SYDNEY, (Reuters) – Australia must brace for higher borrowing costs if the country fails to match other developed nations in efforts to cut carbon emissions to net zero by 2050, Treasurer Josh Frydenberg will say on Friday.
“Australia has a lot at stake. We cannot run the risk that markets falsely assume we are not transitioning in line with the rest of the world,” Frydenberg will say in a speech to the Australian Industry Group, excerpts of which were reviewed by Reuters.
Australia, the highest per capita carbon emitter among the world’s richest nations, has resisted international pressure to commit to a net zero carbon target for 2050.
Prime Minister Scott Morrison is expected to settle on the government’s climate policy ahead of the COP26 climate summit in Glasgow in November, but faces opposition to a net zero target from some members of his ruling conservative coalition.
Current policy is to cut emissions by 26% to 28% by 2030 from 2005 levels, along with a commitment to spend A$18 billion ($13 billion) over 10 years on a range of technology to help cut emissions, such as hydrogen, energy storage and carbon capture and storage.
Frydenberg will make the point that Australia relies heavily on foreign capital.
As global financial markets prepare for lower emissions, any limited access to foreign funds will increase borrowing costs, affecting interest rates on home and business loans and the financial viability of big infrastructure projects, he will say.
Morrison, who is currently in the United States for a Quad meeting, with climate policy on the agenda, said on Thursday that no formal decision has been made on a net-zero target.
“We will be considering further when I return to Australia,” he said in Washington.
