Overall rating

Policies and action
against modelled domestic pathways

< 3°C World

NDC target
against modelled domestic pathways

Almost Sufficient
< 2°C World

NDC target
against fair share

< 3°C World
Climate finance
Critically insufficient
Net zero target



Comprehensiveness rated as

Land use & forestry

historically considered a


Policies and action
against modelled domestic pathways


The CAT policies and action emissions scenario are based on the projections published by the Australian Government in November 2023, which consider policies already in place, adopted or at an advanced design stage. It does not account for policies at an early stage of design nor the nation-wide 82% renewable target, which is accounted for in the announced policy projections as it is not enshrined in the law. With current policies, Australia will fall short of its 2030 target. Australia’s current policies are rated “Insufficient” when compared to modelled domestic pathways.

The “Insufficient” rating Indicates that Australia’s climate policies and action in 2030 need substantial improvements to be consistent with 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. Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

The government, since its election in May 2022, has put into effect a range of policies, mainly focusing on the power and emissions from large industrial facilities, where most of the emissions reductions planned during the decade will occur.

The reform of the Safeguard Mechanism is anticipated to lower net emissions from large industrial facilities by 33% from current levels by 2030, by implementing binding, decreasing emissions baselines. However, while direct emissions will be capped, the reform allows for unlimited use of offsets within this limit. This creates uncertainty about the actual emissions reductions that will be undertaken by the covered facilities. The reduction in direct emissions will depend on factors like the cost of offsets in Australian Carbon Credit Units and Safeguard Mechanism credits, incentives for on-site abatement, and emissions from new entrants to the scheme, especially those from the coal and gas sector.

Emissions from power generation are anticipated to decrease by close to half from 2023 to 2030, thanks in part to the Rewiring the Nation initiative, federal incentives, and state-level policies and targets. The proportion of generation from renewables in the National Electricity Market's power mix, the largest grid in Australia, is expected to increase to 73% by 2030 in the government’s projections, largely due to solar and wind energy deployment. On a national scale, the share of renewable energy is projected to reach 67%. The extent to which new policies, as opposed to market mechanisms, are accelerating the deployment of renewable energy sources remains ambiguous, in light of the cost-efficiency of solar and wind.

The government has announced a target of achieving 82% of renewable energy generation in the country’s grids by 2030. Although not legally binding, this target has been repeatedly mentioned by the Minister and in various policy documents. The impact of the 82% Renewable Electricity target, accounted for in the “with additional measures” scenario of the 2023 projections, is considered by the CAT in the 'announced policy' pathway.

Australia is currently not on track to achieve an 82% share of renewables by 2030, owing to various challenges such as skill shortages, grid issues, and complex administrative processes. The announced target also falls short of the 95-96% renewables penetration needed for alignment with a 1.5°C compatible pathway.

Beyond the renewable policies and the Safeguard Mechanism, action remains insufficient. Emissions from agriculture and waste are projected to remain stable until 2035, while transport emissions are forecasted to increase throughout this decade. Compared to countries at similar socio-economic levels, electric penetration is low. The National Electric Vehicle Strategy, a federal roadmap for transport transition published in 2023, lacks national-level targets and vision for public transport, cargo and modal shift. To fill this gap, states are spearheading the transition to clean mobility, offering targets and incentives with varying degrees of ambition. Australia still does not have fuel efficiency standards, unlike the vast majority of the OECD nations. The introduction of fuel efficiency standards for light vehicles, factored into the planned policy forecasts, would alter the trajectory of transport emissions, leading to a modest decline between now and 2030.

Meanwhile, the government's endorsement of new gas and coal projects contradicts its climate goals. In the discussions leading to the adoption of the Safeguard Mechanism reform, the government declined to commit to prohibiting new coal and gas projects.

As of the end of 2022, 114 fossil fuel projects were in the pipeline. Key developments like the Scarborough field and the North West Shelf plant extension in Western Australia, or the Barossa offshore gas field and the Beetaloo fracking project in the Northern Territory, will perpetuate fossil fuel extraction and production for decades. The industry is empowered by the government’s support for false solutions like offsets and carbon capture and storage (CCS), which do not only appear to be fundamentally flawed, but also fail to address the massive exported emissions from these projects.

Australia’s policies and action are projected to achieve emissions reductions of between 17% and 22% below 2005 levels, excluding LULUCF. Australia’s total GHG emissions excluding LULUCF are projected to be 436 MtCO2e in the current policy projections (443 MtCO2e with AR5 GWPs) and 408 MtCO2e by 2030 (415 MtCO2e using AR5 global warming potentials) in the announced policy projections. The details of these policies are discussed in the sectoral sections below.

Sectoral pledges

In Glasgow, several sectoral initiatives were launched to accelerate climate action. At most, these initiatives may close the 2030 emissions gap by around 9% - or 2.2 GtCO2e, though assessing what is new and what is already covered by existing NDC targets is challenging.

For methane, signatories agreed to cut emissions in all sectors by 30% globally over the next decade. The coal exit initiative seeks to transition away from unabated coal power by the 2030s or 2040s and to cease building new coal plants. Signatories of the 100% EVs declaration agreed that 100% of new car and van sales in 2040 should be electric vehicles, 2035 for leading markets. On forests, leaders agreed “to halt and reverse forest loss and land degradation by 2030”. The Beyond Oil & Gas Alliance (BOGA) seeks to facilitate a managed phase out of oil and gas production.

NDCs should be updated to include these sectoral initiatives, if they're not already covered by existing NDC targets. As with all targets, implementation of the necessary policies and measures is critical to ensuring that these sectoral objectives are actually achieved.

AUSTRALIA Signed? Included in NDC? Taking action to achieve?
Methane Yes No No
Coal Exit No N/A N/A
Electric vehicles No N/A N/A
Forestry Yes No No
  • Methane Pledge: Australia joined the Global Methane Pledge in October 2022, close to one year after the COP26. About 20% of Australia’s total emissions are from methane, mainly come from agriculture and industrial processes. Fugitive emissions have increased significantly since 2015, coinciding with increased natural gas production in Australia (Hare et al., 2021). Recent investigations have brought to light serious issues with Australia’s reporting on fugitive methane emissions from fossil gas and coal production and their impact on the country’s total greenhouse gas emissions (IEA, 2023c; Sadavarte et al., 2021a).

  • Coal exit: Australia has not joined the Powering Past Coal Alliance. Coal is the dominant source in Australia’s electricity generation mix and the share of coal generation was 49% in 2022 (Department of Climate Change, 2023j). The Australian government has no clear policy in place to phase out coal from its power generation mix, despite the recent blackouts and energy crisis caused by the ageing coal-fired fleet. The 69 new coal mining projects in the country’s 2022 investment pipeline will increase emissions both domestically and internationally, while the international movement for a coal exit creates a stranded asset risk for any new investment (DISER, 2022).

  • 100% EVs: Australia does not have any phase-out date for fossil fuel vehicles. The uptake of EVs is very slow: high demand is seeing second hand vehicles selling for higher prices than new (Vorrath, 2022). In April 2023, the government released a National Electric Vehicle Strategy, which outlines a roadmap for increasing EV penetration but does not specify quantified targets, nor measures for public transportation and modal shift.

  • Forestry: In November 2022, Australia joined international initiatives such as the Breakthrough Agenda on Agriculture, the International Mangrove Alliance for Climate, and the Forests and Climate Leaders Partnership. Australia expects a considerable support from the LULUCF sector to reach its NDC target.

  • Public sector: Australia has joined the Net Zero government Initiative. Under this initiative, the government pledges its operations to be net zero by 2030 (Department of Finance, 2023a). In November 2023, the Federal Department of Finance published the Net Zero in Government Operations Strategy, which covers non-corporate Commonwealth entities (Department of Finance, 2023b).

Energy supply

The energy sector (electricity, stationary energy, transport and fugitive energy) represented 76% of Australia’s emissions excluding LULUCF in 2022/23. In this year, the electricity, stationary energy and fugitives sectors accounted respectively for 29%, 20% and 9% of national emissions excluding LULUCF (Department of Climate Change, 2023a).

Electricity sector emissions have been declining since 2016, with decreasing trends expected to continue as renewable energy replaces fossil fuels (Department of Climate Change, 2023a). While the share of renewables rose to 31% of the electricity generation in 2021/22, concerns are rising that Australia will not be able to reach its announced pledge of reaching 82% of renewable share in the power mix by 2030 (ABC, 2023b; Department of Climate Change, 2023j). This led the government to announce a scaling up of the Capacity Investment Scheme to drive the deployment of 23 GW of variable capacity and 9 GW of dispatchable capacity by 2030 in November 2023 (Department of Climate Change, 2023n).

There is no explicit emissions reduction policy for the electricity sector, nor a federal-level coal and gas phase-out plan and timeline.

In August 2022, the government launched the National Energy Transformation Partnership, a framework for aligning federal and state-levels energy policies. The government announced in November 2023 that it will negotiate new bilateral agreement with states and territories as part of the Partnership (Department of Climate Change, 2023n). New Amendments to integrate an emissions reduction objective into the energy laws were adopted in June 2023 (Department of Climate Change, 2023m). The Rewiring the Nation strategy will provide AUD 20 billion for upscaling the electricity transmission system (Department of Climate Change, 2022f).

While Australia has ample opportunities to transition away from fossil fuels, the government has eschewed these in favour of continued support for new coal, oil, and gas projects (Noakes, 2022). 114 new fossil projects are in the pipeline, of which are 69 coal projects (DISER, 2022).

Coal power generation represented 49% of Australia's electricity production in 2021/22 (Department of Climate Change, 2023j). Australia was the world’s largest exporter of coking coal and the second-largest exporter of thermal coal, as well as the fifth-largest coal producer in 2021 (IEA, 2023b). In 2022, Australia was ranked highest globally for coal power emissions per capita (Ember, 2023b).

There has been a noticeable shift away from coal-fired power generation. In June 2022, Australia suffered an energy crisis resulting from a combination of events such as the illegal Russian attack on Ukraine impacting global energy prices, an ageing coal power plant fleet, impacts of COVID-19 on the coal plant workforce, and high energy demand during winter months causing energy supply issues and price spikes (AEMO, 2022c; Hannam, 2022).

The crisis led to blackouts across suburbs in the Eastern states and residents in the state of New South Wales were asked to conserve power. Capacity reserve issues have been mounting as Australia’s east coast power system has a heavy reliance on coal-fired power plants impacting reliability and power prices. These challenges highlighted the shortcomings of coal power generation, in addition to its climate, health and socio-economic impact.

The previous government had already accepted that new coal plants were unlikely to go ahead, with a 2021 report from the Office of the Chief Economist citing investor reluctance to fund new thermal coal projects as a reason for delays to new coal plant plans (Lewis et al., 2021). This has borne out with a proposed new coal-fired power plant in Queensland for which the government provided AUD 4m for a feasibility study (Thornhill, 2020). In 2022, the company, Shine Energy, admitted that the growth of renewables has rendered new baseload plants unviable, and is now promoting it as a backup plant (“load-following”) rather than baseload (Smee, 2022).

The last coal-fired turbine of the Liddel coal power plant, the oldest in Australia, was turned off in April 2023, seven years earlier than originally planned (Sidney Morning Herald, 2023). The Eraring plant, Australia’s largest coal-fired power station, is predicted by its operator to close in 2025 (The Guardian, 2022b). Coal mines are also closing in anticipation of these closures: in December 2022, Glencore announced plans to shut down 12 coal mines before 2035 (Glencore, 2022).

Developed countries must phase out coal from their power system by 2030 (Climate Action Tracker, 2023a). Scenarios by the Australian Energy Market Operator (AEMO) show a cost-effective pathway towards high shares of renewable energy can be achieved with policy and planning (AEMO, 2020, 2022a). To this day, Australia does not have a coal phase-out strategy.

Despite the trends in the domestic power sector, coal production and exports are forecasted to remain stable, at odds with the global efforts towards decarbonisation.

Run-of-mine black coal production is projected by the government to decrease slightly from 563 Mt in 2020 to 550 Mt in 2030, compared to the 560 Mt in 2030 forecasted in the 2022 projections (Department of Climate Change, 2022a, 2023a). This decrease is not in tune with what is needed to align with the Paris Agreement’s goals (IEA, 2023a).

In its 2023 Intergenerational Report, the government has acknowledged that seaborne thermal coal exports would have to decline significantly in a 1.5°C scenario (Australian Government, 2023). Nevertheless, the decline projected in the Intergenerational Report, where thermal coal exports reach 1% of its current levels by 2063 only, is not in phase with recent research showing that coal should be phased-out from the global power system by 2040 in a 1.5°C compatible pathway (Climate Action Tracker, 2023a).

With 69 pipeline coal mining projects in the Department of Industry Resources and Energy Major Projects database, and while many of the new projects included are still speculative, Australia has the highest number of proposed coal mine projects among OECD nations (Global Energy Monitor, 2023a).

Prime Minister Anthony Albanese has argued that Australia stopping producing coal would not result in a reduction of global emissions, because “what you would see is a replacement with coal from other countries that’s likely to produce higher emissions … because of the quality of the product” – a groundless assertion that used to be a talking point from the fossil fuel industry (The Guardian, 2022a).

However, coal producer Whitehaven found that burning its product only emits 4% less greenhouse gases than coal from Korea or China, less than and researchers determined that Australia’s coal mine methane emissions were dramatically underreported (Ember, 2022; The Guardian, 2022a).

The Galilee coal mine megaproject has been rejected by the Queensland Government Department of Environment and Science in April 2023 (Queensland Government, 2023b). In May 2023, the Environment Minister approved the Isaac River mine, the first coal mine approved by the government since its election (The Conversation, 2023). The Minister has since approved three other mines (Australia Institute, 2023b).

Fossil gas and oil
Australia was the world’s largest exporter of liquefied natural gas (LNG) in 2021 (IEA, 2023b).

The government projects that LNG production from its ten facilities will decrease from 83.2 Mt in 2021/22 to a plateau of 79 Mt towards the end of the decade (Department of Climate Change, 2023a). This projection marks a downward revision from the 2022 forecasts, which estimated LNG production to reach 88Mt by 2030 (Department of Climate Change, 2022a). Although no new LNG facilities in the government's projections are expected to come online until the end of the decade, a new production train is being constructed at the Woodside Energy's Pluto plant in Western Australia, and the Ichthys plant expansion in the Northern Territory is slated to begin operating in 2024.

The government’s projections do not include Tamboran Resources’ plan to build a 6.6 Mt plant in Darwin, sourcing its gas from the Beetaloo basin. A Tamboran Resources’ executive has expressed the company’s intention to expand the production capacity of the plant to 20 Mt (Climate Analytics, 2023c).

The government factors in its emissions projections - and in the Safeguard Mechanism reform’s design - the development of new gas fields to replace depleted ones, with the Barossa, Scarborough, Crux, and Browse fields expected to begin operations during this decade. Most of these fields are more carbon-intensive than the sources they are replacing (Department of Climate Change, 2022a).

Gas developments are mostly concentrated in Western Australia and in the Northern Territory. An analysis of Woodside’s plans for Scarborough-Pluto and its associated projects found it to be a “bet against the world implementation of the Paris Agreement” (Climate Analytics, 2021).The Barossa field, in particular, has the highest CO2 content of all fields in Australia, with the Institute for Energy Economics and Financial Analysis referring to it as “an emission factory with an LNG by-product” (Robert, 2022).

Considering it has what the Department of Industry calls “the potential to rival the world’s biggest and best gas resources”, it is uncertain to what extent the Beetaloo basin in the Northern Territory will be exploited (Department of Industry, 2022).

The emissions projections include the exploitation of the Beetaloo Basin, but only to a limited extent, aimed at meeting domestic demand. However, there have since been significant developments in this area (Department of Climate Change, 2023a). Recommendation 9.8 of the Northern Territory government's Pepper Inquiry into the Beetaloo development said the domestic lifecycle emissions of the gas extracted by hydraulic fracturing in the Northern Territory must be made net-zero (CSIRO GISERA, 2023). An analysis found that the emissions estimate from developments in the Northern Territories were severely underestimated, and the potential to offsets its emissions widely overestimated (Climate Analytics, 2023c).

The hydraulic fracturing of the Beetaloo basin is linked with the development of the Middle Arm Precinct in Darwin. Despite being presented as a sustainable precinct, the industrial project could host blue hydrogen production facilities and LNG manufacturing infrastructure (Government of the Northern Territory, 2022). A Senate Inquiry into the Middle Arm Precinct was established in September 2023, after having been voted down twice by the government (ABC, 2023c). Fossil gas companies are also exploring opportunities to frack the Canning Basin, located in Western Australia (ABC, 2023e).

Emissions from coal and LNG use at the final export destination is not accounted for in the national greenhouse gas inventory. The average exported emissions from Australia’s coal, oil and gas between 2016 and 2020 were more than twice its average domestic emissions over the same period (Climate Action Tracker, 2023b).

Australia’s support to fossil fuel production and exports extends to its diplomatic action. The government watered down the Communique of the 2023 52nd Pacific Island Leaders’ Forum in the Cook Islands to avoid having it calling for a phase out of fossil fuel production and exports (Fossil Fuel Non-Proliferation Treaty Institute, 2023).

Around 80% of the fossil gas production goes towards LNG plants (Department of Climate Change, 2023j). The rise of LNG export and the rising domestic demand have caused a drastic increase in domestic gas prices. In 2022, the federal government implemented a domestic wholesale price cap of AUD 12/GJ on gas prices. Originally planned to last one year, the government now plans to extend the cap until 2025 (Ministry for Industry, 2023). The government has refused the call from the Climate Change Authority to phase out new gas connections for residential and small commercial buildings and to phase out existing gas connections (Climate Change Authority, 2023).

The Australian Energy Market Operator (AEMO) anticipates a deficit in the Western Australian gas market amounting to over 16% of demand during the period 2030 to 2032, despite the state accounting for more than half of Australia’s LNG exports and the mandate for LNG facilities to reserve the equivalent of 15% of their export for the domestic market (AEMO, 2022b). The government announced it would reform its Domestic Gas Security Mechanism to make LNG exporters share the shortfall liability equally in case of short supply (Department of the Prime Minister and Cabinet, 2023).

Gas accounted for 18% of Australia’s generation mix in 2021/22 (Department of Climate Change, 2023j). In the government’s projections, published in November 2023, gas power capacity is projected to increase slightly from 19 GW in 2020 to 22 GW by 2025, before remaining stable at 21 GW in 2030 and 2035 (Department of Climate Change, 2023a). As of August 2023, 2.2 GW of capacity were in development (Global Energy Monitor, 2023b). According to the AEMO, from now until 2032, gas plant closures are anticipated solely in South Australia, with an expected retirement of 1.6 GW. Between 2033 and 2035, an additional 0.7 GW of gas-fired capacity is projected to be retired in South Australia, Queensland, and Victoria (AEMO, 2023).

The 2023/24 federal budget includes an allocated budget for the preparation of a Future Gas Strategy to “to support Australia’s energy system to become cleaner, cheaper and more reliable while maintaining our international reputation as a trusted energy supplier to the region” (Minister for Finance, 2023b).

The government subsequently ran a consultation for the strategy, aiming to “provide a medium-term (to 2035) and long-term (to 2050) plan for gas production, consumption and substitution” (Department of Industry, 2023b). The consultation paper frames gas as needed to support in achieving the renewable deployment goals, despite findings showing that Australia needs to phase out gas from its power system by 2035 to align with a 1.5°C compatible pathway (Climate Action Tracker, 2023a). As is the case for coal, Australia still does not have a gas phase-out strategy and timeline.

Oil production has been decreasing for two decades, reaching close to 340,000 barrels per day of crude oil and condensate in 2021/22, and 110,000 barrels per day of LPG. Crude oil and condensate production is expected to fall to 290,000 barrels per day by 2024/25, while LPG production is expected to remain stable (Department of Industry, 2023a).

The oil and gas industry benefits from significant tax rebates, the most prominent being the fuel tax credit scheme (Australian Taxation Office, 2017). Another subsidy is the statutory effective life caps. This subsidy can be applied to oil and gas assets to accelerate the depreciation, and the taxable amount on the asset (ODI, 2015).

These subsidies support the fossil fuel industry and its exports, despite the need for a global phase-out. During the fiscal year 2022/23, the fossil fuel industry and major users received AUD 11.1bn in financial assistance, marking an 11% decrease compared to the previous year. However, the estimates for future subsidies have risen to an all-time high, increasing from AUD 55.3bn to AUD 57.1bn (Australian Institute, 2023).

In the 2023/24 budget, the government announced a revision of the Petroleum Resource Rent Tax (PRRT). The policy will be adjusted to include a minimum income tax threshold for LNG facilities. However, this reform will only apply to new projects seven years after their initial year of production (Minister for Finance, 2023b). To date, no Australian LNG project has been subject to PRRT payments (Minister for Finance, 2023a).

Australia possesses significant potential for renewable energy, which provides an opportunity to decarbonise its power grid and reduce dependence on fossil fuels. However, the realisation of this potential requires adequate policies and financial flows to accelerate the transition.

While the Australian government has demonstrated a bold stance towards the deployment of renewable energy, as evidenced by the preliminary implementation of initiatives such as the Rewiring the Nation project, the level of investment coming online is too slow to put the country on track to reach the 82% national renewable target by 2030 (Clean Energy Council, 2023). Changes to the Capacity Investment Scheme were announced in November 2023 to address these concerns (see below). At COP28, Australia signed the pledge to triple the scale of renewables capacity by 2030 and double the global average annual rate of energy efficiency improvements to 2030 (COP28, 2023a).

The challenges slowing down investments include disruptions in the supply chain due to factors like COVID-19 and geopolitical tensions, skill shortages compounded by immigration challenges following the pandemic, local community resistance, extended permitting processes, lack of preparedness to handle high share of variable energy sources as well as slow grid development (ABC, 2023b; Australian Energy Council, 2023). Nevertheless, developer interest is described as “massive” (ABC, 2023b). It is crucial that further efforts are made to address these barriers and increase the momentum of renewable energy deployment.

Renewable energy generation has increased in recent years from 9% of total electricity generation in fiscal year 2005 to 31% in 2021/22 (Department of Climate Change, 2023j). The government projections’ baseline scenario, which does not include the 82% renewable target, forecasts that 67% of electricity will be generated with renewable energy by fiscal year 2030, and 83% by 2035. In the National Energy Market (NEM) - the largest electricity grid in Australia that covers Queensland, New South Wales, Australian Capital Territory, Victoria, South Australia, Tasmania – renewable generation is anticipated to reach 73% in 2030, and 91% by 2035 (Department of Climate Change, 2023a).

The government has announced AUD 20bn investment in the electricity grid to allow for renewable energy, in addition to AUD 300m for community batteries and solar banks (Australian Government, 2022). The 2022–23 budget commits AUD 25bn to clean energy (Global Australia, 2023). The 2023-24 budget has allocated AUD 10bn towards auctions for renewable generation and storage, in addition to further AUD 4bn in investments for the energy transition (Minister for Finance, 2023a).

The Capacity Investment Scheme, established in December 2022, provides a framework for the deployment of variable and dispatchable capacity that will unlock at least AUD 10bn of investment, thanks to reverse auctions to secure contracts for difference. The first tenders aim at building generation and storage capacity in Victoria and South Australia (Department of Climate Change, 2022d; RenewEconomy, 2023b).

Initially, the policy aimed to support the deployment of 6 GW of clean and dispatchable capacity by 2030 (Department of Climate Change, 2023b). In November 2023, this target was expanded due to concerns about Australia's ability to meet its 82% renewable energy goal. The revised policy now seeks to add 23 GW of variable clean energy capacity and 9 GW of dispatchable capacity by 2030 through reverse auctions (Department of Climate Change, 2023n).

This revision effectively replaces the Renewable Energy Target policy (RenewEconomy, 2023a). The scheme is open to projects over 30 MW in the National Electricity Market, with a lower threshold for projects outside the NEM (Department of Climate Change, 2023b).

The 2023 power demand forecasts for the NEM and Western Australia’s Wholesale Electricity Market are informed by AEMO's 2023 modelling, which attributes the growth in electricity demand to increased electrification across various sectors (Department of Climate Change, 2023a). The Safeguard Mechanism reform is forecasted to drive electrification in large industrial facilities. Meeting the 82% target will require a dual approach: augmenting renewable energy capacity on the supply side and focusing on energy efficiency and management measures on the demand side.

Small-scale renewable energy is experiencing strong growth thanks to the uptake of rooftop solar by private households and small businesses, with a 30% growth between fiscal years 2020 and 2021 and 22% between 2021 and 2022. It produced 8% of the Australia’s electricity in the fiscal year 2022 (Department of Climate Change, 2023j).

By late 2023, there were close to 22 GW of solar photovoltaic panels under the Small-scale Renewable Energy Scheme, a program that rewards individuals and small businesses for installing renewable energy capacity, compared to 18 GW by late 2022 (Clean Energy Regulator, 2023b; Sunwiz, 2023a). Australia has the world's highest uptake of rooftop solar, with more than a third of households equipped (Sunwiz, 2023b). Large-scale solar generation grew by 30% between fiscal years 2021 and 2022. Overall, solar energy represented 13% of the power mix in 2022 (Department of Climate Change, 2023j).

Wind power accounted for 11% of Australia’s power generation in 2021/22 (Department of Climate Change, 2023j). Despite a huge potential estimated at 5,000 GW by the Global Wind Energy Council, Australia is slow to deploy offshore wind energy (Global Wind Energy Council, 2022). The Offshore Electricity Infrastructure Act, regulating the development of this source of energy, was implemented in June 2022 (Department of Climate Change, 2023o).

In December 2022, the government designated the Bass Strait as the first country’s offshore wind zone. The Star of the South project, proposed in the area, was awarded the Major Infrastructure Project status (Minister for Industry and Science, 2022). At the end of 2023, there was five zones defined as offshore wind areas (Department of Climate Change, 2023k). The government of Victoria released a roadmap for the deployment of offshore wind, with a second implementation statement published in March 2023. The state targets 2 GW of offshore wind power capacity by 2032, increasing to 9 GW in 2040 (Government of Victoria, 2023).

In the 2023 projections, power sector emissions for 2030 are estimated to be 3 MtCO2e higher than the 2022 projections suggested. However, the forecast for 2035 is 29 MtCO2e lower than in the 2022 projections. This drastic reduction post-2030 is attributed to the updated Victorian Renewable Energy Targets and revised wind generation forecasts (Department of Climate Change, 2023a).

Nuclear power is prohibited by law in Australia under the Australian Radiation Protection and Nuclear Safety Act 1998 (the ARPANS Act), and the Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) (Cronshaw, 2020).

Energy Efficiency
The government is working on a National Energy Performance Strategy to accelerate the rollout of demand-side measures. A consultation ran until February 2023 (Department of Climate Change, 2022c). The current energy efficiency policy, the National Energy Productivity Plan 2015–2030, aims to improve energy productivity by 40% by 2030 through “encouraging more productive consumer choices and promoting more productive energy services” (Department of Climate Change, 2015). However, research suggests that much more ambitious improvements are possible, with a doubling of energy productivity possible by 2030 with net benefits for GDP (Energetics, 2015).

The government introduced the Energy Efficient Communities Program in 2019, committing AUD 50m in grants for businesses and community organisations to improve energy efficiency and reduce electricity bills (DEE, 2019b). By 2020, this program’s budget was reduced to AUD 40m. The program has been renewed in 2022, but the budget remains the same (Department of Industry Science Energy and Resources, 2020).

States and territories
States and territories are stepping up and committing to their own targets. Seven out of eight states and territories in Australia have committed to a renewable energy target in or beyond 2025:

  • Since 2020, 100% of the Australian Capital Territory’s electricity has come from renewable sources. The government plans to reach net zero by 2045 (Climate Choices, 2023).
  • Tasmania is 100% self-sufficient in renewable energy (Tasmanian Government, 2023). It has set a new target for 200% renewable energy by 2040 (Gutwein, 2020).
  • South Australia is a global leader in terms of the share of variable renewable energy, having increased the share of renewable generation from 1% to 68% of renewables in 16 years. The state targets 100% of net renewables by 2030 (Government of South Australia, 2023). In December 2022, the supply of solar and wind power accounted for more than 100 per cent of the demand over ten days (RenewEconomy, 2023c).
  • The Northern Territory has committed to reaching 50% of renewable electricity generation by 2030 (Langworthy et al., 2017; Northern Territory Government, 2021).
  • The state of Victoria has a target of 65% of renewable penetration by 2030 and 95% by 2035 (Victoria State Government, 2023).
  • Queensland updated its target in September 2022, committing to 70% of renewable by 2032 and 80% by 2035. It previously committed to reaching 50% of renewable by 2050 (Queensland Government, 2023a).
  • New South Wales has a renewable energy capacity target of 12 GW by 2030 (New South Wales Government, 2023). Its climate policy includes as much as AUD 32bn into wind, solar and energy storage projects, through the creation of dedicated Renewable Energy Zones (Mazengarb, 2021).
  • Western Australia has no renewable energy target.

Fugitive emissions are the release of greenhouse gases that occur during the production, processing, transportation, and storage of fossil fuels. They accounted for 9% of national emissions in 2022/23, excluding LULUCF. Methane emissions are expected to increase by 2% between 2023 and 2030, despite Australia being signatory of the Methane Pledge (Department of Climate Change, 2023a).

In 2022/23, fugitive emissions from coal were 25 MtCO2e (using AR5 GWPs), more than half of Australia’s total fugitive greenhouse gas release (Department of Climate Change, 2023a).

Despite shrinking in 2021 and 2022 due to floods, fugitive emissions from the coal sector are expected to rise back to their 2020 levels of around 29 MtCO2e by 2025 (AR5 values), and then decrease to 28 MtCO2e by 2030 (Climate Analytics, 2023a; Department of Climate Change, 2023a). Coal-related fugitive emissions estimates have seen a downward revision from the 2022 to the 2023 projections, attributed to the impact of the Safeguard Mechanism and updated coal production forecasts (Department of Climate Change, 2023a).

Despite efforts for improving monitoring, like the 2021 reassessment of emissions from coal mines in Queensland following analyses of satellite data, fugitive emissions from coal mining are still widely underestimated (Department of Industry, 2021; Ember, 2022; IEA, 2022a; Sadavarte et al., 2021b). The method of calculating fugitive emissions for open-cut mines relies on standardised factors, overlooking seam-specific gas content differences (Ember, 2022). The IEA has estimated that methane emissions from Australian coal mines are underreported - by as much as two-thirds (IEA, 2023c).

Given the scale of these operations, any revisions to the estimates of fugitive emissions from coal mining could increase Australia's reported emissions inventory, as coal mining fugitive emissions are expected to account for 8% of Australia’s emissions in 2030 (including LULUCF) according to the baseline scenario of the government’s projections. In 2020, two thirds of Australia’s fugitive emissions were methane (AR5 values) (Department of Climate Change, 2023a).

Fugitive emissions from Australia’s 10 operational LNG projects have risen rapidly since 2015 to reach 12 MtCO2e (with AR5 GWPs) in 2022/23 (Department of Climate Change, 2023a). According to government forecasts, there will be a reduction of 2 MtCO2e in emissions between 2020 and 2030, with an additional decrease of 3 MtCO2e from 2030 to 2035. This trend is attributed to the enforcement of the Safeguard Mechanism and the establishment of Carbon Capture and Storage (CCS) infrastructure (Department of Climate Change, 2023a). The government’s plan to improve methane monitoring might affect these values in the next years.

CCS is being considered as a solution for mitigating fugitive emissions from gas fields’ CO2 reservoir, without addressing the methane emissions occurring at every stage of the gas lifecycle. Like many plants around the world, the Gorgon project, aimed at sequestering CO2 from its namesake LNG plant in Western Australia, has repeatedly fallen short of its sequestration goals (Center for International Environmental Law, 2023).

Nevertheless, CCS projects continue to be pursued by gas producers with government backing. The 2023/24 budget includes funding for examining opportunities to provide regulatory visibility for offshore CCS facilities (Minister for Finance, 2023b). In November 2023, the CSIRO and the Global CCS Institute published an assessment of the potential for developing CCS in Western Australia (Government of Western Australia, 2023).

Santos is planning to establish CCS infrastructure to capture CO2 from the Barossa offshore field near Darwin. This CCS unit could also address emissions from LNG and hydrogen production in the Middle Arm precinct. Santos is also working on the Moomba CCS project in South Australia, which focuses on capturing emissions from domestic natural gas production. Other projects in the Surat Basin and in the Gippsland Basin are less advanced (Department of Climate Change, 2023a; IEA, 2023b).

Santos also has plans to export CO2 emissions to bury in the depleted offshore Bayu Undan oilfield off the coast of of Timor l'Este (East Timor). In August 2023, Santos signed the latest in a series of MOUs with the Timor l'Este national oil company Timor Gap. The plan is to sequester up to 10 million tonnes of CO2 a year.

In November 2023, the government passed a bill to enable the storage of captured CO2 in overseas waters. The Environment Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Act 2023, will allow Santos to go ahead with the project.

In all these instances, the CCS facilities – provided they function – will only capture a portion of the greenhouse gas emissions associated with fossil fuel production. This approach allows these projects to comply with domestic regulations, including the Safeguard Mechanism, while not fully considering the impact of their emissions in Australia and abroad.

In the 2023 projections, the government estimates that CCS will decrease fugitive emissions from LNG by 1 MtCO2e in 2030 (AR5 values), and reduce domestic gas fugitive emissions by 1.5 MtCO2e. It anticipates a scaling up of CCS between 2030 and 2035, projecting that 4 MtCO2e of LNG-related fugitive emissions will be captured and stored by 2035 (Department of Climate Change, 2023a). However, given the experience at Gorgon, it is doubtful whether any of these projects will capture anything like what they claim.


Australia’s emissions from industrial processes accounted for 6% of total emissions (excluding LULUCF) in 2022/23 (Department of Climate Change, 2023a). This does not include the emissions related to the energy demand in the industry, and stationary energy emissions, categorised under energy emissions.

The government has announced a “Powering the Regions Fund” to support industries such as green metals (steel, alumina and aluminium), clean energy component manufacturing, hydrogen electrolysers and fuel switching, and initiatives like agricultural methane reduction and waste reduction (ALP, 2022; Australian Government, 2022).

The Department of Climate Change opened a consultation for the Powering the Regions initiative in February 2023 (Department of Climate Change, 2023i). AUD 1.4bn were allocated for the fund in the 2023/24 federal budget. The government announced it will invest AUD 15m to create a Powering Australia Industry Growth Centre (Minister for Finance, 2023a).

There are many studies demonstrating Australia’s industry sector can decarbonise and transition away from fossil fuels (Australian Industry Energy Transitions Initiative, 2023; BZE, 2019; Climate Analytics, 2018; ClimateWorks Australia, 2014, 2020).

As part of its 2023-24 budget, the government announced that it will provide over AUD 2bn for the development of a hydrogen supply chain in Australia through competitive contracts for renewable hydrogen producers as part of the Hydrogen Headstart program. The government will also develop a Guarantee of Origin scheme for hydrogen and other low emissions products (Minister for Finance, 2023b).

This builds on previous initiatives to develop hydrogen production and use in Australia. The Hydrogen Headstart program is not accounted for in the 2023 emissions projections, as it is still in initial design phase. Similarly, Western Australia’s Green Hydrogen Target and South Australia’s Hydrogen Jobs Plan are excluded from the forecasts (Department of Climate Change, 2023a).

In November 2019, the previous government released the National Hydrogen Strategy, developed by the Council of Australian Governments’ Hydrogen Working Group (COAG Energy Council, 2019). The strategy did not include quantified targets. Currently, the National Hydrogen Strategy refers to a “technology-neutral” approach and defines “clean hydrogen” as “hydrogen produced using renewable energy or using fossil fuels with substantial carbon capture”. Although the government aims to make Australia a hydrogen exporter, it is crucial not to adopt a technology-neutral approach that places gas-based hydrogen on the same level as hydrogen produced from low-carbon sources. In 2023, the government announced a review of the strategy, with a public consultation commencing shortly (Department of Climate Change, 2023g).

Australia ranks second in projected electrolysers capacity by 2030, behind the European Union (IEA, 2022b). The National Reconstruction Fund has dedicated fund targeted for the development of electrolysers and for incentivising fuel switching (Reputex, 2021). The government is partnering with states to build a green hydrogen highway on the busiest freight routes (Department of Climate Change, 2023c).

As of November 2023, 12 small-scale hydrogen projects were operating. Except for one, all of them produce renewable-based hydrogen. The list of operating projects includes multiple research-related initiatives to study the blending of hydrogen with fossil gas in the gas network. 95 projects, either renewable-based or involving conversion of fossil fuels, were in development, in planning or under construction (CSIRO, 2023).

New South Wales, South Australia, Victoria, the Northern Territory, Queensland, Tasmania and Western Australia have renewable hydrogen strategies (Government of New South Wales, 2021; Government of Queensland, 2022; Government of South Australia, 2019; Government of the Northern Territory, 2020; Government of Victoria, 2021; Tasmanian Government, 2020; WA Dept. of Primary Industries and Regional Development, 2019). The federal budget 2023-24 mentions that Australia’s hydrogen industry could create over 16,000 jobs by 2050 (Minister for Finance, 2023b).

Safeguard Mechanism
Australia’s Safeguard Mechanism started in July 2016, with a goal of limiting significant emissions increases from large industrial sources to a baseline emissions level. This mechanism now applies to 219 facilities with direct emissions of more than 100 ktCO2e (Clean Energy Regulator, 2023c). The power sector is treated separately from industrial facilities.

While the original Safeguard Mechanism was designed to limit emissions instead of reducing them, baseline changes led to increase of emissions from these facilities by 12% in the scheme’s first two years of operation (Department of the Environment and Energy, 2019; Morton, 2020).

The government committed to reforming the Safeguard Mechanism to align it with its updated climate goals. This reform was implemented in March 2023 and became effective in July of the same year, introducing major changes to the system.

The new regulations mandate a 4.9% annual reduction in binding baselines. To comply, facilities must either cut their emissions, acquire Australian Carbon Credit Units (ACCUs), or purchase newly introduced Safeguard Mechanism Credits (SMCs). SMCs, a novel aspect of this reform, allow facilities emitting less than their allotted baselines to earn one credit for each CO2e unit saved, which they can then sell to other facilities needing to meet their requirements. As part of the reform, facilities vulnerable to carbon leakage and classified as trade-exposed may qualify for a slower reduction rate, and benefit from grants (Department of Climate Change, 2023v). Fossil fuel-related facilities, such as LNG plants, are eligible for reduced decline rate even though they cannot physically relocate.

The reform has the objective to reduce net SGM emissions from 138 MtCO2e in 2021/22 to around 100 Mt in 2030 (AR5 values) and allocates a carbon equivalent budget of 1.2 GtCO2e for SGM facilities between 2020 and 2030. The design of the reform assumes significant new fossil fuel projects to come online, such as new carbon-intensive gas fields and coal mines (Clean Energy Regulator, 2023c; Department of Climate Change, 2023v; Reputex, 2023).

The government amended its initial proposal, adding new provisions to secure the necessary cross-party support for passing the legislation. The principal revision to the original reform is the stipulation that there must be a reduction in the five-year rolling average of direct emissions from covered facilities. However, the legislation incorporates a two to three-year gap between the definitions of current and previous rolling averages (Bowen, 2023; Parliament, 2023). This could theoretically allow Safeguard Mechanism emissions to rise year on year.

The reform mandates new offshore gas field to be net zero from start of operation. It enshrines Recommendation 9.8 of the Pepper Inquiry stating that onshore shale gas developments in the Northern Territory must have net zero domestic lifecycle emissions.

Nevertheless, this condition does not seem to affect the will of the fossil fuel developers to frack the Beetaloo sub-basin (Tamboran Resources, 2023). In May 2023, the Northern Territory government announced it had met all the recommendations from the Pepper Inquiry, including 9.8. This claim has been challenged by the officer overseeing the implementation of the requirements (ABC, 2023d). Research found that the estimated emissions from fracking in the Northern Territory and its resulting gas usage have been considerably understated, while the capability to offset these emissions has been exaggerated (Climate Analytics, 2023c).

The Safeguard Mechanism reform introduces a ‘climate trigger’, a modification to the Climate Change Act mandates the Climate Change Authority (CCA) to assist the Minister in preparing the annual public climate change statement, taking into account emissions from new or expanded facilities. The Minister is required to disclose why they believe the mechanism’s outcomes are consistent with the objectives of the National Greenhouse and Energy Reporting (NGER) Act, and if not, develop a plan to adjust the mechanism’s rules. These provisions aim to ensure the Safeguard Mechanism operates in line with the broader objectives of reducing greenhouse gas emissions while balancing the need to support industry competitiveness and incentivise on-site emissions reductions. The actual implementation of this measure will be at the discretion of the ruling government (Gilbert + Tobin Lawyers, 2023).

As noted by Professor Macintosh, “the process requirements are convoluted and caveated and they have been carefully drafted to make it difficult for a third party to drag the Minister to the Courts in the event the caps aren’t adhered to” (Renew Economy, 2023).

To accompany the Safeguard Mechanism reform, the government is introducing a National Reconstruction Fund with up to AUD 3bn to support renewables manufacturing and low emissions technologies. Coal, gas and native logging projects will not be able to receive direct investments from this fund (Australian Government, 2022).

The Safeguard Transformation Stream aims to facilitate the decarbonisation of trade-exposed facilities and has been granted AUD 600m in funding for the period spanning from 2024 to 2028. The Industrial Transformation Stream has been awarded AUD 400m to assist existing facilities. Additionally, the Critical Inputs to Clean Energy Industries Stream will provide funding to support facilities that contribute to the acceleration of Australia's low-carbon industries, with a similar funding allocation (Minister for Finance, 2023b).

How much actual emissions reduction is conducted thanks to the Safeguard Mechanism will have a significant impact on Australia's domestic emissions. Allowing facilities to meet their baselines through offsets makes forecasting the emissions covered by the scheme complex, as the direct emission reduction depends on offset use from existing and new facilities.

The 2023 projections forecast that direct emissions from facilities under the Safeguard Mechanism will reduce from 138 MtCO2e in 2021/22 to 121 MtCO2e in 2029/30, and further down to 97 MtCO2e by 2034/35 (AR5 values). This reduction implies that less than half of the abatement will result from on-site emissions cuts. 40% of the on-site abatement under the Safeguard Mechanism will originate from the stationary energy sector, and around 25% from the fugitive sectors. 60% of emissions reductions will occur within the mining and extraction industries. The modelling of the Safeguard Mechanism facilities’ abatement, commissioned to consulting firm Reputex, is not publicly available (Department of Climate Change, 2023a).


Transport emissions represented 19% of total emissions (excluding LULUCF) in 2022/23 (Department of Climate Change, 2023a). It is projected to become the primary source of Australia’s emissions by 2030 (Department of Climate Change, 2023a).

The government has made several transport policy announcements including developing a National Electric Vehicle (EV) Strategy and establishing the Driving the Nation Fund. The government plans to implement an electric car tax discount, and an emissions testing programme to inform consumer choice (Australian Government, 2022).

Australia has few policies in place to lower emissions from passenger vehicles, and compared with other countries, has had a slow uptake of electric vehicles. EVs accounted for less than 4% of new vehicle sales in 2022 in Australia, compared to the European Union's 17% (Department of Climate Change, 2023d). Still, momentum continues to build. From January to June 2023, electric vehicles made up 8% of new car sales, exceeding the sales volume for the entire year of 2022 (Electric Vehicle Council, 2023).

The baseline scenario of the Australian government projections forecasts that battery EVs sales will only reach 23% of new light duty vehicle sales in 2030, and 47% in 2035 (Department of Climate Change, 2023a). The anticipated slow electrification in Australia's vehicle fleet is a missed opportunity to leverage the power sector's transition for decarbonising transportation.

This scenario includes measures from the National Electric Vehicle Strategy, published in April 2023 (Department of Climate Change, 2023d). It says, Australia, with Russia, was one of the last developed countries not to have fuel efficiency standards, while nearly 80% of new light duty vehicles sold globally are subject to some kind of emissions or fuel economy standard (Department of Climate Change, 2023d). In parallel to the release of its EV strategy, the government released the consultation paper on the design of a national fuel standards (Department of Infrastructure, 2023). The adoption of fuel efficiency standards, accounted for in the with additional measures scenario, leads to a 4% decline in transport emissions between 2023 and 2030, and a 15% drop from 2030 to 2035.

The Australian government has committed to building a National EV Charging Network, with charging stations every 150 kilometres along the country's major highways. While the National Electric Vehicle Strategy outlines a roadmap to encourage EV adoption with a focus on cooperation between the government and states, it does not include quantified targets or direct incentives for consumers, which are crucial to incentivize less well-off households to switch to vehicles with lower emissions.

The government's projections indicate that the trend toward heavier passenger vehicles is not expected to slow down, but the National EV Strategy does not address this issue. The strategy also provides little mention of heavy-duty vehicles. Articulated and rigid trucks emitted 21 MtCO2e in 2023, compared to 41 MtCO2e for cars. It does not address the lack of planning for public transportation and modal shifting. The strategy will be updated annually, and a comprehensive review is planned for 2026 (Department of Climate Change, 2023a, 2023d).

All states have some form of EV incentives, although they vary significantly in nature and scope (IEA, 2023b).

The Australian Capital Territory is moving towards having all new vehicle sales be zero-emission by 2030 (IEA, 2023b). Leading in electric vehicle sales, the region is striving for net-zero GHG emissions by 2045. To support this shift, the ACT offers financial incentives for zero-emission vehicles such as stamp duty exemptions, lower registration fees, and interest-free loans. The ACT Government is also transitioning the government fleet (ACT Government, 2020).

Unlike the federal government, five out of eight Australian states have set targets for EV penetration. Queensland, New South Wales, South Australia and Victoria all have target of having at least 50% of all new cars sold in 2030 EVs. Western Australia, Tasmania and the Northern Territory still have to set fleet-wide EV penetration goals (IEA, 2023b).


The buildings sector accounts for 23% of Australia’s final energy consumption in 2021 (IEA, 2023). Natural gas still accounted for 25% of the energy consumed by buildings in 2021, and 58% of the energy consumed for space-heating, The residential sector's most significant energy-consuming end-use (IEA, 2023b). Stationary emissions from the building sector were 18 MtCO2e (AR5 GWPs) in 2023 (Department of Climate Change, 2023a). Energy efficiency measures in buildings and appliance are essential to decarbonise. The IEA notes that while there has been progress in energy efficiency for commercial buildings, the residential sector is still lagging behind (IEA, 2023b).

The Energy Savings Package, announced in the 2023/24 federal budget, proposes funding of AUD 1.6bn for energy upgrades of households and businesses. As part of the package, AUD 1.3bn will be targeted towards the Household Energy Upgrades Fund, which will provide financing options for household energy efficient renovations. It also includes AUD 300 million for improving the energy efficiency of social housing (Minister for Finance, 2023a).

Heating, ventilation, air conditioning and refrigeration used 25% of the power generated in 2020 (Department of Climate Change, 2022e). Starting July 2024, import and manufacture of small air conditioning using with refrigerant of GWPs higher than 750, as well as the use of small-scale equipment using such refrigerant, will be banned (Department of Climate Change, 2023u).

The National Construction Code was updated In May 2022. The government increased the minimum energy performance standards for residential buildings in August 2022. In April 2023, the Property Council of Australia and the Green Building Council of Australia called the government to design a long-term strategy for zero carbon ready buildings, and accelerate the rollout of energy efficiency and electrification measures in the building sector in the next update of the National Construction Code due in 2025 (Green Building Council Australia, 2023).

As is the case with the transport sector, states are leading decarbonisation in the building sector. All states have implemented net zero commitments for buildings, with deadlines varying between 2030 for Tasmania, 2045 for the Australian Capital Territory and Victoria and 2050 for all the other states (IEA, 2023b).


Agriculture accounted for 16% of Australia’s total emissions (excluding LULUCF) in 2022/23 (Department of Climate Change, 2023a). Emissions from agriculture are expected to remain relatively stable until 2035 at around 80 MtCO2e (AR5 GWPs) (Department of Climate Change, 2023a). Forecasts of emissions from agricultural emissions have been revised upwards in both the 2022 and the 2023 projections (Department of Climate Change, 2021, 2022a, 2023a).

Emissions in the agriculture sector are mainly derived from enteric fermentation (digestive processes of animals), which accounted for 69% of the sector’s emissions in 2022/23 (Department of Climate Change, 2023a). Liming and urea application, manure management, rice cultivation, agricultural soils and field burning are other causes of emissions from the sector (DEE, 2019a). Emissions from grazing beef were 48% of agriculture emissions in 2020, and this share is expected to rise to 59% by 2030 (Department of Climate Change, 2023a).

The Carbon Farming Futures programme ran from 2012 to 2017 and invested AUD 139 million in 200 projects and 530 farm trials (Department of Agriculture and Water Resources, 2017). It promoted research and best practice techniques to reduce emissions. The only policy to disseminate regional best practise and ramp up research came to an end and has not been replaced.

The government is providing AUD 20 million from 2023 to 2026 for the Carbon Farming Outreach Program, aiming at incentivising the integration of low-emission techniques in agricultural practices and letting farmers participate in carbon markets (Department of Climate Change, 2023t).

The Carbon Farming Initiative, a voluntary component of the Emissions Reduction Fund, make it possible for farmers to earn carbon credits if they modify land use or switch to practices that reduce emissions (Department of Climate Change, 2023h). Agriculture will have a dedicated sectoral plan as part of the government’s net zero strategy currently in preparation (Department of Climate Change, 2023t).

At COP28, Australia signed the Emirates Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action to foster adaptation and resilience in the sector (COP28, 2023b).

Land Use, Land-Use Change and Forestry

The overall LULUCF sector is a net sink. It sequestrated 64 MtCO2e (AR5 GWPs) in 2022/23 (Department of Climate Change, 2023a). According to the National Greenhouse Gas Inventory, LULUCF sink levels remained at the same levels in 2020/21, 2021/22 and 2022/23 (Department of Climate Change, 2023q).

LULUCF sinks massively contribute to Australia’s ability to reach its 2030 climate target. The NDC target uses the year 2005 as a baseline. In this year, the LULUCF sector was a net source of emissions, contributing to 13% of Australia’s total emissions for that year (81 MtCO2e). It became a net sink in 2015.

In 2023, historical LULUCF sinks estimates were revised upwards in the National Inventory Report, including by more than 10 MtCO2e (AR5) for the years between 2015/16 and 2018/19. According to the same source, LULUCF sink levels reached 64 MtCO2e in 2020/21, up from 43 MtCO2e in 2019/20. In comparison, the 2022 emissions projections estimated 2020/21 LULUCF sink levels to be 39 MtCO2e (Department of Climate Change, 2022b, 2022a, 2023f, 2023r).

The LULUCF sub-category the most affected by the recalculations is the “land converted to forest”. Sink levels from such areas have been revised upwards from 32 MtCO2e to 50 MtCO2e (Department of Climate Change, 2023p, 2023s). The miscalculations are attributed to the degradation in orbit of the Advance Very High-Resolution Radiometer sensor operated by the United States Geological Survey (Department of Climate Change, 2023p).

In the 2022 emissions projections, the Department of Climate Change anticipated the 2030 LULUCF sink levels to reach 33 MtCO2e (AR5). This new forecast was 17 MtCO2e higher than in the 2021 projections. This change was primarily due to updated land clearing estimates (Department of Climate Change, 2022b).

The 2023 projections incorporate the changes made to the historical timeseries and have adjusted the forecast for 2030 sink levels to 57 MtCO2e (AR5). This is 24 MtCO2e higher than the 33 MtCO2e forecast included in the 2022 projections (Department of Climate Change, 2022a, 2023a).

The fact that the LULUCF was not only a net emissions source in 2005, but also represented a substantial portion of Australia's emissions in the NDC baseline year, has an impact on the direct emissions abatement task required to meet the 2030 target of reducing emissions by 43% below 2005 levels. The successive revisions of historical and forecasted LULUCF emissions, combined with the revisions of the total historical 2005 emissions in the last iterations of the projections, has made the NDC target progressively easier to reach in terms of emissions reductions in the energy, industry, agriculture and waste sectors.

Impact of the revisions of LULUCF sink levels on Australia’s 2030 NDC target (using AR5 GWPs)

The successive recalculations of historical and forecasted LULUCF emissions highlight how uncertain this sector is, and that data changes have significant repercussions on Australia’s progress towards its commitments. The CAT takes into account the uncertainty of these projections (see the assumptions section for details).

The Australian government estimated over 700 MtCO2e (in AR5 values) of net emissions were attributable to the 2019/20 fire season (Department of Climate Change, 2023f).

Emissions from wildfires such as the devastating and unprecedented bushfires in 2019/2020 are not accounted for in the inventory. They are treated as a “natural disturbance” beyond control, and it is assumed that the equivalent amount will be sequestered during forest recovery (Australian Government, 2020a).

However, researchers have expressed doubt as to the forests’ ability to recover within the time frame given the increased likelihood of prolonged drought conditions due to climate change (Bowman et al., 2021; Readfearn, 2019). Although the forest sector currently serves as a net carbon sink, with the regrowth of Australia's previously-harvested forests outweighing those being harvested, past studies have indicated that increased global warming is likely to escalate Australian wildfires (IPCC, 2001; Lucas et al., 2007; Sharples et al., 2016).

Emissions from these fires contribute additional carbon to the atmosphere, thereby creating a feedback loop that exacerbates temperature rises. The Threatened Species Action Plan, unveiled in 2022, includes a roadmap to improve fire prevention and management (Department of Climate Change, 2022c).

Australia was the only developed country on the list of global deforestation fronts (WWF, 2021). Although the forests in Eastern Australia are considered a global biodiversity hotspot, the area is increasing losing forest to the development of livestock as a main driver, but also to timber harvesting and fire and drought (WWF, 2021).

Legally mandated use of offsets
The reassessment of LULUCF historical emissions and forecasts coincidentally aligns with policy developments that are anticipated to increase demand for Australian Carbon Credit Units (ACCUs) demand, a tradeable financial instrument theoretically corresponding to the abatement of one tonne of CO2 equivalent. Since two thirds of the ACCUs issued to date were linked to the land sector, and the majority of ACCU to be issued until 2035 are expected to be generated from the LULUCF sector, the future of ACCUs and LULUCF sink levels in Australia are in close interaction (Clean Energy Regulator, 2023a; Department of Climate Change, 2023a).

The reform of the Safeguard Mechanism will be the main driver of ACCU demand. Australia is heavily relying on domestic carbon offsets to compensate for industry emissions under the scheme. To meet their decreasing SGM baselines, facilities have the option to surrender ACCUs.

LULUCF projections, informed by the Safeguard Mechanism modelling and its associated ACCU demand, boost Safeguard companies’ confidence in their future ability to rely on offsets to meet their domestic obligations.

Demand for ACCUs linked to the Safeguard Mechanism is expected to surge from under one million in 2022 to 26 million by 2030, while annual ACCU issuance is projected to increase from 16-17 million in 2023 to 27 million by 2030 (Department of Climate Change, 2023a). Despite this rising demand linked to the Safeguard Mechanism and driving ACCU prices higher, government-commissioned modelling by Ernst & Young indicates that ACCU prices will likely stay below the cost containment price. According to Ernst & Young's central estimate, ACCU prices are projected to reach AUD 65 by 2035, which is less than half the current carbon price on the EU's emissions trading scheme (Department of Climate Change, 2023a; Ember, 2023a).

Despite being a central component of Australia’s current climate policy framework, ACCUs have been criticised for their lack of integrity (Macintosh, 2022; Macintosh et al., 2022a; Macintosh et al., 2023a; The Australia Institute, 2021). The ERF and Australian Carbon Credit Units (ACCUs) system have also been called “fraudulent” by a former member of the Bushfire Royal Commission, and former Chair of the ERF Integrity Committee (ANU, 2022; Macintosh et al., 2022b). A study from the Australia Conservation Foundation and the Australia Institute found a fifth of ACCUs do not reflect actual abatement, as they rewarded deforestation that was never going to happen, i.e., they were not “additional” to the reduction, or avoidance, of emissions that would happen in the absence of financial support from the sale of carbon credits (The Australia Institute, 2021).

Evidence suggests the use of carbon offsets with carbon storage on land by, for example, tree planting, is scientifically flawed (Climate Analytics., 2022). The current ability for ecosystems to absorb carbon mainly reflects the previous reduction in carbon caused by historical land use. As a result, the maximum amount of atmospheric CO2 that can be reduced through carbon sequestration in ecosystems is relatively small compared to the potential CO2 emissions from burning fossil fuels (Mackey et al., 2013).

Carbon offsets that are issued to activities such as tree planting can create low biodiversity value, creating issues such as maladaptation (Seddon et al., 2020). Other issues include displacement of people and local economies, expropriation of indigenous peoples' territories, and food insecurity (AbibiNsroma Foundation et al., 2021; Forest Peoples Programme, 2021).

Other analysis suggests that 48% of New South Wales projects and 52% of Queensland projects experienced a decline in forest cover. The 59 projects that experienced a net decrease in forest cover in their project areas received 8.2m ACCUs, worth around AUD 200m (Macintosh et al., 2022).

In September 2022, multiple companies that accounted for close to 90% of the ACCUs generated through the landfill gas method, itself accounting for close to 10% of all ACCUs issued to date, signed a letter to warn the Minister that the offsets from this method were not additional. Under this method, landfill operators can be rewarded for burning the waste decomposition methane to generate electricity. This operation is financially viable even before the issuance of ACCUs. The signatory companies argued that the lack of integrity of these offsets undermines the market’s credibility (Climate Action Tracker, 2020; Morton, 2022).

Following these criticisms, the NDC 2022 update stated the government will conduct a review into the Australian Carbon Credit Units (ACCUs), led by the former national chief scientist. The Chubb review was finally released in early January 2023. It claims that the ACCU scheme was “fundamentally well designed when introduced” (Duxfield, 2022). Nevertheless, the review called for no new projects registrations to be allowed under the avoided deforestation method, and to strengthen the human-induced regeneration (HIR) method. The latter recommendation led to the freeze of ACCUs issuance from new HIR projects until they comply with the prescriptions from the Chubb Review. Researchers from the Australian National University estimate that existing HIR projects are likely to issue up to 60 millions of high risk ACCUs from 2022 to 2023 (Macintosh et al., 2023b).

The Chubb review also called for a restructuring of the administration of the carbon offset sector in Australia. At present the CER develops methods, regulated projects, issues ACCUs and administer the government purchase of ACCUs. This situation can lead to conflicts of interests, which is why the Chubb Review recommended to split the CER responsibilities. The panel also called to re-establish the Emissions Reduction Assurance Committee, which ensure methods integrity, as the Carbon Abatement Integrity Committee (Chubb et al., 2022). While having welcomed the conclusions of the Chubb Inquiry, the government announced a few months later the launch of the full audit of over a thousand offsetting sites (Department of Climate Change, 2023l).

In a context of significant exports of fossil fuels, offsetting extraction-related emissions, for example as part of the Safeguard Mechanism, fails to address the full climate impact of gas and coal. One million ACCUs relinquished for an LNG plant in Australia leads to downstream, overseas emissions of 8.4 MtCO2e, and 58 to 67 MtCO2e (AR5 values) in the case of coal (Climate Analytics, 2023b). The option of using offsets is also proposed to enable new polluting developments, such as the fracking of the Beetaloo basin in the Northern Territory (CSIRO GISERA, 2023).


The waste sector emissions represent 3% of total emissions excluding LULUCF in 2022/23 (Department of Climate Change, 2023a). Emissions from the waste sector are the result of mainly methane related to landfill, wastewater treatment, waste incineration and treatment of solid waste.

The national waste policy published in 2019 does not focus on reducing emissions from this sector, despite the publication of an annexure in September 2022 (Climate Action Tracker, 2020; Department of Climate Change, 2022g). It includes the target of reducing total waste generated in Australia by 10% per person by 2030.

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