Australia could have the economic cold shoulder of some of the world’s wealthiest nations unless it does more to cut emissions, observers say.
Climate diplomacy experts have seized on a speech by Germany’s new chancellor, Olaf Scholz, who called on the industrialized nations of the Group of Seven (G7) to become founding members of a “climate club”.
He promised Germany would use its G7 presidency to push for new standards by member countries, warning there would be no more waiting for laggards.
“We will use our presidency of the G7 to make this group the nucleus of an international climate club,” he said Wednesday at an event organized by the World Economic Forum.
“What we want to achieve is a paradigm shift in international climate policy: we will no longer wait for the slowest and least ambitious.
“Instead, we will lead by example and turn climate action from a cost driver into a competitive advantage by agreeing common minimum standards.”
Scholz suggested that the G7 climate club should commit to limiting global warming to 1.5°C and achieving climate neutrality by 2050, and could seek to achieve these goals “by pricing carbon and by preventing carbon leakage”.
Economist Nicki Hutley, an adviser to the Climate Council, said the Chancellor’s comments made it clear what was at stake for countries like Australia if they failed to accelerate their emissions reduction schedules.
“The cost of not doing so is not only due to the prospect of border carbon tariffs, but also a loss of investment capital and the potential for economic gains from being a frontrunner in green industries” , she said.
Dr. Wesley Morgan is an expert in international climate diplomacy and a researcher at the Asia Institute at Griffith University.
He said Scholz’s use of the phrase climate club is a nod to Nobel Prize-winning economist William Nordhaus, who proposed it in 2015 as a way to stop some nations from trying to get a free ride on the back of others’ action.
Nordhaus said collective action is the answer, including punitive mechanisms such as tariffs on products from countries that fail to fare well.
“The Morrison government will be very attentive to this climate club proposal because that is where the rubber will hit the road,” said Dr Morgan.
“This goes beyond diplomatic pressure, for major trading partners and major powers to consider a policy that they will collectively implement – a policy that will impose real economic and diplomatic costs on countries that do not. enough.”
All G7 countries have pledged to halve their emissions by 2030, but Australia has only committed to a 26-28% cut, although it expects to do better than that.
Earlier this year, Germany took over the presidency of the G7 bloc of major Western economic powers, which also includes the United States, France, Italy, Japan, Canada and the United Kingdom.
The AAP has sought comments from the government.