The economy will keep ticking as we turn back climate clock
"The science of climate change is not in doubt. Global warming is due to human activity, and must be arrested as a matter of urgency by reducing global emissions. But how do we reconcile a dramatic reduction in emissions with a prosperous economy?"
Dr Finkel published an editorial 'The economy will keep ticking as we turn back climate clock' in the Sydney Morning Herald on Saturday 26 September 2020. The full editorial is available below.
The science of climate change is not in doubt. Global warming is due to human activity, and must be arrested as a matter of urgency by reducing global emissions. But how do we reconcile a dramatic reduction in emissions with a prosperous economy?
The Paris Agreement of 2015 was a milestone – the first time the world came together to offer ambitious decarbonisation commitments. But it left open the question of how each country would reduce its emissions. This is the question Australia faces, and now we have a blueprint.
The Low Emissions Technology Statement released by Minister Angus Taylor this week positions Australia to be a leader in the global shift to a decarbonised future and capture the economic benefits of the growing international demand for low-emissions technologies and products. It sets the framework for manufacturing industries such as aluminium and steel to produce zero-emissions products by switching to renewable electricity and hydrogen.
The statement expresses its ambition as stretch goals that clearly set out what has to be delivered on the ground if we want to get to net zero as fast as possible.
There is more than one way to create a strategy. In my experience, a focus on the means rather than the target can deliver. For instance, when I ran a biotech company in Silicon Valley, our focus wasn’t on becoming number one in market share. It was on producing the best technology possible. And by concentrating on making products that were better than those of our competitors, we became number one.
For Australia to dramatically reduce emissions while maintaining our prosperity, we need a concrete and realistic plan. This means developing and adopting low-emissions technologies that can cost-effectively replace high-emissions incumbents. These low-emissions technologies will underpin our success in agriculture, transport, industry, the built environment and electricity supply.
In preparing the statement, the reference panel that I chaired to advise Minister Taylor started with 140 technologies identified last year by the Energy Department, working with other expert agencies including the CSIRO. After panel reviews and widespread consultation, we chose the five that are set out in the statement.
To get down to five, we focussed on four criteria: Technologies that had large abatement potential, that had large economic significance, that could build on Australia’s comparative advantages, and where government investment could make a difference in bringing costs down.
The technologies are:
- Clean hydrogen
- Storage such as batteries and pumped hydro to support the integration of more solar and wind into our electricity network
- Zero-emissions aluminium and steel
- Carbon capture and storage
- Low-cost measurement of soil carbon to enable biosequestration
The statement sends a clear signal to investors and trading partners that these are the emerging technologies the government will support, from research and development through to commercial deployment.
The statement identifies specific price thresholds for each technology – “stretch goals” that mark the point at which the clean technologies out-compete the high-emissions incumbents. The stretch goals are ambitious but achievable. When we reach these goals – such as $2 a kilogram for clean hydrogen, $900 a tonne for low-emissions steel, $2700 a tonne for low-emissions aluminium – economically rational buyers will opt for the clean version. This approach doesn’t outlaw high-emissions technologies and won’t increase their costs. Over time, it simply renders them obsolete.
Carbon capture and storage (CCS) has an important role to play, despite criticisms that it presupposes a fossil-fuel industry to generate the carbon. CCS provides a pathway for hard-to-abate industries such as cement production, and could be used to store carbon dioxide drawn down by plants or by direct capture from the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) acknowledges CCS will be necessary to achieve net-zero emissions.
CCS could also enable the use of our fossil-fuel reserves to produce clean hydrogen, alongside hydrogen from renewable electricity and water. If hydrogen is to be produced from fossil fuels, the carbon dioxide by-product has to be permanently stored using CCS, otherwise there will be no buyers.
There are significant technical challenges if we are to meet the stretch goals. To address these, the statement identifies where much of our research and investment should be directed to make these low-emissions technologies an economic reality. Importantly, it will be updated each year, so progress can be tracked and the stretch goals can respond to the fast-changing environment of emerging technologies. And the low-emissions statement doesn’t stand alone; it builds on the broader work already underway to transform Australia’s electricity network and reduce emissions. It will feed in, along with the other work, to the government’s Long-Term Emissions Reduction Strategy being prepared for COP26 in Glasgow.
We cannot and need not choose between dramatically reducing emissions and having a prosperous economy. While working on the national hydrogen strategy in 2018 I was struck by the cogency of then Japanese Prime Minister Shinzo Abe’s message when he urged serious action to address climate change, calling on the global community to accelerate “the virtuous cycle of environmental protection and economic growth”.
There are people who think we can’t focus on reducing emissions because the only thing that counts is the economy. And there are others who insist the opposite is true, and the only focus should be on reducing emissions. This is a false dichotomy. We can only get to the zero-emissions finish line by getting the strategy right for both.
Dr Alan Finkel is Australia’s Chief Scientist. He chaired the expert reference panel that advised Minister for Energy and Emissions Reduction, Angus Taylor, in the preparation of the first Low Emissions Technology Statement.