Climate policy uncertainty and lack of ambition holding back business – national survey

Three weeks out from the critical UN Climate Summit, COP26, a leading business sentiment survey launched today reveals growing concern at home about Australia’s 2030 targets, decarbonisation policies and the looming risk of carbon border tariffs.

Over 400 respondents had their say in the Carbon Market Institute’s annual Australian Climate Policy Survey, now in its 8^th year, including C-suite executives and senior managers from Australia’s biggest emitting companies.

The key findings include:

• 88% of respondents believe Australia should set an economy-wide zero net emissions target by 2050 (in 2020: 88%, 2019: 83%, 2018: 82%)
• 84% believe Australia’s 2030 target should be increased (in 2020: 78%)
• 81% believe carbon tariffs are a growing risk to Australia’s emissions-intensive economy and exports (in 2020: 79%, 2019: 70%).
• In a new question, “Policy or regulatory uncertainty” is the primary barrier to decarbonisation or drawdown (sequestration) investment identified in the survey by a significant margin. This was followed by  “Lack of opportunities with appropriate risk return outcomes”, “Lack of internal resources to identify opportunities” and “Lack of tools to accurately measure decarbonisation/drawdown outcomes”.

“This target is manifestly behind our main trading partners” – survey respondent 

“Our survey shows that the vast majority of respondents support net zero emissions by 2050 and stronger 2030 targets”,  said John Connor, CEO, Carbon Market Institute.

“The major investment barrier of policy uncertainty could be addressed by reducing mandated Safeguard Mechanism baselines – a currently static pollution limit for every business that emits more than 100,000 tonnes annually. Over three quarters of respondents (79%) support the reduction of Safeguard baselines in line with the trajectory of Australia’s 2030 emissions reduction target.

“With most of Australia’s key trading partners already committed to net zero, and to 2030 cuts twice to three times as deep as Australia’s 26-28%, concern about carbon border tariff adjustments is growing year-on-year. Australian businesses are increasingly concerned we will be penalised internationally if we don’t catch up.”

Other key findings include:

• 93% believe global capital and investment is prioritising or will prioritise countries and companies with decarbonisation policies and actions
• 91% believe the longer Australia delays decarbonisation, the more abrupt, forceful and disruptive the policy response will need to be, especially for carbon-intensive industries (in 2020: 93%); and the same percentage of applicable respondents are already factoring in a carbon price of > $20 per tonne.
• 83% state that in the past 12 months their organisation has faced increased engagement from investors/lenders asking how they are addressing emissions reduction
• 84% believe organisations with emission reduction targets should be expected to demonstrate how their targets and trajectories align with Paris Agreement 1.5ºC goals.
• 74% believe Australia’s national (implicit) price on carbon will be >$30 per tonne by 2030 (in 2020: 55%, 2019: 58%)
• 78% agree that voluntary offsetting of emissions by organisations should only be undertaken alongside direct decarbonisation activities that avoid and reduce emissions

John Connor said, “The findings confirm the overwhelming view in industry that capital flows to decarbonising economies and businesses, that climate risk is a key consideration for boards and investors, and that further delays in national emissions reduction policy will inevitably increase disruption to industry.

“A strong majority also responded that companies with emissions reduction commitments should report against Paris goals.

“More than half of respondents are already factoring a carbon price into their investments and operations, and three-quarters believe that by 2030 the (implicit) price will exceed $30/tonne. Responses on both these measures surged by 16% since the 2020 survey.

“Our survey reveals that with the right climate policies in place Australia can rapidly increase its climate ambition and impact.

“Business is already leading the way, and the policy architecture for boosting ambition and opportunities is there waiting for the federal government to step up.

“It is crystal clear that business wants the policy uncertainty and climate culture wars to end, and is ready to embrace the global opportunities of the inevitable transition to net zero emissions.”

“Already seeing this in action” – survey respondent
“The world is moving on without us and our economy will end up being left behind” – survey respondent 

Notes to editors:

2021 Australian Climate Policy Survey 

CMI’s business sentiment survey has been running since 2014. This year has seen a surge in responses, from 234 respondents in 2020 to 409 in 2021, with 73% holding c-suite and senior management roles. The survey ran for three weeks in August and September 2021. The survey is of individuals in business not as representatives of their company. 28% of respondents work for companies with National Greenhouse Gas Emission Reporting obligations.

Over the last 12 months, the CMI has also experienced a surge in its membership (up 36% this financial year), as Australian corporate interest and activity in carbon markets and climate action increases.

The Carbon Market Institute is the independent industry association for business leading the transition to net zero emissions. Its members include primary producers, carbon project developers, Indigenous corporations, legal and advisory services, insurers, banks and emission intensive industries developing decarbonisation and offset strategies.