Climate modelling used to attack Labor policies a 'complete outlier', analysis finds

Greater action to address climate change is not ‘economy wrecking’, Australia Institute concludes

Coal fired power station
An Australia Institute analysis found higher climate targets had, at most, ‘a very small impact on GDP growth compared to no action’. Photograph: David Crosling/AAP

Modelling by BAEconomics that has been used to attack Labor’s climate policies is a “complete outlier” according to an analysis of more than 20 other recent modelling exercises on the effect of higher climate targets on the economy and electricity sector.

The Australia Institute has published a review comparing the work of Brian Fisher with 19 other reports and and three Treasury models that examined the potential effects of higher climate targets.

Ten of those reports examined the economy-wide effects of higher targets, while 12 looked at the impacts on the electricity sector, including five reports modelling 100% renewable energy.

The analysis found none of the reports showed greater action to address climate change was “economy wrecking” and that higher targets had, at most, “a very small impact on GDP growth compared to no action”.

The Australia Institute’s climate and energy program director, Richie Merzian, said Fisher’s models had put the GDP impacts of climate action at levels five to 10 times higher than every other economy-wide model, including those from Warwick McKibbin, Climateworks, the Australian National University, CSIRO, Victoria University and the three Treasury models.

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“There is extensive literature on the cost of climate action in Australia including modelling from or commissioned by the government,” Merzian said. “All 22 reports analysed show the cost of higher emission reduction targets is small, even when ignoring the benefits.

“Every reputable institution modelling climate costs, including the government’s own economic advisers and Treasury, show higher climate ambition has a negligible impact on the economy.”

Fisher’s analysis looked at the cost of Labor’s 45% climate target across a range of scenarios, with and without the use of international permits. It claimed the cumulative costs to GDP could range from $264bn to $542bn between 2020 and 2030.

Fisher’s analysis has been widely criticised for, among other things, assumptions about abatement costs that the Australian National University’s Frank Jotzo has said are implausibly high.

The Australia Institute analysis finds that economy-wide models in other reports put the impact on GDP growth in every scenario at no more than 1.8% of GDP, but Fisher’s models put lost GDP growth at levels as high as 22%.

“Fisher’s claims regarding the so-called huge economy-wide impacts and electricity price hikes are a complete outlier compared to over 20 other pieces of similar research,” Merzian said.

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“These claims do not stack up against the body of literature available or the actual Australian economic experience during the carbon price period, which saw 2% economic growth with 5% emissions reductions.”

The Australia Institute found that the 12 reports examining the electricity sector showed higher ambition targets would reduce power costs, or result in “a modest and manageable increase”, including for 100% renewables.

“The majority of Australians want the country to mobilise in a state of emergency to combat climate change with the same cooperation and commitment as a war effort,” Merzian said. “Meanwhile the Coalition government has gone to great lengths to cherry-pick contrary advice and delay serious climate action.”

Comment was sought from Fisher.