The opportunity for synergistic sustainability
There is, however, a vast opportunity to protect and restore nature as we build a net zero economy. These two goals can, in fact, be mutually reinforcing.
Limiting global temperatures to well below 2°C is not possible without reversing nature loss and enhancing nature-based carbon sinks. Protecting and restoring nature is not possible without ambitious global and local action on climate change.
As a signatory to the Kunming-Montreal Global Biodiversity Framework, Australia has committed to strong action on biodiversity conservation, including protecting and conserving 30% of land and oceans by 2030.
Australia’s 10 largest trading partners are also committed to the Global Biodiversity Fund (GBF). More than half (55%) of Australian exports, totalling AU$226 billion in 2022, go to countries and markets that have or are developing sustainable finance taxonomies to drive trade and investment towards better environmental outcomes.
This suggests protecting and restoring nature could be an emerging source of economic advantage.
Shifting to a nature-positive approach could reduce risk and unlock new growth opportunities for Australia, particularly in industries that rely on nature to deliver value to customers and other stakeholders.
As part of our understanding of how Australia’s net zero goals could support a nature-positive economy, the EY Net Zero Centre modelled three scenarios:
- Carbon focused, which represents current policy settings, and assumes no public or private sector biodiversity co-payments
- Balanced approach, which uses a levy on all carbon sequestration to fund a top-up payment that incentivises restoration of habitat with high conservation values
- Habitat focused, which assumes the carbon market only allows mixed species planting, without a biodiversity fund to drive prioritisation.
Australia’s ability to generate high-integrity land sector carbon credits gives it a distinctive competitive advantage in a world on track to net zero emissions. Few, if any, other advanced nations have this opportunity, which reflects Australia’s distinctive climate, soil and natural resources.
This analysis, featured in the EY Net Zero Centre’s latest report Creating a nature-positive advantage, finds Australia’s current carbon focused policies can drive large-scale land sector sequestration, but will deliver almost no habitat restoration.
The balanced approach delivers more than seven times more native habitat, but at an opportunity cost of 20% less carbon in 2050 when compared to the current carbon focused approach. This area of habitat restoration would reduce extinction risk by 8%, while still delivering substantial financial gains to landholders, and reducing the total extent of land use change.
The analysis also finds a balanced approach could achieve a 25% increase in native habitat in regions facing the most severe pressures from past habitat loss.
The habitat focused approach delivers around 10 times the area of habitat but reduces carbon sequestration by two-thirds.