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Submission to the Climate Change Authority: Economic modelling of potential Australian emissions reduction pathways

September 18, 2023
Amandine Denis-Ryan and Jay Gordon and Anne-Louise Knight
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Key Findings

Inbuilt biases and gaps in the model should be addressed to properly assess the costs and benefits of different solutions.

The modelling questions need to be refined to reflect the model's capabilities and guide scenario development.

The authority should capture all material economic costs and benefits of action in its analysis, some of which are currently excluded.

IEEFA has lodged its submission to the Climate Change Authority's consultation on Economic modelling of potential Australian emissions reduction pathways. The authors draw on extensive experience with climate, energy and economic modelling and the proposed models.

The scope of the CCA's analysis may need broadening to properly answer the proposed questions, particularly to consider the economic costs of climate impacts on Australia under different emissions pathways. The proposed scope should also include the impacts on Australia of decarbonisation in our key export markets.

Updates to the technical structure of the CCA's proposed models may be necessary, as they currently rely on simplifications and unrealistic assumptions regarding gas supply, CCS and Direct Air Capture.

IEEFA has also suggested several considerations for the proposed scenarios, including ensuring that they explore the implications of a well-below 2°C scenario, that they explore the demand-side implications of no new fossil fuel development, and that they are not over-reliant on land sequestration.

As Australia's energy sector is responsible for significant water consumption, IEEFA has suggested that changes in water take between different energy production and generation options should be included in the modelling exercise when examining different emissions pathways. This may require additional data collection on accurate water take nationally.

Amandine Denis-Ryan

Amandine is a recognized expert in net zero emissions transitions across the economy. She led the development of the first domestic net zero emissions pathway for Australia and subsequent updates, which are considered to be the reference for Paris-aligned pathways and used by business, finance and government organisations.

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Jay Gordon

Jay Gordon is an Energy Finance Analyst at IEEFA, focusing on the Australian electricity sector. He brings experience in modeling Australia’s energy system transition, including investigating the role of the electricity sector in helping the broader economy transition towards a net-zero future.

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Anne-Louise Knight

Anne-Louise Knight is IEEFA’s Lead Coal Analyst for Australia. Her work examines the long-term outlooks for coal in Australia and major thermal and coking coal markets. Anne-Louise’s research centres on supporting a profitable and sustainable energy transition that promotes equitable economic growth.

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