Australia Faces Urgent Shift to Net Zero by 2050

Australia has the potential to achieve a net zero energy transformation by 2050, aligning with the Paris climate agreement, according to the 2024 Australian edition of Bloomberg New Energy Finance’s (BNEF) New Energy Outlook series.

However, time is of the essence. The report highlights the need for a substantial $2.4 trillion investment and immediate action to curb emissions growth across all sectors. To meet the target, Australia must significantly expand renewable wind and solar energy, increasing capacity by 135% by 2030. By 2050, the country must electrify its power, transport, and building sectors extensively, raising electricity demand by 2.5 times and installing 290 GW of wind and solar power along with 59 GW of storage.

Released ahead of BNEF’s Energy Transition & Sustainable Finance forum in Sydney, the report underscores the political hurdles Australia must overcome, with national elections approaching in May 2025.

The building and industry sectors present the greatest challenges, with minimal progress anticipated by 2050 under the ETS model. BNEF’s net zero scenario (NZS) aims for a 1.75°C warming outcome, advocating full decarbonisation across all major sectors. In contrast, the less ambitious ETS scenario, which aligns with a 2.6°C warming outcome, limits the transition primarily to power and transport sectors.

The NZS model, though costing an additional 12% ($2.41 trillion) compared to the ETS ($2.16 trillion), promises more substantial benefits in achieving net zero. The report also notes that significant investment will be necessary to modernize Australia’s energy sector, even without a decarbonisation mandate.

Interestingly, BNEF’s analysis excludes nuclear power from Australia’s future energy mix, disregarding the Liberal-National coalition’s plans to build up to seven nuclear reactors. Instead, BNEF focuses on a rapid expansion of wind and solar energy, paired with flexible technologies like batteries and pumped hydro, and the accelerated phase-out of unabated coal and gas.

BNEF stresses that Australia’s energy mix must evolve rapidly over the next decade, with a total exit of unabated coal and nearly all unabated gas by 2025. This approach contrasts sharply with the coalition’s strategy, which aims to extend coal use and expand gas while limiting large-scale renewables.

Leonard Quong, BNEF’s head in Australia, warns of the shrinking window to adhere to a well below two-degree pathway. He emphasizes that transitioning to a clean power system is crucial for reducing carbon emissions in line with decarbonisation targets, with immediate action required this decade.

Encouragingly, BNEF indicates that Australia’s current 2030 emissions reduction target of 43% from 2005 levels aligns with its Paris-compliant NZS goals. However, for continued alignment with the Paris Agreement, Australia must aim for at least a 71% reduction in energy-related emissions by 2035. The next round of nationally determined contributions (NDCs) is due by November 2025, with the Climate Change Authority currently considering targets between 65% and 75% for Australia’s 2035 interim goal. The final decision will depend on the outcome of the upcoming election.