For over a decade of IPCC releases, climate scientists have marked 2025 as the global deadline for peak emissions if we are to keep ‘1.5 degrees’ on the table. That deadline is now just three years away – or one term of government in Australia.

Climateworks and the CSIRO’s’ Decarbonisation Futures outlined a 1.5 degree aligned emissions pathway for Australia to support that global goal, as a high emitting, developed economy. Our work on Australia’s potential to reduce emissions shows a reduction of around 50–75 per cent below 2005 levels by 2030 to reach net zero by 2035 is feasible with an ‘all-in’ effort – governments, businesses, investors and consumers all stepping up their responses. We’ve seen such large scale responses to COVID. Australia’s net zero emissions commitments mean that it’s time for step-ups from all of us in the next three years.

Each sector of the Australian economy has the potential to decarbonise at different rates – Decarbonisation Futures showed the opportunities in each. If Australia makes the most of these opportunities our nation will not only help limit global warming, but also set the country up to thrive as part of the global shift to a net zero economy.

Ths transition requires:

  • Australia to make the most of its renewable energy resources 
  • electricity and buildings to continue rapid trajectories to zero emissions 
  • industry emissions to peak and start to decline by 2025, and 
  • a broadly similar picture for transport and agriculture. 

Harnessing the opportunities across all sectors would set the nation up for a steep drop in emissions beyond 2025, reaching net zero by 2035.

Since Climateworks published Decarbonisation Futures two years ago, there have been tumultuous changes that have led to declines in Australia’s emissions. Some of this has been temporary (e.g. drops in car and air traffic driven by COVID lockdowns and border closures) whereas others (e.g. increased availability and affordability of renewables) indicate that the transition to a net zero economy is underway. However, this transition is not yet on track to make the most of the opportunities in Australia. So what can happen over the next term of government?

The next three years can set us up for net zero by 2035, if there are forces for change.

Australia’s plentiful resources can help set the country (and the world) up for the net zero economy in time for alignment with the Paris Agreement. But only with governments enabling and championing big changes, jointly led with business, investors and individuals.

A clear top task is unlocking further investment in renewable energy and ensuring the electricity system responds to variability from solar and wind energy. Australia’s energy market operator, AEMO, is already making progress here – ensuring that the grid can handle periods of 100 per cent instantaneous renewable energy by 2025. This is already a reality in South Australia, where wind and solar met 100 per cent of grid demand on most days in October last year.

The market also needs to evolve to make the most out of decentralised energy generation, ensuring the right new storage and demand management capabilities are in place and that transmission infrastructure provides access to enough new renewable energy sources. This is not just to fully decarbonise Australia’s current electricity needs but to also address the increased demand for electricity as buildings, transport and industry switches from fossil fuels.

There is still significant investment in fossil fuel extraction and exports, with the government projecting that Australia will remain one of the biggest fossil fuel exporters in 2050. However, the IEA shows global demand for coal declining by 80 per cent, and gas by 70 per cent, by 2050 in a 1.5 degree scenario. Decarbonisation Futures shows domestic demand for coal and gas will be on a downward trajectory with a significant drop by 2025 in order to stay within emissions limits.

The next three years will need policy frameworks and planned investments for new industries – such as hydrogen – where the investment will be key to gaining a comparative advantage in an emerging global market. It will also require scaling through planning and clear market signals for investors. 

Ensuring that existing industries recognise and can invest in different forms of production or new services remains a work in progress. Revising the Safeguard Mechanism (which covers are biggest emitters) can do part of the job to drive deep emissions reductions, but would have to sit alongside a much more comprehensive approach to modernising our industries and exports.

Our 1.5 degree scenario shows that agriculture emissions peak in 2025. The bulk of Australian agricultural emissions are methane, and advances in feedstuffs show there are opportunities to make substantial reductions. These can bring production benefits, as can other on-farm land management techniques. It is clear that methane matters – the latest IPCC AR6 report shows that reducing methane emissions early can have a big impact. It is also clear that many more nature-based solutions – such as plantings – need to start now. Better information on sustainable land use planning and how to measure the value of our natural capital can help drive these changes in the next three years.

On transport, it is time to plan all transport systems from the perspective of being net zero ready. This includes mode-shift – using the right form of transport to improve efficiency of public and freight transport networks – as well as vehicle-shift – implementing vehicle emissions standards or similar to ensure those who rely on light vehicles can access a range of electric vehicles. The latter will also make sure Australia doesn’t become the ‘dumping place’ for inefficient cars. Infrastructure decisions should explicitly consider what is needed to get the country on track for net zero emissions in line with the Paris Agreement. 

Australia has a strong economy, in which exports and international finance are crucial. International trends signal that leading investors and governments are solving for a net zero economy. The 1.5 degree goal is at the centre of the largest network of international financial organisations committed to Paris-alignment, the Glasgow Financial Alliance on Net Zero (GFANZ). Trends also suggest that the nations who are not prepared for the net zero economy will risk damaging delays and disruptive change. In addition, there are many nations in our region that need support, and developed economies – such as ours – should do more to help all nations transition at speed with equitable sustainable outcomes.

The government that takes Australia into 2025 can make the most of Australia’s renewable energy resources and critical minerals to determine how we ‘bend the curve’ for a smooth and swift transition to net zero by 2035. One of the first milestones will be meeting the expectations of COP27 this November, where Australia will be asked to strengthen its 2030 target, to ensure Australia plays its part in meeting the crucial global deadline to avoid the worst effects of global warming.