The revenue losses from the decline in fossil fuel exports could be offset by a significant rise in demand for critical minerals, says the Intergenerational Report.
Australia’s multibillion-dollar thermal coal exports will be all but wiped out in 40 years if the world manages to avoid catastrophic climate change and limit global warming to 1.5 degrees,But the revenue losses from the decline in fossil fuel exports could be offset by a significant rise in demand for critical minerals, including an eightfold global demand for lithium, and by heading off more than $400 billion in economic damage that climate change could cause more broadly.
The impact of decarbonisation on Australia’s revenue will be especially significant as the move to electric vehicles wipes out fuel excise, worth a net $13.7 billion to the budget last year. Thus far, the government has made no move to introduce a road-user charge to recoup the revenue. The IGR does not put a value on the boom in critical minerals that the government hopes will offset the revenue from lost fossil fuel exports such as coal and gas. There will also be “significant new industrial opportunities”.
Australia is already the world’s largest producer of lithium and its output is expected to double in the next five years. “This is equivalent to 26 to 41 million more hours of work in 2063, underscoring the value of timely action to reduce emissions.”
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