4 mins read
Published Nov 21, 2025
Western Australia.
Australia’s Net Zero Plan: Key Decarbonisation Priorities, Sectoral Action Plans & Supporting Policies and Investments
Australia’s Net Zero Plan (Sep 2025) outlines a roadmap to reach net‑zero greenhouse gas emissions by 2050. It builds on the government’s recently announced interim goal of 62–70% emissions cuts by 2035 from 2005 levels.
The plan, described by the Department of Climate Change, Energy, Environment and Water (DCCEEW) as a “fair, orderly and efficient transition”, outlines how Australia intends to decarbonise while preserving competitiveness. Yet its success will depend on resolving grid bottlenecks, unlocking private capital, and maintaining long-term policy stability.
Key Decarbonisation Priorities
The Net Zero Plan identifies five priority strategies under the acrostic CLEAN:
Clean electricity across the economy
Australia aims to rapidly expand renewables (solar, wind, hydro) and modernise transmission. Coal power will be phased out in a planned sequence.
A new Investor Front Door program (pilot in 2025) is designed to streamline permitting and connect renewable projects with financing. However, grid congestion and environmental approval delays remain the biggest barriers to scaling renewables at pace.
Lowering emissions by electrification and efficiency
Switching from fossil fuels to electricity in transport, buildings, and industry is central. This includes expanding EV charging infrastructure, revising fuel-efficiency standards in 2026, and tightening appliance performance programs. The real challenge lies in grid readiness and incentives strong enough to shift household and business behaviour.
Expanding clean fuel use
The government has committed $1.1 billion to accelerate production of low-carbon liquid fuels, hydrogen, biofuels, and sustainable aviation fuels (SAF). While critical for hard-to-electrify sectors, cost competitiveness and certification pathways for these fuels remain uncertain beyond pilot scale.
Accelerating new technologies
Innovation and industrial transformation are key. The $5 billion Net Zero Fund will co-invest with industry to decarbonise manufacturing and scale technologies like green steel, carbon capture, and advanced batteries. Yet many of these remain pre-commercial and face high capital intensity.
Net carbon removals scaled up
Natural and engineered removals will play a growing role through reforestation, soil carbon, and direct air capture. A second funding round of the Carbon Capture Technologies Program (≈$52 million) is now open. The government plans to strengthen the ACCU Scheme’s integrity, though concerns persist over verification and permanence of offsets.
In a nutshell, the strategy blends regulation, incentives, carbon markets, and R&D to deliver the 2035 and 2050 goals.
Sectoral Action Plans
To put the broad priorities into practice, the Net Zero Plan is supported by six detailed sector plans. These sector plans act as roadmaps for each part of the economy, recognising that different industries have different challenges and timelines.
The table below highlights the main focus areas for each sector:
Sector | Key Actions and Realities |
Electricity & Energy | Expand renewables, upgrade transmission, retire coal. Grid investment is now the pace-setter for the entire transition; delays here ripple across every sector. |
Industry & Waste | Electrify processes, improve efficiency, and adopt circular economy practices. Energy efficiency remains the cheapest abatement path but often lacks visibility and policy urgency. |
Resources (Mining) | Electrify mining equipment, decarbonise processing, and develop critical minerals. Success depends on integrating renewables in remote regions and attracting long-term finance. |
Built Environment | Improve building energy standards and promote electrified heating. Implementation will hinge on state planning codes and retrofit funding. |
Agriculture & Land | Cut methane through livestock feed innovation, expand carbon farming and soil sequestration. Verification of land-sector abatement remains a credibility test. |
Transport | Tighten efficiency standards, boost EV uptake, and develop clean fuels for aviation and freight. Charger rollout still trails demand projections. |
Each sector plan includes both short-term actions and long-term goals and is regularly updated as technology and markets evolve.
For example, the electricity plan will track the timetable for retiring coal plants, while the transport plan will specify how fast to phase in electric trucks and trains.
Supporting Policies and Investments
Finance and Investment
The government will invest over $5 billion through the Net Zero Fund and an additional $2 billion via the Clean Energy Finance Corporation. However, the public funding committed to 2030 (~A$7 billion) covers a very small fraction of the total capital required for the transition (estimated in the hundreds of billions annually). Blended finance mechanisms and tax incentives will determine whether the transition attracts large-scale industry investment.
Carbon Markets and Pricing
The Safeguard Mechanism and ACCU Scheme remain central. A 2026–27 review will likely tighten industrial baselines and limit imported credits. Yet market credibility depends on improving transparency and monitoring of claimed abatement.
Regulatory Reform
To speed up clean infrastructure, the plan proposes reforms to environmental approval processes (under the EPBC Act) to avoid delays for renewable energy and transmission projects. It also signals that vehicle fuel-efficiency standards and other regulations will be reviewed or tightened in the coming years.
Progress on these reforms will shape investor confidence far more than new targets alone.
Household and Business Support
The plan emphasises measures to protect consumers and workers during the transition (e.g. retraining programs for affected workers, schemes to make homes more energy-efficient) so that benefits are broadly shared. It also foresees cost savings for consumers from efficiency and competition in clean energy.
Real cost savings will rely on competition and rapid integration of cheaper clean energy into the grid.
Progress should be measured not by announcements but by outcomes: grid connection times, domestic clean-tech output, and verified emissions reductions.
Economic and Policy Outlook
Australian Treasury modelling shows deep emissions cuts can align with long-term growth and higher real wages.
Under current policy settings, Department of Climate Change, Energy, the Environment and Water projects Australia will reduce emissions by about 51% below 2005 levels by 2035 (baseline scenario).
That projection falls short of the mid-range goal of a 62–70% reduction by 2035 recommended by Climate Change Authority and now accepted by government.
Closing the gap will require rapid scaling of renewables, faster EV adoption, and stronger industrial accountability.
Climate Risk and Adaptation
Alongside mitigation, the government released its first National Climate Risk Assessment (NCRA) in 2025. This identifies key physical risks (like extreme heat, bushfires and sea-level rise) to inform adaptation.
A complementary National Adaptation Plan (NAP) details how Australia prepares for those unavoidable impacts. Both reports underscore that, even as we cut emissions, Australia must invest in resilience (infrastructure, health systems, water security, etc.) to protect communities and the economy.
Conclusion
Australia’s Net Zero Plan is the country’s most integrated climate framework to date. It links national targets with sector-level pathways, investment mechanisms, and adaptation planning.
Its credibility, however, will depend on execution, meaning how quickly regulators, financiers, and industries can convert policy intent into measurable outcomes.
If implementation keeps pace with ambition, the transition could position Australia as both a major exporter of clean energy and a hub for advanced low-carbon manufacturing.
If not, it risks becoming another well-designed roadmap that no one follows.
