Australia’s energy companies are starting to move on emissions, but the country’s highest-emitting sector can and must set a faster transition pace. This is according to a new report about the climate commitments of Australia’s 20 highest emitting electricity generators and energy retailers.
The report found six of the energy companies assessed had set decarbonisation targets. None of the companies assessed had fully committed to net zero by 2050 for their direct or indirect emissions (known as scope 1, 2 and 3 emissions).
The report covers the largest energy generators in the country, and which account for almost a third of the country’s total emissions and 89 per cent of electricity (scope 1 and 2) emissions. Collectively they generate 71 per cent of Australia’s power supply.
In the Net Zero Momentum Tracker Energy Sector report, generator and retailer ENGIE was the only company found to be ‘partially’ aligned to the Paris agreement goals. Fourteen companies were found to be taking ‘some steps’ to reduce their emissions, but these were not aligned to global efforts to limit global temperature rise to 1.5 degrees Celsius. Five companies were found to have no disclosed emissions reduction activities.
Overall, the report, prepared by ClimateWorks Australia with Monash Sustainable Development Institute, found some of Australia’s largest energy companies have adopted decarbonisation commitments, but no company is fully aligned with the Paris climate goals, it finds all fall well short of these.
ENGIE had a 2030 target covering a small proportion of its total emissions. Three of Australia’s four biggest energy sector emitters – AGL, EnergyAustralia and Origin – had an emissions reduction target which was not aligned with a sector-specific trajectory, set against the Paris goals. The other, Stanwell, which operates two of Queensland’s largest coal-fired generators, had disclosed no emissions reduction actions. Smaller companies, APT Pipelines and TransAlta, had specific targets for some of their emissions.
Energy sector climate commitments were assessed against the ClimateWorks Decarbonisation Futures scenarios which indicate that for Australia’s transition to be Paris-aligned, the electricity sector would achieve at least 64 per cent in emissions reductions by 2030 and reach near-zero emissions by 2040 and zero emissions by 2050.
Australia’s energy sector has made progress on emissions in recent years. The report shows three-quarters of companies had strategies to address their operational (scope 1 and 2) emissions, such as increasing renewable generation, improving power plant efficiency and retiring coal-fired power plants. Efforts to disclose and reduce scope 3 emissions are limited among all companies we assessed.
The study highlights the urgency the coming decade presents for the sector. In order to keep global temperature rise to 1.5 degrees global emissions must fall by at least 45 per cent from 2010 levels. The work to achieve this is critical and possible.
Energy generation remains Australia’s largest source of greenhouse gas emissions, and contributed to 33 per cent of the country’s total emissions in the year to June 2020. Coal fired generation is responsible for 80 percent of that, or a quarter of all Australia’s emissions.
The energy transition to date has been driven by falling renewable energy costs, along with state and territory government policies, Australian government renewable energy targets, consumer demand and pressure from investor groups.
A strong national energy transition policy would bolster some of the already ambitious state and territory policies and enable electricity market operators and investors to plan a transition aligned with the Paris climate goals.
The report shows companies themselves have an important role to play. This is through new renewable energy generation, improved renewable integration and coal-fired generation early retirement. We found companies perceive gas a having a continuing role in the energy mix, but our scenarios show this will only be for industrial applications. Australia could be well placed to become a top exporter of renewable energy and renewable-based energy-intensive goods, supporting policy-driven clean energy demand and the global transition to a net zero economy.
The energy sector report is the eighth in a series of assessments undertaken as part of the Net Zero Momentum Tracker initiative. The initiative brings organisational emissions-reduction commitments together in one place. The companies assessed by the Net Zero Momentum Tracker represent 61 per cent of market capitalisation in the ASX200, and are accountable for 61 per cent of national emissions.