Albanese's victory bolsters a more robust stance on Australia's climate policy.
Australia Sets Ambitious Climate Targets under New Government
The Australian federal government, led by Prime Minister Anthony Albanese, has announced a bold climate agenda, aiming to reduce emissions by 43% on 2005 levels by 2030 and achieve net zero emissions by 2050. This ambitious target is backed by new policies and investments designed to accelerate the transition to renewable energy and lower Australia's overall emissions.
The government's climate policy plans include a significant increase in Australia's renewable energy share in the main electricity grid, currently standing at 43%. By 2030, it is projected that Australia will achieve a 42.6% emissions reduction under current measures. The renewable energy industry is also experiencing growth, with over 33,000 workers currently employed in electricity generation, storage, and transmission. This number is expected to rise to another 40,000 workers by 2030.
Four million Australian homes have already installed solar panels, resulting in substantial annual savings on power bills. Combining solar power with battery storage offers even larger savings. The government is also preparing to announce a 2035 climate target, with advice from the independent Climate Change Authority guiding this stronger medium-term goal.
However, challenges remain. Despite the climate commitments, substantial government subsidies to fossil fuels continue, complicating Australia’s efforts to accelerate decarbonization. The government faces pressures from international rulings, particularly in relation to emissions related to its large fossil fuel exports, which could potentially lead to legal and compensation obligations.
Rebecca Mikula-Wright, CEO of the Investor Group of Climate Change, has stated that economic damages from growing extreme climate events pose a significant risk to super funds and investors. The ALP's re-election has been seen as a positive sign for Australia's asset owners, indicating a continued focus on climate solutions.
The Albanese government's second term is expected to be marked by high investor expectations, with a renewed conversation over accelerated progress in climate policy. Within 75 days of winning the previous election, the government introduced a climate change bill that enshrined an emissions reductions target of 43% by 2030 into law.
Investors are eager to resume and accelerate the progress towards a net zero, climate resilient economy. Certainty and continuity will set the tone for this renewed conversation. In March, a joint statement was issued by investor groups calling for bipartisanship in climate policy to maintain the progress made in setting targets, reducing emissions, and increasing investor confidence.
In January this year, a mandatory disclosure regime for climate-related information came into effect, which was welcomed by investors. However, in 2023, a review of Australia's sector pathways extinguished the feasibility of nuclear energy.
The Albanese government's climate policy is a significant step forward in Australia's commitment to addressing climate change. With the new 2035 target and continued focus on renewable energy, Australia is poised to make further strides towards its net zero emissions goal by 2050.
- The new environmental-science-based climate targets set by Australia's federal government under Prime Minister Anthony Albanese are driven by policy-and-legislation changes aimed at accelerating the transition to renewable energy and achieving net-zero emissions by 2050.
- The climate change policy of the Albanese government includes a focus on increasing Australia's renewable energy share in the main electricity grid, resulting in job growth in the renewable energy sector—with the number of workers expected to reach 73,000 by 2030.
- As Australia sets ambitious climate-change targets and pursues a net-zero emissions goal, the government faces challenges such as the need to reduce fossil fuel subsidies, address increasing extreme climate events, and manage international pressures related to emissions from fossil fuel exports, particularly in light of potential legal and compensation obligations.
