Australia has committed to reduce emissions to 26 to 28 per cent below 2005 levels by 2030 under the Paris Agreement.
Projections from the Department of the Environment and Energy estimate Australia requires cumulative emissions reductions of 695Mt CO2-e (26 per cent reduction) to 762Mt CO2-e (28 per cent reduction) between 2021 and 2030 to meet this target.
The scale of the emissions challenge suggests Australia requires significant new investment across the economy (see Figure 4). While changes in investment patterns are evident in some sectors of the economy, in other areas the transition to lower emissions is yet to begin in earnest. In this context, the CEFC has a clear focus on increasing private sector investment flows to address a diverse range of emissions challenges. We recognise that lower economy-wide emissions can best be achieved through a multi-sectoral approach.
Figure 4: Economy-wide investment requirements
The transformation of Australia’s electricity sector continued in 2018–19. AEMO data shows that more than 3,700MW of new wind and large-scale solar generation capacity was connected to the NEM in the year. Open NEM data shows that renewables, including rooftop Solar PV, contributed 21.3 per cent of generation in the NEM in 2018–19, up from 17.7 per cent a year earlier.
With the model range of electric vehicles available in Australia increasing, more consumers are expected to make the switch to lower emissions electric and hybrid vehicles. However, the National Greenhouse Accounts show that transport-related emissions continue to grow, influenced by increasing economic output, growing freight volumes and higher diesel use.
Agriculture emissions represent around 13 per cent of national emissions, driven largely by emissions from beef, sheep and dairy. Assuming average seasonal conditions, projections from the Department of the Environment and Energy indicate that agriculture-related emissions will continue to rise slowly, underpinned by growing global food demand and the associated use of on-farm machinery.
New buildings in many sectors are adopting energy efficient designs, but the task of upgrading Australia’s large stock of existing buildings is proceeding slowly. Analysis from ClimateWorks Australia suggests that while the property sector has the potential to reduce emissions by 69 per cent below 2005 levels by 2030, it is on track to achieve just an 11 per cent reduction under current and proposed policies.
Industry is switching to cleaner, lower cost sources of electricity. Large manufacturers have signed PPAs for renewable energy, remote area mines are replacing diesel with solar, and large gas users are embracing energy efficiency. But emissions from industrial sources remain high and continue to grow in some areas, according to data from the Department of the Environment and Energy.
The waste sector covers emissions from the disposal of organic materials to landfill and wastewater emissions from domestic, commercial and industrial sources. The Department of the Environment and Energy projects 2020 waste emissions of 11Mt CO2-e, despite a 14 per cent fall on current levels due to waste diversion from landfill and higher levels of recycling and methane capture.