Australia needs to accelerate its clean energy transition, says new IEA review

Australia is taking positive steps to increase its clean energy ambitions and should continue to strengthen its policies and long-term plans to ensure it meets its targets, the International Energy Agency (IEA) said on Wednesday in a report.

“Today, Australia is a major exporter of both fossil fuels and the critical minerals used in many clean energy technologies. A successful clean energy transition would support the country’s economic diversification and industrial growth while providing long-term resilience against global energy market shocks,” the IEA said in the Australia 2023 Energy Policy Review.

Since the IEA’s last review in 2018, Australia has passed the Climate Change Act in 2022, which doubles the target for emissions reductions by 2030 and sets the goal of reaching net zero emissions by 2050. The Australian government also signed up to the Global Methane Pledge in 2022, joining 130 governments who are collectively targeting a reduction in methane emissions of at least 30% by 2030, the agency noted.

In recent months, the Australian government has presented a host of policy strategies to fast-track the country’s energy transition. The IEA review welcomes these strategies, including the Rewiring the Nation Plan, the National Energy Transformation Partnership, and National Energy Performance Strategy, it said.

“Australia is an important player in global energy markets that is helping to meet today's needs while advancing the transition to clean energy,” IEA Executive Director Fatih Birol said in a statement. “I welcome Australia’s efforts to drive progress on low-emissions hydrogen and supplies of critical minerals – and its leadership on working with partners, including through the IEA, to strengthen the diversity and resilience of clean energy supply chains. Our new report sets out the steps Australia can take to accelerate its own clean energy transition securely and affordably.”

The report finds that Australia can make sufficient progress on emissions reductions by 2030 to align with the goal of net zero by 2050. However, stronger efforts are needed to improve energy efficiency and boost clean energy investment. A whole-of-government approach is needed to end the country’s high reliance on fossil fuels. The IEA review calls for an updated net zero emissions reduction plan for 2050 to guide implementation across all parts of government. A national energy and climate information system is also needed to track progress towards reaching these targets, the IEA said.

Greater energy efficiency efforts in transport and residential buildings can help bring forward Australia’s peak in emissions and mitigate rising energy bills. The IEA review estimates that a 60% productivity improvement would be needed for a net zero aligned trajectory. The new National Building Code and the Electric Vehicle Strategy are critical steps forward in this regard.

Australia’s renewables deployment has a positive outlook thanks to the success of rooftop solar, ambitious targets, and increased funding at federal and state levels. Three million Australian households, the equivalent of one in three, have solar PV installations, together accounting for 17 gigawatts of capacity.

Power sector decarbonisation efforts need to be stepped up considerably, as Australia aims to increase the share of low-carbon power generation by 2030 – with 82% to come from renewable energy, up from 27% today. This will require an accelerated implementation of renewable energy zones, faster permitting of grid related projects, and additional coal retirements, the IEA said.