Extract from ABC News
"Net zero" has become a political slogan, but really it describes science. (ABC News illustration: Alex Lim)
Australia's emissions had the biggest drop ever this year outside the artificial kink in the curve during COVID-19 shutdowns.
The 2.2 per cent reduction in the past financial year is being driven by the record amount of renewables entering the Australian electricity system, which is displacing coal. Early forecasts for the September quarter are showing a 2.8 per cent drop.
There are more green shoots in the data released by the government on Thursday, with emissions dropping across all sectors, except for transport. At the same time, the rate of emissions cuts still needs to accelerate beyond the current levels, according to the Climate Change Authority (CCA).
"Each year that emissions reductions fall short of these required rates compounds the challenge, requiring even steeper cuts in subsequent years to stay on track," CCA said in its annual progress report.
While much has been made of the projections that Australia will miss its 2035 target, climate experts say that's because Australia has yet to set or strengthen the critical policies for the next decade.
Australia only recently released its 2035 target in the lead-up to COP30 in Brazil. (Photo: Supplied)
Under the Paris Agreement, each target set by a country must be more ambitious than the last, and this is where the government now needs to focus its efforts.
"The process the government has to go through is to set the target and then decide on the policies to meet the target. And that's the next piece of work they've got to do," said Alison Reeve, the program director of energy and climate change at the Grattan Institute.
How Australia is tracking
Alongside the latest emissions data, the Climate Change Authority this week released its yearly scorecard for how Australia is progressing towards its 2030 and 2035 targets.
While emissions are 28.5 per cent lower than they were in 2005, Australia is projected to fall just 1 per cent short of its 2030 targets and, as experts have warned, will need to do significantly more to reach its new 2035 target of getting emissions down by 62 to 70 per cent.
This isn't surprising for Anna Malos, the Australia lead at Monash University's Climateworks Centre, as the target was only minted in September. Instead, she says it highlights the work ahead over the next decade.
"Emissions change in the last year has been one of the strongest on record. So that all shows that things are moving in the right direction," says Malos.
"One of the reasons why you don't see that change beyond 2030 in the projections is because governments are still considering what policy should look like post-2030."
Electricity is the workhorse of emissions cuts
So far, the electricity sector has been one of the two main drivers of Australia's emissions reductions.
A decade ago, Australia was mostly powered by high-emitting coal-fired power stations.
Fast forward to today, and renewables account for around 40 per cent of electricity. In October, they inched out fossil fuels in supplying spring-time energy — a trend that will only continue over the rest of the decade.
This has led to a drop of 3.3 per cent (5 million tonnes) in electricity sector emissions in the past year to June 2025, which surprised Grattan's Alison Reeve.
"Most of our emissions reductions are coming out of the electricity sector at the moment and there have been a lot of delays in building new things in that sector," she said.
"So I was surprised that we did as well as we did."
Australia has a target to get to 82 per cent renewable energy by the end of the decade, and without this, it will likely fall short of the 2030 emissions target. The Climate Change Authority is basing its modelling on the assumption that this target will be hit.
"The rate of renewable energy deployment needs to rapidly accelerate to meet emissions and renewable energy targets," the CCA report read.
The CCA projects electricity emissions to drop off drastically over the next 5 years as Australia's aging coal fleet is swapped out for renewable energy.
To achieve that, a lot of wind farms, transmission, solar and batteries need to get built at once, says Reeve.
"[It] really depends on what you assume is possible in terms of the industry just physically being able to construct those assets. And a lot of that is actually out of the government's hands. That is all on the private sector."
Transport is an ongoing problem for Australia
Transport is Australia's fastest-growing sector for climate pollution and is expected to be the top source of emissions by 2030.
This concerning trend has been driven by a shift to bigger, heavier cars that need more fuel, as well as more road freight. Domestic flights also factor into this sector.
The government is hoping to change this with its vehicle efficiency standards. These came into effect this year but haven't started to eat into the sector's emissions.
Under these laws, car manufacturers have an emissions cap for all the vehicles they sell that year, so any higher-emitting cars will have to be offset with lower or zero-emission ones.
The Climate Change Authority says there are already promising signs from those changes, with car companies starting to offer more electric and hybrid options for Australians, in addition to more public chargers coming online.
Still, to get to Australia's 2035 target, half of all new cars sold in the next decade will have to be electric — a long way from today's rate of 12 per cent.
In October, more than 60 per cent of new car sales in Australia were SUVs. (ABC News: Georgia Lenton-Williams)
"It's very clear that more policy is still needed and more work overall is needed to make sure that we're able to really curb transport emissions and to save people money," says Climateworks's Anna Malos.
"Electric vehicles are already cheaper across their life span. At the moment, there's this higher purchase price, but your fuel costs and your maintenance costs are much lower.
"But it's also about helping governments make the right decisions on encouraging active transport, encouraging public transport, so that we're not just vehicle dependent."
Big industry's emissions
Emissions from Australia's heavy industry were down over the past year to June. However, part of this was driven by lower steel production, which required less coal, a couple of major emitters being offline, and lower residential gas use.
Grattan's Alison Reeve says industrial emitters need to start making large cuts to help Australia reach its targets.
"Electricity has been doing all the work, but also that there is going to be a need for policy to start pushing emissions down in other sectors in future," Reeve said.
"The review of the safeguard will be quite critical in getting the settings right so that we can get a faster rate of change within the industrial sector."
The safeguard mechanism is the government policy that regulates emissions from Australia's top emitters — just over 200 different facilities. They are required to make cuts each year or buy offsets to meet their targets.
This policy is set for a major review next year.
"When industrial facilities are making a decision about a really large investment to change their plant, that's probably a seven-year decision process."
"So, having that clarity about the 2035 target but also what settings are going to apply after then is really important so that they can actually build that into the decision-making process early," she explained.
"The assets that we've got in the industrial sector have incredibly long lives, they stick around for 40 years, and what that means is between now and 2050, when our net zero goal is, we're lucky if we've got one decision point for each asset as to when we change it over."
Emissions from heavy industry have been sluggish to move. (Supplied: Glencore)
At the same time as it announced the new 2035 target, the federal government released six plans for how the major sectors could reach net zero. For Climateworks's Anna Malos, these will be a vital signpost for industry investors.
"If we could lock those into legislation so that everyone knows that they will keep being reviewed, that gives the community assurance that there is a well-planned transition. It helps give businesses and investors the confidence they need to put money into the best place to reduce emissions," Malos said.
What is LULUCF?
The striking line cutting downwards across the emissions graphs is the land-use sector: Land use, land-use change and forestry (LULUCF). It covers the changes to trees and forests across the Australian landscape, which can either be drawing down or releasing emissions, and has been on a steady decline since 2005.
Those changes were driven by a shift away from heavy land clearing and a long period of drought, where the land dries up and plants lose their ability to store as much carbon.
"[From] 2005 to 2020, a lot of emissions reductions came from the land sector because we stopped land clearing. But the thing is, you can only do that once," Reeve said.
This sector has accounted for a significant portion of emissions reductions til 2025, and when the land sector is excluded, progress looks less impressive.
This matters because humans (and governments) have somewhat less control over this sector, and depending on it can mask the failure to make cuts to fossil fuel emissions across the economy.
Looking forward, the focus in the land sector is likely to be on maintaining and protecting these carbon sinks and reforesting some areas to store more carbon.
In summary? There's lots of work to do
Halfway through the decade, the Climate Change Authority's projections put Australia 1 per cent short of its 2030 target.
"One per cent of emissions is not huge. It's the sort of thing that could easily be taken out by a currency fluctuation, an industrial plant being temporarily offline for six months, a slightly drier year than normal or conversely, in some areas, like a slightly wetter year might help as well because you get more vegetation growing, which absorbs more carbon," Reeve said.
For both Malos and Reeve, it's no surprise that Australia isn't yet on track to hit its 2035 targets — it requires a massive step-up in efforts — but it's important Australians understand that the target is achievable.
"We're 10 years out from that target. None of the policies that we've got at the moment actually have their settings set for beyond 2030, so it's not surprising," Reeve explained.
"The way those projections are done is that there's a lot of things that just stop in 2030. And so emissions just kind of noodle along at kind of a fairly flat level after that," Reeve explained.
"A target is not the same as putting in place the actual climate policies to get there, and that's where the attention needs to be."
Energy Minister Chris Bowen has his work cut out to deliver policy geared to reach the 2035 target. (ABC News: Ed Reading)
Malos said there were a number of important policy reviews scheduled for next year that would help Australia lay the path for the next decade of decarbonisation.
"The safeguard mechanism will be reviewed … the new vehicle emission standards will be reviewed … and also the electricity sector. That will help not only reach our 2030 target, but to exceed that 2030 target, and make sure that the 2035 target is going to be met and exceeded," Malos said.
She believes the latest emissions data is proof that the work on climate action is starting to pay off, but change needs to happen faster.
"I think it is really good news that the policy and the way that investors are investing and businesses are acting is starting to gain momentum again, because we did have that long period of plateau post-COVID," she said.
"It's good news that emissions are dropping. It is also very clear that Australia will have to move further and faster to meet and exceed its targets."
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