Australia’s fossil fuel earnings set to fall by $50bn a year by 2035
Australia’s production of fossil fuels and the export value of coal and LNG are both predicted to plummet this decade, while at the same time the country reshapes its economy to reach net zero, according to Treasury modelling.The annual value of fossil fuel exports is predicted to fall by $50bn by 2035 if Australia sticks with its current policies and reaches emissions reduction cuts of 65% – an amount in the bottom half of the target range announced this week.Energy experts said the modelling was illustrating what many analysts had been warning for years.“This is dropping the truth bomb again,” said Alison Reeve, the energy and climate change program director at the Grattan Institute.“We have been saying for a long time that if the rest of the world goes for net zero, then it will stop buying our coal and gas.
”Details of the outcome of Treasury modelling on the impacts of net zero were released among a slew of climate reports this week that included the Australian Climate Service’s risk assessment and the government’s report on how Australia can reach net zero by 2050.Treasury modelled three different future scenarios – a “baseline” where existing policies, targets and agendas are followed; a “renewable exports” scenario that includes growth in green hydrogen and other green exports; and a “disorderly” scenario where little climate action is taken and weak or no targets for 2035 are set.Across all three scenarios modelled by Treasury, the value of fossil fuel exports crashed from about $130bn in 2025 to less than $80bn in 2035.Coal and LNG exports will be worth just $30bn by 2050, according to the modelling.The amount of gas and LNG produced in Australia will also fall between 24% and 27% by 2035, and between 66% and 68% by 2050, according to the modelling.
Coal output will drop between 42% and 51% between now and 2035, and between 71% and 74% by 2050, the modelling says.Tim Buckley, the director of thinktank Climate Energy Finance, said the fall in fossil fuel export revenue envisaged in the modelling was “only 15 years away”.“Treasury here is talking about fossil fuel exports reaching as low as $35bn in 2040.We have to realise that the gift horse can turn into the resources curse.”While the value of fossil fuel exports crash, export values for commodities needed as the world decarbonises – including green ammonia, green iron, alumina, aluminium and critical minerals like lithium, nickel and cobalt – are predicted to boom.
The export value of these “green commodities” in the modelling will climb from about $30bn today to between $80bn and $93bn in 2035 and $109-$178bn in 2050.Reeve said: “Part of the story of Australia becoming a renewable energy superpower is that while we are still a resource extraction-based country, but it becomes a different set of resources.”Sign up to Breaking News AustraliaGet the most important news as it breaksafter newsletter promotionBuckley said while he believed the green commodities “will boom”, it was not assured that Australia was in a position to share that boom.The Climate Change Authority (CCA) said this week that CSIRO modelling it had commissioned suggested “Australia’s fossil fuel sector outputs will reduce 30% by 2035 if trade partners take action consistent with limiting warming to 1.5C, or 13% if the pace of global action aligns with 2C of warming”.
“The magnitude of these long-term projected shifts underscores the need for early, strategic planning to safeguard Australia’s economic resilience,” the authority said,Samantha McCulloch, the chief executive of gas industry group Australian Energy Producers (AEP), said gas would “remain essential for Australia’s energy security and transition to net zero by 2050”,She claimed the CCA had “recognised that Australia’s LNG exports will continue to underpin energy security and decarbonisation in our region”,She also pointed to forecasts AEP had commissioned from consultants Wood Mackenzie that suggested global LNG demand would “remain strong”, and said the International Energy Agency had suggested “south-east Asia’s LNG imports will increase eight-fold by 2050 under current policies”,She said: “The growing LNG demand in our region presents a major economic and strategic opportunity for Australia while supporting our region’s transition to cleaner energy.
”The Guardian also approached the Minerals Council of Australia for comment, but did not receive a response.The Guardian sent questions to the office of the resources minister, Madeleine King, which declined to comment, saying questions about the modelling were best directed to the minster for climate change, Chris Bowen.The Guardian did not receive a response from Bowen’s office.
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Bank of England governor says UK ‘not out of the woods’ on inflation, after leaving interest rates on hold – as it happened
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