Aus Institute: Cost of climate inaction $130b per year

oil refiners, fossil fuels, Paris, climate

Unless national action is taken to meet the Paris Target to limit global warming to less than two degrees, Australia’s GDP faces a hit of an average of $130 billion per year according to a new briefing note by The Australia Institute.

The analysis released today by the Canberra-based think tank shows that the current climate debate is largely missing three key points:

  • The cost of inaction on climate change is huge – Australia’s GDP would average $130 billion per year lower if the Paris Agreement is not achieved according to a prominent study.
  • Under the carbon price period, Australia successfully reduced emissions by 2 per cent while the economy grew by 5 per cent.
  • Economic literature suggests the economic impacts of climate policy will be minor.

“As an economist, it is hard to understand why policymakers are ignoring Australia’s own recent history in climate policy and the clear costs imposed by climate change,” Research Director at The Australia Institute Rod Campbell said.

“Australians have seen firsthand how emissions reduction and economic growth are possible at the same time – as a nation Australia experienced this very phenomenon five years ago.

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“For political leaders to suggest we now need economic modelling to tell us whether this is indeed possible after all is a furphy.

“In just two years Australia reduced emissions by 2 per cent and grew the economy by 5 per cent under a carbon price and the sky did not fall in. In fact, employment grew by 200,000 jobs.

“Analysts cannot claim to base their work on the likes of Lord Nicholas Stern or Professor Joseph Stiglitz and then ignore the conclusions drawn by those very same pieces of research.

“Nicholas Stern’s own conclusion was that ‘the benefits of strong and early action far outweigh the economic costs of not acting [on climate change]’.

“Similarly, consultant Brian Fisher cites a study that estimates climate costs to Australia of $130 billion per year, but ignores the conclusion of that very same study.

“Analysis that ignores the economic benefits of acting on climate and only focuses on costs is misleading and does a disservice to this year’s voters and future generations.”

Read the full analysis here.