The Australian government has announced an emissions reduction target of 26-28 per cent on 2005 levels by 2030. We view this figure as weak in that the government has failed to increase Australia’s existing emissions reduction ambition under the Kyoto Protocol.
In line with the government’s National Greenhouse Gas Inventory (NGGI), in 2005 Australia’s emissions were 608 million tonnes (Mt), meaning that emissions will need to fall to 450 Mt by 2030 to meet the 26 per cent target, or 438 Mt to meet the higher 28 per cent reduction (The government refers to emissions figures of 612 Mt in 2005 and 441-453 in 2030, indicating an expected update to the NGGI).
Australian emissions are lower than 2005 levels due to reduced deforestation, lower electricity demand and the increased take up of renewable energy, including residential solar, since that time. We project Australia’s new 2030 target is equivalent to a cut of 21 per cent against current levels, or just 118 million tonnes. This represents a decrease of just 8 Mt per annum (Mtpa) over the next 15 years.
In meeting the target, the government proposes that the Emissions Reduction Fund will remain the cornerstone policy, in collaboration with the safeguard mechanism, energy productivity plan, technology improvements and existing Kyoto carry-over.
The Prime Minister has noted the government expects a $200 million spend per annum over the next ten years in order to meet the target. This largely in line with our earlier Market Outlook, specifically the delivery of Australian Carbon Credit Units (ACCUs) contracted at earlier auctions. Notably, in line with this Outlook
