The transition to carbon neutrality in China and its impacts on Australia

Abstract

As the world's largest developing country, China is marching towards ambitious climate goals of achieving peak carbon by 2030 and carbon neutrality by 2060. Given that China is the largest buyer of Australia's iron ore and one of the largest buyers of Australia's coal and liquefied natural gas (LNG), such climate efforts could be expected to impact Australia profoundly. This chapter examines how China's transition to carbon neutrality will affect the Australian economy at the national and state levels and by industry. Our simulation shows that although China's imports of Australian fossil fuels will fall significantly, the impact of those changes on the national economy is negligible. However, the mining sector and those states and territories that rely on fossil fuel production will suffer relatively larger effects.