New developments in renewable energy and Australian advantages have made it clearer than ever that the country could “prosper exceptionally in the post-carbon world”.
Intelligent climate policy would mean that wholesale electricity prices would fall “substantially”, he said, a source of competitive advantage.
The Melbourne University economics professor and climate economics authority said this could be achieved without any need to return to a politically fraught carbon price, a policy he acknowledged had become a “poisoned well”.
Australia could reverse the long decline of its metals manufacturing industries and become the most competitive place in the world to smelt aluminium and make steel, among other opportunities.
“In a zero carbon world economy, there would be no economic sense in any aluminium or iron smelting in Japan or Korea, not much in Indonesia, and enough to cover only a modest part of domestic demand in China and India,” he said.
Australia would have the opportunity to step in to become the world’s main source of imports for steel and aluminium as a result, he said, instead of just exporting the raw ores.
Processing iron ore and bauxite onshore would add twice as much value and double the number of jobs that Australia currently generates through its coal and oil sectors, he said.
“With globally competitive power, Australia becomes the natural locus for supply of the world’s immense increases in demand for pure silicon,” a vital component of computers and every type of electronic device.
“The processing of many minerals required in increasing proportions by the post carbon world economy fits naturally here—lithium, titanium, vanadium, nickel, cobalt, copper,” Professor Garnaut said.
Professor Garnaut was commissioned by the Rudd government and the states to lead two major reviews of Australian climate policy. His lecture on Wednesday night was the last in a series of six to update those reviews.
He said that the “immediate costs” of moving towards a zero-emissions economy were today “much lower” than he had anticipated in his reviews in 2008 and 2011, largely because of improvements in renewable technology.
He said that Australia could plausibly achieve zero net carbon emissions by 2040, making its contribution to the global effort to limit global warming to 1.5 per cent, if it embraced the Labor party’s emissions target. The Labor policy is to cut emissions by 45 per cent from 2005 levels by 2030.
However, he said that it was “implausible” to reach net zero in that time if Australia continued with its existing Paris commitment under the Coalition to cut emissions by 26 to 28 per cent.
Moving to cut emissions further “would nurture the three great assets for Australian industrial leadership in the post carbon world economy: globally competitive renewable power; an abundance of biomass for the chemical manufacturing industries; and low cost biological and geological sequestration of carbon wastes.”
Peter Hartcher is Political Editor and International Editor of The Sydney Morning Herald.