Australian Government releases 2035 target and other national climate policy updates

This article was co-authored with Harriet Salisbury, Joel Harriss and Krissy Bates.

• Introduction
• The context for the 2035 target
• Australia's 2035 target
• CCAs 2035 Targets Advice
• Net Zero Plan
• Sectoral plans
• National Climate Risk Assessment
• National Adaptation Plan
• Looking forward

Introduction

This week, the Australian Government finally announced its 2035 national emissions reduction target: a 62-70 per cent reduction against 2005 levels by 2035 (2035 Target).¹ This target forms the basis of Australia's third Nationally Determined Contribution (NDC) - which it must submit this year under the rules of the 2015 Paris Agreement - and marks a critical milestone on Australia's journey to being net zero by 2050.

Alongside the 2035 Target, this week also saw the release of Australia's 2035 NDC, the Net Zero Plan, the six Sector Plans, the Climate Change Authority's 2035 Targets Advice, the National Climate Risk Assessment (NCRA) and the National Adaptation Plan (NAP). Taken together, the release of this package of material provides critical insight into Australia's ambition to mitigate its own emissions and readiness to address the climate-related risks it will face in the coming decades.

This article provides a summary of the key elements of these documents.

The context for the 2035 target

The backdrop to the 2035 Target is the Paris Agreement, which was adopted in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC). The Paris Agreement established targets to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.

To achieve this, all Parties to the Paris Agreement (Parties) must prepare and communicate successive NDCs every five years. Under the Paris Agreement's 'ratchet mechanism', each Party's NDC should be more ambitious than its previous one. In their third NDC (which were originally due on 10 February 2025 before an extension was given to the end of September 2025) Parties are required to set a 2035 emissions reduction target.

Australia submitted its most recent NDC in 2022, which committed to reducing emissions by 43% below 2005 levels by 2030. Australia also reaffirmed its commitment to achieving net zero emissions by 2050.² Domestically, Australia codified these targets in the Climate Change Act 2022 (Cth) (Climate Change Act). This legislation ensures progress towards these targets by:

• Requiring the Minister for Climate Change to consult with the Climate Change Authority (CCA) when preparing or updating Australia's NDCs.
• Establishing an emissions budget for Australia covering the period 2021 to 2030.
• Mandating annual climate change statements to Parliament from the Minister for Climate Change, which cover progress made toward achieving Australia's emissions reduction targets and updates on domestic climate change policy.

Moreover, the Climate Change Act's emissions reduction targets are embedded in Australia's Safeguard Mechanism framework, which requires the highest emitting facilities in the country (Safeguard Facilities) to reduce their emissions against a steadily declining baseline, which is re-calculated for each Safeguard Facility on an annual basis. The current legislation for the Safeguard Mechanism also incorporates a carbon budget to limit emissions from Safeguard Facilities for the period 1 July 2020 to 30 June 2030, at 1,233 million tCO2-e to keep Australia on track to meet the Climate Change Act targets.

Australia's 2035 target

On 18 September, the Prime Minister Anthony Albanese announced the 2035 Target, describing it as "ambitious but achievable," and as striking a balance between environmental responsibility and economic feasibility.³ At the same time, the Australian Government also published Australia's 2035 NDC. To achieve the upper range of the target, Australia will need to cut emissions by around 33 million tCO2-e, almost twice the current rate of reduction. As of Q3 2025, the country's annual emissions are approximately 440 million tCO2-e, 28 per cent below 2005 levels. This is putting increasing pressure on all sectors to accelerate their decarbonisation efforts.

In announcing the 2035 Target, the Australian Government noted the existing policies that will be used to help meet the target, including the Safeguard Mechanism, the Future Made in Australia agenda,⁴ the new Vehicle Efficiency Standard⁵ and the Cheaper Home Batteries Program.⁶

CCAs 2035 Targets Advice

In announcing the 2035 Target, the government emphasised that it aligned with the independent advice of the CCA. This is important, not only because the Climate Change Act requires the government to consult the CCA, but also because the CCA's 2035 Targets Advice is grounded in whole-of-economy modelling, sectoral decarbonisation pathways, and international emission reduction trends.⁷

The CCA also considered economic, social, and regional impacts, aiming to ensure that the transition supports prosperity and equity across Australia, and is consistent with the goals of the Paris Agreement, the Climate Change Act and the Climate Change Authority Act 2011 (Cth).⁸

In its advice, the CCA explained that it provided a range for the 2035 Target in recognition of "a variety of uncertainties and delivery risks" including "the rapid growth of artificial intelligence and data centres" and the faster than anticipated rollout of clean energy technologies. However it ultimately stated that Australia should aim for the "top of the 62-70 per cent range, prepare for breakthroughs and setbacks, and not rule out 'overachievement,' should greater emissions reductions prove possible".

The CCA's advice also called for stronger policy settings to ensure the "committed and coordinated efforts of governments, companies and households" are behind the 2035 Target. It recommends a specific focus on electricity sector decarbonisation, improving the emissions intensity of industry and mining, electrifying more buildings and vehicles, and strengthening schemes like the Safeguard Mechanism and the Australian Carbon Credit Unit Scheme (ACCU Scheme).

These recommendations are timely as the Safeguard Mechanism will be subject to review in 2026-2027, and the Department of Climate Change, Energy, the Environment and Water has hinted that it will consider all options to accelerate the emissions reductions that Safeguard Facilities might achieve. Whilst nothing has been confirmed, policy settings under consideration will likely include lowering the threshold for when facilities are captured (currently set at annual scope 1 emissions of 100,000 tCO2-e). The topic of importing international carbon units for compliance purposes is also likely to be part of the review.

Looking abroad, we can compare the 2035 Target with analogous targets set by countries with similar economies and decarbonisation pathways. The UK has a particularly ambitious target to achieve an 81 per cent reduction below 1990 levels by 2035, closely followed by Norway's target of 70-75 per cent below 1990 levels. The lower end of the spectrum sees Canada setting a target of 45-50 per cent below 2005 levels by 2035, and the UAE looking to achieve a 44 per cent reduction against 2019 levels.

Australia's approach is ultimately "ambitious but achievable", balancing climate leadership and domestic capabilities, and generally aligning with commitments from other advanced economies.

Countries	2035 targets
United Kingdom	81% below 1990 levels
Norway	70-75% below 1990 levels
Switzerland	65% below 1990 levels
Australia	62-70% below 2005 levels
USA	61-66% below 2005 levels
Japan	60% below 2013 levels
Brazil	59-67% below 2005 levels
New Zealand	51-55% below 2005 levels
Canada	45-50% below 2005 levels
UAE	44% below 2019 levels

Net Zero Plan

The 2035 Target is supported by the release of Australia's Net Zero Plan (Net Zero Plan) and six accompanying sectoral plans. The purpose of the plans is stated to be to set out a clear pathway and actions to the 2035 Target and net zero by 2050. They are intended to map the steps for a fair and orderly energy transition and to provide the private sector with greater confidence to continue investing.

The Net Zero Plan identifies five main decarbonisation priorities to drive emissions reductions:

• Clean electricity across the economy: Initiatives include rapid expansion and decarbonisation of the electricity grid, replacing coal with renewables (solar, wind, hydro, batteries), streamlining approvals for renewable energy projects through reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) and modernising electricity infrastructure. In addition to the reforms to the environmental approvals process under the EPBC Act, the Net Zero Plan highlights a new Investor Front Door program, with a pilot beginning in September 2025. The Investor Front Door aims to support projects of national significance by guiding projects through regulatory pathways and find suitable government financing opportunities.⁹
• Lowering emissions by electrification and efficiency: Measures to accelerate the switch from fossil fuels to electricity in transport, buildings, and industry, and improving energy efficiency across all sectors have been identified. These include expanding energy performance programs, accelerating the rollout of EV kerbside and fast charging using existing power poles and reviewing the New Vehicle Efficiency Standard in 2026.
• Expanding clean fuel use: The development of a low emissions fuel industry will be achieved through the deployment of low-carbon liquid fuels (LCLFs), renewable hydrogen, biofuels, and sustainable aviation fuels, especially for sectors where electrification is challenging. The Government proposes to invest $1.1 billion in new LCLF production in Australia.
• Accelerating new technologies: It is intended to invest in research, development, and commercialisation of emerging technologies (e.g., green metals, carbon capture, advanced batteries, methane reduction in agriculture). A $5 billion Net Zero Fund will be established as a sub-fund of the National Reconstruction Fund to support major investments by large industrial facilities in decarbonisation and energy efficiency, and to scale up manufacturing low emissions technologies.
• Net carbon removals scaled up: Land-based carbon sequestration (reforestation, soil carbon), will be enhanced by supporting carbon farming, and developing engineered removals like direct air capture. This will be supported in part by opening a second round of the Carbon Capture Technologies Program for $52 million.

Unsurprisingly, the ACCU Scheme and the Safeguard Mechanism remain central to incentivising emissions reductions and removals. The Australian Government considers carbon markets are an important part of a 'portfolio of measures' aimed at achieving net zero emissions by 2050, and will look to continuously improve and strengthen the ACCU Scheme governance, integrity and transparency.

Sectoral plans

The Net Zero Plan is supported by six sector plans: electricity and energy, industry and waste, resources, built environment, agriculture and land, and transport.

The sectoral plans are a cornerstone of the Net Zero Plan, providing detailed, sector-specific roadmaps for emissions reduction, tailored to the opportunities and challenges of each part of the economy. They are intended to be living documents, reviewed and refined over time as technology, markets, and global circumstances evolve.

The tailored sector-specific pathways and policies recognise that some sectors (like electricity) can decarbonise faster, while others (like agriculture and heavy industry) face more gradual transitions. All plans include immediate and long-term actions, and are informed by consultation with industry, First Nations peoples, the CCA, the Commonwealth Scientific and Industrial Research Organisation and economic modelling from Treasury.

The sectoral plans are detailed, but examples of priorities identified for each of the sectors include:

• Electricity and Energy: Rapid expansion of renewables, grid upgrades, and phasing out coal.
• Industry and Waste: Electrification, energy efficiency, fuel switching, and circular economy measures.
• Resources: Decarbonising mining and processing, supporting critical minerals for clean technologies.
• Built Environment: Improving building energy performance, electrification, and sustainable construction.
• Agriculture and Land: Methane reduction, carbon farming, regenerative practices, and land-based carbon removals.
• Transport: Vehicle efficiency standards, electrification, alternative fuels, and infrastructure for EVs.

National Climate Risk Assessment

The National Climate Risk Assessment (NCRA) is the first national baseline assessment of physical climate risk exposure across three different warming scenarios (+1.5°C, +2.0°C and +3.0°C) to 2090. It is intended to support future analysis and decision-making by governments, but has broader relevance to the private sector as a source of information on climate and nature-related risks.

The NCRA analyses the vulnerability of Australia's interdependent systems (including its defence and national security, health and social support, and primary industries and food systems) to priority hazards, including 63 nationally significant risks and 11 'priority risks'. It focuses on physical climate risk - arising from acute, chronic, and slow-onset climate hazards such as extreme heat, bushfires, floods and sea level rise - consistent with national climate risk assessments undertaken in other OECD countries. Transition risks (such as those associated with decarbonisation) are excluded, except where they might directly undermine the effectiveness of transition measures.

The assessment is underpinned by more than 16 technical reports and the underlying data and methodologies are a critical evidentiary resource for investors, regulators and policymakers. Nonetheless, the report acknowledges some areas are subject to significant uncertainty and there is a need for further monitoring and evaluation. For example, in discussing economic impacts the NCRA warns that "[t]he full dynamic response of the Australian economy to national and global climate change impacts is poorly understood and current modelling methodologies are likely to significantly underestimate the economic impacts."¹⁰

Below, we have extracted some of the key findings of the NCRA:

• By 2050, climate-related risks to national security may be "severe". The increasing frequency and intensity of disasters will strain emergency services and reliance on the ADF for domestic disaster response may compromise its core objective of defending Australia.
• By 2050, annual disaster-related costs could reach A$40.3 billion. This may stem from heatwaves causing millions of lost working days, property damage and devaluation totalling A$611 billion, unaffordable insurance products, and rising costs for household goods.
• As for the natural environment, the NCRA found that 70 per cent of native plant species are at risk, ocean warming and acidification will continue to degrade coral reefs and biodiversity loss will have cascading effects on food security, cultural practices, and public health.
• By 2050, risks to primary industries and food systems may be "very high" with significant implications for national food security. Agriculture will be affected by declining soil moisture and crop yields. Fisheries and livestock will face challenges from heat stress and oceanic changes.
• By 2090, over three million Australians may be exposed to sea level rise, which may threaten water security, social cohesion, and lead to displacement and migration from affected areas.

Source: Australia's National Climate Risk Assessment 2025, p. iv

National Adaptation Plan

While the NCRA represents the Australian Government's assessment of climate risks, the National Adaptation Plan (NAP) is the plan to implement the steps to address the climate risks identified in the NCRA. In this respect, the NAP provides a strategic framework for responding to climate risks. It complements mitigation efforts and ensures that Australia is prepared for unavoidable impacts arising from climate change.

The NAP replaces the National Climate Resilience and Adaptation Strategy, which applied from 2021 to 2025. The NAP informs future adaptation action for Australian Government agencies and provides other stakeholders (include other levels of government, businesses and community groups) with clarity as to the Australian Government's priorities and actions to address climate risks.

The NAP outlines current and future actions to address climate risks to seven systems. The seven systems are:

1. Economy, trade and finance
2. Infrastructure and built environment
3. Natural environment
4. Primary industries and food
5. Health and social support
6. Communities - urban, regional and remote
7. Defence and national security

In respect of each system, the NAP outlines a vision for the system, priority risks, roles and responsibilities, what is currently being done and what will be done in the future to address the climate risks associated with the particular system (informed by future priorities).

To date, the NAP is the most comprehensive summary of the action that the Government is currently undertaking to address climate risks. Notably, however, the NAP does not comprehensively list state/territory and local government initiatives which are already underway. The NAP also does not provide a comprehensive summary of private sector involvement in climate mitigation and adaptation.

In respect of many of the systems, the NAP notes that further work is required to be undertaken to understand and assess the impacts on each system and develop appropriate adaptation measures. The NAP also includes a chapter on Aboriginal and Torres Strait Islander (ATSI) peoples, in recognition of the potential for climate change to create disproportionate and unique impacts on the ways of life, health and wellbeing, food and water security, and economic livelihoods of ATSI peoples.

While the Australian Government is coordinating the approach nationally to address climate risks, adaptation will require all levels of government, in additional to private stakeholders and communities. There will be opportunities for private sector involvement in capacity building, risk mitigation and adaptation.

Subsequent to the NCRA and NAP, the Australian Government will work with state, territory and local governments to create an action agenda for the NAP, which will give effect to priority actions to be undertaken by all levels of government.

Looking forward

The setting of the 2035 Target and supporting policies sets a clear trajectory for Australian business and industries.

Australia's transition to clean energy is resulting in increased investment in renewables, grid infrastructure, and storage, which is generating opportunities in construction, manufacturing, and technology sectors. The country's renewable resources and critical minerals position it to expand exports of green hydrogen, green metals, and renewable ammonia. Treasury estimates indicate that green exports could be $68 billion higher by 2050 compared to a baseline scenario. There is also support for domestic manufacturing of batteries, solar PV, and other clean technologies.

The shift to a low-carbon economy is creating new income streams for landholders through carbon credits, reforestation, and regenerative agriculture. The continuation and growth of the ACCU Scheme will provide significant opportunities for future value creation from Australia's natural assets and its land sector.

The scale of investment required for the net zero transition is creating opportunities for banks and institutional investors in infrastructure, clean energy, and technology. The Sustainable Finance Roadmap, released in 2024, continues to be supported by the Government as a way of guiding capital towards net zero-aligned investments, improving transparency, and addressing greenwashing. Financial institutions are expected to manage transition risks, align portfolios with net zero targets, and comply with new climate-related disclosure requirements.

Ultimately, Australia's policy framework and targets are intended to attract international capital and position the country within the global clean economy. The signpost has now been set on the journey to net zero by 2050.

Please contact a member of our climate change team if you are interested in finding out more about the matters covered by this update.

Footnotes