What do China, Japan, South Korea, the United States and the United Kingdom all have in common? They are Australia's top four export markets. And they all have net-zero climate targets.
It is increasingly clear that, despite its positive record in renewables and in green patenting, Australia is an international outlier in regards to declaring a net-zero commitment.
From a conservative standpoint, what is most perplexing about a net-zero target continuing to remain a political issue is the fact that it makes sense to adapt our economy to one that embraces the billions of dollars of opportunities that this shift will provide.
Australia's green competitiveness has notably fallen behind over the past 20 years, and it now barely ranks in the top 100 of the 231 countries and territories assessed in the recent report, Navigating the Green Transition: Insights for the G7, by Dr Penny Mealy from the Monash Business School and Pia Andres of the Grantham Research Institute on Climate Change.
Australia seems to be in the least advantageous starting position to competitively export products with environmental benefits, cited to have just 12 "green strengths" compared to 59 in Canada and 153 in China.
From a purely opportunistic perspective, we know there are incredible gains to be had from bringing our agricultural industry into the 21st century, with the latest technologies to boost productivity for farmers and have a positive impact on reducing emissions.
Agriculture contributes to 15 per cent of our emissions. But better practices, including conservation and improving soil, would lower emissions as well as make farmland more productive. It's why the National Farmers' Federation supports a net-zero target by 2050, and why the Meat and Livestock Association of Australia has an ambitious (and achievable) goal of a net-zero target by 2030.
The UK has strong policies in place for their agricultural sector, focused on improving farms' efficiency and productivity. This includes improved land management and changing land use to capture more carbon.
In Australia, we could generate a whole new sector with policies to reward farmers who can increase their soil capacity to sequester carbon, and to enable private companies to pay farmers to offset biodiversity loss or carbon emissions on their land.
These new revenue streams would create a whole new type of financial product in Australia, not to mention generate food products that would command a higher market price and give access to new export markets.
From a hedging perspective, a lack of action means we will linger at the end of all economic indexes if we continue to believe that Australia will not be punished economically for its lack of net-zero targets. Whether we like it or not, championing trade and economic growth will become increasingly more aligned with environmental goals in a post-Covid world.
We can safely assume that the golden days of exporting our minerals and agricultural products free from carbon-footprint scrutiny will soon be gone. Green trade is here to stay.
At this month's G7 summit, discussion of implementing a carbon border adjustment mechanism (CBAM) continued to dominate the agenda. A CBAM would place a carbon price on the import of certain goods. In effect, we would be locked out of our competitive advantage on products such as wool, livestock and, of course, our minerals - including lithium and potentially iron ore.
Even Australia's most prolific billionaires see the writing on the wall for what this means. Andrew Forrest is pivoting Fortescue to pursue green hydrogen, and has placed a net-zero target of 2030 on his company. Australia's richest woman, Gina Rhinehart, made a major investment in an Australian company, Vulcan Energy Resources, which will produce zero-carbon lithium.
Net zero is where investments are being made. It is time for our government to follow this policy without fear or favour.
Our farmers are highly dependent on exports. We currently send overseas 65 per cent of our total agricultural production, with the value of global agricultural trade growing at an average rate of approximately 8 per cent annually since 2000, making international trade a critical component of farmers' economic success.
We must shift the focus we place on the cost of setting emissions-reduction targets to what will happen to our farmers and to our economy if there is no commitment to net zero.
According to Deloitte Access Economics, the cost of inaction will see a decline of Australia's GDP by 6 per cent in present value terms, costing the economy 880,000 jobs by 2070. On the other hand, working towards a net-zero target will grow Australia's economy by $680 billion, or 2.6 per cent of GDP, in present-value terms - and add over 250,000 jobs to the Australian economy by 2070.
It is not too late to triumph in this arena. We just need our policies to reflect a decarbonisation commitment to embrace this new trend.
That's precisely what farmers and the mining industry are doing, despite the lack of a national policy framework. Business ingenuity is already here. All we need is political will.
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