Recent analysis prepared by Brian Fisher, the former head of the Australian Bureau of Agriculture and Resource Economics, estimates that Australia’s commitment to meeting the Paris Climate Agreement emission reduction obligations will impose $70 billion in cumulative economic losses by 2030 and a 2 per cent reduction to real wage growth. Under the Paris Climate Agreement Australia must reduce its emissions by 26-28 per cent on 2005 levels by 2030.
The research findings, published by The Australian (21 February, 2019), also estimated that the emission reduction obligations would result in 78,000 thousand fewer jobs, and reduce annual full-time wages by around $4,000.
These findings support research by the Institute of Public Affairs published in August 2018. That paper, Why Australia Must Withdraw from the Paris Climate Agreement authored by Director of Economics, Daniel Wild, estimated that the Paris Climate Agreement would result in the cost of generating electricity in Australia being $52 billion higher than if Australia was not in the Agreement. The paper analysed, but did not quantify, the flow-on economic costs of higher electricity prices including lower business investment, fewer job opportunities, and lower wages.
The difference between the estimates prepared by Brian Fisher and IPA research is that Mr Fisher modelled all of the flow-on economic costs of the Paris Agreement. The IPA’s research highlighted the specific impacts on the electricity generation sector.
Mr Fisher’s research provides further evidence for why Australia must withdraw from the Paris Climate Agreement. As IPA research has previously noted, none of the major emitting nations are constrained by the Agreement. The world’s largest emitter, China, can increase its emissions unabated until 2030. The world’s second largest emitter, the United States, has announced it will be withdrawing from the Agreement. The world’s third largest emitter, India, is unconstrained by the Agreement because its emissions reduction obligations are lower than the extent to which emissions are forecast to be reduced under the status quo. And not a single nation in the European Union, which is collectively the fourth largest emitter, is on track to meet its emission reduction obligations.
Australia’s continued observance of the emission reduction obligations under the Agreement is putting Australia at a significant economic disadvantage with the rest of the world, partly reflected by the fact that Australia now has the fourth highest electricity prices in the world.