'Ambitious but achievable' - Australia's 2035 emissions reduction target

The Australian Government has announced plans to target a 62-70% reduction of emissions from 2005 levels by 2035. Described as an ‘ambitious but achievable’ target by the Prime Minister,[1] this announcement continues a recent trend among federal, state and territory governments to accelerate Australia’s emissions reduction efforts.

This new target is critical; the interim emissions target is a key determinant of future energy, industrial, and land use policies.  It also sends a clear investment signal to project proponents and financiers in relation to Australia’s energy transition. Below, we explore some implications of this new target.

A quick recap on the Paris Agreement

The Paris Agreement, adopted at the 21st United Nations Climate Change Conference in 2015 (COP 21), aims to  limit ‘the increase in global average temperature to well below 2⁰C above pre-industrial levels’ and drive progress ‘to limit the temperature increase to 1.5⁰C above pre-industrial levels.’[2] It is a treaty level agreement, which Australia signed and acceded to in 2016.[3] Signatories to the Paris Agreement are required to put forward Nationally Determined Contributions (NDC) every five years, constituting targets that are intended to be increasingly ambitious.[4]

Initial targets

Australia’s initial NDC was communicated in 2015, being a 2030 target of 26-28% reduction below 2005 levels, following a similar pledge by the US and China at COP 21.[5] In 2021, the Australian Government communicated a new NDC, with a headline commitment to achieve net zero emissions by 2050[6] while affirming the existing interim target of 26-28% emissions reduction, notwithstanding the fact that Australia was already on track to reduce emissions by 35% by 2030,[7] alongside announcing a range of other measures as part of the NDC.

Current targets

Australia communicated a new NDC in 2022 following the change of government, uplifting the 2030 emissions reduction target to 43% below 2005 levels and affirming the net zero target.[8] Energy transition was a key focus of this uplift, with several key measures adopted, including:

• The establishment of the Capacity Investment Scheme (CIS), a national revenue underwriting program to support the acceleration of renewable generation and grid firming.
• The implementation of the Rewiring The Nation program to support the construction of transmission infrastructure required to reconfigure the electricity grid from a centralised generation architecture to a distributed matrix.

The Australian Government also passed the Climate Change Act 2022 (Cth) (the Act), which legislated the interim 2030 and 2050 net zero targets[9] and required the Climate Change Authority (CCA) to advise the government on future NDC targets,[10] amongst other things. The CCA is an independent Commonwealth statutory authority tasked with providing expert advice to the Government on its climate policy. The CCA produces an annual report tracking Australia’s progress against its targets. Its latest annual report indicated that Australia was close to but would just miss the 43% reduction target 2030.[11]

New targets

The CCA provided advice to Government (Advice) recommending a 62-70% target for 2035.[12] Although this Advice was expected in late 2024, more time was needed to consider geopolitical developments. The range recommended in the Advice overlaps with the 65-75% range the CCA consulted stakeholders on in 2024.[13]

This new target is more closely aligned with the targets set by some state and territory governments. For instance, Victoria has a 2035 reduction target of 75-80% on 2005 levels,[14] and NSW has a target reduction of 70%.[15]

Assumptions underpinning CCA Advice

The CCA has made several assumptions in its modelling regarding the achievability of the new target, which indicate the scale of necessary changes to the economy, the implications for high emitting industries, and opportunities for many project proponents. Key assumptions include the following, with sectoral pathways set out in Part 2 of the Advice and in the separate Sector Pathways Review.[16]

Energy transition

The CCA adopted the National Electricity Market ‘Step Change’ scenario described in AEMO’s 2024 Integrated System Plan. This scenario anticipates a six-fold increase in utility storage, quadrupling wind capacity, tripling utility solar capacity, and doubling rooftop solar installation, facilitated by the continuation and enhancement of the CIS.[17]

There are a range of challenges which will need to be overcome to deliver the project pipeline that will need to be established to meet these objectives, including securing supply chains, building social licence in communities hosting new infrastructure and facilitating the timely conduct of regulatory processes. The recently announced postponement of the Gippsland offshore wind auction by the Victorian government highlights the challenges.

Transport

The CCA assumes a significant expansion of the sale of electric vehicles, predicting that electric vehicles will comprise half of all light vehicle sales between now and 2035. This would equate to 20 times the number of electric vehicles on the road today[18] and will likely require an expansion of the New Vehicle Efficiency Standards introduced under the New Vehicle Efficiency Standards Act 2024 (Cth), which is already impacting the composition of the national fleet.

Large scale emitters

The Safeguard Mechanism is a requirement for the highest emitting facilities to reduce their emissions in line with Australia’s emissions reductions targets under part 3H of the National Greenhouse and Energy Reporting Act 2007 (Cth), with abatement options available to facilitate compliance.

The CCA has indicated that it expects the Safeguard Mechanism decline rate, currently 4.9% per financial year for non-trade-exposed facilities—due to reduce to 3.285% from 2030[19]—would continue out past 2030.[20] Reduction in emissions from industry, mining, and agricultural activities relies on continued improvements and technological advancements towards improving efficiency and reducing emissions intensity. However, there is some uncertainty about the likelihood of technologies being available by 2035. Cost-effectiveness of abatement measures is also a limitation.   

Land use

Land management and use, particularly activities that store carbon in vegetation and soils, will be important for reducing net emissions. It is anticipated that ceasing logging of old growth forests, reducing re-clearing rates by half, and planting of new forests may provide around 6% of the proposed emissions reductions.[21] Carbon sequestration through improved pasture management and increasing soil carbon levels will also play a key role in reductions in the land sector. These goals have the potential to contribute to land use conflict with agricultural uses on existing farmland used for food production. We anticipate that they will also impact future development and associated biodiversity assessments and offsetting requirements. The Advice indicates that diversifying land uses and developing new business activities for land managers and farmers will be necessary to enable new plantings across a variety of land types.[22]

National Climate Risk Assessment

The significance of Australia’s new emissions target is underlined by the findings in the recently released National Climate Risk Assessment report by the Australian Climate Service.[23] The report examines the impact of different global warming levels on Australian communities caused by several different priority hazards, highlighting the significant escalation of impacts beyond 1.5-degree average temperature increase,[24] including the widely-reported prediction that over 1.5 million Australians could be exposed to the impacts of rising sea levels and other coastal flooding by 2050.[25]

Future updates will look more closely into the impacts of the new targets on different segments of the economy, as well as the effect of adaptation measures.

[1] “Media Release - Setting Australia’s 2035 Climate Change Target” (Australian Government: Canberra: 18/9/25) [Link].

[2] Paris Agreement, 3156 UNTS 79 (entered into force 4 November 2016) art 2. [Link].

[3] UN Treaty Collection Depositary [Link].

[4] Note 2, art 4.

[5] Australia’s intended Nationally Determined Contribution to a new Climate Change Agreement (Australian Government: Canberra: August 2015) [Link].

[6] Australia’s Nationally Determined Contribution Communication 2021 (Australian Government: Canberra) [Link], p 3.

[7] Ibid.

[8] Australia’s Nationally Determined Contribution Communication 2022 (Australian Government: Canberra) [Link], p 3.

[9] Climate Change Act 2022 (Cth) s.10.

[10] Climate Change Act 2022 (Cth) s.15.

[11] 2024 Annual Progress Report (Climate Change Authority: Canberra) [Link], p 29.

[12] 2035 Emissions Reduction Targets Report (Climate Change Authority: Canberra) [Link].

[13] 2024 Issues Paper: Targets, Pathways and Progress (Climate Change Authority: Canberra) [Link], p 6.

[14] Victoria’s 2035 Emissions Reduction Target (State of Victoria: Melbourne: May 2023) [Link] p 3.

[15] Climate Change (Net Zero Future) Act 2023 (NSW), s. 9.

[16] Sector Pathways Review (Climate Change Authority: Canberra: September 2024) [Link].

[17] Note 12, p 8.

[18] Ibid.

[19] Safeguard Baselines (Clean Energy Regulator: Canberra: September 2025) [Link].

[20] Note 12, p 9.

[21] Note 12, p 8.

[22] Note 12, p 64.

[23] Australia’s National Climate Risk Assessment (Australian Climate Services: Canberra: 2025) [Link].

[24] Australia’s National Climate Risk Assessment: An Overview (Australian Climate Service: Canberra: 2025) [Link], p 12.

[25] Note 24, p 22.