Climate modeller forecasts Labor’s low-end 2035 emissions reduction ambition

Anthony Albanese faces pressure to deliver an ambitious 2035 climate target with its former forecasting agency weighing in with its own verdict on Labor’s expected goal.

Prime Minister Anthony Albanese speaking to workers at Newcastle’s Tomago Aluminium. Picture: NewsWire/ Adam Yip

The economic consultancy that modelled Labor’s 43 per cent emissions-reduction target by 2030 has revealed it expects the Albanese government to release a 2035 climate goal in the “low to mid 60s”, considerably lower than the 75 per cent sought by some influential companies and green groups.

With Anthony Albanese and Chris Bowen to unveil a 2035 emissions-reduction target next week and an updated plan for net zero by 2050, experts are divided on the level of ambition, with the Climate Change Authority considering a band of 65 to 75 per cent in advice to the government.

RepuTex told clients on Wednesday it expected Labor to ­release a “balanced” target – ­anchored toward an achievable level to maintain industry support, with enough upside to ­ensure international credibility.

“Expectations point to a 2035 target in the low-to-mid 60s, consistent with the lower end of the CCA’s recommended target 65–75 per cent range, with a margin of around 5 per cent on top,” RepuTex said. “A baseline target in the mid-60s would maintain support from key groups such as the Business Council of Australia, which has warned against a more ambitious target of 70 per cent. Green groups would, however, view such an outcome as disappointing, with many advocating for ‘75 by (20)35’.”

Anthony Albanese is coming under internal Labor pressure to ensure the new target does not fall under the range of 65 to 75 per cent below 2005 levels. A coalition of companies, including Mike Cannon-Brookes-led Atlassian, Andrew Forrest’s Fortescue and tech giant Canva, signed an open letter demanding Labor commit to at least a 75 per cent target by 2035.

The Prime Minister was also warned by ­Australia’s largest employers that cutting emissions by 70 per cent or more would carry a price tag of up to $530bn in capital investment – a move that signalled business leaders would not provide cover for Labor’s higher climate targets.

Mr Albanese indicated on Wednesday his government would pledge a less ambitious ­interim target than some in Labor would like, saying the goal must be “achievable”.

Mr Bowen’s spokeswoman said: “We will set an ambitious and achievable target that’s in the ­national interest. The Climate Change Authority advises Government on targets.”

The intervention by RepuTex comes after Mr Albanese, during the campaign for the May 3 election, junked ALP-commissioned modelling by the consultancy ­underpinning Labor’s ­2022 election promise to cut power bills by $378 from 2030 and the government’s 43 per cent emissions-reduction target.

RepuTex, which has not been involved in consulting on the 2035 target, said it expected the government will announce a target range, instead of a single point.

The “lower end of the target range will be achievable, while the top end will be more ambitious – akin to a stretch target – accounting for uncertainty in the cost and availability of low emissions technologies and industrial decarbonisation, along with other state policy initiatives,” RepuTex said.

Labor’s safeguard mechanism sets a 4.9 per cent emissions decline rate for big industrial users by 2030 which RepuTex said broadly corresponded to a target of about 66 per cent below 2005 levels by 2035. “This means that under current Safeguard Mechanism policy settings, Australia is broadly on track to meet a 65 per cent target by 2035, the lower end of the CCA’s target range, with more ambition potentially requiring more stringent baseline settings,” RepuTex said.

The Albanese government was set to review the safeguard mechanism in 2026-27 to ensure the scheme was calibrated to meet the 2030 target, the consultancy said.

Fortescue, One of Australia’s biggest iron ore producers, said it was imperative Australia pushed for an ambitious 2035 target.

“It’s encouraging that the government is open to a stronger target, which is critical if Australia is going to stay competitive and lead in green energy and green commodities,” said Fortescue chief executive Dino Otranto.

“Deloitte modelling shows a 75 per cent emissions reduction target could deliver an extra $370bn in GDP by 2035 and support tens of thousands of jobs each year. Australia cannot afford to settle for mediocrity. A bold target will show investors that we’re serious about capitalising on the global demand for decarbonised products and green energy.”

Mr Albanese and Mr Bowen’s 75 per cent emissions reduction target for 2035 is expected to be lowered.

Energy consultancy Rennie Advisory pointed to industry tensions as Labor weighs up a decision on the emissions target and pointed to the need for transport, agriculture and industry to do more of the heavy lifting. “This is a classic case of global commitments hitting national political ­reality,” said Rennie’s executive director for capital advisory, Matt Rennie.

“A low-carbon future is not a least-cost outcome and we are ­already seeing the pressure points from the potential impacts on industry. There is no doubt that more time is required for the power sector to transition from coal, but there are other sectors to target.”

Australia’s largest gas pipeline operator, APA Group, said the fastest way for the economy to decarbonise was through fast-tracking renewable power and the continued exit of higher emissions fuels like coal and diesel.

“This will require significant investment in renewable power generation and in firming capacity, through gas and batteries, to keep the lights on when the sun doesn’t shine and the wind doesn’t blow,” said APA chief executive Adam Watson said.

Additional reporting: Greg Brown