Australia Sets 2035 Emissions Reduction Target

Ahead of the upcoming 30^th Conference of the Parties (COP30), the Australian Government has released its updated Nationally Determined Contribution (NDC), which includes a new 2035 emissions reduction target of 62-70% below 2005 levels. In parallel, the Australian Government has released its Net Zero Plan and six supporting sector plans, setting out the Government's priorities and policies aimed at achieving its emissions reduction targets.

Snapshot

The 2035 target is at the lower end of the range considered by the Climate Change Authority (CCA) in its 2024 Targets, Pathways and Progress report, though reflects the CCA's September 2025 advice that a target of 62-70% is Australia's highest possible ambition and achievable.

The NDC sets out:

• Australia's commitment to reducing emissions to 62-70% below 2005 levels by 2035. The target would involve cutting Australia's emissions by roughly half from the current level. The CCA's advice finds that a reduction of 70% by 2035—whilst more challenging—would still be feasible.
• Australia's reaffirmation of its target to reduce emissions to 43% below 2005 levels by 2030 and achieve net zero by 2050. Current projections show Australia's emissions are progressing towards 42.6% below 2005 levels by 2030.
• Five decarbonisation priorities: clean electricity across the economy; lowering emissions through electrification and efficiency; expanding clean fuel use; accelerating new technologies; and increasing net carbon removals.

The NDC is supported by the Net Zero Plan, in turn supported by six sector emissions reduction plans covering agriculture and land; the built environment; electricity and energy; industry; resources; and transport. These plans set out how the Government intends to achieve these targets at economy-wide and sector levels.

What is the NDC?

Under the Paris Agreement, countries must update their NDCs, with increasing targets, every five years. These documents serve as national climate action plans, outlining how a country intends to reduce greenhouse gas emissions and adapt to climate change.

Countries' NDCs should also be informed by the findings of the Global Stocktake, being the assessment of collective progress towards achieving the goals of the Paris Agreement. The conclusion of the first Global Stocktake in 2023 was that efforts to-date were insufficient and the goals of the Paris Agreement, including limiting global temperature rise to 1.5 degrees, were not on track to be met.

The setting of, and implementation of measures to achieve, Australia's new target is also relevant in the context of the expectations set out in the International Court of Justice Advisory Opinion on Obligations of States in respect of Climate Change (23 July 2025), namely that climate change treaties (including the Paris Agreement) place an obligation upon State parties to ensure the protection of the climate system and other parts of the environment from anthropogenic greenhouse gas emissions.

Whilst Australia's 2030 target was legislated, with the intention of providing a degree of certainty for business, the Australian Government has not yet committed to enshrining the 2035 target into law.

What is the plan to achieve Australia's targets and what does it mean for business?

The target of 62-70% is considered by the CCA to be an ambitious target, with a range target allowing for changes and uncertainty in global and domestic markets, advancement of technology and associated costs, and options for emissions reduction pathways.

The Net Zero Plan and sector plans set out the Government's existing and new policies and investment intentions, and the practical measures encouraged to be taken up by industry to support the target.

Generally, there is substantial reliance on existing policy settings, including the Safeguard Mechanism and the view that the baselines are already positioned and driving momentum to achieve net zero by 2050, and so effectively already operate to achieve the 2035 target.

Key legislative reform and new policies and initiatives set out in the Net Zero Plan and sector plans include:

• As anticipated, reform of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) is proposed to deliver 'stronger environmental protection and restoration, more efficient and robust project assessments, and greater accountability and transparency in decision making'. Whilst we await the detail of the reforms, more efficient and strategic assessments and approvals processes are crucial to providing investment certainty and ensuring that renewable energy developments can be rolled out at the requisite pace and scale.
• A consistent theme throughout the plans is that the Safeguard Mechanism remains a cornerstone of decarbonisation and that current baselines will facilitate achievement of the 2035 target. Whilst specific changes to the Safeguard Mechanism and National Greenhouse and Energy Reporting Scheme are not articulated in the plans, they are foreshadowed, with a review of the Safeguard Mechanism set to occur in 2026/2027. We anticipate that this review will consider whether the current baselines are effective in achieving the 2035 and 2050 targets and if not, whether the scheme should be expanded and to whom, and whether baselines need to decline further and faster.
• Increased financial support from Government across a range of sectors and through a number of policies, particularly focused on electrification, energy efficiency, and advancement of technologies.

Notably, the Australian Government will not introduce an economy-wide carbon price.

A snapshot of key sector-specific policies and measures are discussed below.

Electricity and energy

Emissions from the electricity and energy sector made up 32% of Australia's total emissions in 2024 and it is predicted that around half of the emissions reductions to 2035 will continue to come from the electricity grid, through the deployment of large-scale renewables and storage and facilitating decarbonisation of other sectors through electrification.

Key elements of the Net Zero Plan and Electricity and Energy Sector Plan include:

• an update to the Clean Energy Finance Corporation's (CEFC) mandate to include a new focus on the rapid development of renewable energy projects, with an additional $2 billion committed to the CEFC.
• streamlining approvals for renewable energy projects and enhancing landscape-scale approaches to development, including through reform of the Environment Protection and Biodiversity Conservation Act 1999 (Cth).
• the ongoing review of the National Electricity Market, which will inform long term investment in generation and storage capacity.
• investment in scaling new forms of clean energy, including those identified as priority industries under the National Interest Framework, such as renewable hydrogen and low carbon liquid fuels.
• an acknowledgment of the continued and evolving role of gas in the energy mix, consistent with recent Government decisions, including the extension of the North West Shelf gas facility. This will involve progressing the Gas Market Review to identify opportunities to streamline regulations and potential expansion of AEMO's powers to address infrastructure constraints contributing to predicted gas supply shortfalls, which is proposed to be consulted in early 2026.

Industry

The Industry Sector Plan is underpinned by three key principles (1) meaningfully reducing emissions, including through investment in abatement technologies; (2) maintaining and growing competitive industries; and (3) delivering a just and equitable transition.

The Plan also establishes a decarbonisation pathway for industry by optimising energy use now to reduce costs; electrifying processes where possible; switching to alternative fuels and inputs; and investing in technology opportunities to support the transition.

In support of the key principles and pathway:

• identified priority areas include deployment of commercially available technologies, such as energy performance upgrades and electrification at scale, enabled by the expansion of the renewable electricity grid and driven by the Safeguard Mechanism; trials and commercialisation of new technologies; and the scale up of enablers and alternative inputs such as hydrogen and alternative fuels.
• the Australian Government has committed to creating a new $5 billion Net Zero Fund, to be established under the National Reconstruction Fund to support investments by large industrial facilities in decarbonisation, energy efficiency, and low emissions manufacturing. Consultation on the design of the Fund is expected to commence shortly.
• a number of existing investment initiatives will continue to support decarbonisation and the uptake of key technologies, for example the Green Iron Investment Fund, National Reconstruction Fund, and a commitment of $22.7 billion towards Future Made In Australia.
• the Australian Government will explore options for a national stewardship scheme to manage waste and support a circular economy.

Resources

Key objectives for the resources sector include to accelerate technology development and to lead a fair and equitable transition. These objectives are supported by the decarbonisation pillars of reducing fuel combustion emissions, reducing fugitive emissions, and scaling up carbon management technologies.

The Resources Sector Plan includes discussion of the following areas:

• The Safeguard Mechanism is considered critical in decarbonising the resources sector. The Plan suggests that declining baselines will incentivise development and pursuit of decarbonisation pathways, including ensuring that, as the sector expands, it remains on track to achieve the emissions targets, with new entrants required to comply.
• In that regard, the Plan reaffirms the expectation that Australian minerals will be needed for the global transition, and this will create significant economic opportunities and growth for Australia's resource sector.
• Carbon capture and storage is proposed to expand, with a second round of the Carbon Capture Technologies Program offering $52 million to continue to accelerate the development of new carbon management technologies.
• Reducing methane emissions and minimising fugitive emissions is a priority area, including through improved and increased use of methane abatement technology. This is consistent with current public focus on methane and methane leaks. Aongside Australia's involvement in a new study to improve understanding of methane emissions and continuing support for the VAM abatement project under the Powering the Regions Fund, this priority focus may indicate potential specific regulation to reduce fugitive and methane emissions at industrial facilities.
• Reduction in fuel combustion emissions is a further focus area of the Plan, for example through electrifying vehicles and equipment, improving energy performance, and adoption of low-carbon fuels where electrification is not feasible.

Agriculture and land

The Agriculture and Land Sector Plan prioritises increasing the rate of carbon and environmental plantings, the protection and management of existing native forests, reductions in deforestation rates, and improvement of land and agricultural management actions.

Notably, the Plan acknowledges that land-based abatement, particularly reforestation, is the most cost-effective abatement measure to help reach net zero emissions by 2050. However, it also recognises that the potential contribution of the land sector to the target is uncertain given the sensitivity to seasonal and climatic conditions and changes.

Implementation of this Plan is anticipated to involve:

• actioning Australia's National Biodiversity Strategy and Action Plan, Australia's Strategy for Nature 2024–2030, the implementation of which is currently being consulted on.
• scaling up land-sector carbon removals, including through stopping old-growth clearing, reducing native forest harvesting, and planting new forests. It is considered that these actions could provide around 6% of the required emissions reductions needed to meet the targets.
• furthering the Nature Repair Market and improving access to science-based data.
• emissions removal, primarily through carbon sequestration, and eventually through engineered removals. The Australian Government has confirmed it will deliver a Carbon Dioxide Removal Roadmap with the CSIRO and work towards supporting approval processes to deploy carbon removal technologies at scale.

Transport

Transport is the third-largest contributor to Australia's greenhouse gas emissions, with direct emissions from transport accounting for 22% of Australia's total emissions. The Transport Sector Plan focuses on five priority actions to reduce or avoid transport-based emissions:

• Electrify and increase energy performance. This will be the primary decarbonisation pathway for much of the transport sector, especially light vehicles. Building on existing policies, such as the Vehicle Efficiency Standard (which came into effect on 1 January 2025 and will be reviewed in 2026), the Government also intends to progress heavy vehicle reforms to support the uptake of zero emissions vehicles. The Maritime Emissions Reduction National Action Plan (MERNAP), a draft of which is expected to be released this year, will assist in decarbonising maritime transport.
• Invest in enabling low or zero emissions transport infrastructure, including through the existing Infrastructure Investment Program. The National Land Transport Act 2014 (Cth), which outlines the types of land transport infrastructure projects eligible for funding under the Program, may require review to consider how transport infrastructure investments can better support decarbonisation.
• Switch to low carbon alternatives to power transport where electrification is not feasible. This will be crucial for hard-to-electrify transport modes, such as heavy vehicles, maritime, and aviation.
• Innovate to expand cost-competitive technology options. The Government will provide funding and knowledge sharing to support competitiveness, for example, through the CEFC's $200 million Clean Energy Innovation Fund and the $250 million Low Carbon Liquid Fuel component of the Future Made in Australia Innovation Fund. It will also develop a nationally coordinated approach to the rollout of new transport technologies through strategies such as the Aviation White Paper and the MERNAP.
• Scaling up efforts to reduce embodied emissions. A key challenge will be ensuring that the infrastructure that supports low or zero emissions transport infrastructure does not itself counteract the reductions. Commercialisation of low carbon construction materials will be key, together with developing an end-to-end carbon management policy, beginning with a nationally consistent approach to measuring embodied carbon.

Built environment

The Built Environment Sector Plan promotes electrifying where possible, increasing energy efficiency, improving design and decarbonising materials, harnessing low emissions technology, and phasing out hydrofluorocarbons.

The Plan identifies a number of existing actions currently being undertaken by the Government and considers the future direction for the sector, including:

• expanding obligations under the Commercial Building Disclosure Program to cover most commercial buildings by 2035. A roadmap will be published to give industry an understanding of expansion of the program.
• expanding the National Australian Built Environment Rating System to non-residential buildings, which will assist owners in complying with the Commercial Building Disclosure Program.
• modernising the Greenhouse and Energy Minimum Standards Act 2012 (Cth), the primary legislation regulating energy performance of appliances, to expand its application to commercial and industrial sectors.

Looking ahead to COP30 and beyond

Australia's 2025 NDC has been submitted to the COP30 Presidency ahead of the conference in November.

During COP30, all countries' NDCs will be scrutinised, including against the Global Stocktake, to consider whether they are sufficient to collectively meet the temperature targets under the Paris Agreement.

However, it is expected that the international community will be paying particularly close attention to how Australia works towards its climate ambitions, as Australia continues its campaign to host COP31 with the Pacific in 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.