Mapping Australia’s Net Zero investment potential

Report from IGCC and Energetics

Author Sean Trainor, Olivia Kember, Sally Cook

Date October 2020

Energetics provided analysis and insights for a report released by the Investor Group on Climate Change (IGCC), Mapping Australia’s Net Zero investment potential.

Receiving extensive media coverage, the economic modelling showed that $63 billion in new investment opportunities could be created over the next five years with the strengthening of federal climate targets and policies in keeping with the achievement of net zero emissions by the middle of the century. The analysis also found that under this scenario private investment would accelerate out to 2050, with hundreds of billions of dollars in opportunities created across renewable energy, green hydrogen, manufacturing, electrified transport and carbon sequestration.

Insights[1] include:

  • Under an orderly transition there would be significant new investment opportunities created in manufacturing ($15 billion) and transport ($6 billion) over the next five years. A major new investment asset class in carbon sequestration would also emerge ($33 billion) as companies and governments seek to meet tighter emissions goals
  • Under an orderly transition, green hydrogen starts slowly as an investment opportunity ($3 billion to 2025) reflecting its early stage of development. But from the start of the next decade commercial-scale opportunities emerge, leading to green hydrogen becoming the second largest investment opportunity by 2050 ($350 billion)
  • Renewables and other clean power generation would become the largest investment opportunity ($385 billion) from 2020 to 2050 under an orderly transition. Other significant opportunities are also created in transport infrastructure ($104 billion), carbon sequestration ($102 billion) and electricity transmission and distribution ($98 billion)
  • Equities ($525 billion) and private debt finance ($322 billion) are the biggest investment opportunities by asset class to 2050 under an orderly transition, with government ($115 billion) and corporate bonds ($101 billion) following.

It is also worth noting that the analysis did not include investments in assets geared towards export. Estimates are therefore on the conservative side when compared to the opportunities that could arise for products like such as green hydrogen and green steel.

IGCC CEO, Emma Herd said, “If we get this right, Australia could reap the benefits of $63 billion in fresh private investment over the next five years, and over $1 trillion by mid-century, in domestic opportunities alone. If we continue as we are, we’ll leave billions of dollars in investment opportunities behind."

“The billions of dollars in investment opportunities associated with an orderly transition to net zero emissions would support the jobs, livelihoods and wealth of millions of Australians for decades to come."

“Many of these prospects are in regional Australia with multi-billion-dollar opportunities in carbon farming, renewable energy, transport infrastructure and advanced manufacturing."

“Governments will be more fiscally challenged in coming years after deploying immediate COVID-19 relief. Mobilising private capital is therefore critical to economic recovery and unlocking net zero investment opportunities.”

 

Footnotes

[1] Text taken from Media release: “Adopting Paris-aligned climate plan would create billions of dollars in fresh Australian investment opportunities”, Investor Group on Climate Change, 12.10.2020.