How can we deliver a fair and prosperous net zero future for Australia?

With evidence of the global warming crisis mounting month by month, and governments and markets around the world orienting towards a net-zero future, decarbonising is one of the most important and significant challenges our nation faces.

Australia’s legislated emissions reductions targets are 43 per cent below the 2005 level by 2030 and net-zero emissions by 2050. The latest national greenhouse gas inventory indicates Australia’s emissions were 29 per cent below the 2005 level in 2021-22.

In the Climate Change Authority’s 2023 Annual Progress Report we concluded that, while there are risks of falling short of the 2030 target, Australians can succeed by working together. In that report, we outlined the challenges and made 42 recommendations aimed at overcoming them.

We also observed that now is the time to get serious about Australia’s just transition to a prosperous, net-zero economy. The Federal Government is developing, with our assistance and as we previously recommended, a Net Zero Plan to establish pathways to a net-zero future.

Accelerating the rollout of proven, cost-effective solutions across the economy is fundamental to meeting the 2030 target and laying the foundations to achieve future, more ambitious targets.

Transformation of the electricity supply to renewables is well underway. This is crucial for addressing Australia’s largest source of emissions – fossil fuel–based electricity generation. It will also underpin decarbonisation elsewhere in the economy, allowing a transition away from oil and gas in transport, industry and households.

However, the rate at which Australia is adding large-scale wind and solar generation needs to double to meet the Government’s 2030 target of 82 per cent renewables. The investment pipeline for these projects needs to be stronger and the pace of approvals needs to be faster. At the same time, communities are raising concerns about the impacts of generation, network and energy-storage projects, and there are competing environmental objectives to be managed.

The Government’s expanded Capacity Investment Scheme is therefore crucial to accelerate progress, as will be the ability of governments, project developers and communities to work together to deliver solutions at the scale and pace required. Maximising national energy productivity will help ensure investment in new, clean energy infrastructure is no greater than it needs to be.

More than half of transport emissions come from light vehicles such as cars, utes and SUVs, and these emissions are growing. Electrification will go a long way to solving this problem. Accelerating the take-up of electric vehicles will boost emissions reductions and save motorists money in the long run. The Government’s national vehicle efficiency standard will support the transition and is a long overdue measure in Australia.

The Government’s Safeguard Mechanism reforms will help reduce emissions from Australia’s 215 large industrial facilities, which account for 40 per cent of Australia’s annual greenhouse gas emissions, and create demand for land-based carbon offsets. However, increasing limits on safeguard facility emissions is only part of the story. Just as important is ensuring that Australian mining and manufacturing prosper in the face of the challenges and opportunities arising from global decarbonisation.

Initiatives such as the Government’s Powering the Regions Fund, the Carbon Leakage Review and its vision for a ‘Future Made in Australia’ can contribute carefully calibrated interventions that support emissions reductions and the competitiveness of Australian businesses. So too can working with Australia’s trading partners to develop supply chains for clean energy, critical minerals and low and zero-emissions products.

There are limited existing solutions to reduce agricultural emissions – a mix of technologies and changes to farming practices will be required and further R&D is needed. The land sector is a net carbon sink with further sequestration potential.

Looking longer term, the International Energy Agency estimates that about half of 2050 emissions reductions globally will come from technologies at prototype or demonstration stages today. Rapidly scaling up demonstrated but not yet mature technologies for harder-to-abate emissions, such as in manufacturing and industry, will ensure momentum is sustained beyond 2030.

Continued investment in solutions still in the R&D phase, such as e-fuels, cultivated protein and direct air capture of carbon, will likely be needed to achieve net zero by 2050.

If Australia is to ensure these longer-term outcomes, decisions and actions are required as soon as possible. This includes making some no-regrets calls on where Australia is best placed to invest and innovate, and where it makes sense to follow the lead of others.

To this end, and at the request of Parliament, we are undertaking a review of the potential sectoral technology and emission pathways to help the Government develop its net-zero plan. We are also preparing advice on Australia’s 2035 target, which needs to be an ambitious and achievable waypoint on the path to net zero.

The challenges we face also include collectively embracing, planning for and implementing change as a society, and identifying and pursuing new opportunities and new ways of doing things. As we note in our recent consultation paper, planning the pathways and sharing the benefits and burdens will be essential to achieving an orderly and just transition.

With a clear strategy, sustained focus and real cooperation, Australia can meet its targets and prosper in a low-emissions world.