The Business Council of Australia (BCA) is pleased to provide comment on the Climate Change Authority’s (the Authority’s) 2026 Annual Progress Advice Consultation Paper (the consultation paper).
The BCA is ambitious for Australia. We aspire to drive prosperity for all Australians, leveraging our collective expertise and influence to shape a bright and innovative future for businesses, industries and communities. We are committed to working towards an Australia that is globally competitive, productive and fair.
We endorse Australia’s participation in the Paris Agreement and support Australia’s climate legislation enshrining this participation.
Our report, Achieving a net zero economy was supportive of Australia adopting ambitious interim emission reduction targets consistent with the Government’s 2030 target of 43 per cent below 2005 levels, and Australia 2035 – Maximising Our Potential provides an evidence base in relation to the measures required to deliver the Government’s 2035 emission reduction target of 62 to 70 per cent below 2005 levels. Key findings from this report include the following.
- New capital investment to deliver Australia’s emission reductions to 2035 is in the order of $400 to $500 billion (for all sectors of the Australian economy).
- The business case for many low emission technologies needs significant additional funding support before these technologies can be deployed and adopted commercially, notwithstanding the possibility of new technologies emerging and cost reductions in existing technologies over the next ten years.
- The efficiency and effectiveness of Australia’s regulatory approvals system need to improve significantly to enable a rapid acceleration in build rates of electricity and energy and other low emission technology and infrastructure.
- A comprehensive approach to scaling skilled labour capacity through cross industry reskilling, international migration, vocational education and training and university programs, is a critical enabler to the transition.
- If target ambition is not matched with policy ambition, if we do not get the fundamentals right and if we fail to attract the investment needed over the next decade, then Australia risks squandering its green economic opportunity and locking itself into a disorderly and more costly transition to net zero.
Key takeaways
- The ability of our industrial sector to invest capital in the transition to net zero is heavily dependent on maintaining its international competitiveness over the coming decades.
- This is because many of Australia’s incumbent industrial businesses are best placed to be making the large capital investments necessary for a successful transition to net zero, and because many of Australia’s major trading partners / competitors do not have equivalent carbon limits on their industrial sectors.
- If the share of abatement borne by the large industrial sector is inefficiently high, Australia’s international competitiveness will be negatively and unnecessarily impacted as a result.
- The Authority’s advice should have explicit regard for Australia’s international competitiveness, in addition to its legislated guiding principles, when identifying timely and feasible adjustments to policy settings to accelerate emission reductions.
- A partial or incomplete approach to assessing progress, risks a mismatch between resulting sectoral reference pathways and i) sectors’ technical capacity to decarbonise over time and ii) an economy wide, least cost decarbonisation pathway.
- The Safeguard Mechanism’s contribution to Australia’s 2035 target should reflect the level of abatement large industrial facilities are expected to deliver based on the economy wide, least cost modelling that informed the Government’s target setting process.
- A proportional share approach to defining this contribution should only be adopted going forward, if it is consistent with an economy wide, least cost decarbonisation pathway.
- It is critical that the economically efficient and equitable design features of the existing Safeguard Mechanism, such as undifferentiated baseline decline rates and undiluted access to ACCUs and SMCs, are maintained beyond 2030.
- Prescribing or explicitly preferencing levels of onsite/own abatement in the initial years of a multidecadal policy risks raising transition costs and deterring capital investment in industrial decarbonisation over the long term.