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The federal government's energy policy sets out objectives to
provide a reliable, secure, and affordable energy supply while
meeting international commitments to reduce emissions. In the
electricity sector, the government aims to maintain and increase
the supply of low-cost reliable electricity via investments in
transmission infrastructure as well as backing gas-fired generation
and pumped hydro generation to provide firm power to the grid. The
federal government's gas policy aims to increase domestic gas
supplies by incentivising investment in the sector and partially
developing gas infrastructure if the private sector does not
generate projects by its own accord. In support of new low
emissions technologies, amongst other initiatives, the federal
government is backing development of a hydrogen industry through
the National Hydrogen Strategy, which estimates that the industry
could generate over 8,000 jobs and A$11 billion a year in GDP by
2050.
Guiding these policies is the Technology Investment Roadmap, an
investment framework to accelerate the development and
commercialization of low emissions technologies. The road map
identifies priority areas for investment: clean hydrogen, energy
storage, low carbon steel and aluminium, carbon capture and storage
(CCS), and soil carbon. Reluctance to rule out support for coal in
the federal government's low emissions strategies highlights
continued backing of the coal industry under the administration of
Prime Minister Scott Morrison.
In 2015, the federal government first communicated its
commitment to reduce carbon emissions by 26% to 28% below 2005
levels by 2030, a target adopted under the Paris Agreement in 2016,
and formally renewed in December 2020 without any changes. The
Morrison government has touted Australia's progress toward emission
reduction with 2020 greenhouse gas inventory data showing emissions
19% lower than 2005 and proclaiming emissions per person are at
their lowest levels in 20 years. However, the details within
Australia's national greenhouse gas inventory data show the overall
reduction is largely from a change in land use that has been
financially supported through issuing carbon credits. The IHS
Markit long-term outlook indicates Australia's emission levels will
not reach the Paris Agreement target of 26% below 2005 until
2040.
State and territory energy policy shares some aspects of the
federal policy, although each state has put forward its own
long-term ambitions. Unlike at the federal level, renewable
electricity has been the forefront of state development plans. Most
states have set renewable generation targets with Queensland,
Victoria, and Northern Territory aiming for 50% of their generation
from renewable sources, while South Australia, Tasmania, and
Australian Capital Territory have set more ambitious goals of 100%
or more. All of Australia's states and territories have committed
to net-zero emissions by 2050, though states whose economies are
heavily reliant on the resource sector (such as Western Australia)
or manufacturing (New South Wales) focus on jobs, industry, and
corporations in documents supporting net-zero targets, rather than
the global issue of climate change.
Australia's private sector is pushing forward its own climate
and renewable energy goals through corporate social responsibility
initiatives. The growing importance of environment, social, and
governance (ESG) policies in the Australian corporate sector is
driving a significant transformation in project financing and asset
allocation by financial services firms, including banks, insurance
companies, and pension funds. This increasing adoption of ESG
policies by Australian companies is affecting investments across
Australian capital markets, including project financing, equity
markets, and debt capital markets.
The outlook for change in energy and climate policy at the
federal level is therefore driven primarily by the private sector,
as well as by individual states and territories. The coalition
government led by Prime Minister Scott Morrison is likely to
announce new policies on climate and renewable energy in the coming
months, although these would probably remain closely tied to
existing gas-led recovery plans, investment in low-emissions
technologies, and state support for hydrogen production.