The BGA Australia team, led by Managing Director Michael McNeill, wrote an update on Australia’s new emissions targets.

Context

  • Prime Minister Anthony Albanese announced September 18 that his government will aim for a 62-70 percent reduction of greenhouse gas emissions by 2035 — from 2005 levels — and net zero by 2050. The government also released its Net Zero Plan, which outlines how it will seek to achieve these targets. The 2035 targets have implications for Australia’s renewable energy investment environment and Australia’s heaviest emitters. Climate and Energy Minister Chris Bowen said the clean energy transition was Australia’s “best-ever economic opportunity,” and Treasurer Jim Chalmers said the target would provide certainty for investors.
  • The 2035 target is Australia’s latest nationally determined contribution under the 2015 Paris Agreement, informed by the independent Climate Change Authority. Two key components of the government’s emissions-reduction agenda are its goal of 82 percent renewable energy by 2030 and the Safeguard Mechanism, which requires Australia’s heaviest emitters to reduce emissions by 4.9 percent each year until 2030. Both will be critical for Australia to achieve its targets.
  • Albanese said emissions need to be reduced in three sectors: electricity, transport and industry. The Net Zero Plan contains six supporting sector plans focusing on electricity and energy; agriculture and land; built environment; and industry, resources and transport. The plan is anchored by the Safeguard Mechanism and highlights Australia’s comparative advantages in carbon capture and storage. The Safeguard Mechanism will be reviewed from 2026-2027 to ensure it is supporting progress toward the 2035 emissions target. The reintroduction of a carbon tax appears politically unfeasible.

Significance

  • The government will establish an AUD 5 billion (US$3.3 billion) Net Zero Fund, within the National Reconstruction Fund, to help industrial facilities decarbonize and scale up more renewables and low-emissions manufacturing. It will also provide AUD 2 billion ($1.3 billion) to the Clean Energy Finance Corporation to encourage investment in renewables and AUD 1.1 billion ($729 million) to encourage more production of clean fuels.
  • The government already has programs in place to encourage investment in renewable energy. The Capacity Investment Scheme is an underwriting scheme to accelerate investment in renewable energy and storage by providing a long-term revenue safety net for investors. The Clean Energy Corporation’s Rewiring the Nation Fund invests in large-scale renewable energy, energy efficiency and low-emissions technologies projects and usually includes capital from co-investors. The government is looking to streamline investment and environmental approvals for large renewable energy investments.
  • The Net Zero Plan acknowledges that Australia will remain a leading exporter of coal and liquefied natural gas (LNG). Australia’s coal exports are currently largely directed to key Asian markets, including Japan, India, China, Korea, Taiwan and Vietnam. “Australian LNG exports support and sustain millions of households and businesses across Asia and will be pivotal to the ongoing energy security of the region for decades to come,” according to the plan.

Implications

  • The politically contentious announcement comes as Albanese seeks support for Australia to host the 31st United Nations Climate Change Conference (COP31), tries to convince Pacific island nations that Australia is doing enough to reduce emissions and prepares to address the U.N. General Assembly. Albanese has said action on climate change is the “entry fee for credibility” in international relations, but he will tread carefully on this issue when he has his first in-person meeting with U.S. President Donald Trump next week. Although Albanese has disappointed climate activists and some in his party by not going further, he will exploit division on the issue within the Liberal-Nationals opposition, which is contemplating whether to abandon its support for net-zero emissions by 2050.
  • Although legislation is not required under the Paris Agreement, the government believes it would offer businesses certainty. The Albanese government’s 2022 Climate Change Act enshrined into law an emissions-reduction target of 43 percent from 2005 levels by 2030 and net-zero emissions by 2050. The Senate negotiating environment is less complex than the last Parliament; however, Climate and Energy Minister Chris Bowen said the government will assess whether there is a legislative pathway.

We will continue to keep you updated on developments in Australia as they occur. If you have any questions or comments, please contact BGA Australia Managing Director Michael “Mick” McNeill at mmcneill@bowergroupasia.com.

Best regards,

BGA Australia Team

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Managing Director

Mick is a highly-experienced government relations expert and trusted advisor on consensus building, conflict resolution and legislative developments. He has played an integral role in helping parties achieve desired outcomes in areas of national security, health policy, foreign policy and reputational crisis management, as well as media relations, communications campaigns, immigration and human rights. Mick has two decades’ experience working with government as a media analyst, political adviser and NGO advocacy manager. After a stint serving as an adviser to an Australian senator, Mick took on the role of the locally engaged senior political specialist at the U.S. Embassy in ... Read More