“There is a huge opportunity cost when we don’t take action,” he said.
The Morrison government confirmed it would ask department officials to model the Labor policy in a step that prepares for a fight during the election campaign over the cost of asking the industrial sector to cut emissions by 45 per cent by 2030.
Labor climate change spokesman Mark Butler dismissed concerns about the impact on gross domestic product and job creation.
“What’s become increasingly clear here and around the world is that the old link between emissions growth and GDP growth has been broken by a range of technological innovations,” he said.
Mr Butler said the economy would grow by about 23 per cent during the next decade under both the Labor and Coalition carbon targets, citing modelling by the Climate Climate Change Authority.
Industry groups welcomed Labor’s decision to use the Morrison government’s existing “safeguard mechanism” to require companies to reduce their emissions, extending the program from 140 companies today to 250 companies if Labor wins the election.
The Labor policy covers companies that produce more than 25,000 tonnes of carbon emissions from activities such as steel and aluminium production, the liquefaction of gas for export overseas, cement making, aviation, road transport and coal mining.
Business Council of Australia chief Jennifer Westacott warned against Labor’s decision to make its emission target more ambitious by refusing to use the “carry-over credits” available to Australia from exceeding the Kyoto target on climate change.
“Recent modelling has demonstrated that this will have a significant impact on the rate of economic growth and ultimately the size of our economy,” Ms Westacott said.
The BCA chief urged Labor to reconsider its decision and release full modelling of the emissions target if the party won government.
“The linking of Labor’s ambitious emissions reduction target to the safeguard mechanism will require significant and challenging reductions for industry,” she said.
Qantas said it supported ambitious targets and recognised the government’s need to do more to tackle climate change, while Santos said it was reassured by Labor’s promise to consider the risks for exporters.
Liquefied natural gas exporters fear their industry would have to pay for a carbon scheme in Australia while their export rivals in Qatar, Malaysia and Nigeria suffer no similar cost.
“Our LNG is saving between three and ten tonnes of emissions when it replaces coal and dirty fuels in Asia,” said Santos chief executive Kevin Gallagher.
One key concerns for industry is a reference in Labor’s policy document to the “limited” use of international permits, suggesting a bigger burden on companies to reduce emissions rather than pay for permits to offset their obligations.
Australian Chamber of Commerce and Industry chief James Pearson said he wanted to know how Labor’s policy would drive power prices down and keep them down.
Australian Industry Group chief Innes Willox warned that Labor’s 45 per cent target would be a “tough ask” for manufacturers and could hurt the competitiveness of exporters, but he also said there was no reason to fear a price on carbon in the safeguard mechanism.
“If all sides of politics could get over their near blanket rejection of prices and market mechanisms, we could have a much more productive debate about the designs for market and non-market policies that will serve Australia and our industries best,” Mr Willox said.
David Crowe is Chief Political Correspondent of the Sydney Morning Herald and The Age.