Australia

The May 2022 elections heralded a change in Australia’s Federal government, which led to an improvement in ambition of its 2030 climate target. The newly elected government moved swiftly to update its NDC in June 2022, submitting to the UNFCCC a new target of a 43% reduction of greenhouse gas emissions by 2030 below 2005 levels, including LULUCF. The CAT has upgraded Australia’s overall rating to “Insufficient” from “Highly Insufficient”.

While the new NDC target is a positive step, Australia will need to adopt more ambitious climate policies and take further action to compatible with limiting warming to 1.5°C. The new government has an opportunity to increase its climate action in the crucial period to 2030. To achieve this the Albanese Government needs to abandon its support for new fossil fuel projects, which will drive emissions up, not down.

On 26 July, the Government moved to enshrine its target in a bill introduced to Parliament, containing a clause that any future targets must be a progression beyond current commitments. The bill needs the support of the Greens and Independents to be passed by the Senate.

With its new NDC target Australia has improved its rating for its domestic efforts to “Almost sufficient”. Its overall rating is “Insufficient” when compared to its fair share of global action, as it needs to increase its contribution to climate finance. While this represents a significant improvement on the last target, for a 1.5°C compatible target, Australia needs to adopt 2030 domestic reductions of at least 57%, and full fair share reductions, taking into account climate finance commitments, of at least 60% below 2005 emission levels .

Australia has a net zero by 2050 target, but the actions set out in the Long-Term Strategy of the previous Government will not achieve this target, and fall short by a considerable margin. The Albanese government reiterated Australia’s commitment to net zero target by 2050 when it submitted its new NDC. Modelling commissioned by the Australian Labor Party shows high levels of emissions - of at least 60 MtCO₂e - remaining in 2050, from facilities covered by the safeguard mechanism - largely in the industry sector. Other sectors of the economy will have to compensate and meet the abatement burden created by the industry sector.

The CAT rates Australia’s international public climate finance contributions as “Critically insufficient”. Australia’s climate finance contributions under the previous Government have been very low compared to its fair share. To improve its rating, Australia needs to stop supporting fossil fuel related activities overseas and increase the level of its international climate finance.

The Albanese government has an opportunity to transition from the “gas-led” approach of the previous government. However, its recent support for new gas projects and ongoing backing of fossil fuel projects indicates a discrepancy with its new NDC target. New gas and coal projects will significantly add to Australia’s mitigation burden and compromise its ability to meet the new NDC.

The methods of implementation are key if Australia is to achieve real emissions reductions.

Modelling supporting the Albanese government policies suggest high levels of carbon offsets, sourced from the land use sector, are to be used to “meet” the targets even though these are very unlikely to effectively neutralise CO₂ emissions.

The government is open to either domestic or international carbon offsets, both of which have limitations which could undermine the level of ambition in Australia’s updated target. Domestic offsets have been criticised as scientifically flawed as, for example, there is a high risk of reversal of stored carbon in land sector projects and there is serious doubt over the additionality of many of the land sector and sequestration methodologies. As a result of very serious criticism of the present offset system as essentially fraudulent in many respects, the government has announced a review of its domestic carbon credit scheme to be completed by the end of 2022.

Australia is suffering an energy crisis related to high global energy prices, an ageing coal power plant fleet and a lack of investment in renewable energy by the previous government, despite Australia’s huge solar and wind potential, and its renewable energy and green hydrogen export opportunities. The crisis has caused energy supply issues, price spikes and blackouts across Eastern states. Capacity reserve issues have been mounting in Australia’s east coast power system, and it needs urgent attention.

The Energy Security Board recommendations for a new mechanism to pay generators for capacity at certain times, including the ageing coal plants, appears designed to prop up the coal fleet rather than accelerate a renewable transition. A more ambitious approach would incentivise renewable energy, storage and responsive demand-side management to replace the reliance on generation from coal plants.

The CAT rates Australia’s climate targets, policies and climate finance as “Insufficient”.

Australia improved its 2030 target ambition, which has improved its overall rating from “Highly insufficient” to “Insufficient”. The “Insufficient” rating indicates that Australia’s climate policies and commitments are not compatible with limiting warming to 1.5°C. 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 associated policies, and provide finance to support others.

The newly-elected government has an opportunity to transition from the “gas-led” approach we have seen in recent years. The policies and action emissions trajectory shown here does not include the recent planned policy updates announced by the Labor Government. The projections are based on current policies implemented by the prior Morrison government.

GHG emissions in Australia have dipped due to a range of factors, but effective climate policy at the national level is not one of them. The previous government’s 2021 baseline policy projections show Australia’s current policies and action are on track to reaching 30% below 2005 levels by 2030 - excluding LULUCF emissions 15% below 2005 levels. Factoring out the power sector, which has been decarbonising quickly, emissions from the rest of the economy are projected to increase to 9% above 2005 levels by 2030, reflecting the fact that the Morrison government had virtually no policies in place.

Whilst these projections show a decline in emissions in the electricity sector, whereas other sectors of the economy demonstrate a small increase over the next decade from 2021 levels. Declining power sector emissions are a result of an increasing uptake of rooftop solar and large-scale renewables pipeline. States continue to ramp up action, and renewable energy targets, whereas the federal government has no renewable energy generation, nor capacity target. The CAT rates Australia’s policies and action as “Insufficient”.

The Labor government’s support for the massive new Woodside Scarborough-Pluto gas project in Western Australia indicates a discrepancy between its new 2030 target and its backing of fossil fuel projects.

Based on a “gas-fired recovery”, the federal government’s 2022-23 budget (set by the Morrison government) continues support for the gas industry, with an AUD 50m subsidy to accelerate the development of priority gas infrastructure. It also provides AUD 247m to support increased private sector investment in technologies to increase use of hydrogen, without any clear indication of whether it will be “green” hydrogen which doesn’t rely on fossil fuels.

Additionally, this year’s federal budget under the Morrison Government implicitly provided another AUD 300m to the National Water Grid to support a “sustainable development” (industrial/ LNG) precinct “Middle Arm”, in the Northern Territory. Another AUD 200m is allocated for Middle Arm industries to develop infrastructure for an LNG supply chain. According to the IEA, the world already has sufficient oil and gas supply and no new field development is needed if the world is serious about reaching net zero emissions in 2050.

In October 2021, the Morrison Government released the second iteration of its Low Emissions Technology Statement (LETS). Building on its 2020 LETS that predominately discussed options, the 2021 LETS contains detail on programmes, investments and actions without any additional commitment to achieving net zero emissions in 2050. The only addition in the 2021 LETS is the introduction of ultra low-cost solar electricity generation as another priority technology.

The newly-elected Government intends to reduce the emissions baselines of the safeguard mechanism. However, the potential use of carbon offsets puts the emissions reductions into question, and criticism from several quarters has led to the government setting up a review of the Australian Carbon Credit Units scheme, to be completed over six months.

Australia ranks eighth highest in the world for its emissions per capita, and first for coal power emissions per capita.

While the new federal government continues to rely on ineffective policies, state level action shows some climate leadership. Most states and territories, with the exception of Western Australia, have more ambitious emissions reduction and renewable energy targets.

See the policies and action section for more details.

Australia’s 2022 NDC update raised the ambition of the target from “Insufficient” to “Almost sufficient”. All countries need to rapidly reduce their emissions collectively to reach global net zero emissions and limit warming to 1.5°C. 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. To improve its rating, Australia would need to resubmit its NDC with a more ambitious target compatible with limiting warming to 1.5°C.

Australia has an emissions reduction target of 43% below 2005 levels by 2030, including LULUCF. For a 1.5°C compatible NDC target against modelled domestic pathways, Australia needs reductions by 2030 of at least 57%, including LULUCF.

The 2022 NDC update improved the rating of its NDC target against fair share target from "Highly insufficient” to “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 reductions of at least 60% from 2005 levels by 2030 including LULUCF, taking into account climate finance commitments. For comparison, the current target is 43% below 2005 levels by 2030, including LULUCF.

Given that its NDC target against modelled domestic pathways 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 have been low and are not in line with any interpretation of a fair approach to meeting the 1.5°C limit. To receive a better rating, Australia needs to stop funding fossil fuel overseas and increase the level of its international climate finance. The Federal Government withdrew from the Green Climate Fund in 2019, and declined to put funds into its replenishment, and the situation has not changed.

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 is flagged under this rating because its maximum land use, land use change and forestry (LULUCF) net emissions in the last 30 years are greater than 30% of total emissions. Since 1990, deforestation emissions have decreased with a periodical rise during 1998 and 2007, but this previous peak indicates the high potential for deforestation emissions if policies are reversed and impacts its targets and accounting.

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. Projections indicate LULUCF accounts for -26 MtCO₂ in 2030¹. Government data regularly recalculates LULUCF for historical and projected emissions. The recalculations highlight the uncertainty of this sector: data changes have significant repercussions on Australia’s progress in meeting emissions targets. Effective climate policy, particularly in the emissions-intensive energy and industry sectors, would reduce the need to rely on uncertain LULUCF carbon sinks.

1 | Government projections from 2021 estimate -16 MtCO₂e for LULUCF in 2030, but when harmonised to the latest historical data, this increases to -26 MtCO₂e. See Assumptions section for details.

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 66% - 85% below 2005, rather than 100%. The strategy 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 to phase out coal, curb fossil fuel exports, nor to hold heavy polluters accountable. The Emissions Reduction Fund (ERF) and Australian Carbon Credit Units (ACCUs) system has also been heavily criticised by one of its own former regulators as “fraudulent” because of its ineffectiveness in regulating polluting companies.

The new government announced it will be legislating its net zero target (and the 2030 target). Additionally, some states have more ambitious net zero targets, and some have stronger renewable energy targets as well as green/renewable energy hydrogen strategies in place. 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 was developed in the CAT’s “Scaling up Climate Action Australia” report.

The full net zero target analysis can be found here.