Australia can still deliver a sweeping net zero energy transformation by 2050, consistent with the Paris Agreement, according to the 2024 Australian edition of the authoritative New Energy Outlook series from Bloomberg New Energy Finance (BNEF).
It’s a massive $US2.4 trillion opportunity for investors that will unlock 135 per cent growth of renewable wind and solar generation required by 2030. Emissions would fall to zero all sectors. But there’s no time to waste.
By 2050, under BNEF’s most ambitious scenario, Australia will heavily electrify its power, transport and building sectors, pushing overall electricity demand up by 2.5 times, with 290 GW of wind and solar generation and 59 GW of storage.
Released on Monday, ahead of BNEF’s Energy Transition & Sustainable Finance forum in Sydney on Tuesday, this latest report lays bare the immense political challenge that Australia faces to get on track, with the next national elections due by May 2025.
The building and industry sectors are by far the most challenging sectors for transition, with relatively little progress by 2050 under the ETS model.
The BNEF team has modelled a net zero scenario (NZS), which is consistent with a 1.75 C warming outcome, with full decarbonisation of the power, transport, industry and building sectors by 2050, and a less ambitious economy transition scenario (ETS), consistent with a 2.6 C warming outcome, which primarily limits the low-carbon transition to the power and transport sectors.
It regards the building and industry sectors as by far the most challenging, with relatively little progress by 2050 under the ETS model.
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There’s some qualified good news in its projections, however, with the NZS model estimated to cost only an additional 12 per cent more ($US2.41 trillion) when compared to the baseline ETS ($US2.16 trillion) but delivering far better outcomes in net zero terms.
BNEF also makes clear that Australia would still face massive investment requirements to renew and maintain its energy sector even without a decarbonisation imperative.
Given the domestic political context, it is noteworthy that BNEF makes no assumptions for nuclear having a role in Australia’s future energy mix to deliver net zero by 2050, thus ignoring the Coalition’s push to build up to seven reactors around Australia.
While BNEF’s international team defines clean power as being renewables and nuclear, for Australia, it focuses overwhelmingly on a massive build-out of firmed wind and solar generation, with the accelerated retirement of unabated coal and gas during a critical next decade.
It says: “BNEF’s analysis shows that Australia’s energy mix will need to transform over the next decade, with all unabated coal and almost all unabated gas generation exiting the power system between now and 2025. Australia will rely instead on a lower-cost mix of renewables paired with flexible technologies like batteries, pumped hydro and gas.”
This energy mix projection is totally at odds with the coalition’s still-emerging strategy to prolong coal generation and expand reliance on gas while restricting large-scale renewables to leave space for nuclear to enter the market in the decades ahead.
But BNEF makes it clear that there is no time to waste for Australia.
“Australia’s window to stay on a well below two degree pathway is closing fast,” said Leonard Quong, head of BNEF in Australia.
“Rapidly moving to a clean power system based on wind, solar and storage will be essential to cost effectively reduce carbon emissions in line with our existing decarbonisation targets – but the heavy lifting must be done this decade.
“A low carbon power sector will also serve as a bedrock for future emissions reduction efforts in other areas of the economy in the years to come.”
Somewhat encouragingly, BNEF says Australia’s current 2030 emissions reduction target (43 per cent on a 2005 baseline) is in line with its Paris compliant NZS energy related emissions reductions.
But it warns that: “The NZS results imply that for Australia to remain aligned with the Paris Agreement goal, it needs to target at least 71 per cent emission reduction from energy-related sectors by 2035 relative to its 2005 baseline for the next round of nationally determined contributions. These NDCs are due for submission to the United Nations Framework Convention on Climate Change by November 2025.”
Currently, the Climate Change Authority (CCA), which advises the Australian Government on setting carbon targets, is exploring a range of 65 per cent to 75 per cent for Australia’s next NDC, and where Australia lands on a 2035 interim target will be decided by the next election.