The Albanese Labor Government’s clear and credible Net Zero Plan will help Australia grasp the jobs and opportunities of the global energy transformation.
Treasury modelling of three scenarios released today overwhelmingly shows an orderly path to net zero is a path that leads to growing wages and living standards, more jobs and economic opportunity around the country.
This modelling confirms Australia can make the most of our nation’s net zero potential and unique comparative advantages and ensure more Australians share in the benefits.
Our targets and this modelling are all about providing investor certainty, so we can attract the private capital to finance this transformation.
There are five key conclusions from the modelling:
- Australia can be a primary beneficiary from the global net zero transformation if we continue to take decisive action on climate change.
- Cheaper, cleaner energy will strengthen Australia’s international competitiveness.
- Clear and credible climate action will lead to more jobs, higher wages, and better living standards for all Australians.
- Our orderly net zero plan gives businesses the clarity and certainty they need to seize the opportunity and invest in Australia with confidence.
- A disorderly transition would mean fewer jobs, less business investment, lower wages, lower living standards and higher power prices in a smaller economy.
The Treasury modelled two orderly net zero scenarios consistent with our government’s approach and 2035 targets, a Baseline Scenario and a Renewable Exports Upside Scenario.
It also modelled a Disorderly Transition Scenario, which assumes Australia does not set a credible 2035 emissions reduction target, but in 2040 resumes a trajectory to net zero by 2050.
Under the Baseline Scenario, by 2050 Australia’s economy would be $2.2 trillion bigger, real GDP per capita would be $36,000 higher, 5.1 million more Australians would be in jobs and investment in the economy would be around 80 per cent higher than it is today.
The economy would be even bigger under the Renewable Exports Upside Scenario and our green exports from industries like green metals could add $68 billion to exports in 2050 compared to the Baseline Scenario.
By contrast, under the Disorderly Transition Scenario the economy is projected to be a cumulative $2 trillion smaller by 2050 with wholesale electricity prices around 50 per cent higher in the 2040s, compared to the Renewable Exports Upside Scenario.
In addition, per capita GDP is projected to be $4,500 lower when compared to the Renewable Exports Upside Scenario by 2050.
Treasury did not model a pathway that abandoned reaching net zero by 2050 but concluded that that approach would be worse than the results of the Disorderly Transition scenario.
“Not pursuing net zero by 2050 risks lower economic growth, reduced investment, missed export and employment opportunities, and higher electricity prices,” the report says.
The Treasury was tasked to undertake this modelling to inform the development of Australia’s Net Zero Plan.
A link to the modelling is available on the Treasury website.