How is Australia progressing toward the target of net zero by 2050?
Among the topics discussed during Australian Energy Week 2025 in Melbourne last week, there was a recurring theme: net zero. While the pursuit of net zero is a significant topic on its own, almost everything else going on in the energy sector crosses over with or is impacted by Australia’s commitment to achieve net zero by 2050.
Net zero refers to achieving a balance between the greenhouse gases (GHG) we emit into the atmosphere and those we remove from it. It’s like balancing a scale. While we’re trying to reduce the amount of carbon dioxide and other greenhouse gases we produce, we’re also looking to increase the amount we take out of the atmosphere, either through natural processes like forest growth or technological solutions like carbon capture.
Net zero differs from “carbon neutral” in its scope and ambition. While carbon neutrality typically focuses on offsetting emissions through purchasing credits or investing in projects elsewhere, net zero requires deeper structural changes to actually reduce emissions at their source, with offsetting only used for truly unavoidable emissions.
Australia has committed to achieving net zero
Australia has formally committed to achieving net-zero emissions by 2050. The target is now enshrined in legislation, alongside an interim target of 43% emissions reduction by 2030 (compared to 2005 levels).
The commitment forms part of Australia’s broader climate strategy, which includes the “Powering Australia” plan designed to boost renewable energy while creating jobs and reducing energy costs. The government is developing a comprehensive Net Zero Plan that will cover all major sectors of the economy and provide detailed pathways for the transition.
One of the major concerns remains how to pick up the pace of transition in the coming years without having a significant adverse impact on any industries, particularly those that face greater challenges in reducing their emissions.
Questions as to the data we’re relying on
As of 2024, Australia claimed to have achieved net emission reductions of 28% below 2005 levels, including land use, land-use change, and forestry (LULUCF). There is some controversy, however, about whether this figure is the one we should be benchmarking or whether it masks important details about where progress is truly being made.
This is because a substantial portion of Australia’s claimed emissions reductions comes from the land use sector, where forests and vegetation absorb carbon dioxide. While legitimate, critics argue that Australia has repeatedly revised its land sector projections upward, potentially creating an illusion of progress while actual economic emissions remain high. The reliability of these projections becomes crucial as Australia approaches its interim targets.
Meanwhile, Australia’s approach also emphasises the influence of future technological solutions. While these innovations, including hydrogen and carbon capture and storage, may prove crucial, an over-reliance on unproven technologies at scale is a major concern.
The power sector is leading the charge
The electricity sector represents Australia’s biggest climate success story. Renewable energy reached approximately 37% of the electricity mix by 2023, and projections suggest this could reach 58% by 2030.
The expansion of wind and solar power, supported by state renewable energy targets and federal policies like the Capacity Investment Scheme, is driving rapid decarbonisation of the power grid.
States and territories are moving even faster than the federal government. Every Australian state and territory has set net-zero targets for 2050 or sooner, with many establishing ambitious interim goals.
We’re only starting to build better
Recent updates to building codes and energy efficiency standards are beginning to address emissions from the built environment.
While progress has been slower than in electricity, improved building standards and electrification of heating and cooling systems offer pathways for further reductions.
Things are moving – although more slowly – in the transport sector
The transport sector accounts for a significant portion of Australia’s emissions.
The recently introduced New Vehicle Efficiency Standard is expected to reduce emissions from passenger cars and light commercial vehicles by around 16 million tonnes of CO2-equivalent between 2025-2030.
However, Australia’s electric vehicle adoption (and charging infrastructure development) remains a long way behind other comparable countries.
Heavy industry and gas are the major challenges
Perhaps the most contentious aspect of Australia’s net-zero journey relates to fossil gas and heavy industry.
While coal and oil emissions have declined over the past decade, gas emissions have increased by at least 16%. The government’s Future Gas Strategy indicates continued reliance on gas as a “transition fuel” to 2050 and beyond, an approach many climate analysts argue is incompatible with net-zero goals.
The impact on the economy needs to be managed
Australia’s economy remains heavily dependent on fossil fuel exports, particularly coal and gas.
The transition to net zero requires managing the economic and social impacts on communities built around these industries, while ensuring the country remains competitive in a global economy that is actively decarbonising.
On the other hand, Australia’s mining sector could play a crucial role in the global clean energy transition through the supply of critical minerals needed for batteries, solar panels, and wind turbines.
There is also significant investment in clean technology innovation, with opportunities to develop and export solutions for industrial decarbonisation.
Are we on track to net zero by 2050?
To be blunt, Australia is a long way from being on track to reach net zero by 2050.
Apart from good progress in the power sector, most of the challenges we’re facing look as big as ever.
The Climate Action Tracker rates Australia’s progress as “insufficient” in virtually all areas, with climate finance rated “critically insufficient”!
It states that: “Excluding the land and power sectors, emissions from all other economic sectors are projected to be 4.5% above 2005 levels in 2030 (only 5% below 2024 levels)”.
For one thing, because Australia is the world’s third-largest fossil fuel exporter, our total GHG footprint is about 4.5% of global fossil fuel CO2 emissions.
Meanwhile, with our adoption of electric vehicles lagging well behind most other OECD countries, the transport sector is projected to become the country’s greatest source of emissions by 2030.
As McKinsey Global Institute Partner Mekala Krishnan noted ahead of Australian Energy Week:
“Our research has identified 25 physical challenges still ahead of us. These challenges must be addressed if we want the energy transition to succeed – and tackling this “hard stuff” will take real work.”
We’ll have a look at those 25 physical challenges next time.