Australian experience with carbon pricing has shown that it is possible to achieve significant reductions in CO2 emissions, over a relatively short period, with no detectable impact on economic growth or living standards. This research confirms that the economy could be fully decarbonized over a longer period, again with little or no impact on living standards, which would continue to improve over time.

This landmark study with an extent of integrated modelling not achieved before. It spells out Australia’s big challenge: how to keep growing the economy while improving the environment. The answers should give our politicians resolve to face up to the big questions of environmental policy, and to see them as part and parcel of the big economic conversation that the country needs.

Australia is at the cutting edge for finding out how environmental protection can be reconciled with economic growth. The study by Dr Hatfield-Dodds and his team shows that more economic output does not necessarily mean more environmental damage. Australia could have rapid growth for a long time to come, with stable or less environmental pressure. And what works for Australia could be successful in many other countries.

Technology is at the heart of it. We could already could make all electricity we need from renewable power, use electricity for transport, recycle a large share of water, and farm ways that are friendly to the environment.

But the shift to clean technologies does not happen by itself. The old style, environmentally destructive way of doing things is typically still cheaper if you do not count the damage it does to everyone. The change needs concerted policy action. Societies need to push for it, and governments will need to act even if vested interests stand against the transition.

Our key finding is that Australia can break the links between economic growth and environmental pressure, with key pressures falling or stable while the economy more than doubles in size out to 2050.  This can be achieved through mobilising proven technologies through extensions of established policy approaches.  Our analysis suggests other countries can also ‘decouple’ economic growth from environmental damage. 

We do not find, however, that environmental pressures can be reduced for free.  In most cases, reducing environmental pressure results in economic growth being a little slower than it would be in the short term, but then stronger in the long term.  In some cases – like energy efficiency – reducing environmental pressure results in stronger economic growth almost immediately.

But perhaps the most striking aspect of the results is that very large reductions in environmental pressures – including reversing the loss of native habitat in our agricultural landscapes, or achieving zero or lower net greenhouse gas emissions – have relatively modest impacts on income and living standards, whether the impacts are positive or negative.

The analysis represents a number of scientific advances, accounting for multiple aspects of resource use and environmental performance, and locating these in the context of economic activity and growth.  This allows us to explore the relationships between essential services humanity derives from nature, including energy, food, and clean water, and the environmental footprint of these services.

The analysis also explores the different kinds of choices involved in shifting towards a more sustainable future.  We find that while individual choices by businesses and households make an important contribution, policy choices are crucial.  We also find that changes in social values are not required to make progress towards sustainability over coming decades.

The paper by Hatfield-Dodds et al. is similar to many existing studies including those reviewed in IPCC reports using Integrated Assessment Models, which are simulation models of the economy and environmental impacts that result from economic development and climate policies. They claim that they include more environmental impacts and indicators than previous research.

They simulate various scenarios including existing trends where current climate policies continue both globally and in Australia and a no climate policy scenario, which they call "material intensive" and strong climate policies globally and in Australia.

In common with most existing mainstream studies they find that strong policies to abate greenhouse emissions do not prevent economic growth. This is in contrast to what they call "Communitarian Limits" approaches like Tim Jackson's book "Prosperity Without Growth" that claim that economic growth must stop in order for society to have a chance at dealing with climate change.

The surprising finding in the paper is that there are scenarios where the economy doesn't just continue to grow under a strong climate policy but that income per person is actually higher than under current trends - "Win-Win". This seems to be because Australia gains from changes in the global economy under the strong climate policies. For example, other countries pay to plant trees in Australia to capture carbon dioxide.