The ASX flirted with its second-highest close of the year to date before falling on a strong Australian dollar, peaking at 0.7% before falling back down to a flat, unchanged finish. Information Technology was the strongest sector, gaining 3.05%.
The Australian dollar spiked 0.5% to US$0.7578 – its highest level since June – after the RBA opened the door to a rate rise with the removal of any mention of being “patient” when it comes to adjusting monetary policy.
IPCC: rapid energy transition offers hope
The Intergovernmental Panel on Climate Change released its first road map since 2014 on the path to a stable climate, incorporating the latest technological breakthroughs and a fresh understanding of the process and pace of climate change.
Its report warns that keeping average warming below 1.5 degrees Celsius will be an extremely difficult and unlikely proposition, especially as we have already passed the 1.2 degrees Celsius mark.
On the other hand, a rapid energy transition may be the answer to remaining below a 2.0 degrees Celsius increase, which modelling suggests would devastate global cereal crop yields and produce yet more severe and extreme weather events.
The panel’s scientists found that remaining below 2 degrees of warming would require the world to cut 20% of emissions by 2030 with actions expected to cost less than US$20 per tonne of carbon.
This appears much more achievable than remaining below 1.5 degrees, which would require a 50% drop in emissions by 2030 at a cost of more than US$100 per tonne of carbon.
“The main takeaway is that the outlook for a 2-degree trajectory is a much more positive one than has been previously assessed,” Frank Jotzo, a lead author on the report and professor at the ANU’s Crawford School of Public Policy said.
“And that’s really due to reductions in technology costs, greater availability of zero-carbon options right through the economy and positive experiences with the actual implementation of emissions reduction policy.”
Professor Jotzo believes Australia is well-placed to not only reduce its own emissions but create value opportunities in the process.
“Australia has all the opportunities to reduce emissions that are canvassed in the report – it has most of the low-cost opportunities to reduce emissions and Australia has a very large opportunity for carbon dioxide removal from the atmosphere,” Jotzo said.
Greenpeace Australia Pacific senior campaigner Glenn Walker agrees, stating that the cost will be too high for the Australian people if action isn’t taken.
“A faster transition to renewables will also unlock the benefit of low-cost power, with wind and solar backed by batteries found to be the cheapest energy source to power our country,” Walker said.
“With soaring coal and gas prices hurting households, putting an end to polluting fossil fuels will set us up for a fairer and more prosperous future.”
Scope3 as next carbon frontier
While Federal policy has lagged, state and private sectors have stepped into the gap, recognising the huge value that can be generated by a global energy transition and the decarbonisation of our economies.
Business has come under increasing pressure from shareholders and stakeholders to disclose more information about their carbon emissions, especially Scope3 emissions.
Scope3 emissions concern carbon which results from activities not directly undertaken by the reporting business, but that indirectly influence or affect its value chain.
The Scope3 guidelines are a new breed of emissions accountability, requiring companies to understand the impact of their supply chains and other indirect contributors.
“We’re seeing a lot of shareholders asking the question about Scope 3,” Qantas chief executive Alan Joyce said at a roundtable with The Australian Financial Review and Business Council of Australia.
“We’re getting customers come to us for the first time saying ‘How can you help us with Scope 3?’”
This scrutiny of value chains may push some companies toward domestic manufacturing, which tends to have less inherent emissions compared to imported products, and low-carbon production methods in general.
Energy companies have come under fire from the Federal Government as many of them elect to close coal and gas-fired power plants years ahead of schedule, citing worsening economics and cheap renewables as the cause.
Prime Minister Morrison said the Coalition’s policy is for coal power stations to “run as long as they possibly can” to provide baseload power “when the wind doesn’t blow and the sun doesn’t shine”.
Conversely, the Business Council of Australia has been pushing for more ambitious emissions reduction targets, championing a 46-50% reduction by 2030 to drive the necessary investment to reach the 2050 net-zero emissions goal that Australia has committed to.
“Cheap, reliable, renewable energy will absolutely be an advantage for our nation in the decades ahead,” BCA president Tim Reed said.
“The heavy lifting is actually being done by business and by the states to get there. The really hard work comes from 2030 to 2050.”
“We would be strongly encouraging both parties to embrace more ambition because national coordination helps [and] there is no doubt that the system will move more smoothly when there is leadership from a federal perspective.”