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Two Birds, One Trillion-Dollar Stone: Could Climate Change Solutions Answer Australia’s COVID-Debt Prayers?
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Australia’s history of economic prosperity faltered in 2020, as the country entered its first recession in almost 30 years due to the COVID-19 pandemic (Khalil, 2020). Currently, the Australian Government is faced with tackling an estimated $1 trillion of accumulated debt and rising unemployment (Worthington, 2020). However, as the global economy begins to rebuild, there are calls to invest in clean energy solutions; this would simultaneously address climate change and COVID-debt concerns.

Climate change is a collective action problem, in which mutually beneficial cooperation does not occur in regards to a common goal. Morally, this phenomenon is counterintuitive, however, there are key financial factors behind climate inaction (Bernauer, 2013). In the past, prioritization of GDP growth has led to the systemic exploitation of natural resources in the name of material profit (Ripple et al., 2020). Agricultural processes such as deforestation have contributed immensely to CO2 emissions, the primary greenhouse gas polluting the atmosphere. As such, anthropogenic factors have been the biggest driver of climate change, leaving many countries with the ethical and moral responsibility to invest in clean energy solutions.

Additionally, recent research into the consequences of climate change has highlighted the damage caused by governments’ myopic policies. As the World Bank (2009) reports, the predicted consequences of climate change rising above 2°C include increased occurrence of natural disasters, increased likelihood of death and illness from the propagation of disease in severe heat and decreased global food production. These erratic weather events and changing ocean temperatures have had detrimental ramifications on agriculture, fisheries and energy production (Mgbemene et al., 2016). In fact, substantial economic losses have already occurred due to climate inaction, equalling an estimated $320 billion in 2017, the highest annual loss on record (Chao & Feng, 2018). This has instigated a paradigm shift towards climate action being perceived as economically useful, rather than a disadvantage to economic growth.

In the past, barriers to climate action have deterred governments from integrating such solutions. For example, Australia’s carbon tax, established in 2012, reduced greenhouse gas emissions by 1.4% in its second full year of implementation (Andersson & Karpestam, 2012). This was the largest decrease of the decade and yet, the tax was repealed in 2014, despite its effectiveness, in light of economic concerns (Andersson & Karpestam, 2012). Since CO2 emissions have accumulated due to many states' behaviour, this makes the chain of responsibility much less discernible and lessens the pressure on any one government to enact change. However, recently, during the UN Paris Climate Conference, 186 countries pledged to restrict global warming to 1.5°C, ratifying the Paris Agreement (United Nations [UN], 2019). While the Paris Agreement is not legally binding and thus possesses less coercive power, record numbers of participation indicate more countries than ever are committing long term to climate solutions.

As a key world power and polluter, Australia has both moral and financial reason to support strong climate action. In the wake of the pandemic, at least 60% of Australian businesses have been negatively impacted (Roy Morgan, 2020). Accordingly, there has been a push for stimulus packages to support local and international businesses. Among these proposals, have emerged measures which support a clean energy model. These have garnered global support, particularly from the European Union, South Korea and Canada (Morton, 2020). The key difference from previous policies is that COVID-19’s clean energy stimulus packages could see benefits for both issues. Indeed, an Ernst & Young (EY) report foresees government support of sustainable economic policies creating more than 100,000 jobs in Australia while simultaneously decreasing greenhouse gas emissions (Morton, 2020). In particular, EY estimates that for every $1 million of government money invested into renewable energy, at least 4.8 full-time jobs will be created (Morton, 2020). As a result, this would increase household income and spending power to combat economic downfall. Alternatively, the same $1 million spent on fossil fuel energy sources would create only 1.7 full-time jobs (Morton, 2020). While in the past, the prioritization of economic advancement has overpowered climate action, in this case, economic and scientific research overwhelmingly support climate-friendly policies for a more stable future.

Emissions are still increasing by 0.6%, calling for greater urgency in climate action (Long, 2019). It is imperative that the Australian government supports innovation and sustainability in its domestic policies. Climate change is a man-made issue and it is time to denounce the “grow rich and clean up later” (Bernauer, 2013, p. 435) mentality plaguing Australia’s advancement, as we rebuild economic growth in a post-COVID world.

Metta Chalapati is a fourth-year student at the Australian National University (ANU), completing a Bachelor of Science and International Relations. As a multidisciplinary student, she is particularly interested in the intersection of scientific issues and global policy. She has recently completed internships at the Embassy of Belgium, the ANU Research School of Biology and PricewaterhouseCoopers which have enabled her to explore diverse issues. Moving forward, she hopes to continue exploring emerging interdisciplinary research opportunities.

 

References

Andersson, F.N., & Karpestam, P. (2012). The Australian carbon tax: A step in the right direction but not enough. Carbon Management, 3(3), 293-302. https://doi.org/10.4155/cmt.12.18

Bernauer, T. (2013). Climate change politics. Annual Review of Political Sciences, 16(1), 421-448. https://doi.org/10.1146/annurev-polisci-062011-154926

Chao, Q., & Feng, A. (2018). Scientific basis of climate change and its response. Global Energy Interconnection, 1(4), 420-427. https://doi.org/10.14171/j.2096-5117.gei.2018.04.002

Khalil, S. (2020, September 2). Australia in first recession for nearly 30 years.  BBC News. https://www.bbc.com/news/business-53994318

Long, C. (2019, August 30). Australia's carbon emissions continue to rise despite Government assurances about climate change policy. ABC News. https://www.abc.net.au/news/2019-08-30/emissions-drop-but-year-long-trend-on-the-rise/11464816

Mgbemene, C. A., Nnaji, C. C., & Nwozor, C. (2016). Industrialization and its backlash: Focus on climate change and its consequences. Journal of Environmental Science and Technology, 9(4), 301-316. DOI: 10.3923/jest.2016.301.316

Morton, A. (2020, June 7). Renewable energy stimulus can create three times as many Australian jobs as fossil fuels. The Guardian. https://www.theguardian.com/australia-news/2020/jun/07/renewable-energy-stimulus-three-times-as-many-australia-jobs-fossil-fuels-coronavirus-economic-recovery#:~:text=1 year old-,Renewable energy stimulus can create three times,Australian jobs as fossil fuels&text=That suggests that if 10,it could create 160,000 jobs.

Ripple, W. J., Wolf, C., Newsome, T. M., Barnard, P., & Moomaw, W. R. (2020). World scientists’ warning of a climate emergency. BioScience, 70(1), 8-12. https://doi.org/10.1093/biosci/biz088

Roy Morgan. (2020). Australia & COVID-19 the economic story so far - including a focus on Victoria's second wave. http://www.roymorgan.com/findings/8526-australia-during-covid-19-economic-story-so-far-september-2020-202009220503

World Bank. (2009, October). World Development Report 2010: Development and Climate Change. World Bank Publications. https://www.google.com.au/books/edition/World_Development_Report_2010/MGOJs900Q-MC?hl=en&gbpv=0

United Nations. (2021). Climate change. Global Issues. https://www.un.org/en/global-issues/climate-change

Worthington, B. (2020, October 06). Federal Budget 2020 reveals Australia headed to record debt of almost $1 trillion. ABC News. https://www.abc.net.au/news/2020-10-06/budget-2020-tax-cuts-deficit-coronavirus/12731914

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