The Australian Energy Market Operator (AEMO) has released a Phase 2 Draft of the 2025 Inputs, Assumptions and Scenarios report.
AEMO is now seeking public feedback on the inputs and assumptions that form the foundation of their planning and forecasting activities.
In 2022 and 2024, AEMO engaged CSIRO, supported by Climateworks, to conduct multi-sector modelling to quantify the dynamic influences that would shape electricity demand under different emissions reduction scenarios.
The recommendations in this submission draw on insights from that process and will contribute to a robust and optimised Integrated System Plan (ISP).Â
Rapid decarbonisation of the electricity and energy system is essential for Australia to meet its obligations under the Paris Agreement.
Electricity generation is the nation’s largest source of greenhouse gas emissions. Adopting renewables will reduce emissions by approximately one-third and have powerful flow-on effects for other sectors of the economy.
However, the transformation is complex. It requires forecasting and planning that considers evolving energy generation, transmission and storage technologies, changing market and regulatory conditions, and emerging opportunities in renewable energy and resource exports.
AEMO must ensure that the electricity supply supports increasingly ambitious jurisdictional emissions reduction targets while remaining reliable, secure, safe and affordable.
In March 2024, the Energy and Climate Change Ministerial Council (ECMC) recognised AEMO’s evolving role [PDF 0.7mb] and directed it to play a more active part in guiding the energy transformation.
Climateworks supports this approach, and the recommendations in this submission will help facilitate that shift.
The energy system in Climateworks’ 1.5-degree aligned decarbonisation scenario
In 2023, Climateworks published least-cost emissions reduction pathways for Australia.
Our report shows that to align with the Paris Agreement target of limiting global warming to 1.5°C, Australia reduces emissions 68 per cent below 2005 levels by 2030 and reaches net zero before 2040.
In our 1.5oC-aligned scenario, renewables make up 88 per cent of total electricity generation in the NEM by 2030 and close to 100 per cent by 2034.
Clean electricity generation capacity would expand from 55 GW today to around 151 GW by 2030 and 398 GW by 2050.
All coal-fired power generation would cease by 2035, and gas-powered generation would be reduced by 69 per cent by 2030 and 96 per cent by 2050.Â
Submission summary
Climateworks suggests AEMO consider the following recommendations as they develop the 2025 Inputs, Assumptions and Scenarios Report (IASR) and prepare to deliver the 2026 ISP.
The submission body includes specific details on each point. Climateworks recommends AEMO:
- integrate key findings from the Multi-sector energy modelling 2022: Methodology and results Final report into the 2025 IASR scenario parameters and narratives
- expand the IASR multi-sector modelling to include an additional 1.5°C-aligned scenario
- to the extent feasible in the current planning period, expand IASR multi-sector modelling to include analysis of a broader range of sensitivities across all scenarios rather than prioritising only the scenario selected as ‘most likely’, with a commitment to implement this approach more comprehensively in the next planning cycle
- ensure the IASR incorporates a comprehensive range of sensitivities across all modelled scenarios to enable the ISP to embed robust contingency planning
- utilise the IASR to inform the design of an energy system that will enable Australia to become a ‘renewable energy superpower’, including analysis to forecast and plan supply, storage and transmission solutions for ‘regional ISPs’.
