The Australian election was about climate change. Here’s what it means

The Prime Minister of Australia Anthony Albanese is speaking at a press conference in Australia on May 23, 2022 at the Parliament House.

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Australian businesses and their investors will keep a close eye on the newly elected government’s climate change policy worldwide.

Analysts say the Labor government under Prime Minister Anthony Albanese could hit a new deal to expand its emissions reduction targets.

Although the Labor Party won the federal election this weekend, it still failed to claim 76 seats to form a majority government and the count continues. Labor was also short of two seats on Tuesday afternoon.

If Labor cannot form a majority government, it may have to negotiate with climate change-focused independent and minority candidates who have snatched more seats than expected.

For now, Labor has promised to reduce emissions targets by 43% by 2030, based on 2005 figures.

Richard Martin, managing director of IMA Asia, told Street Sciences Asia on Monday that “what will move, what markets want to see is the environment, the carbon tax and so on.”

Who will be affected by climate policies

Businesses such as coal mining and power generation are likely to be affected by the government’s climate policy, Martin said. Companies need to be wary of any policy changes by the Labor government, which, unlike its predecessor, which was soft on climate change, could take action on climate change.

But whether labor needs to be discussed, Martin’s concern is whether the currently proposed processes to reach the 2030 goal will work.

“It’s only five years away and the processes described by Labor are in a state of ‘excellent planning,'” he told CNBC.

All major emissions from industrial to mining need to accelerate emissions reduction plans, and it is expensive to manage.

Richard Martin

Managing Director, IMA Asia

“At the heart of the plan is the imposition of strict caps on large emitters and the revitalization of a market for carbon credit transactions that does not exist.”

Martin pointed to the poor performance of Australia’s carbon credit units, which have been awarded to eligible projects as a result of reduced greenhouse gas (GHG) emissions.

The price of units declined after the previous government under Scott Morrison It said it would return as the largest buyer of emissions in March.

Labor leader Anthony Albaniz stands on stage with his partner Jody Hayden, his son Nathan Albaniz and Australian shadow Foreign Minister Penny Wang during the party’s election night event in Australia on May 21, 2022. Businesses in Australia and their investors around the world will be wary of how the new Australian Labor government will come under pressure to hit a new deal to expand its emissions reduction targets amid concerns it will introduce its climate change policies, analysts say.

Brent Luin | Bloomberg | Getty Images

“If Labor is committed to its 2030 carbon emissions cap, Australia will face a dramatic acceleration next year in developing carbon control and trading frameworks,” Martin said.

“All major emitters – from industry to mining – need to speed up plans to reduce emissions, and there is a cost to its operations.”

New investments may benefit from things like energy generation but “who benefits from such costs is not the same as those who have to spend to reduce emissions and investors have to focus on that,” Martin said.

Labor, green and climate promise

As the vote count continues and new Australian leader Albanese takes time to attend the Quad Security Summit in Tokyo, newly sworn in Treasurer Jim Chalmers reiterated to local media on Monday that he has no intention of reducing the new government’s exit target.

However, the minority party, the Greens, could be on track for record election results. With the possibility of six seats in parliament, they have said they will use them It has increased the power of the government to push for more climate change.

However, the Australian public has indicated through its election of a record number of climate change-focused candidates that they are interested in more climate action, although the new government is unlikely to be flexible with existing commitments, Daniel Wood, CEO of the think tank Gratan, told CNBC on Monday.

Political analyst Mark Kenny, a professor at the Australian National Studies Institute at the Australian National University, agrees.

“The conventional wisdom was that voters would put climate concerns aside if they thought green-policy could reduce their purchasing power through higher electricity prices,” Kenny said.

Voters are concerned about rising costs but also about climate and sustainability.

Mark Kenny

Australian Institute of Studies, Australian National University

“Election 2022 disproves this thesis. Voters are concerned about rising costs but also about climate and sustainability.”

And while the Labor government will probably hold its ground against independent candidates to protect its electoral promises, it could still get off track, Kenny added.

“Over time, Labor will find a way to surpass the target anyway – as far as the Morrison government set its target of 26-28% by 2030 and then [boasted] It was constantly on the way to ‘meeting and beating’ that standard, “he said.

Stability is the key

Additionally, long-term sustainability will be important in climate change, Australian businesses say.

“When we invest, we’re going to manage these assets for 20 and 30 years,” said Meg O’Neill, chief executive of Woodside, Australia’s largest LNG producer. CNBC on the eve of the election.

“What matters to us is the financial and policy stability that gives us the confidence that when we make an investment, we will be able to get the return we want.”

Policy stability will be important, especially when surveys show a reluctance to take action on climate change policies in Australian business.

The Deloitte 2022 CxO Sustainability Report, released earlier this year, shows that while business concerns about climate change have increased, there was no urgent need to work.

Will Simons, Deloitte’s Asia-Pacific Climate and Sustainability leader, said executives were “not yet sure about the connection between climate action and value creation – long-term revenue, margins and resource values.”

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