From ambition to action: understanding Australia’s 2050 net zero plan

The Australian Government has released its Net Zero Plan, pledging to cut emissions by 62–70% on 2005 levels by 2035 and reach net zero by 2050.

Six sector-specific plans and five decarbonisation priorities help map the pathway towards achieving the 2035 target and net zero by 2050. An $8 billion funding package alongside previously committed $63 billion will drive implementation, with further legislative streamlining expected.

Companies should consider whether the new target affects assumptions underlying their climate targets and strategies, and the opportunities (and risks) arising from the sector-specific plans and funding commitments.

Zeroing in on emissions cuts: How Australia’s climate goals have evolved with the Net Zero Plan

The Government has committed to reducing emissions by 62-70% on 2005 levels by 2035. The 2035 target represents an ambitious move, furthering the existing pledge to reduce emissions by 43% by 2030.  Here’s how they compare to the previous target.

The Net Zero Plan was released alongside six sector plans, which provide tailored pathways towards achieving the emissions target and net zero by 2050.

The Government acknowledges that the target is ambitious, but achievable through a framework of five decarbonisation priorities:

1. Clean electricity across the economy.
2. Lowering emissions by electrification and efficiency.
3. Expanding clean fuel use.
4. Accelerating new technologies.
5. Net carbon removals scaled up.

Previous emission targets faced criticism for lacking ambition and were recently challenged in the Federal Court in the Pabai case. While the court did not have to make a finding on the question, it rejected the Government’s argument that the 2015 target of a 26-28% reduction was set having regard to the ‘best available science’ and Climate Change Authority reporting. We have considered the Pabai decision and overseas climate obligations in our recent KWM insight article here.

The Government’s newly announced target for 2035 is informed by independent expert advice from the Climate Change Authority and CSIRO, while taking into account economic and national interests. Interestingly, the Climate Change Authority had considered a slightly higher target range of 65-75% in an earlier consultation paper; but ultimately recommended the 62-70% range now adopted.

The Net Zero Plan and target are also consistent with the calls for positive action by States after the International Court of Justice found that States have obligations under international law to prevent climate harm.

The Government’s emissions target and Net Zero Plan are also underpinned by a suite of significant funding commitments designed to decarbonise Australia’s economy. Approximately $8 billion has been newly allocated to support the net zero transition, including:

• establishing a $5 billion Net Zero Fund within the National Reconstruction Fund to support major investments by large industrial facilities in decarbonisation and energy efficiency, and to scale up manufacturing of low emissions technologies,
• allocating $1 billion to help heavy industry and large regional facilities reduce emissions from gas processes, electrify industrial processes and invest in energy storage, and
• investing $1.1 billion in low carbon liquid fuel production in Australia.

Legislative reforms may also be forthcoming, including amendments to the Environment Protection and Biodiversity Conservation Act to streamline approvals for renewable energy projects.

These mandated initiatives to achieve the 2035 target represent more concrete and tangible steps towards net zero.

Business considerations for the road to net zero

Companies should consider the:

• impact on climate-related risks and opportunities: in particular, the target and sector plans, as well as continuing to consider other developments such as the recent National Climate Risk Assessment
• alignment between business strategies and sector plans (where applicable): the Government has published tailored plans for the electricity and energy, agriculture and land, built environment, industry, resources and transport sectors to reduce emissions from current levels to reach net zero, acknowledging that the pathway for each sector will differ and require coordinated action, innovation and investment, and
• impact on their targets: whether the Government’s new target or sector plans affects assumptions underlying their climate targets and, if there is no longer a reasonable basis for their targets, revise their targets and consider disclosure implications.

The (clean) path ahead

Australia has set its path to net zero by 2050, bringing challenges and opportunities for each sector. For help navigating the new targets, reach out to your KWM contact, and subscribe to our climate and ESG content for updates.