Australia’s window for achieving net zero emissions by 2050 is rapidly closing, but a new report suggests the country could still align with the Paris Agreement’s goal of limiting global warming to well below two degrees Celsius.
BloombergNEF’s New Energy Outlook: Australia report outlines the dramatic transformations required in the nation’s energy landscape to meet this critical target.
The report emphasises the urgent need for Australia to decarbonise its power sector.
To stay on track, the country must increase its renewable energy capacity by a staggering 135 per cent before 2030, reaching over 126 gigawatts.
This transition necessitates the phasing out of all unabated coal and nearly all unabated gas generation by 2035, replacing them with a more cost-effective mix of renewables and flexible technologies.
Leonard Quong, head of BNEF in Australia, stressed the urgency of the situation: “Australia’s window to stay on a well-below-two-degree pathway is closing, fast.
“Rapidly moving to a clean power system based on wind, solar and storage will be essential to cost-effectively reduce carbon emissions in line with our existing decarbonisation targets.”
The report presents two climate scenarios: the Net Zero Scenario (NZS) and the Economic Transition Scenario (ETS).
The NZS, aligned with a 67 per cent chance of limiting global warming to 1.75 degrees Celsius, indicates that Australia’s emissions from power, transport, industry, and buildings sectors must have already peaked and begun rapidly declining.
To remain Paris Agreement compliant, Australia needs to target at least a 71 per cent reduction in energy-related emissions by 2035, relative to its 2005 baseline.
This target should be included in the next round of Nationally Determined Contributions, due for submission to the UNFCCC by November 2025.
The transition to net zero presents significant investment opportunities.
Wind and solar installations are projected to reach a combined 290 gigawatts by mid-century, while storage capacity is expected to grow from about 3 gigawatts today to over 59 gigawatts.
Tushna Antia, BNEF Australia Associate, highlighted the potential: “Australia’s abundance of world-leading wind and solar resources gives us an advantage in decarbonisation, and combined they represent a $213 billion investment opportunity by 2050.”
The report also addresses the challenges in abating the remaining quarter of emissions, which require scaling up technologies such as biofuels, hydrogen, and carbon capture and storage.
Under the NZS, Australia’s hydrogen consumption is projected to increase 14-fold, while carbon capture could reach 30 million metric tons per year.
Sahaj Sood, BNEF Australia Senior Associate, noted the importance of these emerging technologies: “While questions still remain about their reliability, acceptability, and scalability — if they aren’t able to be used, emission reductions will have to come from somewhere else in the economy, and likely from more expensive solutions.”
As Australia navigates this critical transition, the report underscores the need for strategic investment, policy support, and technological innovation to achieve its net zero ambitions and contribute to global climate goals.
