Australian Economy

What is the Labor government energy plan for Australia?

There is a new government, and with it a new strategy for Australia’s energy. What might we expect of the next three years? Cosmos investigates.

How do we drop emissions by 2030?

The Labor Party has set a target of a 43% reduction in domestic emissions on 2005 levels by 2030. Unlike the previous government’s 26-28% target, which was manageable almost on the back of state initiatives alone, this will require work from the federal government.

“It’s certainly achievable. It’d be achievable to do more than that, because the current economic situation is that by far the cheapest form of new generating capacity is solar farms and large wind turbines,” says Ian Lowe, an emeritus professor of science, technology and society at Griffith University.

“Even with enough storage to guarantee capacity, they’re much cheaper than coal or gas.”

How might it be achieved? Labor has ruled out carbon pricing, which is historically one of the most reliable ways to decarbonise.

“An economy-wide carbon price is the most efficient way of reducing emissions, but it is entirely possible to achieve substantial reductions using sector-by-sector policies, including regulation,” says John Quiggin, a professor of economics at the University of Queensland.

Climate Analytics projects that, barring further government intervention, domestic energy will likely deliver a 30-38% drop in emissions.

“Given that state-level policies have already made a 35% reduction likely, Labor should be able to achieve something close to 43% with its currently stated policies, and could achieve substantially more if it chose to do so,” says Quiggin.

Tipping that 35% to 43% relies on a couple of Labor’s policies: a $20 billion initiative to improve the electricity grid (Rewiring the Nation) and an electric vehicle strategy which will subsidise EVs and incentivise more imports and infrastructure (read: charging stations) for them.

Lowe describes Rewiring the Nation as a “great strength” of Labor’s energy platform.

“As Saul Griffith points out in his book The Big Switch, the great advantage we have over most countries is the size of our electricity grid,” says Lowe.

“To make best use of renewables, you need to take advantage of the fact that the Sun can be shining in Ceduna when it isn’t in Cairns, or that the wind can be blowing in North Queensland when it isn’t in Victoria. Strengthening the grid is critical to making best use of renewables.”

Might we cut more than 43%?

If 43% is achievable with some electric vehicles and grid infrastructure, could our emissions go lower? A 43% target, after all, is compatible with 2°C of warming – but not the Paris Agreement target of 1.5°.

“There’s no doubt we could get more ambitious,” says Lowe. “The question is whether the government has the political will to get more ambitious.”

Reducing emissions further is a social, rather than economic or technical, challenge. The 43% target itself is a reduction on the 45% target that Labor brought to the 2019 election, where it was defeated – leading to softer campaigning on climate.

The Greens and several independents (most notably those associated with the Climate 200 group) have set more ambitious targets. Both the party and the group will have some sway in the new parliament – although how much power is yet unclear, as it’s still not obvious whether Labor will have a majority in its own right, or will need the crossbench in the House of Representatives as well as the Senate.

“It’s not just the election of a Labor government, but the election of more Greens senators, probably David Pocock in the ACT, and of the teal independents,” says Lowe.

“All are evidence that the community wants stronger action on climate change.”

The Greens have modelled their energy policy on the Australian Energy Market Operator’s (AEMO) “Hydrogen Superpower” scenario – a future that involves rapid expansion in renewable energy, including large exports of renewable energy overseas, likely in the form of hydrogen. The scenario has been judged feasible by AEMO’s stakeholders – although they believe the slightly less ambitious “Step Change” scenario is more likely to happen.

In short: the electricity grid has a clear, if not inevitable, renewable path ahead of it. Other emissions sources are more complicated.

“A good energy plan would be more aggressive emissions reduction targets, and to start looking at the two-thirds of our emissions without electricity – in other words, to accelerate the transition to electrical transport, and to start talking to manufacturing and mineral processing about less carbon-intensive ways of meeting their energy needs,” says Lowe.

What about exports?

There is a major oversight in Labor’s energy plan: the government doesn’t have plans to curb, or stop, exports of fossil fuels to other countries. Exports don’t count towards our emissions totals – but most of the world’s coal, oil and gas must stay in the ground for the world to meet the Paris targets. Australia is the world’s third largest exporter of fossil fuels.

“If we’re serious about slowing down climate change, we need to phase out existing fossil fuel use in Australia more rapidly,” says Lowe.

“And we also need to accept responsibility for the fossil fuels that we export. And there’s been a deafening silence about that.”

As with domestic energy, the economic days of fossil fuel exports are numbered.

“Most of the countries to whom we export coal and gas have a target of getting to zero emissions by 2050,” says Lowe.

“So there’s a real sense in which investing in new production facilities is almost certain to have these stranded assets.”

“The main determinant of exports will be demand from overseas users, which should decline over time,” agrees Quiggin.

“However, Labor should not approve new developments, which are clearly inconsistent with the Paris goals.”

“The biggest single reason for the Coalition being ejected from office was their failure to do something about climate change,” says Lowe.

“I think if the government doesn’t step up to the mark and respond to what the community wants, the community will be equally damning of them in three years’ time.”


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