Climate in Focus: Cost shapes energy policy debate ahead of federal election

Energy policy is emerging as a defining election issue for Australia in 2025, with the Coalition recently releasing details of its policy.

In this final Climate in Focus for the year, we also highlight the governance needed to navigate heightened greenwashing scrutiny in 2025 and share insights from New Zealand’s world-first climate reporting regime as Australia prepares for mandatory disclosures in January.

Engagement with AICD’s climate content has reached record levels this year. A key resource is the two-hour climate e-learning module, available free for members. We recommend it for directors looking to meet the growing climate governance expectations facing boards and directors.

Also in this newsletter:

• Australia ‘on track’ for 43 per cent emissions reduction in 2030;
• Circularity target for Australia’s economy;
• ACCC finalises sustainability guidance; and
• 118 Australian companies reference ISSB in annual reports; Westpac CEO tells investors more needs to be done to tackle climate change; and more market updates.

Cost shapes energy policy debate ahead of election

Australia’s climate and energy policy is shifting focus to energy prices. The Coalition’s new nuclear energy plan proposes seven nuclear plants, aiming for an energy mix of 54 per cent renewables, 38 per cent nuclear, and eight per cent gas and storage by 2050. The plan is projected to cost $331 billion – which the Coalition says is $263 billion less than the government's approach – but would generate 45 per cent less power. The Labor government aims for 82 per cent renewable energy by 2030. The Step Change scenario in AEMO’s Integrated System Plan has renewables at 99 per cent by 2049-50.

A draft 2024-25 GenCost report from CSIRO and AEMO estimates nuclear energy costs at $150 to $245 per megawatt-hour (MWh), compared to $43 to $73 per MWh for solar and $70 to $116 per MWh for wind. The Coalition disputes these figures. The Australian Energy Regulator warns nuclear plants won’t be ready before coal closures, expected by 2034 under Labor or 2039 under the Coalition.

The Coalition’s plan involves greater government investment in the mostly private energy market, which Opposition leader Peter Dutton said will require bipartisan support. Over the past year, the National Energy Market (excluding WA) has been supplied with 56 per cent coal, five per cent gas, and 39 per cent renewables, including solar, hydro, and wind.

What boards need to know about greenwashing

Greenwashing risk will remain a key focus for organisations in 2025, with the shift to mandatory climate reporting and increased regulatory scrutiny of sustainability claims. This presents new challenges for boards, as even unproven accusations of greenwashing can erode stakeholder trust.

Boards are encouraged to proactively reduce the risk of regulatory intervention by prioritising transparent communication about what their organisations are doing – and not doing. Diligent directors can take steps to mitigate greenwashing risks and establish a foundation for transparent, credible disclosure of sustainability plans. Read our article.

Annual climate change statement: Australia ‘on track’ for 2030 target

This month, the Climate change and energy Minister released the 2024 Annual Climate Change Statement. The statement is informed by advice from the Climate Change Authority (CCA), the June Quarterly Update to the National Greenhouse Gas Inventory and the 2024 emissions projections.

It reveals that emissions for the year to June 2024 are estimated at 440.6 Mt CO2-e, a decrease of 0.7 per cent from the previous year. This marks a 28 per cent reduction from 2005 levels, reflecting declines in electricity and agriculture sector emissions, but an increase in transport sector emissions.

The statement projects that Australia’s emissions will be 42.6 per cent below 2005 levels by 2030, rising to 42.7 per cent when measures such as the National Hydrogen Strategy and the Critical Minerals Production Tax Incentive are factored into its baseline scenario. The improvement is attributed to the rollout of policies like the Safeguard Mechanism, the New Vehicle Efficiency Standard, and the expanded Capacity Investment Scheme.

The CCA’s Climate Policy Tracker consolidates Commonwealth, state, and territory government climate policies to support monitoring progress and identifying policy gaps. A Climateworks Centre study indicates that, if realised, combined Australian state and territory climate targets could deliver a 40–44 per cent reduction in emissions from 2005 levels by 2030 and a 66–71 per cent reduction by 2035.

National circular economy framework unveiled

This month, Australia’s Circular Economy Framework (Framework) and the final report of the Circular Economy Ministerial Advisory Group were released at the Environment Ministers Meeting. The Framework – outlined by the federal minister – sets out the government’s policy to guide Australia’s transition to a circular economy. In a circular economy, products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting.

Australia’s circularity rate, or the rate at which resources are reused and recycled, is about four per cent – half the global average of approximately eight per cent. The Framework introduces a new national ambition to double Australia’s circularity by 2035, supported by three key targets:

• Shrink the per capita material footprint by 10 per cent
• Lift material productivity by 30 per cent
• Safely recover 80 per cent of resources

For businesses, the Framework outlines actionable ways to reduce emissions and waste. It provides guidance, priorities, and case studies to help organisations identify new market opportunities and foster innovation within a circular economy.

The AICD and Accenture Australia will release a circular economy resource for Australian directors in January.

Final ACCC guide on sustainability collaborations released

Yesterday, the ACCC released its final guide on sustainability collaborations and Australian competition law.

The guide is designed to help businesses understand where competition law risks are unlikely to arise when collaborating to improve sustainability outcomes. It also outlines the exemptions available for business collaborations.

Following consultation, the ACCC has expanded the guide to capture collaborations beyond environmental issues, such as modern slavery. The guide also includes additional case studies of low-risk sustainability collaborations. These are points we highlighted in our submission to the ACCC, particularly the need to reframe the guidance to be more permissive, emphasising that many types of sustainability collaborations will not raise competition law concerns.

Look out for a more detailed AICD summary of the guide in the new year.

Priming non-executive directors for nature governance

A new resource from Pollination and Chapter Zero recognises the role non-executive directors play in supporting organisations integrate nature-related risks and opportunities into corporate governance. The primer Nature for Boards builds on two legal opinions for Australia and England and Wales regarding the scope of company law directors’ duties in relation to nature risk, commissioned by Pollination and the Commonwealth Climate and Law Initiative. Access the resource.

Market developments update

• $22.7 billion Future Made in Australia agenda legislated: The government’s Future Made in Australia Act, along with two supporting bills, passed Parliament in November. The legislation establishes a voluntary Guarantee of Origin Scheme to support renewables and authenticate low-emissions products.
• Net Zero Economy Authority leadership announced: David Shankey has been appointed as the authority’s first CEO. He is a former Deputy Director-General of Queensland’s Energy and Jobs Plan. Dr Iain Ross AO has been appointed as Chair.
• 1,000 companies globally reference International Sustainability Standards Board (ISSB) in their annual reports: A report by the IFRS reveals that 118 Australian companies are among those referencing the ISSB Standards ahead of mandatory climate-related risk, opportunity, and emissions reporting in line with the ISSB Standards from 1 January 2025.
• APRA releases Insurance Climate Vulnerability Assessment: The assessment examines future changes in insurance affordability under two climate scenarios, impacts on the industry, and potential challenges for stakeholders, including governments, policyholders, and insurers. Meanwhile, the UNEP calls for insurance-specific transition guidance.
• Westpac says more action needed on climate: The Australian reports that at Westpac’s annual general meeting this month, outgoing CEO Peter King acknowledged more needed to be done to address climate change. His remarks came amid pressure from shareholders and activists calling for an end to coal, oil, and gas financing.
• Executive pay and climate: More structured incentives are needed to effectively link net zero strategies with executive remuneration, according to Zoe Whitton and Rebecca Mikula-Wright in the Australian Financial Review (AFR).
• Warmer-than-average temperatures projected for summer 2024/25: The Bureau of Meteorology has released its long-range summer forecast, predicting a warmer season with higher-than-usual rainfall for many parts of the country, particularly in December.

Upcoming events and courses

• New date: 16 January 2024:Sustainability Issues and Developments to Look Out For in 2025,12pm AEDT. Register now.
• 17 February 2024: Nature-related risks and directors' duties – what is the current state of play? A Monash Business School event featuring AICD Senior Policy Adviser, Laura Bacon, alongside legal and industry leaders. Register now.
• 11–12 March 2025:Australian Governance Summit, Sydney, Tuesday–Wednesday, 9am to 5:00pm AEDT. Register now.
• Climate Governance for Australian Directors short course, first course delivery starts 8 January 2025; courses offered monthly. Book your place.
• Introduction to Climate Governance: A free to member self-paced, 2-hour e-learning module designed to introduce the climate literacy needed to navigate the complexities of climate change for your organisation. Complete the course today.