Australian Regulators and Companies Falling Behind in Net Zero Transition: KPMG

KPMG expert said Labor’s significant growth in ambition toward net zero had caused supply chains and regulators to be unable to keep up with the requirements.

Solar panels can be seen on a roof top in Albany, Western Australia, on Aug. 13. 2023. Susan Mortimer/The Epoch Times

Global consultant giant KPMG has warned that Australian supply chains and regulators are falling behind in the race against net zero emissions.

This comes as KPMG has released a new report measuring the progress of major economies around the world in reducing greenhouse gas emissions and their ability to achieve net zero by 2050.

The report (pdf) ranked Australia 17th out of 32 countries in terms of readiness to achieve the 2050 net zero emission target.

Barry Sterland, the energy transition leader at KMPG Australia, said while Australia had made a “quantum leap” in legislation changes to introduce net zero targets since the Albanese government came into power, the current speed of change was not enough to meet those targets.

Since May 2022, the federal Labor government has set many ambitious goals for the decarbonisation of the country, including reaching emission levels of 43 percent below 2005 levels by 2030 and achieving 82 percent renewable energy by 2030.

Many energy experts have expressed doubts about Australia’s ability to meet those goals.

Mr. Sterland said the Labor government’s significant growth in ambition toward net zero had caused supply chains and regulators to be unable to keep up with the requirements.

He added that the government needed to do more to provide specific emission reduction plans for six sectors of the economy to help them achieve new emission reduction targets by 2035.

“These plans are likely to herald further targets and changes in the policy framework,” Mr. Sterland said, as reported by The Australian newspaper.

“Firms with strong decarbonisation plans are likely to fare better in this evolving framework.”

Readiness to Achieve Net Zero by 2050

While the KMPG’s report ranked Australia pretty high (fifth place) in terms of government policies and enabling environment, the country’s rankings for sector readiness and national preparedness were relatively lower at 19th and 18th, respectively.

The report pointed out that the heavy reliance on coal for energy caused Australia’s overall readiness ranking to remain at 17th place, far below similar advanced economies in Europe and East Asia.

The top five countries were Norway, the United Kingdom, Sweden, Denmark, and Germany.

In the 14th place was the United States, while China was 20th.

The Royalla Solar Farm as seen in Canberra, Australia, on June 28, 2016. Lisa Maree Williams/Getty Images

The report also noted that many Australian businesses were much more willing than the federal government to join state governments in setting emission reduction and net-zero targets. This was influenced by customers and investors, both locally and internationally.

Among the five major sectors of the economy, electricity and heating accounted for the largest share of carbon emissions (37 percent), followed by agriculture, land use and forestry (27 percent), industry (18 percent), transport (16 percent) and building (two percent).

The most significant progress in reducing emissions and setting targets was observed in the electricity and industry sectors.

Huge Financial Costs of Net Zero Transition

While the push for net zero in the name of addressing climate change is prevalent in many aspects of society, not every Australian is aware of the huge price tag that comes with it.

A study by the University of Melbourne revealed that $7-9 trillion (US$4.5-5.8 trillion) of capital needed to be injected into domestic and export energy and industrial infrastructure by 2060 for Australia to achieve net zero with renewable energy.

“Additional investment will be needed by households and businesses to increase the efficiency of their heaters and vehicles, including by converting to heat pumps and electric vehicles,” said Chris Greig, a senior research scientist at Princeton University’s Andlinger Center on Energy and Environment.

“The annualised costs of that investment in energy production, transport and use has been estimated at 8-9 percent of GDP to 2050, which is similar to today’s level.”

Another report by BloombergNEF stated that Australia needed to invest over $1.9 trillion between 2022 and 2050 in the energy sector and low-carbon technologies alone to achieve its emissions targets.

Manpower is also an issue, as Australia will need two million workers in building and engineering trades to build the required infrastructures for net zero, despite the country’s insufficient capacity in its training and migration pipelines.