Treasury Secretary Stephen Kennedy says the lack of a bipartisan energy and climate policy in Australia is hurting the nation's chances of meeting its emission reduction targets.
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"Whatever your policy position, the uncertainty surrounding climate policy in Australia has done significant damage to our efforts to decarbonise, undermining trust among business and the community and driving up transition costs," Dr Kennedy said.
He warned against "poorly-targeted policies, creating inefficient industries, propped up by taxpayer support while at the same time not addressing global supply chain threats."
"This would burden the economy into the future and undermine our long-term strength and influence," he told the United States Studies Centre's Economic Policy in a Changing World conference on Wednesday.
Dr Kennedy said the true cost of carbon emissions "has not been priced into our markets and economic structures".
He did not directly mention Opposition Leader Peter Dutton's plan for a publicly-owned nuclear energy industry, with a reduced role for renewables, details of which were announced hours before his speech.
Mr Dutton on Wednesday unveiled the intended locations of the seven nuclear power plants he announced would be built by 2050, funded by the taxpayer, under the Coalition plan.
![Treasury secretary Steven Kennedy says uncertainty about Australia's climate policy has hurt the nation. Picture by Elesa Kurtz Treasury secretary Steven Kennedy says uncertainty about Australia's climate policy has hurt the nation. Picture by Elesa Kurtz](/images/transform/v1/crop/frm/234480217/22cb433f-2d91-42c6-a178-af6ea12b89c3.jpg/r0_422_8256_5082_w1200_h678_fmax.jpg)
The policy has set the stage for the next election, due by March, to be a referendum on the major parties' climate policies.
Mr Dutton has said a Coalition government would not pursue Australia's legally binding climate target to cut emissions by 43 per cent from 2005 levels by 2030, but would deploy nuclear energy to reach net zero by 2050.
Dr Kennedy said Australia was, under the Albanese government's climate policies, "broadly on-track to achieve our legislated emissions reductions target" by 2030, although there were "implementation risks".
"Beyond 2030, the task will get harder again," he said.
"Achieving net zero by 2050 will require a further round of policies to drive the necessary emissions reductions in harder to abate sectors.
"New technology breakthroughs will be critical to achieve this ... There are real challenges in ensuring such approaches deliver the most efficient transition but nonetheless they can be effective in driving the needed transition, if well designed."
'Private investment' key to energy transition: Treasurer
Earlier on Wednesday, Treasurer Jim Chalmers also highlighted the need for private investment to drive Australia's energy transition.
"We recognise public money can only be a sliver of what we need," Dr Chalmers told The Australian Energy Nation Forum in Sydney, the same venue for Mr Dutton's announcement.
"Our emphasis is on attracting private investment, not replacing it," Dr Chalmers told the forum.
"Renewable energy is our path to prosperity, and private capital will pave the way ... Value for money, discipline, analysis and rigour will underpin our approach."
Dr Chalmers said the Albanese government had made "significant progress" since elected in 2022.
"We've helped unlock the private investment that's led to a 25 per cent increase in renewable energy generation in the National Electricity Market," he said.
"Our plan for net zero is mainstream and middle of the road."
He described Mr Dutton's plan as "a stupendous act of economic self-sabotage which puts political differentiation ahead of investor certainty and Australia's national economic interest".
Dr Kennedy said global competition for clean energy industries was intensifying but that Australia had "significant comparative advantages".
"To capitalise on these advantages, address market failures and strengthen the resilience of our economy at the lowest cost possible, effective policy frameworks to guide government actions are needed," he said.
'It's a race': Peak body for renewable energy companies
Smart Energy Council International Director Richie Merzian said a shift towards publicly-owned nuclear power would be "a real disincentive for private investment in the energy market".
"There's a race right now to build renewable energy projects around the world and we have to compete for investment," he told The Canberra Times.
"Right now, we're giving those investors a signal to pack up and go elsewhere.
"Most investment in renewables is coming privately and internationally. Why would international investors want to invest in such a basket-case of a nation?"
Public servants need to strike 'the right balance': Kennedy
Dr Kennedy said the National Interest Framework to guide investments in renewable energy through the government's Future Made in Australia plan provided "a sound set of tests to guide government decision making".
"Policy advisors will need to continue to better integrate economic and strategic policy, to provide truly joined up advice to government and strike the right balance," he said.
"If the right balance is struck, we can deliver both economic prosperity and secure our national interests. If the wrong balance is struck, neither will be delivered."
He said Australia's advantages included "an abundance of low-cost bulk renewable energy capacity; access to, and abundance of, critical inputs and bulk raw materials"; and research and development strengths.
Access to deep capital markets, low sovereign risk and proximity to fast growing Indo-Pacific markets were also strong points, Dr Kennedy said, along with a "track record as a reliable and trusted exporter of energy and resources".
"Australia has abundant renewable resources, commodities and critical minerals vital to global economic security and the net zero transition, a skilled workforce and is regarded as a trusted trading partner with strong ESG credentials," he said.