Australia

The Australian government is continuing its long-standing support for fossil fuels both at home and abroad, despite promising new investments into clean energy. Emissions from the fossil fuel, industry, agriculture and waste sectors continue to flatline, as the government's ongoing reliance on - and revision of - its land sector for emission removals gives the appearance of action where there has been little.

The government has introduced several measures aimed at stimulating investment in large-scale renewable energy, green hydrogen production and clean manufacturing, and improvements to vehicle efficiency. However, in parallel, the government has doubled down on fossil fuels, embedding their role in Australia’s domestic energy consumption and exports for decades to come.

Australia’s rating remains “Insufficient” and its 2030 NDC target of 43% is not aligned with 1.5°C and needs to be significantly improved to do so.

Since 2018, the government has repeatedly revised its land sector sequestration projections, creating the illusion of action. For example, by 2024 Australia had achieved net emission reductions of 28% below 2005 levels - including LULUCF – but without LULUCF, emissions had dropped by only 2%.

This continued revision of Australia’s historical and projected LULUCF estimates erodes the ambition of its NDC for fossil fuel and industrial emissions, the main drivers of climate change, and where the government holds the most leverage.

Australia’s updated NDC, submitted in 2022, has an emissions reduction target of 43% below 2005 levels by 2030. By 2023, the land sector revisions would have generated a reduction of 38.5% in net emissions reductions below 2005; in 2024 the updated LULUCF inventory generates a 41% net reduction.

The government’s approval of seven new coal mine projects in 2023 and 2024 will allow coal mining and exports to continue for many decades to come. This is incompatible with the Paris Agreement’s goals, and with the government’s own emission reduction commitments.

The government also continues to support the oil and gas industry, reaffirming its support for production and export of fossil gas until 2050 and beyond, with the release of its Future Gas Strategy. The government’s support of the fossil fuel industry hinges on false solutions such as its support for carbon capture and storage (CCS) and offsets. According to the IEA, no new fossil fuel projects are required in its Net Zero Emissions scenario, which reaches net zero emissions by mid-century in a way that limits global warming to 1.5°C, consistent with the Paris Agreement’s long-term temperature goal.

While the government’s expanded Capacity Investment Scheme demonstrates its commitment to its 82% renewable electricity target for 2030, many barriers to renewable energy projects remain. Investment in large-scale renewable energy was down significantly in 2023 compared to 2022. The government still lacks federal-level plans and committed timelines for coal and fossil gas phase-out.

The government introduced several new policies in the industry and transport sectors in 2024. The Future Made in Australia plan, the country’s “response to the U.S. Inflation Reduction Act”, commits AUD 22.7bn (USD 14.9bn) over 10 years to boosting renewable hydrogen, green metals, low carbon liquid fuels, critical minerals processing, and clean energy manufacturing including battery and solar panel supply chains. The updated National Hydrogen Strategy specifically focuses on renewable-based hydrogen production, rather than fossil fuel-derived hydrogen.

The government’s long-awaited New Vehicle Efficiency Standard was also introduced in 2024. Australia was, along with Russia, among the few developed economies to lack such measures. Rollout of electric vehicles in Australia lags behind most OECD countries, and holistic transport policies, which consider public transport, freight, and modal shift, are still missing. Australia’s policy gap for agricultural, buildings and waste sectors also remain: these sectors will be key to align with the 2050 net zero goal.

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 international offsets. Australia not only needs to submit a 2035 1.5°C compatible NDC in 2025 but must also set targets for genuine emissions reduction from its economy without relying on highly uncertain estimates from land sector. It should also introduce full transparency with respect to its land sector modelling and revision.
• 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 streamlining regulatory approvals that are slowing investment in large-scale renewable generation and storage, incentivising demand-side management, and planning the phasing out of coal and gas-fired plants, including off-grid, in a fair and just way.
• Foster the decarbonisation of the transportation sector through the implementation of policies for accelerating the deployment of electric vehicles, public transport planning, incentives for modal shift, and transition pathways for heavy mobility.
• Address emissions from the agriculture, waste and stationary energy sectors, with targeted policies that guarantee a fair and just transition.
• Transition Australia’s industry to future-oriented, low-carbon exports, by exploiting its vast renewables potential and mineral resources, without backing false solutions such as offsets and carbon capture and storage.

Some positive developments are worth highlighting:

• Australia’s AUD 22.7bn (USD 14.9bn) Future Made in Australia plan sets out a vision for Australia to capitalise on its substantial renewable energy and critical mineral resources and to attract investment in clean industries. If successfully implemented, the plan could provide a pathway out of reliance on coal and gas exports.
• Australia’s States and Territories continue to lead the way on climate action, with all except for Western Australia and the Northern Territory having a more ambitious 2030 target than the Federal government or having a 2035/2040 target already in place.

The CAT rates each country’s targets and policies against (1) its fair share contribution to climate change mitigation considering a range of equity principles including responsibility, capability and equality, and (2) what is technically and economically feasible using modelled domestic pathways which in absence of a better method are based on global least-cost climate change mitigation.

Comparing a country’s fair share ranges and modelled domestic pathways provides insights into which governments should provide climate finance, and which should receive it. Developed countries with large responsibility for historical emissions and high per-capita emissions, must not only implement ambitious climate action domestically but must also support climate action in developing countries with lower historical responsibility, capability, and lower per-capita emissions.

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.

To improve its 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 current policies are on track to reduce Australia’s total emissions excluding LULUCF 17–21% below 2005 levels by 2030. The government is relying heavily on a LULUCF sink to reach its climate goals, with LULUCF historical and projected sequestration revised significantly upwards in recent years.

The Capacity Investment Scheme (CIS), expanded in late 2023, aims to deliver 32 GW of new clean energy capacity by 2030, comprised of 23 GW of variable renewable capacity and 9 GW of dispatchable capacity, such as battery storage, in support of the government’s 82% renewable electricity target. While it is too early to assess the impact of the expanded CIS, progress towards the 82% target is lagging and coal still accounts for nearly half of all generation in Australia.

Other promising developments in 2024 include the introduction of the AUD 22.7bn (USD 14.9bn) Future Made in Australia plan, the New Vehicle Efficiency Standard, and an updated National Hydrogen Strategy.

The Safeguard Mechanism (SGM), reformed in 2023, is the government’s main policy for reducing industrial emissions. It is too early to assess the impact of the reforms because of the SGM design, however it is already clear that SGM facilities are relying significantly on offsets in place of making direct on-site emissions reduction.

The full policies and action analysis can be found here.

The CAT rates Australia’s 2030 NDC target as “Insufficient” when compared to modelled domestic emissions pathways. Australia’s NDC targets emissions 43% below 2005 levels by 2030, including LULUCF. However, this target is dependent on LULUCF sequestration estimates, which fluctuate widely year on year. Excluding LULUCF, this target equates to a reduction of 20% below 2005 levels by 2030.

Projections for LULUCF sequestration in 2030 increased nearly fourfold between the government’s 2021 and 2023 projections. This reduces the emissions reduction task for energy, industry, agriculture and waste.

The “Insufficient” rating indicates that Australia’s NDC target in 2030 needs substantial improvements to be consistent with modelled domestic pathways limiting warming to 1.5°C. If all countries were to follow Australia’s approach, warming would reach over 2°C and up to 3°C.

The CAT rates Australia’s 2030 NDC target as “Insufficient” when compared to its fair share emissions allocation. The “Insufficient” rating indicates that Australia’s NDC target in 2030 needs substantial improvements to be consistent with its fair share of the global mitigation effort to limit 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 the 1.5°C limit, 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.

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 within a year. 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 maximum land use, land use change and forestry (LULUCF) net emissions in the last 30 years are greater than 30% of total emissions.

The government intends to meet its NDC and net zero target by relying on LULUCF as a carbon sink (see section Forestry in the Policies and actions tab). 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.

Continued revision of Australia’s historical and projected LULUCF estimates erodes the ambition of its NDC for fossil fuel and industrial emissions, the main drivers of climate change, and where the government holds the most leverage. Effective climate policies are needed to decarbonise all sectors in line with the 1.5°C temperature limit irrespective of projected LULUCF sequestration, which is inherently uncertain.

We evaluate the net zero target as “Poor”.

An updated Net Zero Plan is under development by the government but is yet to be published. Australia’s current long-term emissions reduction plan, also submitted to the UNFCCC as a Long-Term Strategy (LTS), was published in 2021. 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 introduce 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.

It is still possible for Australia to get emissions onto a pathway to limit global warming to 1.5℃ this century, but urgent action is required. The full net zero target analysis can be found here.