Australia’s Reserve Bank endorses warning from 66 central banks that unless international climate policies are ramped up the economy will take a dramatic hit.
By Mike Foley and Nick Toscano
Australia’s Reserve Bank has endorsed a warning that unless international climate policies are made drastically more ambitious, the disruption under the trajectory of climate change will cause global GDP to fall by 25 per cent by 2100.
The Reserve Bank is one of 66 central banks – including Japan, Britain and China – growing increasingly alarmed at the financial crisis which will result from global warming of 3 degrees or more, unless significant steps are taken to avoid the most severe physical and economic impacts of climate change.
“Climate change leads to financial risks and therefore remains a vital issue for central banks and supervisors to address,” said Frank Elderson, a Netherlands central bank executive and director of the Network of Central Banks and Supervisors for Greening the Financial System.
A network report issued on Wednesday modelled a range of scenarios which forecast the physical risks – such as more frequent weather-related disasters – as well as the “transition risks” which will affect the profitability of businesses and household wealth including regulatory changes and shifting consumer preferences in favour of green technologies.
The report found that achieving global net zero emissions by 2050 through early and ambitious action would give a greater than 67 per cent chance of limiting global warming to below 2 degrees – and capping the global hit to GDP at 4 per cent by the end of the century.
“Climate change is one of the most significant structural forces shaping the global economy,” the network said. “Its impact will be substantial and diverse, affecting all economic agents and sectors across the globe.”
Representatives for power suppliers, the heaviest-polluting Australian industry, on Thursday threw their support behind a nationwide target for “net zero” emissions by 2050.
“Settling on an economy-wide target will let us then decide the best ways to get there and what policy mechanisms could be applied,” said Sarah McNamara of the Australian Energy Council.
“Our members have long accepted the science of climate change and the need to decarbonise the economy. In that regard we have consistently argued for well-designed, market-based and stable national policy settings around which our members can invest.”
The network report follows a record heatwave in Siberia, one of the coldest places on earth. The region’s exceptionally warm year to date has contributed to permafrost melt and started the wildfire season early.
The Morrison government has committed to reach net zero emissions by the second half of the century, which is consistent with global action that would see global warming and weather impacts like the worst forecast by the coalition of central banks.
On Tuesday Labor leader Anthony Albanese announced the Opposition would offer support to the emissions reduction mechanism being developed by the government for September, known as the Technology Roadmap, and reaffirmed his party’s goal to hit net zero by 2050.
Labor leader Anthony Albanese says he’s willing to work with the government to come up with a new energy policy after years of political battles between the major parties on the issue. Vision courtesy ABC.
Investor Group on Climate Change chief executive Emma Herd said a zero emissions transition “is inevitable”.
“Early action reduces the cost of the transition to net zero emission by 2050 substantially and helps avoid severe and irreversible impacts from climate change itself. In Australia, this will require a stable long-term policy framework and a commitment to net zero emissions by 2050,” she said.