Josh Frydenberg admits climate change a major preoccupation in global markets
Treasurer says there are lots of internal conversations on whether Australia could make a firm net zero commitment at Cop26 Josh Frydenberg has acknowledged that managing carbon risk is now a major preoccupation in global capital markets as the Morrison government mulls what commitments it will take to the Cop26 in Glasgow later this year. While Nationals have incorrectly characterised managing carbon risk as virtue signalling on multiple occasions, the treasurer told Guardian Australias politics podcast that climate change, and the assessment of carbon risk, was now influencing global capital markets in a significant way. He acknowledged it was a factor behind financial stability. We are going to see more and more climate-related disclosure and regulatory agencies are across that, both here and overseas, Frydenberg said. The treasurer acknowledged with the world moving to constrain carbon emissions in line with the Paris agreement goals, there were now material risks to Australian businesses. He said he had spoken recently with Mark Carney, the former governor of the Bank of England, about international developments. Hes been very engaged in this and it was a very interesting discussion. I talk to the central bank governor, Phil Lowe, and he says this is a major topic at central bank governors meetings so yes [climate change] is influencing in a significant way global capital, he said. Frydenberg said he had been clear on budget night back in May that he wanted Australia to reach net zero emissions by 2050, or sooner. I take this issue very seriously, he said. Ive been very consistent that climate change is real and man is contributing to it and we need to take relevant actions to reduce our emissions. Email: sign up for our daily morning and afternoon email newsletters App: download our free app and never miss the biggest stories Social: follow us on YouTube , TikTok , Instagram , Facebook or Twitter Podcast: listen to our daily episodes on Apple Podcasts , Spotify or search "Full Story" in your favourite app Asked whether the Morrison government intended to make a firm commitment to reaching net zero at the Cop26 in Glasgow, rather than articulating non-specific aspirations, Frydenberg said the deliberations were ongoing. We are having lots of internal conversations I cant say any more than that, the treasurer said. We are having lots of internal conversations about this issue and there are lots of angles to it. Global capital is one, another is what this means for our export industries and jobs, what does it mean for the electricity market and affordability, what does it mean for our general manufacturing approach. Some Nationals insist they will oppose any attempt by Scott Morrison to make a concrete commitment to net zero, but Frydenberg said a lot of progress is being made. The way you move the dial is to try to take people with you. If you storm the barricades, you will never win this one. Youve got to persuade, youve got to promote an evidence-based approach. Progress is being made behind closed doors. Australia is under significant pressure from key allies, particularly the US and the UK, to increase national ambition. A senior US climate official has warned Australias targets are not sufficient and the country should be considering a 50% cut in greenhouse gas emissions by 2030. Dr Jonathan Pershing, the deputy to US presidential climate envoy John Kerry, said recently the major report by the Intergovernmental Panel on Climate Change had set the stage for the Cop26 summit in Glasgow in November and would place a lot more pressure on the worlds biggest 20 emitting countries to act. Earlier this week, the former European Union trade commissioner, Cecilia Malmstrom, warned Australia was becoming more and more isolated on climate action at a time when floods, fires, droughts, and the latest assessment by the IPCC shows global heating is created by humanity. Scott Morrison has hinted the government may update its 2030 target ahead of Cop26 in Glasgow in November, but Frydenberg said: Im very comfortable with the target weve got. The Abbott-era 2030 target is widely criticised as being insufficient to meet the challenge of global heating and the Morrison government has also been criticised for prioritising a gas-led recovery from the coronavirus pandemic. Frydenberg acknowledged during the podcast that a lot of listeners wont like our focus on gas, but it is a transitional fuel. He said gas peaking plants were required alongside batteries and pumped hydro to firm renewables during the transition to low emissions. Frydenberg was previously the minister for the environment and energy in the Turnbull era, when he presided over efforts to legislate the national energy guarantee a mechanism that would have reduced emissions in the electricity grid. That effort failed when Malcolm Turnbull was toppled. Frydenberg said he tried to do as well as I could during that period, and I do think we made some gains. He said resolving a climate and energy policy had been difficult for successive governments because the issue plays to the extremes. He said climate change had become a cultural battle as well as an issue of science and economics, but I do think that is changing, maybe not as fast as some people would like, but maybe too fast for others.