Our new report outlines ambitious but achievable pathways to low emissions for key sectors. Our researchers have developed decarbonisation scenarios for energy, transport, building, and heavy industry.
Each scenario was specifically tailored to an Australian context, informed by the global paths towards net zero developed by the International Energy Agency (IEA). The results are now available for use by business and industry to drive greater ambition and action on rapid emissions reduction.
Dr Stuart Whitten is the research director of our Sustainability Pathways program and science lead for the report.
"Australia certainly has the potential to rapidly decarbonise," Stuart said.
"We know there are challenges ahead in some of our hard-to-abate sectors, but this piece of research also delivers good news across several key sectors."
Australia's challenges to net zero
There is now widespread agreement that limiting global warming to 1.5 degrees Celsius by 2100 requires a rapid transformation of global economic and social systems.
Choosing to delay that transition would put Australia at a competitive disadvantage. Failure to take adequate action now simply means when decarbonisation does inevitably take place, it will be more costly and will need to happen more quickly if we are to limit global warming.
Australia is faced with simultaneous challenges. One is how to rapidly reduce emissions to meet national and global targets. Another is how to grow new and existing industries to provide essential goods, services, and employment. What's more, we need to do this at the same time as taking action to become more resilient to the physical impacts of climate change.
Pathways to net zero emissions
Our report, Pathways to Net Zero Emissions — an Australian Perspective on Rapid Decarbonisation, starts to address this complex problem. Drawing on IEA global data for the report, researchers have developed sector-based analyses on pathways to net zero.
Six sectors are modelled in detail: electricity, transport, buildings, steel, aluminium, and cement. These sectors combined produce about two thirds (66 per cent) of Australia's emissions, either directly or through consumption of energy.
For each sector, the report sets out a rapid but plausible decarbonisation pathway to net zero for Australia. Each pathway aligns with the IEA's Net Zero Emissions global 1.5 degree Celsius carbon budget, and details the opportunities, risks, and challenges.
The research, funded by the Commonwealth Bank of Australia, provides a robust, evidence-based body of work. It can be used by Australian businesses to understand what opportunities might be available as the transition to a lower-carbon economy accelerates.
Key findings for reducing emissions
The modelling suggests Australia can use existing technologies to reduce emissions by 52 per cent from 2020 levels by 2030.
Electricity leads the decarbonisation charge in the 2020s, with emissions declining by 83 per cent by 2030. This dramatic reduction in emissions would be driven by a rapid shift from fossil fuels to renewables – a move which also helps drive down emissions from existing and new electricity users across housing and commercial buildings, mining, and eventually transport.
"The electricity sector is already decarbonising far more quickly than we expected it to," Stuart said.
"We expected transition because of aging existing infrastructure – for example older coal fired power stations – reaching the end of its usable life. Now, we are seeing the declining cost of renewables, combined with consumer and market demand to reduce emissions, shifting closure earlier.
"It makes more sense to speed up investment in renewables than to reinvest in fossil fuel technologies, so we are seeing the energy sector transition very rapidly."
The modelling projects that the share of national electricity consumption met by renewable sources would likely triple by 2030. This does require a significant investment to replace existing generation, service a growing economy, and build a fit-for-purpose low emissions grid.
How the sectors compare
Our analysis suggests the mining sector can begin to decarbonise in the mid-2020s. Meanwhile, investment in decarbonising the transport sector may not yield significant results until the mid-2030s.
"In sectors like transport we see how the Australian context is quite different to other regions globally, even those that might initially seem comparable. Unlike some European countries, Australia's vast distances made early electrification of our passenger fleet less attractive," Stuart said.
"However, there are opportunities to move more quickly now around short distance passenger and light vehicles. This might include fast charging infrastructure and nudges towards purchase of electric vehicles (EVs) through tax, fuel efficiency standards, or other measures.
"In contrast, long-haul road transport, shipping and rail are more complex problems that we can't just fix tomorrow. We will require commercialisation of early-stage technologies such as hydrogen fuel cells for heavy transport.
"The flip side of that is in the residential and commercial buildings sector, we might not face as big a challenge as somewhere with a colder climate.
"We can do more through electrification, by fuel switching away from gas for heating and cooking. Over time, the largest effect is improved building energy efficiency as we move toward seven-star standards," he said.
Evidence-based findings to inform decisions
As the requirement for rapid, significant emissions reduction across all sectors of the Australian economy becomes more urgent, it's clear that taking a business-as-usual pathway is not a feasible option.
But it's also clear that government, industries, and financial institutions require evidence-based research to support their decision making around investments, lending, and policy making.
Stuart said the researchers believe the report makes a useful contribution to the conversation.
"Our biggest hope for this work is that it adds to the important transition conversation. We know there's a lot of meaningful action taking place across these industries," Stuart said.
"The report will support those conversations as well as help sectors track how they – or their clients, in the case of finance institutions – are progressing as the nation moves towards delivering on our Paris commitments."