Stronger emissions cuts beyond net zero by 2050 will be better for Australian economy, modelling shows

The Australian Energy Market Operator has pointed to alternatives to a net zero by 2050 target it says could lead to deeper emissions cuts and a stronger economy.

High voltage transmission lines in Sydney, Australia. Source: AAP

Going harder and faster on emission reduction beyond net zero by 2050 would make Australia economically stronger, new modelling shows.

Australia has not committed to reaching net zero emissions by 2050, but says it is a preference to get there by then.

The Australian Energy Market Operator modelled five scenarios about how the country's energy future could look.

It found two ways to achieve deeper emissions cuts and stronger economic outcomes compared with a net zero by 2050 policy.

Under the latter scenario, the focus would be on the development of low-emissions technologies helped by state government-supported renewable energy zones to move away from high-polluting power.

The shift would take off in the 2030s, with nearly half of Australia's homes currently heated by gas being electrified by the middle of that decade, and into the 2040s.

Economy-wide decarbonisation would occur as the 2050 deadline approached.

This approach was consistent with global warming of about 2.6C by the end of the century.

A protester holds a placard during a School Strike 4 Climate event in Australia. Source: Sipa USA Joshua Prieto / SOPA Images/Sipa

The Paris Agreement, which Australia signed up to, aims to avoid dangerous climate change by limiting global warming to well below 2C.

AEMO found a more aggressive approach would lead to stronger economic outcomes.

One scenario, dubbed "step change", involved a rapid, coordinated and an economy-wide move towards renewables.

Net-zero would be achieved on or before 2050 under this model, which was consistent with keeping global warming to under 2C.

Renewable energy would become more affordable more quickly.

Much of the transport sector would be electrified, with electric vehicles taking over from traditional cars.

Sectors such as manufacturing would lean on domestic hydrogen and biofuels, while carbon sequestration in the land would help offset hard-to-abate emissions.

This scenario assumed the scale of hydrogen production would be largely immaterial to the national energy market.

The most aggressive approach, called "hydrogen superpower", would involve Australia reaching net zero emissions by the early 2040s.

This pace was consistent with limit global warming to 1.5C and would lead to the strongest economic outcomes for Australia.

A banner depicting global temperatures by knitters from the Christian group Common Grace's Knit for Climate Action initiative at Parliament House in Canberra Source: AAP

Hydrogen, produced not by fossil fuels but renewable energy, would supply domestic needs and exports.

Electrification of the energy market would remain strong, but more homes would instead replace gas heating with hydrogen.

The worst-case option modelled by AEMO involved a largely business-as-usual approach to policy, slow economic recovery from the COVID-19 pandemic and the greatest risk of power outages.

It was consistent with a mean global temperature rise of 4C by 2100.