The Real Story of Net Zero Emissions in Australia

Australia has set a legislated target to reach net zero emissions by 2050. However, its current level of emissions remains high for a developed nation on a per-capita basis. While emissions have shown a downward trend over the last decade, the rate of decline is not yet consistent with a linear pathway to net zero by 2050. The government's current policy focus is on its 2030 target as a critical stepping stone.

So how is our progress towards the 2030 target? As of September 2023, Australia's emissions (463 Mt) are 24% below 2005 levels. To meet the 2030 target of a 43% reduction, emissions need to fall by an additional 115 million tonnes in just over six years. The Federal government's projections suggest that with current policies, Australia is on track to meet and potentially exceed its 2030 target, forecasting a reduction of 42% by 2030.

This progress sounds great to the general population and we all feel that we are pulling our weight when it comes to Climate Change and willing to bear some pain in the hip pocket through higher electricity prices and the like. However when you dig a little deeper it becomes evident that Australia's official emissions reports show that the most significant reductions in carbon emissions come from the Land Use, Land Use Change and Forestry (LULUCF) sector. When you exclude land-based sequestration (natural and human-induced), Australia's gross emissions have remained stubbornly high and are declining very slowly. The significant drop in net emissions you often see is largely due to CO₂ being absorbed by forests and land management, not due to deep cuts in pollution from fossil fuels.

Gross Emissions vs. Net Emissions

It's essential to understand the two ways emissions are reported in Australia:

• Gross Emissions (a.k.a. "All sectors excluding LULUCF"): This is the total CO₂-e released directly into the atmosphere from all human activities without subtracting any carbon absorbed by the land sector. This includes energy (electricity, transport, industry), agriculture, industrial processes, and waste.

• Net Emissions (the official headline number): This is Gross Emissions minus the carbon dioxide removed from the atmosphere by the LULUCF sector (e.g., forests regrowing).

So we should ask the question is  Australia's Land Use, Land Use Change and Forestry (LULUCF) carbon accounting accurate or even appropriate? Technically, yes. The calculations are done using a world-class system and follow complex international accounting rules to the letter. However, pragmatically and ethically, the answer is often no. The outcome is seen as misleading because it portrays Australia as a climate leader for largely:

•  Stopping a damaging practice (land clearing) that was rampant in 1990s.

• Claiming credit for natural regrowth as managed human action.

•  Not accounting for major reversals like catastrophic bushfires.

  
  

The result is a significant gap between the "accounting reality" (a large and growing carbon sink that makes net emissions look good) and the "physical reality" (a continent with ecosystems vulnerable to climate change and an economy that remains one of the world's highest per-capita emitters from fossil fuels. This is why analysts often urge looking at "emissions excluding LULUCF" to understand the real pace of decarbonisation in Australia's energy, industry, and transport systems.

So in the context of the Federal Governments policy we should really be focussing on Gross Emissions as this is what all the billions of dollars is being spent on in an effort to turn the dial on reducing carbon emissions.

Australia's Current Gross Emissions Level

Using the latest data for the year to September 2023 (DCCEEW):

• Gross Emissions (excluding LULUCF): 546 Million tonnes of CO₂-e (Mt CO₂-e)

• Net Emissions (including LULUCF): 463 Mt CO₂-e

This means land-based sequestration offset 83 Mt CO₂-e in that year.

Over the past 15-20 years, while net emissions have fallen by ~26%, gross emissions have only decreased by a modest 6% since 2005. This indicates that the vast majority of Australia's reported progress is not from cleaning up industry and energy, but from the carbon being absorbed by the landscape.

What This Means for Net Zero

This analysis reveals the core challenge for Australia's path to genuine net zero:

1. An Economy Still Addicted to Fossil Fuels: The gross emissions figure of 546 Mt CO₂-e shows that the core engine of the Australian economy—energy, transport, industry, and agriculture—is still heavily reliant on processes that release greenhouse gases.

2. The Offset Risk: Heavy reliance on land sequestration is a risk. This sink is not guaranteed forever. It can be reversed by events like bushfires, drought, and changes in land management, which would cause net emissions to spike. True decarbonisation requires reducing gross emissions.

3. The 2030 Target Recalculated:

   
   

   • The official 2030 target is a 43% reduction from 2005 net emissions levels (from 610 Mt to ~348 Mt).

   • The 2005 gross emissions level was 583 Mt CO₂-e.

   • Therefore, to be on a robust path to net zero without relying on future land sequestration, Australia would need to reduce its gross emissions from 546 Mt today to a small fraction of that by 2050. The 2030 milestone on this gross emissions pathway would require much more aggressive action.

     
     

A Different Perspective

Metric	Including Sequestration (Net)	Excluding Sequestration (Gross)
Current Level (2023)	463 Mt CO₂-e	546 Mt CO₂-e
Change since 2005	-24%	-6%
Primary Driver of Trend	Growth in forest carbon stores	Slow uptake of renewables, efficiency gains

In summary, excluding carbon sequestered by land and trees shows that Australia's fundamental emissions problem is largely unchanged. The nation has made a start, particularly in the electricity sector, but the decarbonisation of its industry, transport, and agricultural systems has barely begun and the population are already feeling the economic pain. Reaching net zero by 2050 will require a monumental effort to radically reduce this 546 Mt CO₂-e of annual gross emissions.

The alternative solution which is staring the Federal Government in the face is to rely on nature to continue cleaning up a significant portion of the problem, and invest more in LULUCF practices and technologies and then it would be appropriate to use Net Emissions as the scoreboard in the move towards Net Zero.

Some of these LULUCF programs could include:

• There are strong fundamentals for the cultivation of saltbush as a method to capture carbon dioxide for carbon credits. Research on saltbush's carbon sequestration estimates 2 tons per hectare per year and it can be successfully grown in saline, low-productivity areas of Australia. Link this with remote and Indigenous community development programs and we can realise long term synergies.

• Among the best species in CO₂ absorption are tropical species, such as: Teak, which has some of the highest carbon sequestration capacity among trees. In a time of soaring house construction costs shouldn’t we consider turning to forestry plantations as both a viable capture of carbon dioxide and then when harvested and used in housing as a long term store of that carbon dioxide. Imagine what we can do with construction costs if those carbon reduction program funds were reallocated to forestry programs.

• In the wet tropics we can cultivate bamboo which absorbs 5 times more greenhouse gases and produces 35% more oxygen than an equivalent volume of trees. It has a very important CO2 retention capacity since one hectare of bamboo grove can capture up to 60 tons of CO2 each year and when harvested can be used in construction and furniture industries again providing a long term store of that carbon dioxide.

Australia has a long history in forestry and agricultural production. This history provides a key lesson for Government in how to tackle our carbon emissions and reach net zero.

Carey Ramm

Principal Economist

AEC Group