What is Australia's pathway to limit global warming to 1.5°C?
Power
Decarbonising the power sector
Australia’s power sector is dominated by fossil fuels, with coal and gas-fired generation at 53% and 19% in 2021. Renewables (including biomass) are gaining ground, however, at 27% of the mix in 2021.1 While the government’s target of 82% renewable penetration of the main grid by 2030 is commendable, the target falls short of 1.5°C compatibility. 2 Across all assessed 1.5°C pathways, renewables rapidly replace fossil fuels in Australia’s electricity sector, reaching a share of 90-95% in 2030.
Australia's power mix
terawatt-hour per year
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Graph description
Power energy mix composition in generation (TWh) and capacities (GW) for the years 2030, 2040 and 2050 based on selected IPCC AR6 global least costs pathways. Selected countries include the Stated Policies Scenario from the IEA's World Energy Outlook 2023.
Methodology
Data References
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The Australian Energy Market Operator expects coal to be phased-out of the Wholesale Electricity Market in Western Australia by 2031 and out of the National Electricity Market on the east coast by 2037, under its central scenarios.3,4 All assessed 1.5°C-compatible pathways show coal essentially phased out by the early 2030s, with the Minimal CDR Reliance pathway, which limits the use of carbon dioxide removal through deeper cuts to fossil fuel use, seeing coal power phased out by 2030.
Under the Deep Electrification pathway, which best captures the potential for rapid electrification to drive fossil fuels out of the energy system, total electricity demand would grow three-fold between 2021 and 2050. This increased electricity demand is supported by a rapid increase in renewables and a small share of hydrogen (5%) and bioenergy with carbon capture and storage (4%).
Fossil gas use also declines rapidly across all 1.5°C compatible pathways, dropping to a 3-4% share in 2030 and is fully phased out between 2030-2035. However, the Australian government has not committed to either a coal or a gas phase out.
Australia's power sector emissions and carbon intensity
MtCO₂/yr
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Graph description
Emissions and carbon intensity of the power sector in selected 1.5°C compatible pathways.
Methodology
Data References
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Power capacity investments
Australia has abundant wind and solar resources. In 2023, solar was the greatest source of variable renewable energy, provided by both utility scale solar (at 6% of electricity generation) and rooftop solar (9%), followed by wind (11%).5 Solar PV and wind are the cheapest options for new-build generation in Australia, including integration costs such as storage and transmission.6
However, renewables investment in Australia remains obstructed by slow planning and approvals, social licence issues, increased costs, supply chain issues and workforce shortages.7,8 Investment in large-scale renewable generation fell to AUD 1.5 bn (USD 1 bn) in 2023, down substantially from AUD 6.5 bn committed to new projects in 2022.9
The Deep Electrification pathway, which best captures the rapid cost reductions seen in wind and solar over the past decade and the potential for future progress, would require an average annual investment of USD 12 bn/yr committed to wind and solar between 2026-2030. The Net Zero Commitments pathway, which limits global warming to 1.5°C through stringent climate policies, including optimal carbon pricing, would see a comparatively lower investment in renewables to 2050, but would still see investments reach an average USD 9.8 bn/yr between 2026-2030 annually.
Australia’s expanded Capacity Investment Scheme (CIS) aims to deliver 32 GW of new clean energy capacity by 2030, comprised of 23 GW renewable energy capacity and 9 GW storage capacity.10 The CIS is a government underwriting scheme that sets an agreed revenue ‘cap and floor’ for projects selected in a reverse auction tender process. Under current policies, including the 82% on-grid renewable energy target and expanded CIS, Australia would reach 110 GW installed renewable energy capacity and 29 GW storage capacity by 2030.11 This falls short of the renewable capacity required to align with 1.5°C pathways, which would see 156-178 GW online by 2030 and 286-350 GW by 2050.
Australia's renewable electricity investments and capacities
Billion USD / yr
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Graph description
Average annual investments in power sector renewable electricity capacity and cumulative installed power capacities across time under 1.5°C compatible pathways downscaled at country levels.
Methodology
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1.5°C compatible power sector benchmarks
Carbon intensity, renewable generation share, and fossil fuel generation share from illustrative 1.5°C pathways for Australia
| Indicator |
2021
|
2030
|
2035
|
2040
|
2050
|
Decarbonised power sector by
|
|---|---|---|---|---|---|---|
|
Carbon intensity of power
gCO₂/kWh
|
648
|
15 to
59
|
-10 to
1
|
-14 to
0
|
-17 to
0
|
2034
|
|
Relative to reference year in %
|
-98 to
-91%
|
-102 to
-100%
|
-102 to
-100%
|
-103 to
-100%
|
| Indicator |
2021
|
2030
|
2035
|
2040
|
2050
|
|---|---|---|---|---|---|
|
Share of unabated coal
per cent
|
53
|
0 to
4
|
0 to
0
|
0 to
0
|
0 to
0
|
|
Share of unabated gas
per cent
|
19
|
3 to
4
|
0 to
0
|
0 to
0
|
0 to
0
|
|
Share of renewable energy
per cent
|
27
|
90 to
95
|
97 to
100
|
96 to
100
|
95 to
100
|
BECCS are the only Carbon Dioxide Removal (CDR) technologies considered in these benchmarks
All values are rounded
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Methodology
Data References
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