A new report has warned the impact of the shrinking economy from COVID-19 won't compare to a lack of action on climate change if no big changes are made over the next 50 years.
The analysis by Deloitte Access Economics has indicated that the Australian economy will be six per cent smaller and have 880,000 fewer jobs by 2070 if nothing is done.
That would be a $3.4 trillion loss in present value terms, it said.
Deloitte Australia chief economist Chris Richardson says the COVID pandemic showed the cost of overlooking catastrophic risks.
"So it's an urgent wake-up call for us to get ahead of that other big risk - climate change," he said.
Deloitte Access Economic's Chris Richardson Source: AAP
The report shows there is $680 billion dividend should Australia rise to the challenge along with 250,000 more jobs.
Mr Richardson said the best and most effective way to tackle climate change is through market mechanisms.
"Australians need policy and regulatory reform that modernises our economy and unleashes business investment," he said.
"The benefits of acting are huge. But we are fast running out of opportunity," Mr Richardson said.
Principal author of the report titled 'A new choice: Australia's climate for growth,' and Deloitte Access Economics partner Pradeep Philip said climate change was no longer a possibility but a reality and its costs are rising each year.
"Doing nothing is now a policy choice, and it is costly," Dr Philip said.
"By 2050 Australia will experience economic losses on par with COVID every single year if we don't address climate change. That would compromise the economic future of all future generations of Australians."
He said both government and private sector investment needs to get cracking to accelerate Australia's inevitable shift to a low emission future because every day of delay will cost the country more.
The report says this about high-growth industries such as mining new minerals for new technologies and investment in the upgrade, and replacement of Australia's infrastructure, such as transforming the National Electricity Market.
This would need new energy structures, pricing and regulation, while driving innovation in advanced manufacturing and addressing emissions efficiency in traditional economic sectors.
"Yes, there'll be costs. And there'll be some losers," Dr Philip said.
"But we'll all be losers if we fail to act," he said.
