IEEFA submits recommendations to improve Australia's emissions modelling

IEEFA has lodged a submission to Australia's Climate Change Authority recommending that the economic modelling of emissions reduction pathways be broadened to capture the full costs and benefits of different decarbonisation scenarios, including the economic consequences of climate impacts under each pathway. The institute identifies structural biases and gaps in the proposed models related to gas supply, carbon capture and storage, and direct air capture that could distort scenario outcomes.

IEEFA's submission draws on extensive experience with climate, energy and economic modelling to identify limitations in the Climate Change Authority's proposed analytical framework. Key technical concerns include unrealistic assumptions about gas supply availability, overstated effectiveness of carbon capture and storage technology, and similarly optimistic projections for direct air capture. The submission argues that without correcting these inbuilt biases, the modelling will systematically understate the costs of fossil fuel pathways and overstate the feasibility of technology-dependent solutions, skewing policy recommendations.

The institute recommends broadening the scope of the CCA's analysis to include the economic costs of climate impacts on Australia under different emissions trajectories — a dimension currently excluded from the proposed framework. The submission also calls for explicit modelling of the implications of no new fossil fuel development for Australia, addressing demand-side dynamics as key export markets including Japan, South Korea and China accelerate their own decarbonisation. Land sequestration is flagged as a risk area, with IEEFA recommending that scenarios avoid over-reliance on this uncertain and contested mitigation option.

IEEFA also recommends that changes in water consumption across different energy production options be incorporated into the modelling, as Australia's energy sector is a significant user of water resources. This inclusion may require additional national data collection on water take by energy technology type. The submission calls for scenario development to include a well-below 2 degrees Celsius pathway to align with Australia's international climate commitments. The institute positions these recommendations as necessary for the CCA's analysis to provide robust, unbiased guidance to policymakers on least-cost pathways to Australia's emissions reduction targets.

Key figure — 2 degrees Celsius — IEEFA recommends including a well-below-2C scenario in the CCA's emissions pathway modelling