By Renju Jose

SYDNEY (Reuters) – Australia must brace for higher borrowing costs if the country fails to match other developed nations in efforts to cut carbon emissions to net zero by 2050, Treasurer Josh Frydenberg will say on Friday.

Australia has much at stake. “We cannot risk the market falsely assuming that we aren’t transitioning in line the rest of world,” Frydenberg said in a speech at the Australian Industry Group. Reuters reviewed excerpts from the speech.

Australia is among the most carbon-emitting countries, and has so far resisted the international call to set a 2050 net zero carbon emission target.

Scott Morrison, Prime Minister, is likely to reach a consensus on Scott’s government’s policy regarding climate before the COP26 summit in Glasgow. However some of his conservative allies are against a net zero goal.

The current policy calls for a 26%-28% reduction in emissions from 2005, and a $13 billion investment over the next 10 years to support a variety of technologies to reduce emissions such as carbon capture and storage, hydrogen and energy storage.

Frydenberg will emphasize that Australia is heavily dependent on foreign capital.

He will state that as global financial markets work to reduce emissions, the lack of access to foreign capital will lead to higher borrowing costs. This will impact interest rates for home and small business loans, and financial viability of large infrastructure projects.

Morrison is in America for the Quad Meeting, where climate policy is on the agenda. He stated that no decision had been made regarding a net zero target.

He said that he would be examining the matter further once he returns to Australia.

($1 = 1.3716 Australian dollars)