Industrial transition will occur in phases due to complexity and evolving nature of low‑emissions technology. A phased transition allows industries to adapt over time while ensuring that investments align with technological readiness, cost‑effectiveness and emissions reduction potential. This approach will vary depending on the subsector, balancing ambition with practical implementation, to help industry maintain competitiveness while progressing towards net zero.
Phase 1: Deploy existing opportunities and planning (near term 2025–30)
Focusing on developing industry knowledge and deployment of existing commercial abatement technologies, subsectors such as food and beverages, and pulp, paper and paperboard will likely be early movers. Overall abatement may be minor but can build momentum within industry.
The Safeguard Mechanism will be an important driver for large industrial emitters. To ensure they are appropriately calibrated, the Australian Government will review Safeguard Mechanism policy settings in 2026–27. As part of the review, the Climate Change Authority (CCA) will advise the Australian Government on the extent to which on-site abatement is being driven by the reforms, and whether any additional incentives are required.
Australia’s Carbon Leakage Review was undertaken as part of the 2023 Safeguard Mechanism reforms to assess potential carbon leakage risks and develop policy options to address carbon leakage. Findings from the review found that current Safeguard Mechanism settings are effective at mitigating carbon leakage risk in the short to medium term, but settings for some sectors may need to be augmented with additional measures over time. The Australian Government will release the report from the Review to continue discussions on recommendations with impacted industries and will give further consideration to the issues and whether to implement a border carbon adjustment in the 2026–27 review of the Safeguard Mechanism.
Energy performance upgrades, increasing use of circular economy, switching from coal to gas, and electrification where commercial solutions exist are likely pathways during this time. For industrial abatement to continue at pace, planning for key enablers including grid infrastructure, R&D, skills, and regional coordination will need to be begin in Phase 1.
Phase 2: Widespread adoption of existing technologies and commercialise new tech (medium term 2030–35)
Building on progress from Phase 1, industrial transition will focus on the widespread deployment of commercially available net zero technologies and broader deployment of circular economy practices. Widespread adoption of electrification, energy performance upgrades and other alternative inputs is anticipated for low heat processes such as food and beverage manufacturing. Heavy industries are also expected to deploy commercial technologies such as electric boilers at scale, enabled by the buildout of the renewable grid.
Trials and commercialisation of new technologies are also anticipated ahead of the next phase of decarbonisation. Scale up and build out of the necessary infrastructure, supply chains and workforce for alternative inputs such as hydrogen and bioresources are also likely to begin progressing at pace.
Phase 3: Net zero and new market opportunities (longer term 2035–50)
Significant emissions abatement from across industry is anticipated, particularly for hard‑to‑abate processes such as high temperature heating in alumina calciners. Much of this would be driven by the technology developments and innovations occurring today. Alternative inputs such as hydrogen and bioresources are also likely at sufficient scale and cost to enable widespread industrial adoption.
This period will also likely see the growth of new industry opportunities in green metals, green chemicals and other areas of comparative advantage. New breakthrough technologies may also be commercialised and deployed during this time and circular economy practices will be widely integrated.
The Climate Change Act 2022 sets up a strong framework to ensure Australia remains on track to reach net zero emissions. It requires the Minister for Climate Change and Energy to report progress through an Annual Climate Change Statement to Parliament, including progress towards emissions targets, and whether current policies are effective. This regular reporting ensures transparency and accountability. It also creates a clear cycle for reviewing and improving climate policies over time.
Together with advice from the Climate Change Authority, the Net Zero Plan and corresponding sector plans will guide the decarbonisation trajectory of industry and the broader economy. Through ongoing monitoring and review, new opportunities for action will be identified. Continued engagement and contribution of stakeholders is fundamental to this process.