What if Australia had Rejected Net Zero? By David Leyonhjelm
"Some people believe the Earth is warming because of the carbon dioxide generated by human activity. To mitigate this warming, they say, we must cease using fossil fuels. That means using the wind and sun to generate electricity, buying electric cars, replacing gas appliances with electrical appliances, and generally consuming less.
Nuclear generation of electricity is also part of the process internationally, although not Australia. Nonetheless, both sides of politics have signed on to the Paris Agreement's target of net zero emissions by 2050.
The consequences of this are now apparent – expensive electricity, the hollowing out of manufacturing, budget deficits aggravated by subsidies, static productivity, and the risk of blackouts whenever the wind and sun fail to cooperate.
But what if, instead of signing on to the Paris Agreement in 2015, Australia had simply walked away? Or, perhaps more pragmatically, what if it had done the same as China, which merely committed to reach peak carbon dioxide emissions by 2030 and carbon neutrality by 2060?
Rather than phasing out coal-fired power stations, as Australia and some other countries are doing, China is building them at high speed. In 2024, the country had the highest level of construction in the past 10 years, commencing 94.5 gigawatts (GW) of new coal-power capacity and resuming 3.3GW of suspended projects. Total planned capacity is 216GW, according to Global Energy Monitor.
A number of other countries never signed up to the Paris Agreement and are building coal-fired power stations. India and Russia are two of the biggest, but others include Kazakhstan, Laos, Mongolia, Pakistan, Philippines, Vietnam and Zimbabwe. In total, 148GW of coal-fired generating capacity is being built or planned.
As is well known, President Trump has also withdrawn America from the Agreement. That leaves the countries still pursuing net zero representing less than 40% of global emissions. Even if they all reach their targets, and there is zero possibility of that, it is even more pointless.
Of course, Australia should withdraw as well. It is never too late to turn away from a bad policy. It should cancel all renewable energy subsidies and allow the energy market to operate freely, without discriminating between coal, gas, nuclear, wind or solar power. It would boost productivity, lower the cost of energy, and get the economy back on a growth path.
But what if we had never signed up to net zero in the first place? In what ways would the country be different?
For a start, coal-fired power stations would not have been closed. Those that are cost-competitive would have been upgraded and properly maintained to ensure they remained efficient and reliable. Given Australia's massive reserves of coal, new stations may have been built to cater for growing demand for energy.
Australia would also have a bountiful supply of gas with no restrictions on exploration or extraction. Even if disputes over access to land for fracking had continued, enough gas would have available several years ago to ensure Australia was the world's largest exporter.
We cannot say whether gas would have been cheap enough to compete with coal for power generation, but there would certainly have been no incentive to replace gas heating and cooking with electricity.
The massively expensive white elephant, Snowy 2.0, would never have been countenanced.
With no subsidies, electric cars would be more expensive. Assuming they eventually replace internal combustion vehicles, the experience of other countries as they deal with the issues of charging and range would be very informative.
With low energy prices, industries with significant electricity consumption would flourish. That includes not only steel, cement, plastic and fertiliser but also cryptocurrency mining and AI, both new high technology sectors.
The environment would be substantially better without the mass of wind turbines, solar farms and transmission lines. The clearing of pristine vegetation to erect wind and transmission towers has to be one of the worst examples of the hypocrisy of the renewable industry.
The budget would be in a much healthier state, not only due to a more robust economy with no electricity subsidies but also because of the additional excise revenue from coal and gas exports. The national debt would be lower and our ability to pay for a larger and more lethal military, to address potential threats, would be enhanced.
The World Economic Forum report says the transition to net zero will cost about $3 trillion a year. To hit net zero, it estimates that figure will need to rise to $13.5 trillion annually by 2030 and exceed $15 trillion every year from 2031 to 2050.
Australia should never have joined that treadmill. And it should certainly get off now."
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