Guest essay by Eric Worrall
Just in case you thought the politician in charge of Australia’s financial stability has a clue, the following interview with the Guardian should settle any doubts.
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
Political editor @murpharoo
Sat 28 Aug 2021 06.00 AEST
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 Australia’s 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. “He’s 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.
“I’ve 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.”
Read more: https://www.theguardian.com/australia-news/2021/aug/28/josh-frydenberg-admits-climate-change-a-major-preoccupation-in-global-markets
Aussie treasurer Josh Frydenberg understands that Australia’s intransigence on announcing a net zero target is causing problems with access to capital markets, and I fully accept this is the case. But you would expect Josh to understand purely economics related issues – he does have an economics and law degree.
What he clearly in my opinion does not understand, is that net zero by 2050 is impossible. Even a nation with as much sunlight as Australia cannot afford to assemble the materials required to hit net zero, let alone build the required infrastructure, in any reasonable timeframe.
How can someone who understands numbers fail to understand the technological limits?
The answer to this paradox as far as I can tell is blind faith in technological innovation, and a big dose of groupthink. In my opinion they fully expect a magical energy innovation to appear any day now, to save the situation.
I once had a one on one conversation with a senior federal Australian politician, asked her about how her colleagues could fail to understand the obstacles to going 100% renewable. She was in despair. She said “They’re not listening to me. They tell me I’m wrong, but they do not understand the issues.”.
Even the recently announced Physical Retailer Reliability Obligation – nobody in their right mind would think that was any more than a temporary measure, and I’m sure this is how senior Australian politicians see it – a short term stopgap to maintain stability, until the magic appears.
I fully expect Prime Minister Scott Morrison to make a net zero commitment in November in Glasgow with the full support of his cabinet, come home the climate hero, and announce a snap election early 2022. Not because he and his fellow politicians are idiots, or bad people. But because from their limited understanding, they have faith it will all work out – they believe the required magical innovations will appear in time to save the day, and life will go on as normal.
“An unlimited market, Mr. Rearden?” the purchasing manager asked dryly.
Rearden glanced up at him. “I guess I’m not smart enough to make the sort of deals needed nowadays,” he said, in answer to the unspoken thoughts that hung across his desk.
The purchasing manager shook his head. “No, Mr. Rearden, it’s one or the other. The same kind of brain can’t do both. Either you’re good at running the mills or you’re good at running to Washington.”
“Maybe I ought to learn their method.”
“You couldn’t learn it and it wouldn’t do you any good. You wouldn’t win in any of those deals. Don’t you understand? You’re the one who’s got something to be looted.”
Source: Atlas Shrugged
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