Article by Judith Sloan, courtesy of The Australian.
04.09.2025
By rights, we should already know the figure for the Albanese government’s emissions reduction target for 2035. But the May election got in the way, and the decision was made to kick the can down the road lest any negative political consequences emerge from the announcement.
Recall here that one of the obligations of being a signatory to the Paris climate agreement is the declaration of a Nationally Determined Contribution every five years. Each NDC must be more ambitious that the previous one.
The present NDC requires that our emissions will be 43 per cent below the 2005 figure by 2030. We are sitting at a reduction of 28 per cent, which was overwhelmingly because of the early inclusion of Land Use, Land Use Change and Forestry.
According to the most recent figures, emissions fell by a mere 1.3 per cent in the year ending in the March quarter 2025. Emissions have essentially been flat since the Albanese government was elected in 2022. This is notwithstanding some frenetic policymaking as well as the expenditure of billions of dollars; in particular, to subsidise renewable energy.
Most commentators take the view that the figure of 43 per cent is very unlikely to be met – it’s only five years away. The one scenario that would make this possible is a series of closures of emissions-intensive factories – refineries and smelters, in particular – as well as the additional closure of some coal-fired power plants.
But it’s a sure bet that the life of Eraring in NSW will be extended into the next decade; ditto Loy Yang A in Victoria. The anticipated rollout of new electric vehicles is way behind schedule. There has also been little progress in reducing emissions in agriculture.
But here’s the thing: notwithstanding the high probability the 2030 target won’t be met – and let’s not forget that this target is legislated – both climate activists and self-interested businesses are campaigning for a ridiculously high target for 2035, of 75 per cent relative to 2005. While this target may seem absurd, fervent beliefs can be a powerful force, even if these beliefs are essentially baseless.
Take a recently released report designed to support the case for an emissions reduction target of 75 per cent. We are being told that 350 businesses back this target, including Atlassian, Ikea, Canva and Fortescue. Note here that only iron ore producer Fortescue is a significant emitter of carbon dioxide. According to its most recent results, the emissions from the company’s operations increased by more than 10 per cent last financial year.
The report, produced by Deloitte Access Economics, reaches the extraordinary conclusion that a 75 per cent target would add $370bn to GDP by 2035, which in per capita terms is $10,000.
In addition, there would then be an additional 69,000 jobs – trivial given the number of employed is almost 15 million. We are also told that export revenues would increase by $190bn by 2050 in total, which is a rounding error. Iron ore, coal and LNG today generate almost $250bn in export income annually.
Of course, readers of this newspaper are very aware of the limitations of modelling – it is a case of assumptions driving the results: garbage in, garbage out. We are told the model results are a comparison with “business as usual” and that “setting a lower target comes at the cost of lower business investment than would otherwise be the case”.
If this sounds unconvincing, it’s because it is. We are most unlikely to reach our 2030 target, with the percentage of renewable energy falling well short of the target of 82 per cent. The slow rollout of wind and solar installations and the delay to increasingly costly transmission connections underpin this prediction. The fact that offshore wind is dead in the water – excuse the pun – means there will be no projects in that category that come on stream by 2035, let alone 2030.
But having failed to achieve the 2030 target, we are expected to believe that a massively higher target for 2035 is both feasible and economically sensible. Even Professor Frank Jotzo, who is consulted by the Albanese government on climate matters, is dubious about such a large target, even if it is stated as a range.
“Anything significantly stronger than 50 per cent will need dedicated and significant policy effort … The more ambitious is the target, the more vulnerable it is to being dismissed and not even worth trying for.” According to Jotzo, a target of 75 per cent would require massive progress in hard-to-abate sectors, including transport, agriculture and industrial plants.
Land-based carbon farming would have to be part of the mix, which is likely to be resisted by regional communities already hit hard by the intrusion of renewable energy installations and transmission lines.
Of course, politics has a nasty habit of getting in the way of sensible decision-making, particularly with climate matters. Climate Change and Energy Minister Chris Bowen is very keen to see the 2026 Conference of Parties climate conference take place in Australia and the Pacific. A high domestic emissions reduction target for 2035 could help his case. However, the wife of Turkey’s President is vigorously lobbying for her country to host the annual event.
There is also the backdrop of the debate about the Coalition’s commitment to net zero 2050, a position that was lobbed on the Coalition government by prime minister Scott Morrison in 2021.
Given that net zero 2050 is essentially a religious belief, the announcement of the 2035 target by the Albanese government provides a pathway for some sensible participation by the Coalition in an important debate. Key questions include the measures that will be needed to achieve the target, the sectors to be hit and the costs of doing so.
The facts are that the electricity market, at least on the east coast, is no longer a market in any real sense of the word. Every single renewable energy project is going ahead, albeit at a snail’s pace, because it is being underwritten by the government.
The costs of these installations, as well as the necessary transmission lines to connect them to the grid, have been escalating. The wholesale price of electricity is rising and is likely to increase even further as the guaranteed returns to the regulated assets in the system flow through to higher retail and industrial prices. Gas will remain the marginal supplier, and its costs are also likely to rise.
Contrary to what the Prime Minister declares, a higher penetration of renewable energy will lead to higher prices, which will significantly crimp economic growth. We are seeing this already. (One wonders what assumption on energy prices was used in the hopelessly optimistic modelling cited above.)
But with 60 per cent of the world’s emissions not covered by a commitment to net zero 2050, it is time we had a realistic debate about where we are heading, rather than be led by the nose by fanciful modelling and impractical, ideologically driven policies.