A watershed on the hard road to net zero

Australia is now committed to reducing its greenhouse gas emissions by 62-to-70 per cent below the 2005 level by 2035. This is part of our obligations under the 2016 Paris Agreement and our commitment to containing global warming.

The new target is already being criticised as not being ambitious enough (environmentalists) and not being achievable (business groups).

Environmental groups say the bottom of this new range falls short of what is required to tackle the climate emergency; business groups say the top of the range is unacceptable because it would do too much damage to the economy. The Minister for Energy and Climate Change, Chris Bowen, says anything above 70 per cent is unachievable. And the federal Coalition is struggling to get a team on this field at present.

Committing to a range is sensible for two reasons. First, as the prime minister said at the media conference, it allows for flexibility to respond to the unknown things that will evolve over the next decade. Second, it may avoid the current obsession over the achievement or otherwise of a specific target representing success or failure. It would have been better if the government had been clear on how it intends to use what is a wide range – a good outcome would be to get moving towards 62 per cent and deliver 70 per cent.

Alongside the target, the government released the national Net Zero Plan and plans for individual sectors of the economy to achieve a “fair, orderly, and efficient” transition to net zero. There are several multibillion-dollar commitments, including for a new $5 billion Net Zero Fund and increased funding for the Clean Energy Finance Corporation. While the sector plans describe a plethora of government actions supporting the transition, it is disappointing that there is no clear aggregation of what these actions will deliver and how they will add up to the total.

A step up in action to reduce emissions is urgently required.

Australia’s emissions in 2005 were 612 million tonnes. They have fallen to 440 million tonnes, a 28 per cent reduction, almost all of which is occurring in electricity generation and changes in land use, land clearing, and forestry. Meeting the current, legislated target of 43 per cent reduction by 2030 means a doubling in annual reductions, from about 9 million tonnes to 18 million tonnes. Achieving that target will be no small feat.

It gets tougher from there. To meet the announced target range will require an average annual reduction from 2030 to 2035 of between 23 million tonnes (to hit 62 per cent) and 33 million tonnes (to hit 70 per cent). And if the 2030 target is not achieved, those figures will have to increase to pick up the shortfall.

What needs to happen from here varies considerably across the sectors of the economy.

In electricity, the transition to renewables has slowed, but getting close to 100 per cent remains achievable. The easy steps – rooftop solar and connecting solar and wind farms to the existing grid – have been taken. Higher costs, regulatory barriers, and social licence issues have been problematic, but we should be confident of getting well beyond 80 per cent renewables by the early 2030s. New policies may be necessary to support that transition because the existing renewable energy target and capacity investment scheme are both scheduled to finish by 2030.

In heavy industry, it will be necessary to increase the rate of emissions reduction under the safeguard mechanism and consider lowering the current annual threshold for coverage from 100,000 tonnes of emissions to around 25,000. Support for technology developments will be critical. And good progress on the cost and availability of electric vehicles should allow an increase in the ambition of the new vehicle efficiency standard. The government has announced that such considerations will be on the table for the 2026 reviews of both these policies.

It is far less clear how policies and other support mechanisms will deliver net zero in other sectors, such as heavy vehicle transport, other uses of diesel and natural gas, and agriculture. An economy-wide carbon price or cross-sector trading of reduction credits is not on the agenda on either side of politics and would not be sufficient. The sector-specific net zero plans consist of a range of mostly existing programs, and they are worth pursuing.

This week has been a watershed on Australia’s hard road to net zero, with the publication of the National Climate Risk Assessment, the announcement of the 2035 emissions-reduction target range, and the release of the net zero plans. The main game now is implementation, as the spectre of climate change awaits.