Australia is tying itself up in contradictory emissions goals and policies and will struggle to meet its 1.5°C commitment without an overarching strategy, a new report says.
Contradictions and inconsistencies between government objectives are creating confusion for industry and investors, says report author and IEEFA Australia CEO Amandine Denis-Ryan.
“Australia does not have a shared national view of how the transition will occur,” Denis-Ryan says.
“This is leading to confusion and discrepancies in the advice and decisions of government departments and agencies.
“To put it simply, the left hand of the government does not know what the right hand is doing.”
The report Australia needs 1.5°C pathways aligned with national energy pathways outlines a labyrinth of different policy aims, legislated targets and regulatory guides.
Australia has a federally legislated 2050 net zero emissions target and an emissions reduction target of 43 per cent on 2005 levels by 2030 to meet its commitment to limit climate change to 1.5°C above pre-industrial levels.
Yet multiple studies show Australia needs to cut its emissions by more than 60 per cent by 2030 and reach net zero before 2040 to align with that global goal.
The government hasn’t actually said how it plans to meet its legislated targets.
It’s hydrogen-curious, has set a declining cap on the biggest emitters via the Safeguard Mechanism reforms, and has joined the Global Methane Pledge and is working through electric vehicles and energy use strategies.
But to date few hard measures have been put in place.
Denis-Ryan told RenewEconomy a coordinated approach would look at the energy transition in a comprehensive way, placing the 1.5°C goal at the top and working backwards from that.
While she doesn’t point a finger at the Net Zero Authority, it is one government agency that could take the lead.
She does say the situation is urgent though.
“I’m worried that we’re making decisions today that are based on a 40 year outlook, without a clear overarching approach,” she says.
The risk is of an energy transition slowed by projects caused by building out big projects, because no one has bet on how smaller solutions can fill gaps.
How much renewable capacity does government actually want?
Green hydrogen is a classic example of where federal government aims, and $2 billion of taxpayer money for the Hydrogen Headstart strategy, contradict each other.
The federal government wants 82 per cent renewables by 2030, up from 35 per cent in 2022, and consistent with the Australian Energy Market Operator’s (AEMO) Step Change scenario.
Yet it also wants to be a “hydrogen superpower” in exports by the same year. AEMO’s modelling shows capacity in the National Energy Market would need to double by 2030 to meet that goal and quadruple by 2050.
One pathway requires an enormous build out of energy infrastructure starting now, while the other which only needs a slight bump on business as usual. Yet there is no clarity from the government as to which dramatically different route it wants the country to follow.
“Leaving such a vast level of ambiguity on the volume of renewables build-out required to achieve the government’s ambitions could create issues when it comes to planning supply chain and other requirements,” the report said.
Green tape
A patchwork of different federal and state government objectives are also creating confusion when it comes to implementation, the report said.
Victoria has a target to reduce emissions by 75-80 per cent by 2035, and net-zero by 2045, while Queensland wants to reduce emissions by 30 per cent below 2005 levels by 2030 and source 50 per cent of electricity from renewables by the same year.
NSW plans to legislate a 50 per cent reduction in carbon emissions on 2005 levels by 2030, and net zero emissions by 2050.
However, its own data says coal and gas use will continue until 2042, and land is expected to do the heavy lifting in absorbing carbon through the 2030s, despite laws put through in 2021 making land clearing easier.
South Australia is aiming for 50 per cent by 2050, Tasmania has legislated net zero by 2030, the ACT wants to cut emissions by 50-60 per cent by 2025, and the Northern Territory and Western Australia don’t have more than loose commitments to hit net zero by 2050.
But without an overarching plan to not only say how each of these targets will be achieved but coordinate them, many are leaning on AEMO’s modelled scenarios as a defacto roadmap to support planning and investment decisions, report authors Denis-Ryan and Jay Gordon wrote.
“The [AEMO] scenario presented as most likely only meets some but not all of the government’s objectives and [for example] doesn’t meet Victoria’s emissions reduction targets. Its electricity and gas scenarios also materially contradict each other, and AEMO’s choice of assumptions has been questioned by clean energy investors.”
AEMO planning documents such as the Integrated System Plan are supposed to guide electricity market planning — not whole-of-country carbon emissions reductions, they said.
Demand side solutions are missing from the puzzle
The piecemeal approach is also leading to a prioritisation of supply-side solutions over demand-side solutions without looking deeply at the impact and value of each wind and solar farm, effectively pushing an open-slather approach to building and ignoring the opportunities created by avoiding use.
Denis-Ryan says they would like to see a more explorative approach from AEMO and its ilk that looks into the optimal mix of demand and supply side solution.
“In terms of the demand side one of the main things is that a lot of the conclusions of government agencies like AEMO and the ACCC are that we need new gas fields to power our energy needs. I’m not sure that’s true. I think we could meet our energy needs by not opening new gas fields, if we looked at demand side options,” she told RenewEconomy.
She says IEEFA did an analysis recently that indicated that “by doing a bit more on the demand side” the gas shortage expected over the next decade could be eradicated.
These include accelerating actions such as electrification of buildings to start next year rather than in three years, or pushing for a majority of houses to have solar panels and batteries, and more on the industrial side such as energy efficiency and alternative fuels — an area that AEMO has neglected in its modelling.
