Research: Carbon crisis: Systemic risk of carbon emission liabilities

The switch to clean energy investment can reduce Australia's economic risks

Australia’s industry and exports are emissions-intensive - we are on track to be the source of 16% of the global carbon budget by 2050. This intensity is a growing economic liability, as the international community strengthens its efforts to limit climate change. Changing the Australian investment focus towards cleaner energy can reduce our chances of systemic economic decline including high unemployment, high debt, and deep recession.

We can lower the risk of a systemic crisis

Carbon Crisis shows that Australia has a greater than 50% chance of a systemic crisis as a result of global action to limit climate change. While global economic risks cannot be controlled by domestic actions and policies - carbon-related risks, such as building up the capacity of low-emission industries focused on exports, can be. We explore how considered and effective forward planning can lower the risk of a systemic crisis.

We can lower the risk of a systemic crisis

Australia's strategic risk factors over the next 25 years that could precipitate a major crisis:

Carbon emission liabilities:

On a per person basis, Australia is among the world’s highest domestic greenhouse gas emitters. Greenhouse gas emissions attributed to Australia’s exports are now 160% of domestic emissions, and projected to increase to between 270 and 330% in the next 20 years. Greenhouse gas emissions must be constrained to avoid runaway climate change. Some penalty will materialise which realises this liability, causing heavy emitters to shift away from emissions-intensive practises to low and zero emission alternatives.

General economic risk factors:

Australia faces a moderate risk of a systemic crisis as a result of global economic factors, such as geopolitical risk, low global growth and the reversal of post GFC monetary policy. With the occurrence of any of these events, a well-managed response will most likely to avert a crisis. Even with a well-managed response, the occurrence of any event will reduce the capacity of the economy to manage subsequent negative shocks. Australia is not well-placed to manage long-lived global economic woes.

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Carbon crisis: Systemic risk of carbon emission liabilities

Australia’s industry and exports are emissions-intensive. This intensity is a growing economic liability.

The switch to clean energy investment can reduce Australia's economic risks

We can lower the risk of a systemic crisis

We can lower the risk of a systemic crisis

Download the report

Industry leaders support this research

Australia's strategic risk factors over the next 25 years that could precipitate a major crisis:

Carbon emission liabilities:

General economic risk factors:

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