 2050 target with Morrison in their first phone call, it is likely US leaders will be putting climate change front and centre in conversations with their Australian counterparts in the years ahead.


Morrison will not bow to international pressure easily. Responding to questions about his call with Johnson, Morrison declared that Australia's policies "won't be set in any part of the world other than here”. But even if Australia was to take a purely self-interested approach to determine climate policy, there are some good reasons to re-evaluate its stance.


Economic Exposure


Australia should be worried about the economic impact of China, Japan and South Korea's announcements. In 2018 those three countries took in 53 per cent and 80 per cent of Australia's coal and gas exports respectively, worth about $30 billion. Those exports will decline as the three countries transition away from fossil fuel to meet their emissions reductions targets. That will have a serious impact on the Australian economy, which is highly reliant on fossil fuel exports. Australia needs to diversity its exports and increase its presence in green markets to maintain its prosperity.


Trade with other markets could also be affected by climate considerations. Exporting to the EU could become more costly in the near future with "carbon border adjustment" fees being imposed on imports. International investors are also becoming wearier of Australian bonds, with Sweden dumping Australian sovereign bonds last year over concerns about inaction on climate change. Internationally there is a growth in regulations requiring companies to disclose their 'climate risk'. This could make Australia a less attractive market for investors.


The Tide Turns Domestically


Australian federal climate policy has been stymied for many years by an entrenched fossil fuel lobby. But state governments are becoming more ambitious. All states and territories support targets for net-zero emission by 2050, and New South Wales has made significant changes to its renewable energy policy, estimated to incentivise $32 billion in private investment.


Public opinion also supports greater action. The Australia Institute found 68 per cent of Australians supported setting a national target for net-zero emissions by 2050, and 62 per cent believed Australia should not wait for other countries to act before strengthening its emissions reductions target. There is an appetite for a change in policy at the federal level.


Australia is walking into a diplomatic maelstrom and economic turbulence it seems unwilling to acknowledge. Countries are less prepared than ever to stay silent as Australia continues to emit excessively, worsening climate change around the world. Neither will the global economy wait for Australia to get its act together before undertaking a zero-carbon transition. Australia needs to instate a program for serious emissions reductions before it faces the consequences of inaction.


Alexander McManis is the Climate Change & Energy Security Fellow for Young Australians in International Affairs.

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