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Australia deserves to pay a climate risk premium

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A firefighter gives instructions near a bushfire in Windsor Downs Nature Reserve near Sydney on September 10, 2013. More than 550 firefighters are working on multiple bushfires across New South Wales (NSW) who left a destroyed house and six injured firefighters, according to the NSW Rural Fire Department. REUTERS / Daniel Munoz (AUSTRALIA – Tags: CATASTROPHE) / File Photo – RC2D8Q97X8AN

MELBOURNE, Nov. 18 (Reuters Breakingviews) – The Australian federal government is blowing hot air into the global warming conversation. The coalition led by Prime Minister Scott Morrison ultimately adopted a net zero emissions target in part out of fears that fund managers would punish the country for not having one. The plan was initially quite meaningless, but new details confirm the lack of seriousness – and the potential cost.

Canberra’s future fuel and vehicle strategy highlights how little the government intends to do to reduce emissions by 2030. An additional A $ 178 million ($ 130 million) for charging stations electric and hydrogen refueling and the like will complement what companies like Tritium and BlackRock- backed (BLK.N) Jolt do. However, better options are still lacking, such as capping tailgate pollution, eliminating remaining import duties and other taxes, and offering federal incentives to buyers of electric vehicles.

The government expects its measures to help put 1.7 million clean cars on Australia’s roads, or about 9% of the country’s light vehicle fleet in 2030, Breakingviews estimates. It would eliminate just 8 million tonnes of CO2 equivalent in total by 2035, roughly what the country’s transport sector threw up in a month in 2019.

The reason is that more than 500,000 additional gasoline engines are said to be in circulation. And “super efficient” hybrids and gas guzzlers, not electric vehicles, would make up virtually all clean cars, according to the models that underpin the global net zero plan released last week.

They contain a lot of precious stones. On the one hand, there is a cap of 2 degrees Celsius, not 1.5 degrees, for the average rise in global temperature since pre-industrial times. The report only postulates that net issuance falls 85%, bypassing the rest to save AU $ 4.9 billion. It further predicts that the value of fossil gas exports will increase by 13% by 2050 and highlights 62,000 potential new roles in mining and manufacturing with almost no mention of climate-related opportunities in others. sectors. Think tank Beyond Zero Emissions puts them at 1.8 million jobs nationwide.

Such greenwashing keeps on the table the potential investor penalty that Treasurer Josh Frydenberg raised in a September speech. Last week’s modeling estimates that this would reduce investment in the country by 5.5% on average until 2050 and come back to almost 1 percentage point of GDP. Even underestimated, on current policies, that would be a well-deserved risk premium.

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NEWS CONTEXT

– The Australian federal government released on November 12 the modeling of its plan to achieve net zero emissions by 2050 which it unveiled on October 26.

– It follows an announcement on November 10 that the government would commit A $ 500 million ($ 363 million) to a new fund to invest in national start-ups developing technologies to fight climate change, and it expects private sector investors to pay the same amount.

– The Low Emission Technology Commercialization Fund would be managed by the government’s green bank, Clean Energy Finance Corp. The right-wing coalition government also wants to change the institution’s mandate so that it can invest in carbon capture and storage. Both initiatives require new legislation.

– On November 9, the government unveiled an updated Future Fuels Strategy, increasing available capital to A $ 250 million from A $ 72 million. The fund will focus on public electric vehicle charging stations and hydrogen refueling stations; domestic smart chargers; commercial fleets; and heavy and long haul vehicle technologies.

($ 1 = 1.3767 Australian dollar)

Editing by Jeffrey Goldfarb and Katrina Hamlin

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