IMF SLAPS OUT OZ GOVT
Australia can prosper from global net zero targets, the IMF says – but lawmakers must allow green technology to thriveDavid Adams
Oct. 13, 2021
Australia is uniquely poised to benefit from the global shirt to green energy, the International Monetary Fund says.
Rising prices for lithium, nickel, and cobalt could lift the GDP of major exporters, including Australia.
However lawmakers must first agree on climate strategies to avoid prices spiraling out of control, the lender notes.
Australia’s vast mineral wealth could reap dividends in the global transition to green technology, the International Monetary Fund says, so long as international and domestic lawmakers coordinate on climate policy.
In its latest World Economic Outlook, released Wednesday, the international lender highlighted the importance of Australia’s large lithium, cobalt, and nickel reserves to global green energy production.
Renewable energy systems and batteries require those metals to a greater extent than many traditional fossil fuel-generated power technologies.
Demand is expected to lift even higher as world leaders knuckle down on their emission reduction pledges, the IMF states.
Under a global net zero emissions by 2050 scenario, “total consumption of lithium and cobalt rises by a factor of more than six,” with nickel demand rising four times over.
Increased demand will lead to higher prices in the short-term, the IMF says, benefiting Australia’s export economy.
“A 15% persistent increase in the IMF metal price index adds an extra 1 percentage point of real GDP growth (fiscal balance) for metal exporters compared with metal importers,” the lender notes.
But as Australian miners gear up to supply the world’s renewable revolution, the IMF warns that sky-high resource prices and constrained production elasticity in the short term may actually stymie the global shift.
“If metal demand ramps up and supply is slow to react, a multiyear price rally may follow—possibly derailing or delaying the energy transition,” the report notes.
One salve would be to reduce “high policy uncertainty” which “may hinder mining investment,” the IMF says.
“A credible, globally coordinated climate policy; high environmental, social, labor, and governance standards; and reduced trade barriers and export restrictions would allow markets to operate efficiently, directing investment to sufficiently expand metal supply— thus avoiding unnecessarily increasing the cost of low-carbon technologies and supporting the clean energy transition.”
With billions of dollars on the line, the IMF report will renew focus on Australia’s climate commitments and its navigation of a rapidly-greening global economy.
The federal government is yet to announce any formal net zero by 2050 target, although The Australian reports Prime Minister Scott Morrison is preparing to present a heavily-vetted proposal to Cabinet on Wednesday.
International figureheads including Prince Charles have called upon Morrison to attend the impending COP26 conference in Glasgow, billed as one of the most significant international summits since the Paris Agreement of 2015, but the Prime Minister has not confirmed his involvement.
Iron ore magnate Andrew Forrest has also called on Australia to actively participate in the green transition, saying the nation could deter international investors if it does not keep up with global climate mores.
Beyond the financial implications of lagging policy, the IMF report reiterates the civilisation-defining impact of continued climate inaction.
“Moreover, doubling down efforts to curb greenhouse gas emissions is critical—current actions and pledges are not enough to prevent a dangerous overheating of the planet,” the report states.
In its latest World Economic Outlook, released Wednesday, the international lender highlighted the importance of Australia’s large lithium, cobalt, and nickel reserves to global green energy production.
Renewable energy systems and batteries require those metals to a greater extent than many traditional fossil fuel-generated power technologies.
Demand is expected to lift even higher as world leaders knuckle down on their emission reduction pledges, the IMF states.
Under a global net zero emissions by 2050 scenario, “total consumption of lithium and cobalt rises by a factor of more than six,” with nickel demand rising four times over.
Increased demand will lead to higher prices in the short-term, the IMF says, benefiting Australia’s export economy.
“A 15% persistent increase in the IMF metal price index adds an extra 1 percentage point of real GDP growth (fiscal balance) for metal exporters compared with metal importers,” the lender notes.
But as Australian miners gear up to supply the world’s renewable revolution, the IMF warns that sky-high resource prices and constrained production elasticity in the short term may actually stymie the global shift.
“If metal demand ramps up and supply is slow to react, a multiyear price rally may follow—possibly derailing or delaying the energy transition,” the report notes.
One salve would be to reduce “high policy uncertainty” which “may hinder mining investment,” the IMF says.
“A credible, globally coordinated climate policy; high environmental, social, labor, and governance standards; and reduced trade barriers and export restrictions would allow markets to operate efficiently, directing investment to sufficiently expand metal supply— thus avoiding unnecessarily increasing the cost of low-carbon technologies and supporting the clean energy transition.”
With billions of dollars on the line, the IMF report will renew focus on Australia’s climate commitments and its navigation of a rapidly-greening global economy.
The federal government is yet to announce any formal net zero by 2050 target, although The Australian reports Prime Minister Scott Morrison is preparing to present a heavily-vetted proposal to Cabinet on Wednesday.
International figureheads including Prince Charles have called upon Morrison to attend the impending COP26 conference in Glasgow, billed as one of the most significant international summits since the Paris Agreement of 2015, but the Prime Minister has not confirmed his involvement.
Iron ore magnate Andrew Forrest has also called on Australia to actively participate in the green transition, saying the nation could deter international investors if it does not keep up with global climate mores.
Beyond the financial implications of lagging policy, the IMF report reiterates the civilisation-defining impact of continued climate inaction.
“Moreover, doubling down efforts to curb greenhouse gas emissions is critical—current actions and pledges are not enough to prevent a dangerous overheating of the planet,” the report states.
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