Australia must address climate adaptation finance gap: Experts

Australia currently suffers from a lack of investment in adapting to a renewable and climate-resilient future, according to experts, who graded the nation's efforts and transition plan as somewhat of a mixed bag.

At the annual Responsible Investment Association Australia (RIAA) Conference yesterday, Stella Whittaker, the climate lead at engineering consultancy firm Royal Haskoning DHV, warned that the adaptation finance gap in Australia is "huge".

"If we knew the figure - which is the first problem - is that we don't know. No one has done that assessment of what the adaptation finance need is in Australia, and therefore what the finance that is available and then what the gap is, and whose responsibility it is to work on that gap," she told a panel.

Unlike Europe, where Whittaker focuses much of her PhD research in climate finance, Australian investors' awareness of what an adaptation project is or what an adaptation investment could look like is "extremely low".

Australia, she said, is not ensuring all its investments could be as resilient or climate proofed as they possibly can be.

Citing a new study as a case in point, the European Central Bank (ECB) and Oxford University found that €1.3 trillion worth of loans are at risk from water scarcity.

The research found that surface water scarcity is the "most significant risk to the Euro area's economy" and under an extreme but plausible drought with a 25-year return period, nearly 15% of economic output would be at risk.

"This is caused by a shortfall in water supplies coming from rivers, lakes, reservoirs and upper soil layers, and amplified by persisting drought conditions, excessive withdrawals and unsustainable consumption," the ECB said.

Whittaker pointed out: "We don't have that figure for Australia, and we desperately need it. We've got a big part of the country in dire water scarcity needs, but we haven't done the assessments to say, what are the assets at risk, what are the portfolios at risk, and what can we be doing about it?"

Climate investment opportunities, she said, are not just about batteries and solar photovoltaic panels (PVs) but include drought, agriculture and heat.

Whittaker described Australia's climate and green initiatives as "lumpy" at best, leading in green buildings, decarbonisation and climate resilience in buildings.

"Climate resilience in our energy sector is probably world leading. So, there are some things that we're doing really well that we probably don't talk very much about," she said.

Tim Buckley, a director of Climate Energy Finance, spoke on the same panel urging Australia to "move faster" on the energy transition, particularly as the US backs out of the playing field.

"In the last four months of 2025, we're about 40% renewable energy penetration. In the fourth quarter of last year, it was 46%," Buckley said.

Some media outlets fearmonger that Australia will never get to 82% [of electricity consumption to be generated by renewable energy by 2030] and that "we should give up" and "stick to fossil fuels". Buckley slammed this as nonsense.

"We are going to get there, but we have to go faster, and then we've got to get even more ambitious so we can bring on a 75% national emissions reduction by 2035," he said.

While Australia has several public policy initiatives on the energy transition, Buckley said that private capital "can't move at the speed and scale we need."

"Without a price on carbon, we are going to have to dig into taxpayers' pockets and subsidise the transition. Europe puts $20 million to $40 million a year into industry subsidisation to transition, but they pay for it from their EU Emissions Trading System (EU ETS). We don't, so taxpayers have to pay. If we don't pay, the next generation will," Buckley said

Financial Standard is the media partner of the 2025 Responsible Investment Association Australasia Conference.