With the world’s third largest coal reserves and extensive natural gas and oil reserves, Australia historically has depended on fossil fuels for its energy needs and economic growth. In 2021, coal, oil, and natural gas accounted for 92% of its primary energy needs, while the country was the world’s largest exporter of both coal and LNG. More than two thirds of Australia’s energy production is exported, with China, Japan and the Republic of Korea the leading destinations for its LNG.
Australia’s long-term plan in recent years had been to grow the contribution of renewable energy, while increasing the use of natural gas as a stable transition fuel with a lower carbon footprint than coal and oil to meet its commitments under the Paris Agreement. Successive 2020-21 and 2021-22 Federal Budgets were focused on a ‘gas-fired recovery’ from COVID-19. Simultaneously, government investment in new technology and efficiency would drive down emissions, while new low-carbon energy sources such as hydrogen were developed.
But a change of government in May 2022 has accelerated timelines for several of Australia’s key climate targets. Under the Climate Change Bill passed by the Labor Government, a 43% reduction target in 2005 emissions levels by 2030 has now been legislated, as has the target of net zero emissions by 2050. The government is also targeting 82% renewable power generation by 2050 and has introduced a AUD20 billion Rewiring The Nation Fund to upgrade the national electricity grid in preparation.
Australia has a difficult balance to achieve. It needs to protect the country’s economic future in the short and medium term, which will depend on fossil fuel exports, while meeting new climate targets and managing strengthening activist pressures to move more swiftly to a carbon neutral future. Prime Minister Anthony Albanese has noted the importance of gas projects – both current and future – to “keeping the lights on”, while also pursuing ambitious renewable energy targets.