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(Bloomberg) — Australia’s carbon emissions aren’t dropping fast enough to reach its 2030 climate target, Oxford Economics said, as the rollout of renewable energy takes longer than initially anticipated.
Australia is set to miss the goal by a couple of years, Oxford said Monday in an analysis contained in its bi-annual economic outlook. Australia is aiming to reach emissions levels of 43% below 2005 levels by 2030.
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“The roll out of renewable energy is taking longer than expected,” said Kristian Kolding, head of consulting for Oxford Economics Australia. “But more worrying is the fact that we don’t currently see a path to meaningfully decarbonising hard to abate industrial sectors and electrifying the vehicle fleet will take decades.”
The world experienced its hottest year on record in 2023, reinforcing the urgency for countries to meet their emissions targets and slow climate change. Australia, one of the world’s highest emitters per-capita, has legislated its commitment to reach net zero emissions by 2050.
“Credible paths to net zero do exist,” Kolding said. “Technological advancements and policy initiatives are steering the forecast in that direction, but the cost of transition will be high and we’re yet to see who is willing to pay.”
On the economic front, Oxford predicted Australia will avoid a technical recession aided by strong population growth. Both fiscal and monetary policy are at or close to the peak drag they will impose on the economy in this cycle, said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
He doesn’t expect the Reserve Bank to begin lowering interest rates until the final three months of the year because services inflation remains sticky. “The next part of the disinflation cycle will be tougher. The ‘easy wins’ from supply chain improvements have already been realised.”
The RBA is expected to leave rates unchanged at a 12-year high of 4.35% when it announces its decision on Tuesday.
—With assistance from Swati Pandey.
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