“Net zero” has become one of the most widely used phrases in today’s climate and energy debates. Governments, businesses, and communities are grappling with what it means in practice and what it will cost. For some, the target is an urgent necessity. For others, it is a dangerous distraction.
Discussing net zero is important because the Australian Government has set a strong target of a 62-70% reduction in greenhouse gas emissions by 2035 on the way to net zero by 2050. This policy target will have significant implications for households and businesses over the coming years.
This article draws on conversations from Economics Explored, the podcast hosted by Adept Economics Director Gene Tunny. Over several episodes, Gene has interviewed experts and policymakers offering very different perspectives on net zero. Together, their insights highlight the complexity of what is perhaps the defining economic and policy challenge of our time. Episode 298 of Economics Explored, Is Net Zero Achievable—or Just a Slogan?, presents highlights from these critical conversations.
Economist Nicki Hutley argues that the costs of inaction on climate change could be astronomical. Drawing on modelling done at Deloitte Access Economics and elsewhere, she stresses that extreme weather events—such as floods, fires, and cyclones—already impose significant costs on households, businesses, and governments. These include not only the direct cost of damage and repairs, but also the knock-on effects on supply chains, health, and productivity.
Her position is clear: the costs of doing nothing far exceed the costs of transitioning. While the shift to net zero involves economic disruption, Hutley believes that proper planning—such as retraining workers and investing in new industries—can mitigate the impact. For her, the choice is between paying now or paying much more later.
Tony Wood from the Grattan Institute takes a pragmatic view. For him, the path to net zero lies in technological innovation. Several solutions are already available and relatively inexpensive, including renewable energy and electric vehicles. Others, like hydrogen, soil carbon, and direct air capture, remain expensive or experimental.
Wood suggests thinking in three stages:
This approach reflects cautious optimism. Innovation may not guarantee success, but without it, net zero targets are unlikely to be met.
Not all observers share this optimism. Queensland Senator Matt Canavan has been one of Australia’s most prominent critics of the net zero agenda. He argues the policy is more slogan than substance, with little chance that countries like China, India, and Russia will actually deliver on their commitments.
Canavan warns that Australia risks handicapping its own industries while competitors continue to rely on fossil fuels. He is especially sceptical of carbon pricing, which he views as politically toxic and economically costly. In his view, Australia’s high-quality coal will remain in demand even if global coal consumption falls, and it would be reckless to prematurely abandon such an important export.
Australian Taxpayers’ Alliance (ATA) Chief Economist John Humphreys is another critic of Net Zero. Speaking on a recent ATA live stream with Gene, he highlighted the productivity risks of aggressive decarbonisation targets, such as the government’s 62–70% emissions reduction goal by 2035.
Humphreys notes that Australia contributes around 1% of global emissions, raising doubts about whether unilateral cuts will make a meaningful difference to climate outcomes. At the same time, he argues the costs are substantial—billions in subsidies, more regulation, and a loss of industrial competitiveness. For Humphreys, the risk is that “decarbonising” really means “de-industrialising.” He suggests a conditional approach: Australia should act if and when major emitters do the same.
What emerges from these conversations is that net zero is not just an environmental issue—it is a deeply economic one. Hutley sees the financial danger of inaction. Wood sees the promise of innovation. Canavan warns of political and competitive risks. Humphreys highlights the threat to productivity.
For policymakers, businesses, and communities, these perspectives underscore the trade-offs involved. Should Australia lead boldly, hedge cautiously, or take incremental steps while waiting for technology to catch up? There are no easy answers, but the choices we make will shape our economy and environment for decades to come.
Published on 30 September 2025. For further information, please get in touch with us via contact@adepteconomics.com.au or by calling us on 1300 169 870.