In September 2024, major climate agencies worldwide renewed calls for global emissions to peak urgently, underscoring the importance of this milestone in the fight against climate change. As more countries commit to emissions targets, the prospect of peak emissions by 2025 has grown, particularly as renewable energy adoption accelerates and fossil fuel use declines. For Australian businesses and policymakers, this presents both challenges and opportunities in shaping a sustainable future.
Why Emissions Peaking Matters
Peaking global emissions is a pivotal step toward limiting temperature rises to 1.5°C above pre-industrial levels. According to a 2023 report by the IPCC, meeting this target requires a sharp decline in emissions post-peak. Failure to achieve this could lead to severe consequences, such as more frequent extreme weather events and greater economic costs. However, merely reaching the peak is not enough; sustained reductions are critical for avoiding irreversible damage.
The global push for peaking emissions has intensified due to the increasing awareness that delaying this transition could lead to “stranded assets.” Investments in new fossil fuel infrastructure now carry significant financial risks, as they may become obsolete in the near future as the world shifts away from carbon-intensive energy sources.
Australia’s Path to Net-Zero: The Role of Renewable Energy to Combat Climate Change
Australia, as a major emitter, plays a key role in the global effort to reach net-zero emissions by 2050 in our part to combat climate change. The country has experienced a surge in renewable energy projects, with wind and solar contributing to a record share of the energy mix in 2024. According to data from the Australian Energy Market Operator (AEMO), renewables accounted for over 35% of electricity generation in the first half of the year, up from 32% in 2023. The rapid uptake of renewable energy has been driven by falling technology costs and policy incentives, such as Australia’s National Hydrogen Strategy and Clean Energy Finance Corporation funding initiatives.
Challenges on the Road to Emissions Peak
Despite progress, Australia faces challenges in its journey to peak emissions and combat climate change. The country’s heavy reliance on coal and liquefied natural gas (LNG) exports creates economic and political barriers. While the demand for coal has begun to wane, with predictions suggesting peak coal usage may have occurred in 2023, LNG demand remains resilient. To stay on track, Australia must expedite policies that incentivize the electrification of transport, improve energy efficiency in buildings, and enhance carbon sequestration efforts.
The upcoming COP28 climate summit will likely put further pressure on Australia to increase its emissions reduction targets. Analysts note that Australia could reduce its emissions by 10% by 2030, but achieving the IPCC’s goal of a 43% reduction will require more ambitious efforts, including tripling renewable energy capacity and doubling energy efficiency measures.
The Role of Businesses in Supporting the Transition
Businesses in Australia are increasingly recognising the importance of integrating sustainability into their operations and climate change. Energy-intensive industries, such as mining and manufacturing, have a significant role in reducing emissions. Organisations are also seeking ways to offset their carbon footprints through renewable energy purchases and investing in carbon-neutral projects. According to the latest “Climate Action Tracker” report, private sector investments in clean energy technologies are expected to grow by 50% by 2025, driven by favourable regulatory environments and consumer demand for sustainable practices.
However, a critical concern remains the accessibility of financing for clean energy projects, particularly for small and medium enterprises (SMEs). Supporting these businesses with grants, subsidies, and low-interest loans can bridge the gap between ambition and action.
“The global drive toward emissions peaking presents a crucial opportunity for Australian businesses to future-proof their operations. While the energy transition may involve initial costs, the long-term benefits in terms of energy security and cost savings far outweigh these. We see a growing trend of businesses seeking advice on how to leverage government incentives to reduce their emissions footprint. Now is the time for companies to adopt proactive strategies to not only comply with regulations but also gain a competitive advantage in a low-carbon economy.” – Nick Halaris – Managing Director, Electricity Brokers Australia
The Financial Implications of Delayed Action
Postponing emissions peaking could lead to economic consequences, particularly for industries heavily tied to fossil fuels. A 2024 analysis by Climate Analytics reveals that if new fossil fuel production continues, it could result in $1 trillion worth of stranded assets globally by 2030. This risk is exacerbated by financial institutions’ increasing reluctance to finance high-carbon projects, as demonstrated by several major banks pledging to divest from fossil fuel assets.
Moreover, the social costs of climate inaction are already evident, with more frequent droughts, bushfires, and extreme weather events impacting communities across Australia. According to a report by the Bureau of Meteorology, 2024 has seen a 25% increase in heatwave-related hospitalisations compared to the previous year. The costs associated with adapting to these climate impacts could outweigh the investment needed for preventive measures.
Seizing the Moment
Australia stands at a crossroads in its climate journey. The push to peak global emissions before 2025 is a critical inflection point that will shape the country’s economic landscape for decades. While challenges persist, the momentum toward cleaner energy and a decarbonised economy offers a pathway to sustainable growth. For Australian businesses, adapting to these changes is not just about regulatory compliance but about seizing opportunities to innovate and thrive in a future where emissions reductions will be increasingly central to competitiveness.
Want to find out more or require a comment from our MD and Energy Specialist Nick Halaris? Contact Electricity Brokers here.
*Supporting Data Reference*
Climate Analytics’ report (2024) highlights the potential for a 10% emissions reduction by 2030, driven by rapid renewable adoption and energy policy shifts across major economies.
By integrating this information, Australian businesses can better understand their role in the global transition to a net-zero economy and prepare for future changes in energy and climate policies.
