Australia’s emissions are expected to decline modestly by the end of 2026, continuing the downward trend seen in 2025.
Australia’s emissions are expected to decline modestly by the end of 2026, continuing the downward trend seen in 2025. National emissions for the year to June 2025 fell by around 2.2%, and current policy and investment settings suggest that this trajectory will persist into 2026.
The electricity sector will remain the primary driver of reductions. Emissions from electricity generation dropped 3.3% in the year to June 2025, reflecting the rapid expansion of renewable energy across the grid. With Australia targeting 82% renewable electricity by 2030, further declines are likely as additional large-scale solar and wind capacity comes online and battery storage increases, reducing reliance on coal- and gas-fired generation.
By contrast, transport emissions are expected to remain broadly flat. The sector is now one of the fastest-growing contributors to national emissions. The 2025 June quarterly update shows transport emissions rising slightly (up 0.3%) in the year to June 2025, mainly driven by increased diesel consumption for road transport and domestic aviation activity. Although the New Vehicle Efficiency Standard (NVES) took effect in 2025, its impact will be gradual as older, less-efficient vehicles retire, and cleaner vehicles enter the fleet. Rising demand for freight, convenience delivery services, and aviation travel will likely offset short-term gains from vehicle efficiency improvements.
In the stationary energy and fugitive emissions sectors, a slight increase is anticipated. The June 2025 Quarterly update shows that emissions in this sector increased over the past year, reflecting higher industrial activity and fossil fuel production. While the Safeguard Mechanism is designed to incentivise emissions reductions across major industrial facilities, continued fossil fuel production and export growth are expected to apply upward pressure in the near term.
Agricultural emissions are projected to remain largely unchanged in 2026. The recent decline in this sector has been driven primarily by lower cattle and sheep numbers rather than structural changes. According to Australia’s 2025 Emissions Projections, this sector is expected to stabilise at current levels. It has lower emissions than previously forecast, due to improved methane accounting methods and developments and innovations in methane reductions through cattle feed.
Finally, the Land Use, Land-Use Change and Forestry (LULUCF) sector continues to act as a significant carbon sink. However, recent modelling shows the size of this sink may be smaller than previously projected due to environmental and methodological changes. Ongoing sequestration activities, including land clearing and increased native vegetation, are expected to continue contributing positively to Australia’s emissions profile.
Overall, the outlook for 2026 suggests a small but modest reduction in Australia’s total emissions, driven largely by continued decarbonisation of the electricity grid, partially offset by flat or rising emissions in transport, stationary energy, and fugitive sources.
This Post was submitted by Climate Scorecard Australia Country Manager, Jessica Gregory.
Engagement Resources:
https://www.dcceew.gov.au/sites/default/files/documents/australias-emissions-projections-2025.pdf