Australia Must Be Engaged and Involved in Global Climate Policies: Treasury

The Yallourn coal-fired power station in Latrobe Valley, Victoria, Australia on Oct. 9, 2002. AAP Image/Julian Smith

The Australian Treasury Secretary Steven Kennedy warned that the country must do more to keep up with the global standards on climate change or face increasing scrutiny from financial markets.

“There might be aspects that do not align with Australia’s national interest,” Kennedy told a public climate forum hosted by the Centre of Policy Development. “We don’t have to like what’s happening, but we do have to be engaged and involved, and we must have a credible alternative that appropriately aligned with others.”

Kennedy noted that investors are taking increasingly comprehensive measures to align their portfolio investments with climate-related commitments, a trend that is also occurring in public policy.

“These two trends towards aligning public and private, I think, are going to be very powerful forces in shaping in shaping future global investment flows,” he said.

Treasury, he said, had noted the increasing demand for more detailed climate-related reporting frameworks and requirements.

“It’s what investors and institutions want. Australia will need to take further steps to meet these expectations,” Kennedy said.

Kennedy acknowledged that while net-zero targets will create opportunities for some, they will also generate costs for others.

“It’s a critical period ahead for Australia consider how we navigate these international developments in climate-related financial disclosure and sustainable finance,” he said.

Workers hang their hard hats on the fence outside of the Hazelwood Power Station on the final day of operation in Hazelwood, Australia, on March 31, 2017. Scott Barbour/Getty Images

Climate counsellor at the U.S. Treasury John Morton told the forum said the recent urgency to climate commitments meant that targets previously thought of as impossible were now on track.

“I think the leadership of the U.S. government has undeniably breathed some urgency back into this conversation,” he said.

The U.S. Treasury will be using US$100 trillion (A$137 trillion) from private sector capital for clean and sustainable infrastructure incrementally over the next 30 years.

“Capital of that size has to come from the private sector; it can’t come from the public sector,” Morton said.

However, Morton said the shift needs to be enabled by the public sector through policies so private markets understand that the trajectory and transition to a global low carbon economy are “predictable and consequential.”

“There are economic consequences to being left behind, both for companies, for industries, and indeed for countries,” Morton added.

Macquarie Group CEO Shemara Wikramanayake said greater clarity is required for collaboration between government and businesses.

“Ultimately, what the private sector needs is for the public sector to set the priorities and the targets,” she said.

An analysis by advisory firm EY estimated that Australia’s export industry could be at risk from global net-zero ambitions.

“The direction of travel towards global decarbonisation is clear, and this will impact Australia’s export base, whether we like it or not,” co-author Jo Masters said.

Australia’s coal and oil exports, which makes up nearly 15 percent of Australia’s export value in 2020, are expected to diminish if nations commit to net-zero targets.