Climate Change and Environment
Climate change a risk to Australia’s financial stability
The deputy governor of the Reserve Bank of Australia warns of the growing risk of climate change to the Australian economy.
In a speech to the Centre for Policy Development, Guy Debelle outlined how climate change poses risks for the Australia’s financial stability in several ways.
“Insurers may face large, unanticipated payouts because of climate change-related property damage and business losses. In some cases businesses and households could lose access to insurance,” he said.
“Companies that generate significant pollution might face reputational damage or legal liability from their activities, and changes to regulation could cause previously valuable assets to become uneconomic.
“All of these consequences could precipitate sharp adjustments in asset prices, which would have consequences for financial stability.”
Debelle emphasised that climate events are increasingly a trend within the economy, not a cycle.
“Droughts have generally been regarded, at least economically, as cyclical events that recur every so often. In contrast, climate change is a trend change. The impact of a trend is ongoing, whereas a cycle is temporary.
“That situation is more challenging to assess and respond to,” he said.
The RBA’s warning is the third by a major financial regulator – following similar interventions by Australian Prudential Regulation Authority and Australian Securities and Investments Commission – that climate change is an issue that must be embedded in disclosure, risk management and assessments of monetary policy and financial stability.
“All while a climate denialist government has been in power in Canberra, refusing to have any coherent policy on either energy or emissions abatement,” commented the online journal Crikey.
Where the parties stand on CLIMATE CHANGE
The Greens aim for net zero greenhouse gas emissions by “no later than” 2040, the banning of fossil fuel mining and for 100 per cent of electricity to be generated by renewable energy.
They also promise binding national emission limits for each year through to 2050 and the pricing of electricity and fossil fuels to reflect their true cost.
Labor has a target of a 45 per cent reduction in greenhouse gas emissions by 2030 from 2005 levels. By 2050 it aims for net zero greenhouse gas emissions.
It says it will achieve this chiefly through a massive investment in renewable energy. By 2030 Labor aims to generate 50 per cent of the country’s electricity by renewable resources.
Its official target is to reduce Australia’s greenhouse emissions by between 26 and 28 per cent from 2005 levels which would see it meet its commitments under the Paris agreement.
The main vehicle to achieve this is the Emissions Reduction Fund – a $2.5 billion fund to pay for carbon mitigation projects like tree planting. Ninety per cent of the fund has already been spent and experts say the outcomes are a drop in the ocean compared to what is needed to meet the government’s own targets.
Malcolm Turnbull’s National Energy Guarantee was supposed to reduce emissions from the electricity sector below the 26 per cent target. That policy was scrapped by new Prime Minister Scott Morrison and replaced with – nothing.