The federal government’s recent decision to join the global methane pledge has been welcomed by the Investor Group on Climate Change (IGCC) as a step in the right direction.
But the IGCC’s director of policy, Erwin Jackson, is worried that this commitment doesn’t go far enough in terms of bringing Australia into alignment with global expectations and policies.
Speaking to InvestorDaily, Mr Jackson said investors want to see the government implement policies that are going to keep Australia competitive in the long term — policies that emulate the Paris agreement which dictates the pursuance of efforts to limit global warming to 1.5 degrees.
“Investors are looking for the government to implement policies that are going to keep Australia competitive in the long term, and the only way you can do that is if you get a strong path that aligns with the Paris agreement,” Mr Jackson said.
These policies have, however, been lacking to date, which has created considerable barriers for investors.
“Investors are people, and if you stick your hand on a fire and you burn it, you’re not likely to stick your hand back, and that’s been what the Australian policy environment has created for institutional investors,” Mr Jackson said.
“It’s created high-risk premiums, it’s increased costs and as a result, they’ve been investing in jurisdictions with more stable climate policy”.
While he described the steps taken by the current government as “really positive”, the IGCC wants to see the creation of mandatory climate-related risk disclosure soon.
Last month, Labor passed its Climate Change Bills, legislating targets to reduce emissions by 43 per cent below 2005 levels by 2030 and reach net zero by 2050.
“They’re really good initial steps, but there’s still a long way to go between the current policy suite and Australia on a 1.5 degree trajectory,” Mr Jackson said.
“The big policy issue is really going to be around how we price carbon in the industrial sector, which the government is effectively going to be doing through reforms to the safeguard mechanism,” he noted.
“The test will be how that is actually achieved,” Mr Jackson judged, adding that “big decisions” needed to be handed down.
The global methane pledge was originally unveiled by US president Joe Biden last year, but the Australian government at the time refused to participate.
In signing the pledge this week, the Albanese government said it will invest $3 billion from its $15 billion National Reconstruction Fund to support initiatives such as agricultural methane reduction as well as low emissions technologies and component manufacturing.
“The Australian government will continue to partner with the industry to decarbonise the economy and pursue emissions reduction initiatives across energy and waste sectors including capturing waste methane to generate electricity,” said minister for climate change and energy, Chris Bowen.
“By joining the pledge, Australia will join the rest of the world’s major agricultural commodity exporters including the United States, Brazil, and Indonesia in identifying opportunities to reduce emissions in this hard-to-abate sector.”
As part of its announcement, the government also highlighted further planned initiatives across the waste and energy sectors such as capturing waste methane to generate electricity, capturing or avoiding fugitive emissions from coal mines, and gas infrastructure.
The government noted, however, that the pledge does not require Australia to focus solely on agriculture or reduce agricultural production or livestock numbers, and that there are currently no plans to legislate or introduce taxes or levies to reduce livestock emissions.
