REPORT: Setting the Clean Energy Target – Implications for industry & Australia’s 2030 target

The ambition of the government’s Clean Energy Target (CET) will not only establish the timeline for the phase out of emissions from Australia’s electricity sector, but will also have implications for the ‘effort sharing’ contribution of all sectors of the economy to meet Australia’s 26-28 per cent emissions target by 2030.

In this update, we examine a series of target scenarios for the CET, analysing the impact on the generation sector – and all sectors of the economy through to 2030.

Key findings include:

    • Modelling indicates that a “minimum CET” of 28 per cent would reduce national emissions by 44 Mt of CO2e in 2030, an 8 per cent cut on 2005 emissions levels. This would leave a shortfall of 119 Mt to meet Australia’s 2030 target.
    • Notably, such a trajectory would result in electricity emissions being phased out by 2095 – 2101, far later than a target of net-zero emissions prior to 2050 under the Paris Agreement.
    • Should a 28 per cent target be applied across all sectors of the economy, modelling indicates that Australia’s emissions growth sectors – such as the direct combustion of oil and gas and transport sectors – would be liable for 31 and 32 per cent of all emissions reductions to meet the 2030 target, despite making up only 17 and 18 per cent of all emissions. Comparably, the the electricity sector – Australia’s largest emitting sector – would contribute only 20 per cent of all abatement.
    • Under such a scenario, the LULUCF sector would, in theory, be free to increase emissions with LULUCF emissions currently over 100 per cent below 2005 emissions levels.
    • An alternative CET of 45 per cent would achieve zero emissions by approximately 2045. Under this scenario, a 45 per cent CET would contribute a cumulative 424 Mt of abatement – or 41 per cent of Australia’s abatement task to meet a national 28 per cent reduction target by 2030.
    • A 63 per cent CET target – equivalent to a reduction of around 10 Mt annually – would phase out electricity sector emissions a decade earlier, by 2035, contributing 619 Mt of cumulative abatement – or 60 per cent of Australia’s abatement task to meet a national 28 per cent target.
    • In both the 45 and 63 per cent CET scenarios, we project downward pressure on wholesale electricity prices, with greater volumes of renewables to cause electricity supply to become more competitive and less influenced by high gas prices. In such scenarios, we estimate that wholesale electricity prices could fall towards $60/MWh within the first year of a CET mechanism.
Restricted Access

This is a subscriber report. Please login to access this content.

Not a subscriber?

To learn more about our research services for the Australian energy and emissions markets, click the button below, or email our subscriptions team.

Sign up for regular insights

LATEST UPDATES

  • UPDATE: Short- and long-term ACCU spot price impacts of COVID-19

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    International carbon prices have tumbled amid fears that a COVID-19 induced economic downturn will curb […]

    Analyst Alerts, Research Insights | March 26th, 2020
  • ALERT: COVID-19 service continuity and client support information

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    Dear Subscriber, As the COVID-19 situation evolves, we will continue to provide our regular research […]

    Research Insights, Service Alerts | March 24th, 2020
  • ALERT: Inclusion of AEMO “Step Change” scenario in Australian Electricity Outlook (AEO) service

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    Dear Subscriber, Following the release of AEMO’s draft 2020 Integrated System Plan, the Alternative Case […]

    Research Insights, Service Alerts | March 13th, 2020
  • WEBINAR: The Australian Carbon Price and Net-Zero Emissions – Where to next?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    As pressure builds for Australia to develop a more ambitious long-term emissions target ahead of […]

    Research Insights, Webinars | February 25th, 2020
  • OUTLOOK: Long-term carbon price, supply and demand outlook (Q3 FY19-20)

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Safeguard Mechanism covers greenhouse gas emissions from Australia’s largest emitting facilities, extending to 450 […]

    Outlook, Research Insights | February 11th, 2020
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone
  • Quick Navigation

  • Electricity

    Learn more about our modelling and price outlooks for the NEM
  • Renewable Energy

    Learn more about our services for wind and solar developers
  • Carbon Market

    Learn more about our Australian carbon price and market analysis
  • Latest Insights

    View our latest articles, white papers, reports and publications