The lack of agreement between the two major parties has left the potential for a national climate policy framework in complete and utter chaos when it comes to long-term investment decisions.
Both sides of politics lack leadership when it comes to establishing clear climate policies, according to a leading public policy and economics expert at The Australian National University (ANU).
Warwick McKibbin, a Professor at the ANU Crawford School of Public Policy and Director of the Centre for Applied Macroeconomic Analysis, said the two major political parties had missed an opportunity to commit to clear policies on climate change before the recent COP26 summit in Glasgow.
Professor McKibbin said Labor had now moved towards a reasonable policy.
"The lack of agreement between the two major parties has left the potential for a national climate policy framework in complete and utter chaos when it comes to long-term investment decisions," he said.
"It's been state governments and the mums and dads who have been making the real decisions as they retool their houses and their energy use, while the big superannuation funds are also being affected by the excess of political uncertainty on climate policies."
Professor McKibbin has co-authored three separate papers that outline a pathway to address the political and economic steps to achieve net zero carbon emissions by 2050.
"You need to have a mix of carbon pricing and green infrastructure to get the economic and environmental outcomes to be better balanced," Professor McKibbin said.
"That means putting in place charging stations for motor vehicles, for example, where the private market doesn't yet see the economic benefits of the core infrastructure that you need to move out of carbon.
"The beauty of green infrastructure is that the government is spending money, which is a great stimulus for the economy coming out of the COVID-19 pandemic, but over time it also raises private sector productivity which enhances the economy."
Professor McKibbin said that as Australia moved toward net zero there will be some hurt and job losses for the coal, oil and gas sectors. But the costs can be completely neutralised by further investment in renewable energy technology that is already in place, which fuels more output in the economy over time.
"We're now at a point where we can expand the non-fossil fuel sectors and really change the mix of the economy, but we should have done this more than a decade ago," he said.
"If you design policy properly, you give the right incentives to the private sector to bring technology to market. The problem we have with the government's roadmap is that it's all about technology, but there's nothing that says how that technology is going to be taken up.
"The incentives need to be directed at how to decarbonise everything in the economy, and both sides of politics have quite simply got it wrong."
The three papers from the ANU Crawford School of Public Policy also feature research by leading ANU PhD students and researchers at the International Monetary Fund, who have examined climate mitigation strategies to reach net-zero emissions by 2050.
Read the papers below:
- Mitigating Climate Change: Growth-Friendly Policies to Achieve Net Zero Emissions by 2050
- Low Hanging Fruit in Australia's Climate Policy
- Climate Policies and Monetary Policies in the Euro Area