Matt Kean urging opposition to back govt's 2035 emissions target || Insiders: On Background

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Well, it's been a huge week for Australia's ambition on climate change with the government announcing its 2035 emissions reductions target.

And as he often does, the Prime Minister is seeking the middle path, the sweet spot, is what he called it this week.

Now, we were already aiming to reduce emissions by 43% by 2030.

And that's already proving to be pretty challenging.

But in the five years after that, under this plan released this week, Australia will need to ramp up its ambition a lot more to deliver a new target of 62 to 70% reduction by 2035.

Now, Pacific Nations and scientists say this is not nearly ambitious enough, but the opposition has declared it's dead against this plan.

And even the Climate Change Authority says getting to 62%

won't be easy.

From Ngunnawal Country here at Parliament House in Canberra, I'm David Lickson, filling in for David Spears.

Welcome to On Background.

And my guest today is Chair of the Climate Change Authority, Matt Keene.

Thanks for joining us.

Thanks for having me, David.

I want to go straight to power bills because really, this is what matters to a lot of people right now.

Your report cites an expected drop in household energy costs of 20% by 2050 if we follow this plan.

That's $1,000 a year.

Now the government's not prepared to promise the same thing.

Can you put your hand on your heart and say that energy costs will drop by $1,000 a year?

Well what I can put my hand on my heart and say is exactly what the AEMC have said, which is a coordinated rollout of renewables in the system will put downward pressure on electricity bills.

And it's not just the AEMC.

That finding is backed up by AEMO, the people that run our energy system, and the CSIRO.

In fact, the CSIRO modelling that we relied on for the targets advice we've just provided for the government clearly and undeniably shows that the energy transition is an economic growth opportunity for our country, not a drag.

There is a pathway to lower bills for families and businesses if we have a coordinated rollout of renewables.

To be clear, we're talking about $1,000 cheaper than it would be if we didn't take this path rather than sort of $1,000 cheaper every year

per household as compared to what they are now.

Is that right?

Well, the AEMC has said that a coordinated renewables rollout will lead to lower bills compared to the counterfactual, which is doing nothing.

So we know that renewables today are the cheapest form of energy.

And the problem with our energy bills is not that there are too many renewables in the system at the moment.

it's that there's not enough.

So we need to get on with the job of building more capacity from renewables into the system.

That's good for the environment, but importantly, that's great for household bills.

More renewables means lower prices for households and families across Australia.

The AEMC report that you cite there, it does...

point out that that 20% reduction figure, that $1,000 a year, does not include costs incurred to purchase electric appliances and vehicles.

Do we know what those costs are expected to be?

I mean, does that mean that only people who can afford an EV will get those sort of benefits?

What we know is that the savings will be even greater if people electrify their homes, put solar on their roofs and batteries behind the meter.

So the savings that are cited, the ones that the AEMC cites of 20%

from a coordinated renewables rollout, are even greater if you electrify your home.

That is clearly what the AEMC are saying.

Well, speaking of EVs, you're saying to get to this target range of 62 to 70%

by 2035, we will need half of all new cars sold between now and 2035 to be EVs.

That's 20 times as many EVs as we have today.

What needs to happen to ensure that that is achievable?

Because that sounds like a lot.

Well, I think why do we, firstly, why do you believe

believe those assumptions?

Well, because the economics are changing when it comes to driving in this country, the price point of an EV, so the sticker price of an EV, is coming down dramatically.

And we're forecasting that by the end of this decade, 2029, 2030,

that the price of an EV will be cheaper than an internal combustion engine vehicle.

In addition to that,

we already know today, even with with a higher price for an EV, the total life cost because of the savings you'll make in not paying for petrol is better than internal combustion engine vehicles.

So the economics are changing and that's driving people towards EVs.

The second point that I'd make to your viewers is that the vehicle manufacturers are starting to make only EVs.

Now, we don't have a vehicle manufacturing business here in Australia.

We take the cars that are sold into this market, and increasingly those cars are EVs.

Just drive around the suburbs, go get your coffee this morning, you'll see, you'll struggle not to see a BYD or a Tesla or an EV on the road.

The third thing is that other countries are doing this.

Other countries in Europe, for example, Norway last month saw new car sales at 98% being EVs.

Now

those trends will continue to accelerate.

So the assumption that the majority of new car sales will be EVs by 2035, I think it is an appropriate one.

Do Do we need government help, though, to get there?

Well, I think government has a role to play.

I think government can do things like rolling out more charging infrastructure, which encourages people to go and get an EV,

to deal with some of those issues around range anxiety.

They've already got a number of programs in place at the federal and state level, incentivising people to go and get an EV.

But again, the main driver towards this is the economics.

The sticker price is almost on parity with an internal combustion engine vehicle and will only come down the cost curve.

And the total life cost of driving an EV, you can save thousands of dollars instead of driving an internal combustion engine vehicle and not paying for petrol.

On the economics, one thing that would make driving an EV more expensive is a road user charge.

And as you know, this is being put forward, pushed forward, if you like, by state and federal governments.

Do you think we could get to that target of half of all EVs by 2035 if a road user charge is in place?

Well, there is a number of things that you could consider when implementing a road user charge.

You could delay when that comes in.

You could start it at a lower rate and ratchet it up over time so that you're able to continue to pay for your roads.

There are a number of levers that you could use to make sure a road user charge still incentivizes people to get an EV and still is able to make a contribution to building building our road system and making sure that we can drive around this city and this country safely and properly.

So you could do that, but do we need to do that sort of

glide in, if you like, in order to ensure that we get where we need to get by 2035?

We want to make sure that the policies that are being put in place, whether it be around transport or electricity, support the decarbonisation of our economy.

So we will be putting forward ideas to the government as part of the Climate Change Authority's ongoing work about what we can do to accelerate the uptake of things that will help us decarbonise, but also help us grow our economy.

I'm just trying to sort of work this out because

you're obviously the chair of the authority that advises the government on this.

So surely your advice to government when you're trying to push for this 2035 target, realistically, to make it achievable, as is the language this week.

Surely a road user charge is going to make it a lot more difficult in the vehicle space?

Well not necessarily.

I was the Treasurer of New South Wales.

We put in place a road user charge in New South Wales.

It didn't come online until a certain percentage of vehicles on the road were EVs or

till a certain period of time had passed.

So there is lots of ways you can put policy in place that continues to drive people to take up the opportunities that low-carbon products will provide.

Well, it's not just vehicles that is going to be challenging in terms of reaching this target.

As you say in your report, we need to quadruple wind capacity, double rooftop solar.

There are major changes that

would be needed in the safeguard mechanism to force big polluters to reduce their emissions.

Help give us some hope that we can actually achieve this because scientists, green groups, Pacific Nations say 62% isn't nearly enough.

But even getting to that number, 62%, it does sound really challenging.

Well, there are challenges, but these are challenges that are not insurmountable.

I mean, the technology exists, particularly when it comes to energy and electricity, for example, that when rolled out on scale can help us decarbonise, but also put downward pressure on electricity bills.

And we need to do this regardless of climate change.

We know that the majority of our coal-fired generation is at end of life, and it needs to be replaced anyway.

So, the cheapest way to replace that existing capacity, which is at end of life, is renewables.

Renewables, being wind, solar,

batteries, and storage being rolled out on scale is not only necessary to keep the lights on, and we're going to have to do it anyway.

So, this is not an additional cost, this is an investment that we have to make regardless.

But in doing so, that is the cheapest way to modernise our electricity system.

And it also happens to be the one that's going to decarbonise the electricity system.

You also say in your report that we need to cease the logging of old-growth forests and halve re-clearing rates to achieve the 2035 targets.

The government today hasn't shown a whole lot of interest in making that happen anytime soon.

When does that need to happen, in your view?

Well, that's a matter for the government.

The government, we've put advice forward to the government about

what we think is in the national interest when it comes to decarbonisation.

That very clearly is a 62 to 70% range.

Underpinning that is a number of assumptions, like the one that you just cited.

But it's a matter for the government as to how they will get there.

They've signed up to this target.

I'm thrilled that they've accepted the CCA's independent advice.

But, you know, that was one of the assumptions that we made around land use and native forestry.

It doesn't necessarily mean that's the one the government is going to take up.

A huge part of the plan, this plan, and

any plan beyond 2035 would lean really heavily on carbon removal because, remembering, this is a net zero target that we're going for, not a sort of hard zero.

So that means we've got to...

pull carbon out of the atmosphere at the same time.

How much of that is going to need to be just planting trees in your view?

Well, there is an opportunity to use Australia's expansive land to sequester carbon.

Now that has to be done in line with the best science, but we see an opportunity to increase the amount of carbon that can be captured in our soils and in our biodiversity.

And we've put those assumptions into our model that's underpinned the 62 to 70% advice to the government.

So we think there is a great opportunity to incentivise our farmers, the agriculture sector, and broader land use sector to capture carbon and get paid for doing so.

So we want to create those new revenue streams and growth and investment opportunities for the bush.

This is the biggest regional development opportunity that we've seen in a long time.

It means opportunities for new revenue streams and investment going to rural and regional Australia.

So we've just got to work with those communities to make sure we get the policy settings right to continue to ensure that we're able to provide food and fibre and create additional revenue streams for our farmers to be able to access when it comes to sequestration of carbon.

Just zooming out a bit, last year you advocated for a 65 to 75%

cut.

Why did we scale back the ambition here?

We didn't scale back the ambition at all.

What we did is put out a consultation paper, a discussion paper as part of our deliberative process asking for stakeholder feedback on what a 65 to 75%

emissions reduction target could look like.

We received over 500 stakeholder submissions.

We conducted over 560 public meetings, meetings, and events.

And that helped us ground truth our bottom-up analysis.

And what became clear is that some of these pathways were hard.

So when we were building our assumptions, when we were considering what policies and technologies we could use to decarbonise, that ground-truthing exercise was absolutely vital.

And that's how we landed on the 62 to 70% range.

Did the US dumping its targets and Queensland,

I guess, getting a bit gun-shy on its targets, play into that change?

Because it was 65% to 75, it's now 62 to 70.

Largely what shaped the ultimate advice to the government was that ground-trooping exercise.

We built a bottom-up analysis of every sector of the economy based on the technologies that are available to see how far we could go.

And as you've said earlier, it is highly ambitious to get to the target that we've recommended, but it's technically feasible.

And

the vast majority of emissions reduction make

economic sense to do anyway.

With regard to the US administration, I mean, like

we looked at the impact that would have and largely we found that there might be opportunities to attract capital that would be fleeing the US because there is uncertainty in the policies.

One of the key things that we got from investors, from the private sector, from the business sector is the need for certainty.

They will invest, they will deploy, provided they know what the rules are.

And we've seen what happens when you have uncertainty around these policies.

People won't invest, the private sector won't lean in, and we can't achieve our objectives.

These targets provide certainty, and the policies that underpin them provide certainty.

And if the private sector leans in and business leads in, then I'm confident we'll be able to not only meet the recommended targets, that we'll be able to exceed them as well.

Well, that brings us pretty neatly to a question about your old party, the Liberals, who say that they're dead against this plan.

That doesn't deliver the sort of certainty you've just been talking about.

They may even, even, they're still formulating this position, but they may even dump net zero altogether.

Matt Keene, what does their opposition to this plan mean in the real world here in Australia?

Well, look, I can't speak for what they're doing, but I can speak as the former deputy leader of the Liberal Party, a former treasurer of New South Wales, and a lifelong Liberal.

And that is that

we should be seizing the moment to grow our economy.

All the modelling shows that this is an economic growth opportunity, not a drag.

And we should be putting policy certainty in place to encourage private enterprise and private investment because we know that will turbocharge our country's economic success.

But Conservatives should always believe

that

we should be conserving things that are important, whether whether it be our economy, whether it be our institutions, or in this case, our environment.

And it is a fundamental principle of Conservatives and Liberals to believe that our responsibility is to hand things on to the next generation better than we found it.

We know that climate change is a huge threat to our lives and livelihoods and to our planet.

And I think we've all got a responsibility, not as just as Conservatives, but as Australians, to focus on how we build a better future, build a stronger, more prosperous economy, and hand our planet and our world to our kids better than we found it.

Matt Keene, great to speak to you.

Thank you.

Thanks, David.

And Matt Keene is the chair of the Climate Change Authority.

That's all for this edition of On Background.

I'm David Lipson, filling in for David Spears.

See you next week.

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