Australia is about to set its 2035 emissions-reduction target, likely somewhere between 65% and 75% (Climate Change Authority). For context, a 70% cut means shrinking national emissions from about 440 million tonnes of CO₂-equivalent to roughly 132 million tonnes (DCCEEW quarterly update). The headline numbers are big. The debate over cost versus benefit is bigger.
The $500 billion figure that launched a thousand hot takes
Australia’s top business lobby says getting to a 70% cut will require about A$500 billion in capital over the next decade (Business Council of Australia report). That estimate is already doing the rounds as the “cost” of ambition (SBS explainer). Important nuance: it’s a build budget, not a net loss, and it assumes current costs and technologies even as renewables, EVs and grid-scale storage keep getting cheaper and better (IEA World Energy Outlook 2024).
There’s a bigger problem: the report tallies the spend but skips the benefits. No allowance for avoided climate damage. No attempt to quantify new-industry growth or productivity gains. As a result, the figure is being waved around as the “cost” of ambition when it’s really only half the equation. By contrast, the Council’s earlier net-zero report projected gains to GDP from a smooth transition (BCA 2021).
What happens when you add the upside?
Plenty of analysis—here and overseas—says fast action pays for itself many times over once you include avoided damage and new activity.
- A high-ambition business coalition, Business for 75% (site), led in part by Andrew Forrest (who publicly challenged the BCA over the missing benefits: Guardian), modelled that aiming for a 75% cut rather than 65% could lift investment by ~$20 billion a year and leave GDP $227 billion higher over the decade (full modelling PDF).
- The Business Council itself said in 2021 that a smooth net-zero transition would leave the average Australian ~\$5,000 (today’s dollars) better off by 2050, with regional Australia faring even better (BCA 2021).
- Treasury’s landmark 2008 modelling found climate action would trim real GDP growth by only ~0.1 percentage points a year—small change next to the hit from unchecked warming (Treasury study). One estimate pegs Australia’s cumulative wealth loss from climate-driven hits to farm and labour productivity at \$4.2 trillion by 2100 (Climate Council report).
- Globally, the Stern Review put the annual cost of strong mitigation at ~1% of world GDP, versus damages of 5–20% if we drag our feet (Stern Review). Since then, the price of clean tech has plunged while the cost of climate impacts has risen (new analysis on warming costs).
Stack these together and the pattern is clear: serious cuts dominate on the net-benefit ledger.
How to cut smarter, not harder
Economists overwhelmingly back pricing pollution as the cleanest way to cut emissions—classic Pigouvian logic: price the harm, drive better choices, recycle the revenue (ESA poll on priorities; ESA poll on carbon pricing; Pigouvian tax explainer). Australia doesn’t have an economy-wide carbon price today—our pioneering scheme was axed in 2014 (backgrounder)—though there’s renewed interest (analysis).
What we do have is the Safeguard Mechanism, which functions like a targeted carbon price for heavy industry (scheme overview). It covers facilities responsible for almost a third of national emissions (DCCEEW explainer). And the New Vehicle Efficiency Standard will start squeezing car emissions (policy details). A market-based scheme would be more efficient and could fund tax reform by replacing some of our most inefficient taxes (why some taxes should go)—but even under today’s mix, investment is moving.
Stop calling Australia a “minnow”
We’re wealthy (GDP per capita context), we’ve long benefited from cheap coal and gas, and our per-capita emissions are among the world’s highest (Our World in Data). We’re also unusually exposed to climate damage—and unusually well placed to lead on solutions: world-class solar, critical minerals, and the makings of green metals like iron. Business tends to be cautious about upheaval; climate change guarantees upheaval. The smart play is to choose the change that builds industries and cushions households rather than wear the damage bill.
The bottom line
Treat the $500 billion as a build budget, not a loss. When you add in avoided disasters, productivity, export opportunities and cheaper clean tech, ambitious targets—70% and even 75% by 2035—look less like a burden and more like a growth plan with a safety net. The best evidence we have points one way: act fast, bank the benefits, and don’t confuse price with cost.
Article adapted from: The Conversation - Rapid climate action will come at a cost, according to the Business Council. But experts say the benefits are far larger