Mapping Australia's path to transition

Australia has less than three decades to achieve a net-zero economy – a target our nation committed to last year. The transition presents a massive opportunity for our economy and for driving global innovation, but it is also a formidable challenge. 

The scale of this opportunity is so significant that many businesses have already taken steps along their decarbonisation journey because they see a strategic imperative to move. As a nation, rebasing our energy system stands to deliver an enviable comparative advantage. Our abundance of natural resources, our experience as a commodities exporter, our global connectivity and our stable regulatory environments are all competitive advantages that will help us help the world along this journey.

Of course, the transition to a carbon neutral economy will have its challenges. Achieving net-zero will require investment – an estimated US$9.2 trillion a year in spending on assets globally, according to McKinsey.  It will require extensive coordination across business, industry and government, and significant investment in new technology, infrastructure and processes. It calls on all of us across Australia to consider the roles we can play to ensure our country and planet continue to thrive.

Part of the complexity lies in converting the big picture aspiration into concrete, actionable steps we can all take today and over the next three decades to help Australia reach its goal.

At CommBank we have identified five areas for action on a system-wide basis. These focus areas are: greening the grid, electrifying everything, replacement and refurbishment of the machinery of the economy, shifting our approach to land use, and abating and offsetting emissions. We are supporting our customers across these areas of action as Australia advances towards net zero. 

A greener grid is crucial to a greener future. Federal government data show that nearly a quarter of Australia’s electricity was generated from renewable sources in 2020 – but our sunburnt, windswept country can do better. This is why we are supporting customers at the retail, business and institutional level in their pursuit of renewable power generation - whether putting solar panels on your home, purchasing a battery for your business or developing utility-scale renewable generation infrastructure.

Alongside that effort needs to come a wholesale push to electrify absolutely everything. The investment in low-cost renewables pays dividends only when we use that cheap, green power to drive processes currently reliant on fossil fuels. From the bus that takes you to work, to the forklift at the warehouse, electrifying these everyday tools and processes will rebase the cost of our economy and give us a massive advantage.

To make better-informed decisions, everyone from consumers and businesses to institutions needs the ability to reliably and inexpensively measure their emissions profile. We at CBA are tackling this challenge by partnering with leading Australian institutions and companies to deliver solutions for our clients. This includes our partnership with CoGo providing retail customers with the opportunity to measure their carbon footprint.

Understanding the size of our carbon footprint, as well as what’s driving it, can help us find opportunities to reduce emissions. One area that’s ripe for the taking is the machinery that powers our economy. Replacing outdated equipment with more efficient, automated, digitised machinery and processes presents a meaningful opportunity to make our country both greener and more productive. This can be done at all levels, whether upgrading your clothes dryer or the office elevator.

We also have an opportunity to review our land-use mix and continue to support the agriculture sector with its sustainability goals, particularly around natural capital enhancement and carbon sequestration. This transition is already underway with the backing of consumers, farmers, and business. We’re working closely with our regional and agribusiness customers to understand their needs and transition plans, and support them with sustainable finance products that help achieve those goals.

Once we’ve worked out what can be stopped, what can be substituted, and what can be reduced, we’re left with emissions that need to be abated and offset. Here, a liquid and transparent carbon credit market is crucial. This is why we’ve partnered with leading commodities marketplace Xpansiv to help develop Australia’s carbon market.

It will absolutely take coordinated, collaborative action to help Australia achieve its net-zero commitment. We hope our system-wide approach captures how everyone from individuals, businesses, industry and government can participate in the climate transition.

As we look to COP27 and beyond, we look forward to working with all of you on advancing Australia’s transition to ensure our nation can capitalise on the immense opportunities a net-zero world will bring. 

This article was originally published in The Australian Financial Review (Nine Publishing) on 8th March 2022. 

Our expert

Sally Reid is Executive General Manager, Global Client Solutions in our institutional bank. She is responsible for the management of the global client coverage teams, sustainable finance team and the transaction banking solutions team.

Find more information about sustainability at CommBank Foresight – insights for future-facing businesses.