Want to decarbonise faster? We need to become more productive

Decarbonising the Australian economy is vital and will cost money. The longer we put it off, the quicker we need to do it to get to net zero emissions by 2050. 

Productivity isn’t everything, but in the long run, it’s almost everything

- Paul Krugman 

Australia will need new power plants, some new transmission lines, new battery storage, new appliances and many other changes. It will be a much softer hit to the economy if we spend that money over several decades rather than just one. This is why getting cracking on decarbonisation is vital — to spread the cost out over time.

Governments and companies can act as a buffer for the costs for a time by paying upfront and holding debt, but this can’t last forever. We will pay back government debt with taxes and pay back company debt via higher prices, lower wages, and lower returns on investments.

If the costs of change are too high in any one period, Australians will start to notice. Consumers could face higher taxes, higher prices and potentially even lower pay. Such a confluence would put living standards at risk, raise the spectre of populist politics and put at risk the viability of the whole vital project. 

Read the story from Crikey by Jason Murphy - “Want to decarbonise faster? We need to become more productive.”

Scope 2017 survey: Economists say action on carbon is vital, or say nothing at all

Ai Group's Julie Toth said market mechanisms
 should be used to meet national commitments
to substantially cut emissions. 

There is no consensus. Economists either believe it is vital that Australia becomes a low-carbon intensity economy, or that the issue is so unimportant – or perhaps that it is so politically divisive – that they choose not to volunteer an opinion.

Asked about the importance of reducing the country's carbon footprint and how best to do it, more than half of 27 economists from industry, consultancy, academia and finance questioned for the annual BusinessDay Scope survey agreed it was a must.

Another 10 left the question blank. Whether this indicates a lack of interest or the contentious nature of climate change policy is unclear.

But none of those who did answer made the case that cleaning up the economy did not matter. They overwhelmingly said action should be swift and include a market-based carbon pricing scheme.

Read Adam Morton’s story in today’s Melbourne Age - “Scope 2017 survey: Economists say action on carbon is vital, or say nothing at all.”