Australia's New Emissions Targets: The Net Zero Game Plan

Introduction

In September 2025, the Australian Government released its long awaited climate policy update, confirming a national target to cut greenhouse gas emissions by between 62 and 70 per cent below 2005 levels by 2035. The announcement came with sector specific plans and refreshed modelling to show how the country will accelerate towards net zero by 2050.

What Is Being Proposed?

The 2035 target commits Australia to reducing emissions by 62 to 70 per cent compared with 2005 levels. The government has set out six focus areas for delivery: electricity, transport, industry, agriculture and land, the built environment and the resources sector.

Is It Too Ambitious or Not Ambitious Enough?

Critics have said that the 2035 targets do not do enough to accelerate emissions reductions. Others say it's going too far. Rather than worry too much about the target increase, the concern should be about the adequacy of policy and budgets to get to the 62-70%.

How Does This Compare with Other Countries?

The new target places Australia broadly in line with other advanced economies. The United Kingdom has set a target equivalent to around a 78 per cent reduction. The European Union is working toward a 66 to 72 per cent cut. New Zealand has committed to just over 50 per cent and Canada is aiming for 45 to 50 per cent.

What Does It Mean for Australian Corporates?

For corporates, the new target changes the equation. The acceleration in the national pathway means that gradual emissions reductions will no longer be sufficient. The business case for decarbonisation is now stronger and more urgent.

• The risk of stranded assets if high emitting operations cannot operate economically in a tighter policy environment.
• The risk of losing contracts to competitors who do decide to invest in these changes.
• The cost of a wait and see game compared to acting now (access to finance, incentives, and lower transition risk).

Closing Thoughts

The release of Australia's 2035 target marks a pivotal moment. For Sustainability and Finance leaders, these changes will bring both risks and opportunities. Now more than ever businesses need to have a robust understanding of their own emissions profile.