IEEFA Urges Australia to Adopt Integrated National Energy Pathways for Net Zero

The Institute for Energy Economics and Financial Analysis has submitted to Australia's Climate Change Authority that the country cannot achieve its emissions reduction targets through sector-by-sector analysis alone and requires a fully integrated national energy strategy covering all fuel types, sectors, and solutions. The submission also flags unresolved methane under-reporting and decommissioning liability risks as material threats to an orderly energy transition.

IEEFA's submission, prepared by IEEFA Australia chief executive Amandine Denis-Ryan and research analyst Jay Gordon, argues that the current reliance on Australian Energy Market Operator scenarios as a de facto planning tool is inadequate because AEMO scenarios were designed for narrower electricity and gas market purposes. The most likely AEMO scenario fails to meet the Australian government's 1.5-degree objective, Victoria's legislated emissions reduction targets, and the government's hydrogen ambitions. The electricity and gas-focused AEMO publications also contain materially contradictory forecasts for future gas use in power generation.

The submission calls for integrated national energy pathways that jointly assess the electricity and fuels transitions, place appropriate weight on demand-side solutions and distributed energy resources, and make explicit recommendations on which new supply investments are essential and which existing infrastructure should be retired and when. IEEFA argues that supply-side solutions have received disproportionate attention relative to demand-side management, which can deliver consumer cost savings, reduce infrastructure requirements, and generate multiple co-benefits for the economy.

Beyond strategic planning, the submission raises two other urgent issues. First, it urges the authority to take account of significant methane under-reporting by the coal, oil, and gas sectors when setting emissions baselines under the Safeguard Mechanism — a gap that IEA satellite data estimates at 28 million tonnes of CO2 equivalent. Second, it calls for proactive policy on decommissioning risks and transferred emissions liability to prevent an unplanned or inequitable burden falling on governments and communities as fossil fuel assets retire. These two issues are described as potentially undermining an otherwise orderly transition.

Key figure — 28 MtCO2e — estimated annual volume of Australian fugitive methane emissions absent from the national inventory, based on IEA satellite data