November 28th, 2021Most of Victoria better off under net-zero economy

New economic modelling shows most regions across Victoria will experience higher economic and jobs growth if Australia transitions to a net-zero economy.

The modelling report from the highly respected Centre of Policy Studies at Victoria University, compares two scenarios: business–as-usual and a transition to net-zero emissions by 2050.

Under both scenarios, all areas of Victoria will experience economic and jobs growth. However, if Australia takes action to transition to net-zero emissions more jobs will be created and economic growth will be higher. Hume, Ballarat region and the South West will experience to most economic benefit. (see map here)

La Trobe Valley/Gippsland will see 36,100 new jobs in a net-zero economy by 2050, however jobs growth is lower compared to business-as-usual scenario and it is the only Victorian region seeing slower growth in a net-zero economy.

The report shows that even with a commitment to net-zero emissions the Australian economy will continue to grow strongly at an average of 2.56% per annum, just 0.03 below a business-as-usual approach.

“The cost of Australia transitioning to net-zero emissions by 2050 has plummeted by 80% in just eight years thanks to a rapid decline in the cost of renewable energy and electric vehicles, and the emergence of new green technologies,” report author Professor Philip Adams said.

The report highlights under a net-zero emissions transition, every region in Australia will continue to grow, and in 42 out of 88 regions economic growth will be above the business-as-usual scenario. The report identifies 9 out of 88 regions where production and employment growth is more constrained because of a net-zero emissions policy. Growth is still expected in these regions, but at a lower rate compared to the business-as-usual scenario.

The modelling takes a conservative approach and is based on today’s technology and industries, but does require government policy intervention.

Importantly, the modelling does not include the possible effects of slowing climate change such as savings from less frequent extreme weather events and fires.

Professor Philip Adams said transitioning to net-zero represents value for money for Australia.

“Cutting greenhouse gas emissions is like buying an insurance policy. We incur a small decline in the growth in GDP in order to limit the potential impact of catastrophic climate change,” he said.

Some sectors will experience economic and jobs growth as a result of net-zero such as the forestry and renewable energy generation sectors. Forestry will grow at 93% with a commitment to net-zero compared to business as usual, largely due to bio-sequestration (removal of CO2 from the atmosphere by plants).

The modelling uses a price on carbon to incentivise transition to net-zero emissions.

“It will be very difficult for Australia to achieve net-zero without some price on carbon, whether that is explicitly through a carbon tax, or implicitly through costs imposed by regulation, subsidies for new technology or the removal of existing fossil fuel subsidies.” Professor Adams said. “But the task is getting much easier. Eight years ago, our modelling showed the effective price on carbon needed to be $285 a tonne to achieve net-zero – now it is at $151 per tonne.”

Professor Adams said that while the modelling showed net-zero would have an economic benefit or neutral effect on most of Australia, government support and transition strategies were needed for some regions.

“Governments need to properly plan, resource and invest in regions like the LaTrobe Valley to attract renewable energy industries, new green industries and invest in retraining and upskilling the workforce,” he said. “Not having these strategies or delaying the transition means the pain will be felt greatest in these regions with large coal, gas and petroleum industries.”

If the pledges made at the COPS26 conference are delivered, the world will warm by an average 1.9 degrees by the end of the century.

The Federal Government has said it will reach net zero emissions by 2050, but how it plans to get there is unclear.

Economic growth by region, map: https://datawrapper.dwcdn.net/Nu3fK/6/

Jobs growth by region, map: https://datawrapper.dwcdn.net/m1f6y/4/