Australia

The May 2022 Federal elections resulted in a new government, which led to a significant improvement in ambition of Australia’s NDC. The Albanese government updated 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 (Australian Government, 2022a).

Prior to this, Australia had a target of 26–28% reduction of greenhouse gas emissions by 2030 below 2005 levels, including LULUCF. The previous target was first submitted in 2015, and recommunicated in a submission to the UNFCCC in October 2021.

In an effort to estimate the actual emissions reduction impact of a target, the CAT excludes emissions from land use, land use change and forestry from NDC targets. The CAT calculates Australia’s 2022 NDC target to be 375 MtCO₂e in 2030 excluding LULUCF. This an improvement on the last target, calculated to be 466-479 MtCO₂e in 2030 excluding LULUCF. Australia has improved its CAT ratings to “Almost sufficient” modelled domestic pathways, and “Insufficient” for its fair share of global efforts.

While the new target is a positive step, Australia will need to submit improved NDC updates to be compatible with limiting warming to 1.5°C.

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.

In October 2021, Australia released a long-term emissions reduction plan for achieving net zero emissions by 2050, also submitted as a Long-Term Strategy (LTS) to the UNFCCC. However, the scenarios presented in the strategy only reduce emissions by 66% to 85% from 2005 emissions levels, so will not reach net zero. The new NDC submitted by the new Labor Government reiterates this target. However, the Labor Party commissioned modelling based on its policies, and there is still no clarity on how it will achieve net zero (see net zero target section for details).

NDC description
Australia has a 2030 NDC emissions reduction target of 43% below 2005 levels by 2030, including LULUCF and using Global Warming Potential (GWP) values from the IPCC’s Fifth Assessment Report (AR5) (Australian Government, 2022a).

Analysis of the effect of the NDC on likely fossil fuel and industrial GHG emissions is made difficult by the fact that the NDC target includes LULUCF emissions, which have been substantial in the past and fluctuate significantly. See the assumptions section for further details.

The target equates to about a 31% reduction below 2005 emissions levels by 2030 when LULUCF is excluded, or an absolute emissions level of 370 MtCO₂e based on AR5 values (Australian Government, 2022c)¹.

When converted to AR4 values (the CAT standard), the absolute emissions level in 2030 would be 375 MtCO₂e (excl. LULUCF).

This NDC has made several improvements. The NDC has raised ambition of the 2030 target. The last target represented 466-479 MtCO₂e in 2030, or 8-11% above 1990 emissions levels and 11-13% above 2010 levels excluding LULUCF. The new target results in 375 MtCO₂e in 2030, or 13% below 1990 emissions levels, and 29% below 2005 levels, excluding LULUCF. This is a positive step, but further NDC updates with increased ambition are required for Australia to be compatible with limiting warming to 1.5°C.

The NDC now states Australia will not use carryover from overachieving the Kyoto Protocol targets — or its 2020 target — to meet the 2030 target. However, Australia must also ensure carryover from the emissions budget and absolute target is not used for future targets.

The NDC document also lists a number of funding and policy measures. The methods of implementation to achieve the policies and target is critical to real emissions reductions. The use of carbon offsets places the effectiveness of the policies such as the safeguard mechanism into question (see the policies and action section). The NDC states the government will conduct a review into the Australian Carbon Credit Units (ACCUs).

The CAT rates Australia’s NDC target as “Almost sufficient” when compared to the level of reductions needed within its borders and as “Insufficient” when compared to its fair share emissions allocation.

1 | See National Inventory Report submitted to the UNFCCC on 27 May 2022 Table A3.1, Annex 3, Volume 3.

The “Almost sufficient” rating indicates that Australia’s NDC target in 2030 is not yet consistent with limiting warming to 1.5°C but could be, with moderate improvements. If all countries were to follow Australia’s approach, warming could be held below—but not well below—2°C.

Australia’s NDC update in 2022 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 achieve the 1.5°C temperature limit. 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.

We rate Australia’s 2030 emissions reduction target as “Insufficient” when compared with its fair share emissions allocation.

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, Australia needs fair share 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.

Australia’s international climate finance is rated “Critically insufficient” (see below) and is not enough to improve Australia’s fair share rating.

Australia’s international public climate finance contributions are rated “Critically insufficient”. Australia has committed to increase its climate finance but contributions to date have been very low compared to its fair share. To improve its rating, Australia needs to stop funding fossil fuels overseas and increase the level of its international climate finance.

Australia has committed AUD 1bn to climate finance (both mitigation and adaptation) over the period of 2015-2020 (Gayfer et al., 2018). Most of the finance is disbursed through multilateral finance, particularly compared with other OECD countries, and focuses on adaptation projects (Gayfer et al., 2018). Overall yearly contributions have slightly decreased since before the Paris Agreement. The trend is more significant when only projects where climate is a principal component are considered (OECD, 2018). 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 (Mathiesen, 2019). A clear and sustained increase in international climate mitigation finance is fundamental in the period post-2020.

Australia remains committed to the USD 100bn a year goal in climate finance for developing countries through 2025. However, the USD 100bn goal, in itself, is insufficient in the period post-2020. Australia has committed to increasing its international climate finance to AUD 2bn over five years (2021-2025), for both mitigation and adaptation projects, up from a previous commitment to increasing funding to AUD 1.5bn over the same period (Australian Government, 2020e; UK Government, 2021b). This level of financial contributions would not be enough to improve Australia’s CAT climate finance rating.

The biggest four Australian private banks have committed to stop funding coal thermal projects abroad (S&P Global, 2020). The government has not made such commitments. Concerns remain about continued support for fossil fuel projects in the Pacific region by Export Finance Australia, a commonwealth company (Market Forces, 2021). Australia has been described as “out of step” as the G7 stops international coal finance and calls for a phase out of fossil fuel subsidies while Australia hedges its future on a gas-fired recovery (SBS News, 2021). At COP26, Australia failed to commit to ending new direct public support for the international fossil fuel energy sector, contrary to the UK, USA, New Zealand and others (UK Government, 2021a).

Note: The CAT current contributions and trend ratings are based on OECD data which is released mid-year. The scores are based on data to 2019 (the latest year) and will be updated in due course.

Australia submitted a stronger target to the UNFCCC in June 2022 (Australian Government, 2022a). The new target is a 43% reduction of greenhouse gas emissions by 2030 below 2005 levels, including LULUCF.

In a prior update, Australia submitted an updated NDC to the UNFCCC in October 2021, without an improvement in ambition from its 2016 target. The target previously submitted was a 26-28% reduction of greenhouse gas emissions by 2030 below 2005 levels, including LULUCF.

The target submitted in June 2022 presents a higher level of ambition.

It includes a set of new policies measures such as investment into batteries, solar, and the electricity grid to accelerate renewables, a fund for decarbonising industry, and a declining emissions baseline for the safeguard mechanism (See the policies and action section).

The target will be implemented as both an absolute target and an emissions budget which declines on a linear trajectory. This should ensure mitigation efforts will be continuous over the budget period, with year-by-year reductions, which creates more substantial reductions across time.

Australia regularly updates its National Inventory data. Updates to the targets baseline year of 2005 impact the NDC target in terms of absolute emissions. The NDC 2022 update states that the historical data for it baseline year 2005 is from Australia's National Inventory Report 2020 (Australian Government, 2022c).

The methods of implementation are key for the target to achieve real emissions reductions. Modelling behind Labor Party policies suggest high levels of carbon offsets could be used to meet the targets (Reputex, 2021). The modelling paper refers to domestic carbon credits, i.e. Australian Carbon Credit Units (ACCUs). Domestic carbon offsets have been criticised as scientifically flawed (see forestry section). The NDC states the government will conduct a review into the ACCUs.

The NDC also indicates it will make adjustments for “internationally transferred mitigation outcomes” in line with Article 6 of the Paris Agreement, indicating it is also open to using international carbon credits, potentially as a buyer or seller. At present, the detailed rules and quality standards for making use of Article 6 as an ambition raising mechanism are still pending, making it difficult to assess whether they can offer a meaningful contribution to emissions reductions. Regardless, Australia should first improve its NDC target and climate finance contributions to align with a 1.5°C compatible pathway and focus on reducing its domestic emissions instead of relying on international carbon credits.

The updated NDC states Australia will not use carryover from past over achievement from previous targets to meet its 2030 target. This is the first time the Australian government has explicitly ruled this out. The government must also ensure carryover is not used from the emissions budget or the absolute target for future targets. Carryover significantly lowers the actual emissions reductions and is neither legitimate nor defensible under the Paris Agreement (Climate Analytics, 2019c).

The 2022 NDC reaffirms Australia’s target to achieve net zero emissions by 2050.

Analysis of earlier NDC developments:

• 11.09.2019 “Australian Prime Minister Morrison unwilling to commit to a new target”
• 12.05.2020 “Australian Government confirms there will be no target update for COP26”
• 31.12.2020 “Australia repeats old target with no increase in ambition”
• 28.10.2021 “Australia did not increase ambition”

Australia has submitted a long-term emissions reduction plan for achieving net zero emissions by 2050, also submitted as a Long-Term Strategy (LTS) to the UNFCCC in October 2021. However, the scenarios presented in the strategy only reduce emissions by 66% to 85% from 2005 emissions levels. The plan relies on carbon offsets, global technology trends and unknown “technology breakthroughs”, without presenting any new policies (DISER, 2021d). The new government announced it will be legislating its net zero target (and the 2030 target) (Albanese and Bowen 2022).

The Technology Investment Roadmap indicates it will guide AUD 20bn of public funding towards the following priority low emissions technologies: clean hydrogen, ultralow-cost solar, energy storage, low emissions steel, CCS, and soil carbon. Overall, the LTS relies heavily on the future development of “low-emissions technology” not proven at scale such as CCS, along with land use reductions and international offsets, with no plans to phase out coal, curb fossil fuel exports, nor hold heavy polluters accountable.

The target was reiterated in the NDC update submitted to the UNFCCC in June 2022. Although new policies and funding were announced in the NDC, the modelling behind the Labor Party policies is unclear on Australia could achieve net zero (Reputex, 2021). The modelling suggests at least 60 MtCO₂e will remain from facilities covered under the safeguard mechanism by 2050 (Reputex, 2021). There will likely be more emissions from industrial facilities not covered under the mechanism. Other sectors of the economy will have to compensate and meet the abatement burden from the industry sector.

The modelling also indicates using a high level of carbon offsets. Carbon offsets and high reliance on the LULUCF sector will not achieve real emissions reductions. Studies have found Australia’s carbon offsets to be scientifically flawed (see forestry section).

In contrast, the reality on the ground at the state level, in public opinion, across the business sectors, and research organisations is very different. All states (including the Northern Territory and the ACT) now have either aspirational or legislated zero-emissions targets, and some have strong renewable energy targets as well as green/renewable energy hydrogen strategies in place.

Limiting temperature to 1.5°C is still possible with effective political action in place (Hare, Schleussner, et al., 2021).

Further analysis of Australia’s net zero emissions can be found here.