RBA economists said risks in climate-sensitive suburbs could increase further if insurance costs for affected areas become prohibitive.
“That is, the technical insurance premium may underestimate the actual rise in premiums, especially if insurers become more concerned about exposures to ‘high risk’ regions,” they said. âThis can happen because many addresses in these areas are affected by the same hazard (for example, an entire town is built in a flood-prone area or near fire hazards). Moreover, if climate change also caused lower incomes in these regions, it would pose even greater risks for banks. “
Separate work by RBA economists Jonathan Kemp, Madeleine McCowage and Faye Wang on the impact of climate change mitigation policies from China, Japan and South Korea suggests that Australia’s coal and LNG sectors will face an uphill battle over the next three decades.
Each country has pledged to achieve net zero emissions by 2050, and the three take a large chunk of Australia’s coal and LNG exports.
The researchers found that without any effort to reduce emissions, coal exports to the three countries would increase by 17% by 2050. But if nations reached net zero, Australian coal exports would fall by 80%, including two-thirds due to actions from China, Japan and South Korea.
Thermal coal exports this year are expected to reach $ 21 billion.
LNG exports, estimated at $ 49 billion in 2021-2022, are not expected to decline as much as those of coal.
According to the researchers, LNG exports would increase by 60 to 80% without any action on climate change. Below net zero, however, they are expected to fall by half, mainly due to sharp declines in demand from Japan and South Korea.
“Commitments by China, Japan and South Korea to achieve net zero emissions by mid-century and the broader global shift to carbon reduction are putting downward pressure on the outlook Australian fossil fuel exports, âthey noted.
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