Climate action

• Extreme weather is expected to upend lives and livelihoods, intensifying wildfires and pushing ecosystems towards collapse as ocean heatwaves savage coral reefs.
• It may surprise you, but most economic models predict climate change will just be a blip, with a minor impact on gross domestic product (GDP).
• Most predict a hit of around 1% to 7%, while the most pessimistic modelling suggests GDP shrinking by 23%.
• Inevitably, models can’t come close to capturing the upheavals climate change could cause in markets fundamental to human life, such as agriculture.

Economic models aren’t capturing the reality

• The report estimated what it would do to labour productivity –  Australia’s GDP would be lower by between A$135 and $423 billion.
• Over 40 years, that figure is actually vanishingly small, implying an average yearly effect of around 0.3% of today’s GDP.
• The report stressed that a number of impacts of severe climate change were not modelled.
• Even so, it appears the damages that were included weren’t likely to be major economic concerns.
• Most economic models in this area rely on a fundamental premise – that we can gain useful insight into future damage by looking at how economies have been hit by earlier weather shocks.
• Yet the risk of global food insecurity is not captured in economic models of climate change.

Global shocks are greater than the sum of their parts

• Climate change also threatens crop yields and damage to homes and infrastructure from extreme weather and sea level rise.
• The Intergenerational Report did just this by focusing on the climate impact on labour productivity and crop yields.
• Because our global economy is so tightly interwoven, what happens elsewhere affects us here in many ways, as we saw during the early COVID years and the global financial crisis.

We need better economic models of climate damage

• My research – as well as that of other other economists – is working towards building global weather shocks into modelling of what climate change will do to individual economies, which should radically change economic predictions.
• In the meantime, when you see economic modelling suggesting climate change won’t do much, you should treat it with serious scepticism.
• The impact of climate change on natural systems is well understood.

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• In some parts of the world, such as the Middle East, airlines are even expanding rapidly – well beyond pre-pandemic levels.
• But how will the industry continue to grow while doing its fair share on climate change?
• Unless global aviation changes tack, its greenhouse gas emissions are projected to cause about 0.1℃ of total global warming by 2050.

A tough ask

• Individual airlines have made similar commitments, including American Airlines, Qantas and Air New Zealand.
• But there are very few low-carbon alternatives to traditional fossil jet fuel.
• But at the moment, very little sustainable aviation fuel is being produced – and it’s much more expensive than fossil jet fuel.
• Read more:
  Green hydrogen funding is a step forward – but a step doesn't win the race

What we found

• We found the plans rely heavily on biofuels in the medium-term and synthetic e-kerosene in the longer term.
• Currently, all sustainable aviation fuels used commercially are produced from food waste such as cooking oil or animal fat.
• Our research found the roadmaps largely omitted a number of fundamental problems with sustainable aviation fuels.
• If sustainable aviation fuels were produced in this way, they’d be considerably worse for the climate than fossil fuels.
• Research to date is inconclusive about whether sustainable aviation fuels will improve this problem.

‘Unrealistic and irresponsible’

• But clearly, while the fuels will play a useful role to some extent, the industry’s growth plans are unrealistic and irresponsible.
• Private and government investment should instead be directed to lower-carbon forms of transport, such as rail.
• And for the travelling public, a shift in mindset is required, involving how often and how far we need to travel.