Getting our response to climate change right will be crucial to getting Australia back on the path to productivity growth.

With the right policy settings, we can limit the costs of decarbonising and speed up approvals to unlock the opportunities of cheaper, more abundant clean energy. We can also improve housing to be more resilient to the effects of climate change.

Achieving deeper cuts to emissions as we address the more difficult decarbonisation challenges in the economy will inevitably bring costs. So too will responding to the impacts of climate change.

The government can minimise these costs through carefully designed policies. This is a key theme of the Productivity Commission’s interim report on Investing in cheaper, cleaner energy and net zero transformation. This is the second of five reports due out ahead of Treasurer Jim Chalmers’ reform roundtable later this month.

To achieve net zero along with good productivity outcomes, Australia needs consistent and comprehensive incentives to reduce emissions.

Governments need to address the gaps and overlaps in incentives for emissions reduction. And incentives need to back the lowest-cost solutions, regardless of technology.

Several priorities stand out. First, the electricity sector needs enduring, broad-based market settings that drive emissions reductions beyond 2030. The currentreview into the........

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