Early last year, a potential silver lining to the COVID-19 crisis emerged: Australia’s carbon emissions were falling. By June, Australia’s emissions had decreased by 3%, with transport emissions falling 6.7% as cities locked down. But by the end of the year it was clear these reductions were temporary. When lockdowns eased, emissions returned to pre-pandemic levels. 

In contrast, climate-aligned economic recovery packages announced by state and territory governments last year are likely to have long term positive impacts on Australia’s emissions. Clean energy investments made by states and territories in 2020 boosted Australia’s score in Vivid Economics’ recent Greenness of Stimulus Index, an analysis of COVID-19 stimulus by major economies in relation to climate action.

State and territory governments put emissions reductions front and centre in their policy announcements for 2020. This is not just because all have committed to net zero emissions by 2050, but also because these measures are good stimulus initiatives. 

Climateworks’ Recover and reduce: prudent investments to boost the economy and lower emissions report, released last year, highlights that economic recovery investments aligned with emissions reductions have high job creation potential. They also lay the foundations for resilient and productive economies, in a world transitioning to net zero emissions.  

Investments in keeping with the findings of Recover and reduce were announced across the political spectrum in 2020, signalling a potential end to the hyper-partisanship of climate action in Australia. 

The New South Wales government announced their Electricity Infrastructure Roadmap, which will coordinate five renewable energy zones – modern-day power stations that combine renewable energy generation to deliver energy – aiming to deliver 12GW of capacity. Queensland and Victoria have announced three and six renewable energy zones respectively. These zones won’t only reduce emissions, they will also drive regional job creation and attract new industries seeking access to clean, cheap energy.

These announcements have brought Australia’s largest states closer to the ambitious electricity programs of smaller jurisdictions: the Australian Capital Territory is now procuring 100% renewable energy, Tasmania has legislated a target of  200% renewables by 2040, and South Australia is on track to achieve 100% renewables by 2030.

Competition has also been brewing over who can build the biggest battery. All states and territories have announced new grid-scale storage (or extensions to existing storage) over the past 12 months. These investments are crucial to managing the transition from fossil fuel generation to renewables like solar and wind.

Action hasn’t just been in the electricity sector. The Victorian budget included the largest outlay on building energy efficiency by a state government in Australia’s history. Victoria also announced investments and policies to expand and electrify public transport networks, as did South Australia, New South Wales, and the Australian Capital Territory. Almost all jurisdictions have also funded the rollout of electric vehicle charging infrastructure.  

These investments will not only support short term economic recovery. Many will establish long term buy-in from the private sector. New South Wales’ Electricity Infrastructure Roadmap intends to draw in up to $32 billion in private investment by 2030, while Western Australia is taking initial steps to the establishment of clean manufacturing industries such as green steel, aluminium and hydrogen. 

The importance of investment in low emissions industries was amplified in 2020. Some of Australia’s key trading partners including China, Japan, Korea, the UK and the US are now targeting net zero emissions by mid-century. This will have implications for the demand of fossil fuel-intensive Australian goods, and create new markets for clean exports. By 2030, Australia could be using renewable electricity and water to produce 500,000 tonnes of green hydrogen annually – likely to be one of the most important commodities in a net zero economy.

The task for 2021 and beyond

Despite positive momentum generated in 2020, action needs to accelerate rapidly. Transition of the electricity grid and buildings remains behind the pace of change required to reach net zero by 2050, as scenarios modelled by Climateworks demonstrate. Meanwhile, major emissions sources in the transport, agriculture and industry sectors have not yet been adequately addressed. Global temperature rise has surpassed 1.1 degrees, and Climateworks’ Decarbonisation Futures report shows that to stabilise this and achieve net zero emissions by 2050, this decade needs to be transformational for climate action.

In 2021, Climateworks will continue our work to understand how climate policy from Australian governments can be aligned to net zero, while creating jobs and preparing the economy for the global transition to net zero emissions. We will also continue our work on the Climate and Recovery Initiative with the Centre for Policy Development to bring together business, government and civil society to help the response to the COVID-19 pandemic facilitate a transition towards a net zero emissions economy.

For those interested in climate impacts and action in Victoria and beyond, Climateworks and the Australian National University Institute for Climate, Energy & Disaster Solutions hosted the VIC Climate Update 2021 on March 1st. The update took stock of climate impacts and climate action in 2020 from a Victorian perspective, and what policymakers can do to respond more effectively to climate change in the year ahead. You can watch the recording here.