Parties to the Paris Agreement are tasked with updating their national climate targets, policies and strategies to support global climate efforts. Australia has recently completed a draft of its revised plan. When finalised, it will have a cascading effect on businesses and individuals. We provide a summary of the proposal and discuss next steps.
At the conclusion of COP28 in December last year, parties to the Paris Agreement walked away with some important and urgent homework.
As part of the urgent course correction process, countries were tasked with updating their Nationally Determined Contributions (NDCs) – or their specific targets, policies and strategies to support global efforts.
Australia has completed a draft of its revised plan and has shared it for public commentary due at the end of May.
Created by the Climate Change Authority, the 2024 Issues Paper: Targets, Pathways and Progress presents the proposed approach, direction and latest thinking to be included in Australia’s next NDC.
These renewed commitments will have a cascading effect on businesses and individuals. We all have a role to play in supporting climate and nature repair.
To help business leaders understand this developing narrative, we put together an overview of the key issues raised.
This article considers the following:
The Climate Change Authority has released a paper proposing a new net zero and emissions reduction target for Australia and the ways to achieve them. This new climate solution package is expected to be finalized by the end of the year.
It will be presented as Australia’s renewed commitment to the world in the form of a more ambitious NDC. A plan that is science basedand designed to help supercharge global climate progress.
This is what’s happening at a high level:
Is this achievable?
The paper indicates, yes.
Australia is already on track to reduce emissions by 69% by 2035 if current pledges from each state are fulfilled. This means we have an opportunity to aim at the upper end of the 65-75% target range currently being proposed.
In the words of the UN:
“The best NDCs aim high and reach far. Grounded in sound analysis and data, they help countries begin a transformative shift to development that is greener and more sustainable.”
When setting an ambitious target for the long run, Australia, like every other country, must balance between climate ambitions, sustainable economic growth, and maintaining the general welfare of its people.
As highlighted in the discussion paper, the largest contributors to Australia’s total emissions are drivers of almost 40% of Australia’s GDP in 2021. Significant changes to the way these organisations operate will have an impact, on the national economic output.
Hence, it is important to shape the sectoral pathways in a scalable fashion, with proposed interim solutions to maintain growth through the transition.
Being an export driven country, Australia also faces exposure to other countries’ climate targets and regulations.
Australia must be able to keep up with expectations set by importing countries in terms of emissions reporting and in placing an appropriate price on carbon-intensive exports.
An example of this risk is the European Union’s Carbon Border Adjustment Mechanism (CBAM). Designed to level the playing field between European importers and manufacturers, it places a carbon charge on imports to the levels imposed on local producers. The regulation also has additional disclosure requirements.
Fortunately, this global exposure also comes with opportunities for Australia to expand its climate impact beyond domestic borders. Australia can share its skillsets and technology to assist other developing countries in achieving their climate ambition.
Article 6 of the Paris Agreement is the main driver behind this opportunity. Australia has started to establish bilateral and multilateral agreements as per the Article 6 guidelines to develop projects in neighboring countries with the goal of expanding climate impact reach beyond supply chains.
The way to optimise the trade-off between these risk and opportunity is by exploring different scenarios.
The Climate Change Authority has proposed the new target through its own research and by considering the analysis completed by other credible entities.
The table below compares Australia’s new proposed target as put forward by the Climate Change Authority (CCA), with the current progress scenario and the proposed Australian targets from other organisations, including the World Wildlife Fund (WWF), the Climateworks Centre, the Climate Council, and the United Nations.
The most notable global platform to benchmark NDC commitments is Climate Action Tracker. As of December 2023, Climate Tracker rates Australia’s current strategy as ‘insufficient’ based on ‘insufficient’ policies and actions and ‘critically insufficient’ on climate finance. The actual NDC target is, however, ‘almost sufficient.’
The Climate Change Authority's proposed new NDC target for Australia will be more ambitious than the Climate Action Tracker’s suggested target for Australia’s 'fair share' in achieving global 1.5-degree C. And with this new target, Australia has the potential of achieving net zero earlier than 2050.
In the formation of this proposed new target, the Climate Change Authority has also considered factors that will ensure this target is fair and just for all Australians, and acknowledges the need for collaboration across government, private sector, investors, Indigenous Peoples and local communities (IPLCs) and individuals.
The discussion paper presented by the Climate Change Authority presents proposed pathways, broken down by sector, to reach the new target. A consultation process is underway to evaluate them in more detail.
The table below outlines the sectorial pathways as presented in the paper. Here are some highlights:
The proposal document also identifies key barriers to and enablers of implementation. These are outlined in the table that follows with the following highlights:
The consultation process is running until 28 May 2024.
The Nationally Determined Contribution then needs to be submitted to the UNFCCC by the end of the year.
While the details may not be finalised until then, we can expect that Australia will need to implement significant changes to meet the more ambitious new target.
These changes will be a challenge for some, but an opportunity for those who embrace the momentum, commence the transition, and learn through doing.
There is opportunity for Australia to develop an ambitious target that contributes beyond what is deemed to be our 'fair share' and to integrate other relevant targets such as Nature Positive by 2030.
There is also significant potential in the new emerging environmental markets.
We are now familiar with the concept of carbon credits and renewable energy certificates. The coverage of environmental markets is now expanding to include commodities such as hydrogen credits, biofuels, nature and biodiversity credits, water credits and plastic credits.
Engagement with and demand for these new initiatives from Australian businesses and investors will help accelerate positive change.
By taking on the challenge, embracing the new target and the pathways to get there, Australia will be able to deliver beyond value chain ambitions in high scale, impact and integrity.
Australia’s proposed new climate targets, pathways and current progress review
