Unveiling the target to cut emissions 62–70 per cent below 2005 levels, Treasurer Jim Chalmers said Treasury modelling shows early, orderly action on climate change will deliver stronger growth, more jobs and higher returns.
“Modelling shows an orderly path to net zero leads to more jobs and investment, higher wages and living standards, and a bigger economy,” Chalmers said, adding that the Net Zero Plan gives businesses and investors the clarity they need to finance Australia’s shift into a low-carbon economy.
Treasury’s baseline scenario projects the economy will be $2.2 trillion larger by 2050, with investment up 80 per cent and gross domestic product (GDP) per capita $36,000 higher.
A renewable exports case points to even greater upside, with green metals and clean energy exports adding $68 billion a year by mid-century.
By contrast, a disorderly transition would shrink the economy by $2 trillion and push power prices up 50 per cent.
The target will be backed by six sectoral decarbonisation plans, alongside the Net Zero Plan and the Future Made in Australia initiative, aimed at accelerating renewables, electrification and low-carbon manufacturing.
The new target comes ahead of international climate talks where Australia will face pressure to demonstrate credibility on climate commitments.
Super funds and institutional investors welcomed the clarity, with HESTA CEO Debby Blakey noting the target supports “businesses and long-term investors to invest in Australia’s shift to a low-carbon future”.
She, however, urged the government to aim for the upper end of the range, arguing stronger ambition would deliver greater certainty and unlock more opportunities.
“Given this urgent case for action, we believe it’s important to view the lower end of the target range as setting a floor. We see the need to push hard so Australia can reach the top end of the target, which we consider both ambitious and achievable,” Blakey said.
HESTA, which manages $98 billion, has committed to having 10 per cent of its portfolio invested in climate solutions by 2030.
Blakey said the Net Zero Plan and sectoral pathways would help direct investment into areas where faster action is possible.
“This increased action can support a resilient economy, which is in the long-term financial interest of our members,” she said.
Additional modelling by Deloitte Access Economics has suggested a 75 per cent target could unlock $227 billion in GDP over the next decade and provide “one of the clearest signals” to global capital that Australia is a credible low-carbon investment destination.
