NET ZERO & AUSTRALIAN SOVEREIGNTY – ED CAVANOUGH

Between the catastrophists and the sceptics, modern day life is now dominated by national attempts to move from emissions generating fossil fuels to renewables or nuclear power. But as power bills rise, with the need to build new infrastructure with renewables, the question arises – with net zero by 2050 – can we afford it? On Wednesday 13 August 2025, The Sydney Institute heard two differing views on the prospects of Net Zero. Ed Cavanough – Chief Executive Officer with the McKell Institute – joined Aidan Morrison – Director of Energy Research at the Centre for Independent Studies to discuss the issues.

NET ZERO & AUSTRALIAN SOVEREIGNTY 

ED CAVANOUGH

The issue of Net Zero is characterised by two clear paths. One is an optimistic path that recognises that Australia has a more complex economy and that our minerals sector is adding value here at home. Also, our energy sovereignty is enhanced  and we lead, don’t lag, on one of the defining global issues of this century where environment and climate is more stable and predictable.

The other is a path towards a much smaller Australia. It is a path is in which Australia is isolated on climate and unbothered by what occurs beyond our shores. It is an Australia that is stuck in endless culture wars on energy and which wants to spend the next 25 years dismantling policy architecture we have already legislated and committed to, rather than building a better future.

Tonight, I want to detail these choices, and allow you to make up your mind about which of these paths is preferable. But first, I wanted to lay some basic foundations.

What is net zero?

If you consume your news primarily from Sky and the Australian, you’ll likely have been digesting what I’d describe as “Net Zero Alarmism”. A view that says “net zero” means basically a return to the stone ages –  no industry, means no flying, no mining. This is of course an absolutist caricature of net zero. Net zero is undoubtedly ambitious — but you can’t forget the “net” in the title.

Australia’s current policy is that by 2050, we will aim for net zero carbon emissions, which we will achieve by scaling clean energy and sequestering remaining emissions from hard to abate sectors. A net zero Australia in 2050 will still have emissions from fossil fuels. But this would ideally be occurring in the hardest to abate sector — like aviation and certain industrial activities — not in the easy to abate tasks, like turning on a light bulb, charging your phone, and driving a car around a city. Emissions would be much lower — as close to zero as possible — with offsets and sequestration ideally capturing as much of the remaining emissions from the atmosphere. There would be of course externalities on energy generation under net zero, as there are today.

But the objective is to mitigate the current externality that we’re most concerned with — high carbon emissions — that are fuelling anthropogenic climate change, which I want to briefly touch on.

Climate reality

Note I don’t place Aidan in this category, but there is clearly a persistent denialism about human induced climate change that informs this debate.  It is important to state clearly— climate change isn’t an issue of belief or ideology, but one informed by evidence and ever-increasing consensus. The planet won’t be destroyed by climate change by 2050. But the historically-unique pace of a warming we’re seeing at the moment, challenges the determinants of human flourishing and economic vitality, upon which our civilisation has grown.

Now I’m a pragmatist on this, not an alarmist. This disruption is already costing livelihoods, and when it comes to Australia, these livelihoods are typically in the regions. Look at my home state of South Australia, where as we speak, a quarter of the state’s coastline is inundated with an algal bloom that, on all preliminary scientific assessments, is likely fuelled in its intensity by warmer ocean temperatures, already costing jobs.

We’ve seen major impacts elsewhere. The 2022 floods in this state of NSW, which I reported on as a journalist, repeatedly inundated communities with historically atypical intensity. If you live in Surry Hills, it probably didn’t bother you that much.  If you live in Gunnedah, where in 2022 the Namoi was flooded nine times, or every six weeks, I can tell you the prospect of an even more disruptive climate is a real-life threat, not a political game. It’s already driving up insurance costs and undermining investor certainty. Floods, algal blooms, bush fires, temperature changes — they’ve happened throughout all history. But the increasing intensity and cost of these events is worth hedging against.

Now, there’s many that say they don’t deny these issues — just that Australia is too small to do anything about it, so we shouldn’t bother. In fundamentally rejecting this notion, it shrinks Australia, and basically says on issues of international importance, we shouldn’t do anything, even if these issues are affecting us at home. If we applied such defeatist isolationism to any other international issue, many would rightly be outraged. But for climate sceptics, Australian isolationism is a core objective. As the 14th biggest economy in the world, to say our transition is meaningless is defeatist and diminutive in the extreme.

Now, it is your right to not care about climate change. But, under the weight of evidence, the majority opinion of both electorates and governments here in Australia and around the world disagree with you. There is a near global political consensus — in favour of action, informed by science.

Australia would be foolish to run against this consensus — even if we didn’t have opportunities in net zero. But fortunately, we do have much to gain from this transition.

Opportunities for Australia

The first benefit is that Net Zero will enhance Australia’s energy sovereignty. The alternative to Net Zero is a future Australian economy dependent on coal. Coal has been essential to Australia’s development. There are communities that depend on it. It is a major revenue driver. But fundamentally, the domestic price of Australian coal is subject to global coal price, which have about doubled in the past 20 years. Our domestic coal market is inextricably tethered to that global market. It is fantastical to argue that by doubling down on coal generation at home, the input price would just magically be lowered. In fact, the only way that this vision for a low cost, coal powered future would be realised is if Australia basically unhitches itself from the global coal market — if it simply diverted its exports to provide surplus, cheap energy at home. Not only does this contradict the mainstream position on trade, but it also undermines the investment logic of Australian coal, which is largely export dependent. 89 per cent of Australian black coal, for example, was exported in 2022/23.

So, as long as we’re tethered to the global market prices of energy inputs like coal, but also LNG, and oil, our domestic energy prices will be shaped by global forces.  And that basically means that anytime a foreign dictator like Putin wants to engage in a conflict, or a trade war breaks out between China and the US, or the oil cartel run by the Saudis, and Venezuela, decide to pump up prices, we carry the price shocks here at home — in our coal generation, in our LNG supply, and at the petrol bowser.

Now, none of these sources of energy are going away tomorrow. But there is a strategic logic that is lessening our dependence on these inputs, even placing the issue of climate to one side. And it is inaccurate to say that doubling on these energy source will be a silver bullet for prices — it won’t.

So, diversifying our energy, and making more cheaper wind, solar and firmed energy at home, will enhance Australia’s energy security in the long term, lessen our exposure to global energy market volatility, and that is a good thing in a volatile world. Australia has a unique set of comparative advantages that allow it to seize upon the broader global shift towards net zero

On green industry 

There is an emerging global hunger for greener industrial outputs, which Australia, with its extraordinary abundance of clean energy, is in the best position to develop and satiate. This won’t be easy. But that doesn’t mean there’s no future for it, or we should ignore this global market in the long run. And this is an opportunity that can see new value-adding industrial activity developed in Australia, supplying global markets that are embracing their own climate obligations, and seeking to diversify away from the Chinese export market, in particular. And in terms of the critical minerals that will supply the world’s transition towards electrified cities, transportation systems, and economies more broadly, Australia is in the box seat to provide supply.

We are a rare earths super power — and the demand for these minerals is skyrocketing. So, the global pursuit of net zero, of which we can help shape, delivers major opportunities for the Australian minerals sector. Australia can leverage leadership on Net Zero to sustain meaningful global influence on this issue, rather than running away from it. Like it or not, the world is moving on the energy transition. And if we pack our bags and go home now, Australia will be relegated to pariah status among much of the world, instead of shaping and influencing one o the major policy shifts of our time.

Conservatives abandon the field

There are practical, strategic, and economic reasons to embrace and to shape net zero. But to arrive at that conclusion, one must first consider the alternative. And on that point, there is no credible alternative being advanced whatsoever. Opposition to net zero has become a litmus test for those in conservative circles.  And this is a great shame, because its centrality to conservative politics now trumps so many positions that conservatives once held.

Increasingly, this is a debate dominated by hyperbole, and alarmism, each amplified in the narrowing echo chamber of Australia’s right wing media ecosystem. Once, it was progressives who were criticised — often rightly — for favouring protest over outcomes. On the issue of energy and climate, this is now the conservative way. And those arguing net zero are willing to bend and twist their principles to demonstrate their anti-net zero credentials.

Let me give a few examples. Firstly, the issue of China. Conservatives are at pains to tie progressive governments to Beijing. But on energy — all I hear is that we should be doing what China is doing. We get told that, because China is a bad climate actor, we have permission to be one too. That is because China is doubling down on coal, and so should Australia. Despite the increasing chest beating on the right about just about everything China does, it would appear on the issue of climate, Beijing’s policies are a source of inspiration.

Then there is the issue of personal and national responsibility. At the core of the Menzian political philosophy is the idea of responsibility — both of the individual, and of the nation. On climate, today’s conservatives want Australia to shirk responsibility. They reject the notion that Australia should aspire to lead and shape a global issue.

But they even disrespect individual choices in favour of green energy, seen by household demand for solar and batteries. In fact, they even ridicule this choice, by inventing vapid culture wars on issues like electric cars. This is a politics that doesn’t embrace responsibility, but runs away from it, and even mocks it.

There is the disrespect for the popular mandate as well. All polling overwhelmingly shows Australians support climate action, and net zero. So too has just about every election result, including the recent federal election. In South Australia, the Labor Party’s ascendancy is aided, not hindered, by its success in clean energy. Yet, this electoral reality is being denied by an entire side of Australian politics, showing a fundamental disrespect for the public will.

Then there are voices that one day will say they are fundamentally opposed to government involvement in energy markets, but on the other hand, advocate for a nuclear policy which would have represented the largest nationalisation project in Australian history. There are those that look at any subsidy programs today as evidence that clean energy doesn’t stake up, while ignoring the fact that much of our current coal generation was guided by the heavy hand of the state, during an era of state run energy networks.

So, the opposition position against net zero is really murky. It is just anti net-zero. It is informed by cultural politics, littered with philosophical contradictions, and validated by straw men arguments, and is deeply unambitious about Australia’s capacity to do big and challenging things. And the abrogation of this debate by the mainstream right is a bad thing, as it means there is less good faith debate around how we deliver, on the ground a policy preference overwhelmingly backed by Australian voters.

***

My young boy just turned 4 months the other day. Born in April 2025, he will probably be finishing university by the date that we’re talking about tonight. He will be 24 years old. One of the joys of having a kid is that it instantly expands your own time horizon to the end of their life; in My kids case, well into the next century. The point being — 2050 is not far away.

I don’t think unchecked climate change will make earth uninhabitable for him by then. I don’t think the world will end by 2050, if we don’t implement these policies.

But I do think that an Australia that turns it back on both the opportunities and obligations of the global decarbonisation mission will be a much more challenging placing to live, than one that embraces, for all its difficulties, this epic and ambitious task.