Despite a fresh start after a decade of inertia, the Australian government's promise to “take the country forward on climate action” has failed to deliver. The government’s overreliance on reported emissions reductions in the land sector obscures its continuous support for fossil fuels and lack of action beyond policies addressing emissions from large industrial facilities and the power sector. The new policy measures for these areas are either flawed or not effectively implemented. As a result, the CAT's rating of Australia's climate targets and action remains "Insufficient."
Australia's climate policy shortcomings have been masked by its recent revisions of land use, land-use change, and forestry (LULUCF) sequestration data. Historical LULUCF sequestration up to 2020 has been revised upwards, sequestration estimates have seen a twofold increase between 2020 and 2021, and projections for LULUCF sequestration in 2030 doubled from 2021 to 2022, and nearly doubled again between 2022 and 2023. These adjustments significantly ease the path for Australia to meet its 2030 and 2050 climate targets.
Australia has a net 2030 emissions target of a 43% reduction below 2005 levels. This means its allowed emissions under this target are determined using the sum of industrial greenhouse gas emissions and land use sequestration.
An increase in projected land sequestration values in 2030 decreases the reductions required from emissions excluding LULUCF. Three years ago, a 43% reduction target expressed in net terms would have required greenhouse gas emissions to be reduced by 32% by 2030. Now, with revised land use sequestration projections, greenhouse gas emissions will only need to be reduced by 24%, excluding LULUCF, giving Australia's emitters additional headroom of over 40 MtCO2e in 2030.
These successive revisions to Australia’s LULUCF inventory essentially lead Australia - and indeed its fossil fuel and other industrial emitters - to being able to reduce its level of effort for the same 2030 target, creating an illusion of progress, while the atmosphere suffers.
Issues related to LULUCF extend to other sectors. The much-awaited Safeguard Mechanism reform, adopted after major political turmoil, aims at curbing greenhouse gas releases from large industrial facilities by introducing binding and declining net emissions baselines. Facilities under the mechanism, such as LNG plants and coal mines, will be allowed to meet their emissions reduction obligations through offsets predominantly sourced from the land sector. This is despite ongoing concerns about the integrity of the Australian carbon credits scheme. Offsets are not a viable alternative to reducing emissions, and under this legislation Australia is enabling ongoing or even increased emissions from fossil fuels.
The government continues to endorse the expansion of the fossil fuel industry by supporting new carbon-intensive offshore gas field developments, permitting fracking, approving new coal mines, and creating regulations for CO2 sequestration beyond its borders, in contradiction with its stated climate goals.
Federal policies for the power sector are inadequate. While there are positive initiatives in terms of funding for the grid development and support for the rollout of storage, the absence of a legislated target or other regime to require a faster renewables uptake, combined with administrative and grid challenges, has led to a significant slowdown in deployment.
Progress towards the stated objective of reaching 82% renewable energy by 2030 is off track. With the November 2023 revision of the Capacity Investment Scheme, the government is making efforts to address this shortcoming. However, specific plans and timelines for phasing out coal and gas power generation remain conspicuously absent.
Measures for other sectors range from limited to non-existent. Yet to materialise are promised emission efficiency standards for motor vehicles, which, unlike most other developed countries, Australia does not have. Policies for electric vehicles have yet to materialise. Meanwhile, the efficiency of Australia's vehicle fleet continues to languish or even deteriorate. Beyond that, emissions from the building and agriculture sectors are left unchecked.
Australia's current policy rating continues to be classified as "Insufficient." When compared to its fair share of global action, its overall rating is also "Insufficient", as it is necessary for Australia to increase its contribution to climate finance.
Australia will need to adopt more ambitious climate policies and take further action to reach 1.5ºC Paris Agreement compatibility. Time is running out in the crucial period to 2030. To improve its climate action, Australia could:
- Decrease its reliance on offsetting and LULUCF emissions by implementing ambitious policies to provide a sufficient level of transparency and certainty of impact, without depending on domestic carbon sequestration or the integration of the national market with international offsets.
- Stop supporting the fossil fuel industry, by ceasing its financial and administrative support for coal and gas projects, stopping new developments, and establishing a framework to shift away from fossil fuel exports.
- Accelerate the phase-out of fossil fuel power generation by incentivising renewable energy, storage, and responsive demand-side management, and planning the phasing-out of coal and gas-fired plants, including off-grid facilities, in a fair and just way.
- Transition Australia’s industry to new exports, by exploiting its vast renewables potential and mineral resources, without backing false solutions such as offsets and carbon capture and storage.
- Foster the decarbonisation of the transportation sector through the implementation of policies for accelerating the deployment of electric vehicles, state-of-the-art fuel standards, public transport planning, incentives for modal shift, and transition pathways for heavy mobility.
- Address emissions from the agriculture, waste and stationary energy sectors, with actions that guarantee a fair and just transition.
Some positive developments are worth highlighting:
- Australia is already experiencing a rapid renewables rollout that needs to be further accelerated. In 2022, renewable energy accounted for 31% of the total electricity production, 4% more than in the previous year and twice that of 2017.
- Several states are leading the charge in the climate transition, with ambitious targets for achieving net-zero emissions, transforming their power sector, and decarbonising transportation. They are taking bold steps to address the shortcomings of federal-level policies, despite the significant disparities in the level of action between states governments.
The CAT rates Australia’s climate targets, policies and climate finance as “Insufficient”.
The “Insufficient” rating indicates that Australia’s climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit. Australia’s 2030 domestic emissions reduction target is consistent with warming of 2°C if all other countries followed a similar level of ambition.
Under Australia’s current policies, emissions will continue to rise and are consistent with more than 3°C warming if all other countries followed a similar level of ambition. To get a better rating, Australia needs to set a more ambitious 2030 target for emissions reductions, establish policies to reach its objectives, and provide finance to support others.
The government has yet to take the necessary steps to put the country on track to limit global warming to 1.5°C below pre-industrial levels.
The government's 2023 projections baseline scenario, which includes the Safeguard Mechanism reform, shows that Australia’s current policies and actions are on track to reach 17-22% below 2005 levels by 2030, excluding LULUCF. The government is relying heavily on LULUCF sinks to reach its climate goals, with LULUCF historical and forecasted sinks levels significantly revised upwards in recent years.
Government projections indicate a decrease in electricity sector emissions and those from large industrial facilities. These are attributed to the deployment of renewable energy sources and the Safeguard Mechanism reform, which drives down stationary energy, fugitives and industrial processes emissions. However, the effectiveness of the Safeguard Mechanism in reducing emissions depends on the degree to which large industrial facilities use offsets. Emissions in other sectors are projected to remain stable or rise slightly over this decade.
The government’s support for massive new fossil gas projects, such as the Woodside Scarborough-Pluto field in Western Australia, the Santos-led Barossa gas fields or the Beetaloo shale gas project stands in stark contrast to the legislated 2030 emissions reduction target. According to the IEA, new fossil fuel projects put the net zero emissions by 2050 goal at risk.
While the new federal government is still setting up its climate framework with a net zero strategy in preparation, some states are showing climate leadership. States and territories have emissions reduction, renewable energy targets and electric vehicle deployment targets with varying levels of ambition. The CAT rates Australia’s policies and action as “Insufficient”.
The full policies and action analysis can be found here.
All countries need to rapidly reduce their emissions collectively to reach global net zero emissions and limit warming to 1.5°C. Australia has an emissions reduction target of 43% below 2005 levels by 2030, including LULUCF. This translates into a 24% reduction below 2005 levels by 2030, excluding LULUCF. It should be noted that the reference point of the 2030 NDC target fluctuates because of the recalculation of historical emissions and LULUCF estimates. Australia’s 2022 NDC update is evaluated “Almost sufficient” against modelled domestic pathways.
Australia’s NDC is still higher than the 1.5°C modelled domestic pathway and as such, Australia has a domestic gap between its target and a 1.5°C compatible pathway. For a 1.5°C compatible NDC target against modelled domestic pathways, Australia needs reductions by 2030 of at least 61% including LULUCF, and 44% excluding LULUCF. To improve its rating, Australia would need to resubmit its NDC with a more ambitious target compatible with limiting warming to 1.5°C.
The CAT’s assessment of Australia’s total fair share contribution takes into account its emissions reduction target and its climate finance.
The rating of Australia’s NDC target against fair share is “Insufficient”. The “Insufficient” rating indicates that Australia’s NDC target in 2030 needs substantial improvements to be consistent with limiting warming to 1.5°C. Australia’s target is at the least stringent end of what would be a fair share of global effort and is not consistent with limiting warming to 1.5°C, unless other countries make much deeper reductions and comparably greater effort. If all countries were to follow Australia’s approach, warming would reach over 2°C and up to 3°C.
For a 1.5°C compatible target against fair share, Australia needs fair share reductions of at least 66% from 2005 levels by 2030 including LULUCF, and 50% excluding LULUCF.
Given that its NDC target against its fair share is not compatible with limiting warming to 1.5°C, Australia needs to improve its fair share contribution through both strengthened domestic emissions reductions as well as financing additional climate action in developing countries.
The “Critically insufficient” rating indicates that Australia’s climate finance contributions to date are low and not in line with any interpretation of a fair approach to meeting the Paris Agreement’s 1.5°C limit. At COP28, Australia pledged to stop financing fossil fuel projects abroad. The country has one year to fulfill this commitment. Although the international fossil fuel financing rating improved from “Highly Insufficient” to “Insufficient”, Australia’s overall climate finance rating remained unchanged. To receive a better rating, Australia must increase the level of its international climate finance.
Australia’s climate finance is not sufficient to improve the rating of its NDC target against fair share, and the CAT rates Australia’s overall fair share contribution as “Insufficient”.
Australia’s maximum land use, land use change and forestry (LULUCF) net emissions in the last 30 years are greater than 30% of total emissions. Australia is the world’s only developed country that is classified as a deforestation hotspot.
Despite this, the government intends to meet its NDC and net zero target by relying on LULUCF as a carbon sink (see section on forestry). The government regularly recalculates LULUCF for historical and projected emissions. The extent of these recalculations highlights the uncertainty of this sector: data changes have significant repercussions on Australia’s progress in meeting emissions targets. Effective climate policies, particularly in the emissions-intensive energy and industry sectors, would reduce the need to rely on uncertain LULUCF carbon sinks.
We evaluate the net zero target as “Poor”. In 2021, Australia released a long-term emissions reduction plan for achieving net zero emissions by 2050, also submitted as a Long-Term Strategy. The LTS sets a net zero emissions target for 2050. Yet the strategy presents scenarios which only reduces emissions by 60% below 2005, excluding LULUCF. It does not come up with new any new policies, and relies on global technology trends, carbon offsets and further unknown technology “breakthroughs”.
There are also no plans in the document to phase out coal, curb fossil fuel exports, nor to hold heavy polluters accountable. The government legislated its net zero and 2030 targets in September 2022, and is working on updating its net zero strategy.
It is still possible for Australia to get emissions onto a pathway to limit global warming to 1.5˚C this century, but urgent action is required. To be 1.5˚C compatible, Australia would need to reverse its current federal policy direction. A 1.5˚C pathway is developed in the CAT’s “Scaling up Climate Action Australia” report.
The full net zero target analysis can be found here.