According to Willox, achieving these cuts will require a major effort from industry - particularly the trade exposed industries that Ai Group represents; the community and policy makers.
"The pressing challenge for us all is to develop efficient, effective, durable policies that can deliver these cuts without eroding the competitiveness of our trade exposed industries," said Willox.
"A cut of 26-28 per cent below 2005 levels by 2020 is comparable to targets announced by Japan and Canada, and would require Australian emissions reductions scaling up to more than 250 million tonnes per annum by 2030, based on recent projections of business as usual growth and the outcome of Renewable Energy Target negotiations.
"The new target is a major step change from anything deliverable by current policies. For comparison, if the target were delivered solely through Budget spending it would cost between $100 billion and $250 billion in unadjusted terms. If the 50 per cent 2030 renewable energy goal recently floated by the Opposition were achieved, it would only deliver around a sixth of the emissions cuts sought.
"The numbers are huge and there is a good chance that even tougher targets will be needed to meet the 2 degrees goal shared by all sides of politics to manage the risks of climate change.
"It will be vital to ensure that emissions are reduced at least cost and that trade exposed industries do not suffer an unnecessary loss of competitiveness due to uneven international climate policies. Access to international emissions reduction opportunities is going to be an essential supplement to domestic activity if we are to achieve these goals at a manageable cost.
"The cost of these targets to industry and households – and their success – depends on policies yet to be developed by either side of politics. Those policies have got to operate at the lowest achievable cost if they are to be responsible. They need to be durable if they are to be relied on by investors.
"Ai Group is a member of the Australian Climate Roundtable, which brings together leading business, environment, union, research and social organisations and which has put forward sensible principles for policy design. Good process, wide consultation, independent analysis and adequate time are needed to set Australia up for success.
"Climate policies will only be effective if they outlive the governments that introduce them. Moving beyond partisanship is hard but necessary if any emissions target is to be met," Willox said.
