Australia faces default over planet rescue

Bloomberg: Australian national debt may grow due to climate risks … Bloomberg reports on climate risks to the economy.

According to official figures, the country's national debt will rise by 100 basis points without a strategy to achieve carbon neutrality. If Australia were the only country without such a plan, the incremental cost would increase by 300 basis points. Investors are starting to increase pressure to invest in green projects, and Australia is seen as lagging behind in saving the planet due to its dependence on coal. Thus, the country's economy was under threat due to the rising cost of loans. The central bank of Sweden, for example, has already dumped bonds of two Australian states.

Sean Kidney, co-founder of the Climate Bonds Initiative, noted that this is the first time he sees such data in print from the official government of a large state. “This is a recognition of what is happening in the world – investors are becoming more aware of the climate risk, and if countries do not react, the cost of their loans will rise,” the expert said. Australia will default on its sovereign debt by 2050 if climate risks to the country's economy continue to grow, according to FTSE Russell research.

Australian government forecasts are based on market prices for green bonds used to finance projects to combat climate change. The report notes that such securities reduce borrowing costs for states, and these dynamics will over time lead to an increase in the national debt of countries lagging behind in the fight against climate change. Around the world, more and more countries are committed to reducing zero emissions. Australia's plan calls for a reduction in harmful emissions by only a third by 2050. According to experts, such a strategy will make the consequences of a climate catastrophe inevitable.



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