Australia’s Most Significant Climate Policies and Programs in 2023

The Expanded Capacity Investment Scheme

Australia continues to lag in progress and ambition in the global decarbonization race. However, some past and recent climate policies have yielded substantial success across some sectors, with many hoping for continued progress over the next decade. The most notable successes have been in the energy sector, where policies have significantly boosted energy decarbonization from the household level upwards.

Australia has long supported increased rooftop solar for residential buildings, boasting the panels installed per capita, with more than one in four homes having solar panels installed on their roofs. This progress was largely driven by the 2009 Small-scale Renewable Energy Scheme, which provided substantial subsidies for households and small businesses to install solar.  As a result, household solar uptake has continued to grow, both in numbers and average installation size. In 2013, Australia’s average rooftop PV system was only 3.4kW, whereas today it averages approximately 8.3kW.

At the community and state level, other policies such as the Renewable Energy Target and the Commonwealth Large-scale Renewable Energy Target helped renewable electricity generation quadruple between 2000 and 2021. These policies have helped achieve Australia’s current energy sector emissions decline. The latest Australian emissions data (which measures emissions up to June 2023) indicates that while overall national emissions have increased 0.8% (3.6 Mt CO2-e) since the previous year, electricity-specific emissions are down 3.5% (5.6 Mt CO2-e) as renewable-energy uptake continues to displace fossil fuels.

Figure: Quarterly installation numbers of rooftop solar PV in Australia since 2016 (unadjusted data). Source: Clean Energy Regulator data, Australian Energy Council analysis, data as of 21 April 2023, Australian Energy Council Solar Report Quarter 1, 2023, page 4

However, despite this progress, Australia’s electric grid system is highly emission-intensive and has remained dependent on fossil fuels. Consequently, the country is unlikely to meet the targets of 2030 power grid emissions reductions. A new policy called the Capacity Investment Scheme (CIS) was introduced in 2022 to address this issue. Expanded in 2023, the policy subsidizes and underwrites new renewable energy projects to accelerate the slow progress in decarbonizing the grid and achieving the target of 83 percent renewables by 2030. The CIS aims to drive investment in 32 gigawatts of renewable generation and storage, such as wind, solar, batteries, and pumped hydro. It is also anticipated to play a major role in helping Australia meet its global pledge to double renewable energy and energy efficiency by 2030.

The CIS was introduced with the change to a center-left government in 2022. After a decade of climate inaction and piecemeal policy responses, the new Labor administration quickly legislated a 43% emissions reduction by 2030 target and goal of net-zero emissions by 2050. They also acknowledged these targets were unlikely to be met, prompting the introduction of the CIS in response.

Reaching this point took many years of advocacy by a large number of civil sector groups and coalitions, as well as calls for change from groups across different sectors such as the Business Council of Australia, National Farmers Federation, St Vicent de Paul Society, Energy Networks Australia, and the Australian Aluminum Council. Civil sector groups such as Solar Citizens formed to lobby specifically on the issue of solar energy. In contrast, long-established environmental groups such as the Australian Conservation Council ran many campaigns calling for a rapid clean energy transition. Solar Citizens alone built a community of over 147,000 members who advocated for policies and programs in their local communities to support increased solar uptake. They also campaigned for affordable electricity storage solutions and electric vehicles.

A range of business groups, including the Clean Energy Council and the Smart Energy Council, also came together to advocate for renewable technologies. These groups played an important role in demonstrating the feasibility of decarbonizing Australia’s energy grid and providing alternative voices from the business industry calling for change. Together, pressure from these diverse groups has helped garner broad public support for energy decarbonization, particularly at the household and trim business level. Given the many years of overt climate denialism propagated by the previous center-right government, this public support was instrumental in breaking the deadlock on climate action in Australia.

Given this widespread public support for renewable energy alongside growing support for climate action, policies propelling energy decarbonization across the country will likely be widespread and sustainable in the long term. These policies will address climate change and help deliver cleaner air and healthier communities, a more secure and reliable energy supply, and substantial economic benefits. As Australia’s energy grid remains dependent on fossil fuels, the benefits of transitioning to renewable energy will increase in the future. These benefits will continue to be measured and quantified by government sources, such as the emissions reporting data, and a wide range of stakeholders across not-for-profit and community groups, such as the Climate Council, Clean Energy Council, and the Smart Energy Council. This will track Australia’s decarbonization progress and amplify the voices demanding climate action across other sectors.

This Post was submitted by Climate Scorecard Australia Country Manager Dr Robyn Gulliver.


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