The road to Net Zero: progress and friction

Australia’s drive to reach net-zero emissions by 2050 is intensifying with a recently announced 2035 emissions reduction target of up to 70 per cent – but industry debate reveals both progress and friction in terms of low-emission transport, the adoption of electric vehicles, and a big missed opportunity when it comes to refrigerants.

Global scrutiny is mounting and the nation’s performance is being measured not only against its own ambitions but international peers, placing pressure on policymakers and business leaders, not to mention consumers.

The case for early action

A new scientific study reports that reaching net-zero emissions by 2050 depends on how quickly the country can transition from fossil fuels to renewable energy and implement effective carbon removal technologies.

Published in the Nature scientific journal, Early transition to near-zero emissions electricity and carbon dioxide removal is essential to achieve net-zero emissions at a low cost in Australia compares two scenarios.

The first is a ‘rapid decarbonisation’ pathway aligned with limiting global warming to 1.5°C by 2100 and a ‘stated policies’ case following current commitments, which is predicted to allow temperatures to rise around 2.6°C.

Under the rapid pathway, “annual greenhouse gas emissions from the electricity sector are projected to decline by over 50 per cent” between 2020 and 2025, with coal-fired plants largely retired by 2035 and 85 per cent of capacity closing by 2030.

By then, renewables including wind, solar, hydro, and battery storage are expected to supply more than 90 per cent of electricity, with at least one in four homes having rooftop solar.

According to the study, even with rapid decarbonisation, some sectors – such as steel, cement, fertilisers, transport, and agriculture – will continue to produce residual emissions, making carbon removal essential from 2030.

The analysis estimates that “Australia aims to capture 84 million tonnes of CO₂ by 2050”, mostly through direct air capture and bioenergy with carbon capture, alongside removals from reforestation and improved agricultural practices, and warns that offsets may not deliver the same climate benefits as avoiding emissions altogether.

The energy shift also has major implications for industry and employment, as fossil fuel exports are expected to decline while demand for critical minerals such as lithium and cobalt surges, driven by global growth in solar and battery technologies.

According to the report, Australia’s mining sector must decarbonise its operations to remain competitive, while developing a robust green hydrogen industry could position the country as a leading exporter of zero-emissions fuel, despite ongoing challenges around cost, infrastructure, and market development.

The research concludes that “early decarbonisation of electricity is both essential and cost-effective in reaching net-zero emissions”.

With coordinated government, industry, and community action, Australia could even achieve negative emissions by mid-century, helping offset pollution from other regions and strengthening its role in the global clean energy transition.

Roadmap and funding for a low-carbon future

Finally responding to public, business and investor pressure for clearer climate policy direction, in September this year government policymakers released the Transport and Infrastructure Net Zero Roadmap and Action Plan, following Prime Minister Anthony Albanese’s announcement of Australia’s 2035 emissions target.

The 2035 target is the next step on the path to the nation’s long-term goal of net zero by 2050, with a roadmap outlining how cleaner cars, low-carbon fuels, and upgraded transport infrastructure will reduce emissions across road, rail, aviation, and shipping.

It represents the first integrated attempt to align transport decarbonisation with broader infrastructure planning, signalling that emissions reductions are not merely a technological challenge but a systemic one requiring coordination across government and industry.

Australia’s Net Zero Plan prioritises expanding clean electricity, electrifying vehicles and improving efficiency, switching to low-emissions fuels, supporting innovation in emerging technologies, and scaling up carbon removals.

Key initiatives include $1.1 billion for domestic low-carbon fuel production, $40 million to expand EV charging, and a $5 billion Net Zero Fund (a sub-fund of the National Reconstruction Fund) to support industrial decarbonisation and energy efficiency.

These complement earlier measures like the $100 million Active Transport Fund, the recently implemented New Vehicle Efficiency Standard and the Investor Front Door pilot program to create a coordinated pathway for both light and heavy transport to decarbonise.

Industry reactions and challenges

While many in the industry have welcomed the federal government’s Transport and Infrastructure Net Zero Roadmap, others have cautioned that it must be backed by practical, on-the-ground support.

Roads Australia chief executive Ehssan Veiszadeh said the plan reflects both “the scale of the transformation ahead of us and the significant opportunities for Australia’s economy if we get this right”.

He added that “not only is decarbonisation achievable, but it is also scalable and economically sound”.

Mr Veiszadeh highlighted how Australian transport projects are already demonstrating what low-emissions infrastructure can achieve. The Western Sydney Airport terminal has 8848 solar panels, climate-responsive ventilation and lighting, efficient energy and water systems, smart LED airfield lighting, rainwater recycling, and EV infrastructure to minimise environmental impact.

Alongside these practical examples, Roads Australia’s On the Road to Net Zero report makes recommendations including harmonised carbon measurement, updated emissions benchmarks, and the creation of a national decarbonisation library to facilitate knowledge-sharing and innovation across the sector.

“Transport infrastructure plays a vital role in Australia’s total emissions,” Mr Veiszadeh said.

“Reducing this footprint is both a climate imperative and an economic opportunity. With clear policy direction and industry leadership, Australia is well-positioned to build a cleaner, smarter, and more resilient transport system.”

Refrigerants and lost opportunities

While some sectors show momentum, industry representatives argue that critical areas – such as refrigerant management – remain overlooked in Australia’s net-zero approach.

Refrigerants Australia executive director Greg Picker criticised the government’s 2035 climate targets and net-zero plan’s failure to address refrigerant management as “a lost opportunity”.

He pointed out that the HFC phase-down remains unchanged, and that the lack of new measures to accelerate progress or tackle growing challenges are a “costly mistake” that risks disruption across the economy, environment, and industry.

“So, what did we get in the net zero plans? Nothing,” Dr Picker said of the consideration given to refrigerants.

He cited a lack of critical measures such as global warming potential (GWP) limits and improved tradesperson licensing, leaving the industry vulnerable to rising costs and shortages of high-GWP refrigerants required for servicing existing equipment, the amount of which keeps increasing as new equipment containing and designed for high-GWP refrigerants is still able to be imported.

Dr Picker also paraphrased a warning from federal environment and water minister Murray Watt that “the more we delay (in taking action), the higher the cost will be”. 

Each year that new cars can be imported with R134a systems cuts into potential emissions savings and pushes Australia further from its climate goals.

Dr Picker drove home this point with a practical example from the stationary equipment market.

“If we can stop a single kilogram of R404A from going to the atmosphere today, that reduces emissions by the equivalent of four tonnes of carbon dioxide. But if we wait and only act next year, we may be preventing a kilogram of the R404A replacements R448A/R449A from going to the atmosphere. This is useful, as it prevents the equivalent of 1.4 tonnes of carbon dioxide going to air.” 

Warning that the lack of progress on refrigerants is part of a broader failure in the government’s approach, Dr Picker concluded that “net zero is really zero ambition”.

Heavy vehicle challenges

Road freight is emerging as a major test for Australia’s net-zero ambitions, with Heavy Vehicle Industry Australia (HVIA) warning that “the plan relies on industry progressing the actions, and there is no concrete financial or policy commitment from government to enable a faster transition for heavy vehicles”.

While the roadmap outlines a phased approach beginning with the electrification of buses and smaller trucks before expanding to battery-electric and hydrogen-fuel-cell freight vehicles, it lacks the financial backing and clear policy mechanisms needed to make that shift feasible.

HVIA chief executive Adele Lausberg also criticised the roadmap for overlooking critical components such as training programs, national charging standards for heavy vehicles, and investment in renewable diesel.

The roadmap does not include a dedicated incentive pool – something the Productivity Commission had identified as crucial for decarbonising freight.

HVIA further warned that the plan’s reliance on renewable diesel is unrealistic, describing the market as “immature” and “prohibitive in cost”.

Without stronger coordination, clear standards and targeted funding, Ms Lausberg said “industry cannot carry the burden alone”, and warned that the heavy vehicle sector may struggle to meet the roadmap’s targets.

National concerns and global comparisons

Domestic challenges over affordability and fairness are also being echoed by the National Road Transport Association (NatRoad), which says Australia’s transition to net zero must be realistic and economically viable for freight operators.

NatRoad chief executive Warren Clark said the latest international findings underscore “the need for Australian policymakers to support the industry’s transition”.

“The journey to decarbonising here in Australia must be economically viable for operators who are already dealing with tight margins and uncertainty around costs,” said Mr Clark.

“We will continue our calls for governments here to assist with the transition by engaging with the road freight industry and listening to our concerns.”

Recent findings from the International Road Transport Union’s Green Compact Survey Report 2025 provide a global comparison of Australia’s progress, showing that local operators face similar challenges to those in Europe, including the level of invesment in new technology required, limited infrastructure and customer reluctance to absorb the costs of decarbonisation.

Mr Clark said the report “reflects what we’re seeing locally in terms of the barriers holding operators back”.

The report also highlights that 67 per cent of Australian operators are not actively monitoring their carbon emissions, while 75 per cent plan to continue investing in diesel vehicles.

Mr Clark said that while these statistics are concerning, progress can still be made with existing technology. 

“It’s important to remember emissions reduction can be achieved with technology and tools we already have. The research data shows us many Australian operators are decarbonising by increasing existing diesel vehicle efficiency.”

EV incentives debate

The debate over incentives for EVs has become another flashpoint, with new analysis by Magenta Advisory and the Pragmatic Policy Group for the Electric Vehicle Council (EVC), the National Automotive Leasing and Salary Packaging Association (NALSPA), and the Australian Finance Industry Association (AFIA) showing that extending the federal Fringe Benefits Tax (FBT) exemption known as the ‘Electric Car Discount’ for battery electric vehicles (BEVs) and reinstating it for plug-in hybrid vehicles (PHEVs) until 2035 “would likely result in 50 per cent lower carbon emissions compared to a scenario where the discount ends in 2027”.

The report also found that “every $1 spent on the EV discount has delivered $2.25 in environmental, economic and health benefits”, a return that is expected to rise to $3.00 by 2030. 

Introduced in July 2022, the policy applies to BEVs and hydrogen fuel-cell vehicles below the Luxury Car Tax threshold, saving buyers on average $3500 a year on a novated lease for a $45,000 EV, rising to $4700 on a $60,000 EV and $5500 on a $75,000 EV.

Nearly half of all new EVs are now purchased this way.

Between 2022 and 2024, the policy helped place an extra 105,500 BEVs and PHEVs on Australian roads, with used EV sales rising 157 per cent.

If extended to 2035, it could add 1.5 million BEVs, 200,000 PHEVs and 870,000 used EVs to the market.

However, Treasury projections reported by the Australian Financial Review warn the policy could cost taxpayers $3.2 billion over four years and A$23.4 billion over the decade, with forgone FBT revenue increasing from $285 million this financial year to $945 million by 2027–28.

EVC chief executive Julie Delvecchio said maintaining the discount “could deliver hundreds of thousands more new and second-hand EVs, making them affordable for more households, including young people and lower-income families”.

“When more Australians can afford an EV, we all benefit.” 

NALSPA chief executive Rohan Martin said EV uptake in Australia has risen due to the FBT break “but we still trail global leaders”.

AFIA chief executive Diane Tate agreed, saying the policy “has driven real change … helping over 100,000 Aussies get behind the wheel,” of an EV or PHEV.

She urged the Australian government to “double down, not pull back,” with stronger incentives and infrastructure.

Car dealer concerns

Beyond incentives, the structure of the New Vehicle Efficiency Standard (NVES) is raising major concerns for car dealers, who claim they could face $1.1–2.1 billion in costs over five years ($343,000–656,000 per dealership). 

These costs stem from potential penalties for exceeding emissions targets, reliance on manufacturers’ vehicle mix, and capital investments in EV infrastructure, staff training, and specialised service equipment.

Rural and regional dealers face additional challenges due to limited charging infrastructure and the need for long-range vehicles, while consumer demand remains focused on traditional models.

Australian Automotive Dealer Association (AADA) chief executive James Voortman said dealers support “an ambitious and achievable emissions target” but warned that they and their 70,000 employees “will have to pay for the short-term cost of our targets over the next five years”.

He emphasised that rapid adoption of electric vehicles is unrealistic without substantial government incentives and cost reductions, noting that “people are still buying the same vehicles… we’re not selling electric vehicles right now”.

Mr Voortman cautioned that pursuing ambitious targets without financial support could limit both affordability and choice for consumers.

The AADA advocates setting the point of NVES compliance at sale rather than import to avoid manufacturers bringing in more low-emission vehicles than they can realistically sell, then shifting costs and unsellable stock onto dealers.

Industry groups broadly echoed these concerns. The Victorian Automotive Chamber of Commerce (VACC) supported the 62–70 per cent emissions reduction target by 2035 but warned that “without substantial and sustained investment in both charging infrastructure and industry capability, these ambitious targets risk becoming unattainable aspirations”.

VACC chief executive Peter Jones described the federal $40 million charging rollout as “a positive first step” but “simply inadequate”.

Similarly, the Federal Chamber of Automotive Industries (FCAI) pointed out that BEVs currently account for “less than eight per cent of new vehicle sales so far this year”. 

FCAI chief executive Tony Weber said Australians “are not yet purchasing EVs at the rate that was expected”.

In contrast, Ms Delvecchio argued that “increasing EV uptake is the highway to Australia’s 2035 climate target,” noting that “one in every two cars sold within the decade must be electric”.

She acknowledged the government’s $40 million charging initiative as “a good step” but emphasised that meeting this goal “would require 20 times more electric passenger vehicles on the road than there are today – more than five million EVs.”

Climate council push 

Looking towards 2035, the Climate Council has urged the federal government to strengthen its climate ambition, warning that the lower end of its 62–70 per cent emissions reduction target is “dangerously inadequate”. 

New analysis from the Council found that “if we cut climate pollution by 70 per cent by 2035 and maintained this rate of progress, we would reach net zero by 2040,” reducing total climate pollution by 1409 million tonnes by mid-century.

Climate Council CEO Amanda McKenzie said the federal government “must do more to protect Australians from worsening floods, fires and heatwaves”.

She described a 62 per cent reduction as “inconsistent with the science”, adding that “cuts stronger than 70 per cent are not only achievable but hugely beneficial”.

“They mean cleaner, more affordable electricity, healthier homes, cleaner cities and new export industries.”

Deloitte Access Economics estimates this could boost Australia’s GDP by $227 billion over the next decade, compared with a weaker 65 per cent target.

The Climate Council also criticised the approval of new coal and gas projects, warning that “every new coal or gas project adds to our domestic pollution, making it more difficult to meet our target”.

Climate scientist Martin Rice added that “a target in the 60s is too weak to protect Australians,” while Climate Council director Greg Bourne argued that “the 70 per cent target should become a floor, not a ceiling”.

Transport: The Decisive Factor 

Experts warn that achieving Australia’s climate targets will hinge on the transport sector, the nation’s third-largest and fastest-growing source of CO₂ emissions.

Professor Hussein Dia of Swinburne University of Technology stressed that transport is on track to become Australia’s largest emitter by 2030 unless stronger policies are introduced.

HVIA reiterated that the government’s plan places too much responsibility on industry “and there is no concrete financial or policy commitment” that would “enable a faster transition for heavy vehicles”.

The association noted that “most other OECD nations that have shifted the dial in low- and zero-emission heavy vehicle sales have had some kind of tax rebate, or point-of-sale voucher, to encourage uptake” and described the renewable diesel market as “immature” and “prohibitive” in cost.

HVIA also criticised the lack of progress on EV charging standards for freight vehicles, which currently only apply to light vehicles.

“We would benefit from an incentive pool so that new vehicles, technologies and infrastructure can be utilised immediately by more operators,” it said, stressing that “industry is doing a lot to progress the transition, and we need more than hope from the government”.