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Refining the Technology Roadmap for real emissions progress

New research from Ndevr Environmental shows that while the effects of COVID have reduced Australian emissions, our emissions will inevitably rebound as the COVID recovery continues. In the absence of more ambitious climate policy, Ndevr Environmental Managing Director Matt Drum says changes to the Technology Roadmap could drive meaningful progress on emissions reduction.

The recently released IPCC Sixth Assessment Report (AR6) further highlights the likely impacts of unmitigated climate change and the urgency with which we must act to reduce carbon emissions. The report concludes it is unequivocal that human influence has warmed the atmosphere, this warming is happening faster than projected and extreme weather events are increasing in frequency and severity. This analysis will surely feature when UN member states meet in Glasgow for COP26 in October. Pressure will be high for members to commit to stronger emissions-reduction targets. Our latest data shows that excluding the changes brought on by COVID-19, Australia has not made progress on emissions reduction since the abolition of the carbon tax in 2014. While bigger policy thinking will be required in the long-run, immediate changes to our existing climate policies could make a meaningful difference to our emissions output.

Where does Australia stand?

Australian leaders still won’t commit to a net zero target by 2050. As Australia is one of the OECD’s heaviest per capita emitters, it is likely our trading partners will put pressure on the government to do this. While the Federal Government claims we are on track to meet our 2030 Paris Targets ‘in a canter’, our emissions were actually increasing before COVID hit.

Ndevr Environmental has been reporting on Australia’s emissions and our progress towards the Paris Target for several years in our Tracking 2 Degrees report. Our latest report shows Australia’s emissions for the 12-month period ending 31 March have decreased by 5.9 per cent on the previous 12-month period. However, most of this reduction is due directly to the economic impacts of COVID. This decrease has been largely due to falls in liquid fuel consumption from aviation fuel and light vehicle fuels. On the positive an increase in energy renewables penetration is bringing sustained emissions reductions in the energy sector.  

The figure below shows that all other emissions sources across the economy have remained steady or increased, as they have largely done since the carbon price was abolished in 2014. The ‘COVID-induced’ emissions decrease is in fact the largest single reduction since the carbon price drove down emissions in 2012-2014. Unless our climate policy suite is strengthened, our emissions will inevitably begin to increase again as the COVID recovery continues. 

The Technology Investment Roadmap: a road to nowhere?

After more than 10 years of climate wars, people are urging the Federal Government to take meaningful action, and industry and investors are demanding further clarity. We know that a price on carbon works to reduce emissions across the economy, but it unfortunately remains unpalatable for both sides of politics. In its absence, rapid and straightforward improvements to existing policies can help make a difference.

Our current national climate policies centre on Technology Investment Roadmap and the Climate Solutions Fund. As it stands, the Roadmap is little more than a list of technologies the Government thinks might help us reduce emissions towards 2050 – clean hydrogen, green ammonia and carbon capture and storage (CSS) seem to be the current golden children. What’s missing is real incentives for business to properly research and adopt these and other promising technologies.

When we talk to our clients about research and development (R&D) priorities and whether low-emissions technologies are being investigated, the answer is often ‘no’, or ‘we’re in the early stages’. The reason is that resources are tight and there is no legislated imperative to do so, as business as usual (BAU) emissions do not incur a penalty in this country. The R&D Tax Incentives program, which has been around since 2011, has successfully driven investment into the R&D of new and improved products, ideas and processes.

To give the Technology Investment Roadmap some teeth, I propose that a dedicated climate stream of R&D-eligible tax activities be created for non-BAU activities that reduce carbon emissions. The tax offset could be increased well above the current 38.5 per cent for business and be targeted to technologies identified in the Coalition’s Technology Investment Roadmap.

Last year’s Technology Investment Roadmap Discussion Paper mentions “research and development” many times, usually in the context that “further research and development is required”. However, it does not say how it is going to encourage a step change in R&D in this space, which is what the country, the workforce and ultimately the environment needs.

Many of our largest emitters are setting net zero targets and looking to engage in the Climate Solutions Fund, which can help them create carbon offsets that support capital investment. Setting the target is one thing – discovering, testing and implementing the technologies to get there is another. These are exactly the activities that should be better supported under a climate-focussed stream of the R&D Tax Incentives program. Let’s leverage what we have in place already to drive investment in clean technology, rather than simply talking about it and providing an ‘ideas bucket’.

The global policy ground is shifting quickly. The EU’s proposed Carbon Border Adjustment Mechanism (CBAM) could have significant ramifications for Australian exports unless we reduce our emissions intensity in a meaningful way. I am not suggesting that an improved Technology Investment Roadmap will rapidly decrease our emissions across the economy and protect us from future adjustment tariffs. But it is a worthwhile starting point while Australian politicians refuse to consider a carbon price that may eventually be forced on us by the international market. 

About the authors
MD

Matt Drum

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Matt Drum is Managing Director of Ndevr Environmental. He is a respected leader in the climate change and sustainability space with over 15 years' experience advising some of Australia's largest companies. He has led over a thousand impact projects and holds the highest level of greenhouse and energy audit accreditation in Australia, Category 2 RGEA.

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