What should Australia's 2035 climate target be?

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Well, the Albanese government is about to make a big decision, one of its biggest calls since the election.

It's about to set Australia's next climate target, the 2035 Emissions Reduction Target, as required under the Paris Climate Agreement.

It's a big call because this number will determine how hard Australia will push over the next decade to bring emissions down.

Inevitably, some business groups are urging caution, green groups are urging ambition.

The Prime Minister says it will be an achievable target.

The process to settle on this number has been drawn out, complicated by Donald Trump's return to the White House and the much slower than expected rollout of big renewable energy projects in Australia.

The 2030 target is already proving difficult to achieve.

So what sort of target should Australia be setting for 2035?

I'm David Spears on Ngunnawal Country at Parliament House in Canberra.

Welcome to Insiders on Background.

Well, Erwin Jackson is a veteran of climate policy in Australia.

He's now the head of Australian programs for Climate Works Centre.

And Erwin Jackson, sorry for calling you a veteran there, but from memory, I think I first met you around the time of the Copenhagen COP meeting all those years ago, which probably dates us both.

But look, thanks for bringing your expertise to the discussion.

Well, it actually goes longer than that, Dave.

I was around before Howard said the Kyoto table.

There you go.

You've seen this debate

over many years and many cycles, and we'll come back to the idea of Australia hosting a COP meeting, which the government's trying to secure for next year.

But the big question first: what sort of 2035 target should Australia be setting?

Well, there's basically three criteria that the government needs to think about.

The first is, you know, is the target aligned with avoiding the worst impacts of climate change?

So that's the first real test.

So is it putting Australia on a path to contribute to limiting global warming to one and a half to well below two degrees?

The second test is under the Paris Agreement, countries are supposed to put forward their highest possible level of ambition.

So when the Prime Minister talks about ambition, there's a couple of key words that need to go in front of that, which is highest possible and be able to demonstrate that to the global and Australian communities.

The other one really is where the rubber hits the road in many respects.

So what are the sector by sector decarbonisation plans that are going to underpin the target?

What are we going to do about the renewable energy rollout?

What are we going to do about making our homes more efficient?

What are we going to do about

decarbonising industry and transport?

And ultimately, what are we going to do about transitioning out of fossil fuels over the next few decades?

So when you look at those three criteria, and I think that's quite interesting the way you've laid them out, obviously, trying to come up with a number that does limit warming to the agreed target is the highest possible that Australia can achieve,

which I don't think is factored much in the debate leading up to this, but anyway.

And then, what we're doing to actually achieve it, where does that number sit?

We know the Climate Change Authority had been consulting stakeholders on a 65 to 75 percent range.

Is that still the the range, do you think?

Yes.

Climate Work Centre with CSIRO has done quite a lot of modelling on what is technically possible to reduce emissions in Australia.

And our work shows that you can certainly achieve the range which the Climate Change Authority has put forward.

And we certainly should be looking at that as the benchmark against what we judge the government's commitment.

So what is achievable here,

we've heard from the Business Council that if it's over 70%, that's going to cost capital investment more than $500 billion.

What would you say to that, that the cost is going to be too high if it's over 70?

Well, investment isn't necessarily a cost.

You know, investment generates jobs, it generates new industries, it generates new

economic opportunities.

And I think the first thing we need to remember is we're not starting from zero,

where we don't have policies in place that can actually achieve the reductions that we might want to achieve.

We have policies in place to drive additional renewable energy generation into the electricity market.

We have policies in place to put a price on carbon in the industrial sector to drive down emissions and promote investment in new technology.

We have vehicle standards, which are designed to, through time, reduce emissions in the transport sector.

So we're not starting from scratch.

And the key thing we need to be doing is sort of building on those existing policies, enhancing them when required, and really focusing on the core immediate and long-term challenges.

So that really goes to the point you made early on in the introduction about maintaining and building on the progress we've made in driving renewable energy into the grid.

So that renewable energy can be powering our homes, can be powering our industries, can be powering our cars.

We also need to be really focused on what this actually means for average Australians.

Like our research has shown that if we had a program to renovate our existing housing stock, the average Australian could be saving thousands of dollars a year in energy bills and having a more comfortable home to live in.

And I think finally, the thing that's really not emerging in the conversation at the moment is the intersection between climate action and the land.

We know that the land sector is going to go under very significant changes in the next few decades because of climate change itself.

We also know that a lot of the renewables that need to be built will be on the land.

We know that a lot of the carbon sinks that we plant will need to be on the land.

And at the same time, we need to support regional communities and agricultural production.

So I think that's the real long-term challenge.

How do we integrate climate, nature, food into a long-term plan for how we're going to deal with the land sector?

That's interesting.

What's the answer to that?

Because you're right.

It all sort of links back, doesn't it, to how we use the land.

Are you saying that's not really been explained or thought through what that intersection looks like?

Well, when the government renounces the target, it will release six sector-by-sector plans.

One of them will be for the land sector.

But, you know, there hasn't been as much focus on the land sector in Australia like there has been on electricity.

And in part for good reason, you know, the electricity sector

is a relatively easy way and a relatively cheap way way to reduce emissions.

But we've got to do more with agriculture.

We've got to do more with transport as well, I guess.

Right.

Yeah, exactly.

So if you can imagine that in any 2035 target that the government sets is going to require most of our electricity to be generated by renewables.

So that actually means that the ability to reduce emissions from that sector becomes less because they're not emitting anymore.

So we're going to need to look at other sectors, in particular industry in the short term, transport in the medium term, and land in the long term.

But all of those actions need to start now.

So we avoid the challenges we've had in the electricity sector over the last 30 years.

I mean, more politically difficult, I suppose, bringing down emissions in agriculture and even transport.

We're seeing the debate over, you know, electric vehicles and whether we need a road user charge and so on.

But

you're saying if we don't do these things soon, getting to net zero by 2050 is just going to become incredibly difficult.

Yes, and I think this is where, you know, this is a slightly different conversation to one that we've had in the past.

In, you know,

congratulate the government for announcing that it's going to do the six sector-by-sector plans alongside the national target, because we're really being forced to have a think about how we transition the whole economy, how we maximize the benefits of that transition, how we manage any risks associated with that transition.

but also doing it in a stepped way.

Every sector has different emission reduction opportunities.

Some are available now

and some are available now but are very expensive.

So we're going to need to step it out across the different sectors, put in place the right policies to drive the appropriate level of action so that we can meet our targets but probably more importantly, make sure that our communities and our economy are sustainable.

I mentioned meeting the 2030 target is already proving difficult and that is because of the

slow pace of rolling out the large-scale wind and solar.

How much of a challenge is that proving to be and how confident are you about the 2030 target, which is 43%?

How confident are you about that being met?

Well, it's difficult.

And no one ever said that saving the planet was going to be easy.

And I think that's what, going back to the original point I made, is we're sort of building off a foundation here.

Yes, there are bumps along the road.

And you see that with the integration of any new technology into an economy, really, you get an amazing level of hype early on.

You know, we see a lot of interest in the technology and then we realize that it's not as easy as we thought and support drops off.

And then we sort of move back up as we find ways to innovate and deliver outcomes.

And I think that's one of the observations I would make about Australian policy over the last 30 years is we underestimate the ability of Australians to innovate.

When we set the 2020 target,

we had business saying that well, some in business saying that a 5% target would turn us into a candle economy.

When we actually got to 2020,

in the real world, our emissions were more than 20% below 2005 levels.

And I think the core thing that we need to be doing is sort of recognising that it's difficult,

building off the progress we've already made and accelerating that progress and doing it in a way.

that delivers not just benefits to the overall economy, but the communities that are impacted by it.

But, I mean, you know, heavy industry is struggling and energy prices

are a part of that reason.

Is this going to be too difficult for some parts of Australian industry to survive?

I don't think so.

I think the target itself is not really the determinant on whether an industry

prospers or goes in the opposite direction.

What really matters is the policies that you put in place to deliver that outcome, because that's what industry really see.

We have an existing carbon pricing mechanism that covers most of Australian industry at the moment.

That's in its early days.

This is the safeguards mechanism.

That's right, the safeguard mechanism.

It's sort of got its training wheels on, but it does provide us with a mechanism to drive additional action in the industrial sector.

But also at the same time, you can put policy architecture around that to ensure that they're not competitively disadvantaged in the global economy.

And that's the balance that we need to make.

And I'm confident, actually, that the government will try and address that balance when it announces its targets.

Speaking of the global economy, what are others doing when it comes to 2035?

Some have announced their targets, others haven't.

And of course,

the US under Donald Trump famously is

withdrawing from the Paris Agreement altogether.

So what's the rest of the world doing generally on this?

Well, I'd probably say two things up front.

First of all, is that decarbonisation as a megatrend is unstoppable.

Ross Garneau, one of the early architects of Australian climate policy,

once said to me that economics trumps politics.

I was a bit sceptical at the time when he said that to me, but I think it's bearing out in the real world where the economics of renewable energy and increasingly things like batteries, EVs, electric vehicles are really becoming the driving factor behind the energy system globally.

So decarbonization is inevitable.

Simply because that stuff becomes cheaper than a

internal combustion engine car.

Yeah, it's like you're basically factoring in mass scale of manufacturing here.

Like the good thing about a PV panel on your roof or a battery in your house or a battery in your car is they're module.

You can build a lot of them really quickly and as you build more of them, they get cheaper, which is different from building a coal plant, for example.

I think the other thing I'd say is Australia is not any other country.

Unlike other countries, we have world-class renewable energy sources.

We've got lots of land.

We've got very talented people.

And that provides us with an opportunity to do more.

and reap the economic benefits of doing more than other countries.

And just on that, because you would have heard this, a lot of people say, well, if the US isn't doing anything, China and India, the big emitters, aren't doing enough.

Why should we be setting an ambitious target?

You're saying that the economic benefit is there for Australia if we do.

That's right.

And I think, you know, it's fairly clear from the work that's been done by economists around the world, but also by...

central banks and others is that those countries that are positioned themselves for the transition early

both benefit from the the additional investment that comes, the new jobs that come, the lower power prices that come, but they also cushion themselves against potential economic shocks that come from when other countries and the world get really serious about climate change, which is inevitable at some point, given what we all see around us in terms of the floods in New South Wales or whatever.

So

basically one you're doing, you're maximizing your economic opportunities in the transition.

You're demonstrating to your global trading partners that you have the products that they're going to want in the future to build strong and long-standing trading relationships.

But you're also delivering benefits to households.

As I mentioned, you know, with the right renovation policy, Australians could be saving thousands of dollars a year on their energy bills.

So are there any dollars that can be attached to the sort of targets that should be set?

I mean, if, you know, I mentioned the business council number

earlier around anything over 70%.

What would you say?

What are the opportunities at stake here for Australia when it comes to setting this target?

Well, the main opportunities are the ones I said.

You know, it's the trading potential for trading relationships.

We know already that there are customers out there looking for products like green iron.

The challenge at the moment is those products are more expensive than they're willing to pay.

But with the reliant trading partnerships with countries, the right policies here to promote and drive investment in those industries.

The markets are there for these industries that are essentially going to be foundational for the Australian economy going forward.

So if you were.

Yeah, sorry.

And I think the other one, I just, in terms of a broader point you raised, is that the cost is minuscule to the impacts of climate change.

You know,

all the economic analysis that's been done in Australia and globally shows that if to get to net zero, you're talking maybe one or 2% impact on GDP on the pessimistic side.

The costs of climate change are conservatively 10, 15, 20, 30% to the economy.

But relative to the investment and costs associated with any transition, the benefit of avoiding climate change far outweighs any costs we incur in the short term.

So Erwin, if you were setting the number for 2035, what would it be?

Are you backing a 65 to 75 percent target as Australia's official target?

Well, I'm not sure I can be put in the shoes of the Prime Minister, but

look, at the end of the day, like in terms of achieving what I said at the beginning, like is it consistent with limiting the worst impacts of climate change?

Is it aiming for the highest possible level of ambition?

You know, you are looking at the sort of the middle of the range for the Climate Change Authority.

But as I said, at the end of the day, whatever number is set,

the...

Real rubber hit the road or the real test of that will be the policies and the sector plans that sit underneath it because you know a number on a piece of paper paper is not worth very much a number with a detailed plan to achieve it is worth a lot more to investors in particular but also to the broader australian community no okay look finally i want to ask you about australia well the joint bid by australia and the pacific to co-host the cop meeting the climate summit next year

um you've been in many of these things Why does it matter to Australia to host this here?

Well, I think the first thing I would say is you really need to go back to why we have COPs in the first place.

And the reason we have COPs in the first place is to normalize and reinforce global action to reduce emissions and to adapt to the impacts of climate change.

So COPs don't set ambition, they normalize global activity and then normalize business behavior, investment behavior and how countries implement policies.

So

what do you mean by that?

Like it shows the business community and the public that the world is heading down this path.

Well,

I've spent the last seven years working with Australia's largest superannuation funds,

and they expect the world to be at net zero by around 2050.

They think that is the most probable outcome because of things like the Paris Agreement, because of things like the economics of renewable energy.

And they make investment decisions on that basis.

So a target is not just something on a piece of paper.

It is a very clear signal to investors.

It's a clear signal to the business on the direction of travel.

But it also critically demonstrates to those actors whether the transition we're going to go on is an orderly one or a disorderly one.

You know, you could set a weak 2035 target and try and do everything after 2035 to get to net zero.

But that just makes the job harder and basically doubles the economic cost of achieving the target.

So the target sends a signal that, as you know, if you're a long-term investor, that Australia is looking for an orderly transition, not a disorderly one.

And again, you've seen the criticism about hosting cops, that

thousands and tens of thousands of people all fly in and there's a huge carbon footprint involved and all the hangers-on that attend these things.

What do you say to that?

Is the way it's done the right way to do these things?

Well, I think that could be done better.

Like there's obviously opportunities to reform UN processes to make them more efficient.

But I I think the key benefit to Australia and the Pacific really comes down to a threefold.

One is it's continuing the action that will come out of Brazil this year, continuing the momentum globally to reduce emissions, which is of course important to both countries because we're both, well both the region generally, because we're very vulnerable to the impacts of climate change.

But it's also an opportunity to show the world what good looks like.

You know, Australia has made very significant progress over the last 30 years in integrating renewable energy into our systems.

You know, we could demonstrate how we're managing the challenges we talked about earlier around land and nature and integrating those two things together.

So it's a real opportunity for us to showcase the good that we've done.

And I think finally, it's really an opportunity to cement and establish some very clear regional trading relationships.

into Southeast Asia, into North Asia, into South Asia, to create the demand for the commodities that Australia can produce, whether it be green iron, green aluminium, green ammonia, green hydrogen.

You know, all of these commodities are going to be in demand in the future.

And COP is an opportunity to bring businesses, investors, governments together to forge deals, essentially, which will drive additional investment in those technologies.

Well, Erwin Jackson, thank you for giving us a better understanding of the issue that's going to be dominating debate for the next couple of weeks as the government lands this decision and then sells it to the world.

Thanks so much for talking to us.

No worries, David.

And if you have any thoughts on this conversation, drop us a line, insiders at abc.net.au.

We'll have more on this Sunday morning.

Hope you can join us at 9 a.m.

on ABC TV.

You're making us all feel very excited about being here.