The resources sector pathway to net zero

Economic modelling and analysis by the Treasury explores plausible scenarios of Australia’s transition to net zero by 2050. This work informs the development of the Australian Government’s Net Zero Plan and sector plans and includes potential economy‑wide and sector‑specific emissions reductions pathways. The RSP considers the Baseline Scenario, in which Australia efficiently builds on existing climate policies and trends.

Under the Baseline Scenario: 

  • Through to 2050, Australia’s commodity exports are expected to shift from hydrocarbon energy commodities towards minerals and resources essential for global decarbonisation.
  • Emissions from Australia’s resources sector are projected to reduce from 94 Mt CO2‑e in 2025 to 19 Mt CO2‑e in 2050. In 2050, emissions from the resources sector are projected to make up 12% of economy‑wide gross emissions. 

To achieve the necessary reduction in emissions while supporting energy security and increasing output through to 2050, operations in the sector will focus on lowering emissions intensity (Treasury 2025). This is especially the case for energy commodities and emissions‑intensive mining activities that will continue to play a role in the transition.

To come.

Resources sector emissions projections to 2050, by commodity group under the Baseline Scenario. 

Note: In a stacked area chart, emissions are represented cumulatively. Values should be interpreted as the magnitude within each visible area, not from the baseline of the chart. ‘Electricity Generation’ covers emissions from off-grid electricity generation in industries covered by the Resources Sector Plan.

Source: Modelling report: Treasury (2025) Australia’s net zero transformation: Treasury modelling and analysis, Treasury, accessed September 2025.

These declines are broadly consistent with technology pathways advice from the CCA. Government sees a credible pathway with a structural shift to production of the energy and mineral resources that will be crucial for the global energy transition, which leads to a reduction in emissions (CCA 2024a).

While scenario‑based analysis is a powerful tool in helping inform Australia’s net zero pathway, it is not possible to precisely predict how the transition will unfold. The future is uncertain and many factors will influence the net zero transition, including changes in technology, global dynamics and community responses.

Australia’s energy commodities

The global shift toward clean energy and the production of clean energy‑intensive commodities is expected to reduce demand for coal and gas. As a result, demand for Australia’s emissions‑intensive exports such as coal and LNG is projected to decline (IEA 2023b).

However, some large industrial users will continue to require gas as for several decades, and gas production will continue to maintain energy security in Australia and the region (AEMO 2024). The International Energy Agency (IEA) suggests that between 2025 and 2050, global demand for coal is projected to decrease by 71%, LNG by 40%, and oil by 42%. Despite these global projections, there will be an ongoing need for some Australian metallurgical coal and gas in 2050, and beyond. This supports investment in further development and deployment of technologies to abate emissions in these sub-sectors.

To come.

Resources sector fugitive emissions projections to 2050, by commodity under the Baseline Scenario

Note: In a stacked area chart, emissions are represented cumulatively. Values should be interpreted as the magnitude within each visible area, not from the baseline of the chart.

Source: Modelling report: Treasury (2025) Australia’s net zero transformation: Treasury modelling and analysis, Treasury, accessed September 2025.

Australian minerals needed for the global transition to net zero

Australia’s rich endowment in minerals and metals positions us to be a leading enabler in the global transition to net zero. This creates significant economic opportunities and potential to grow the overall output of Australia’s resources sector while reducing global emissions.

Global demand for the mineral commodities needed to support the net zero transition – especially critical minerals – is projected to increase rapidly. Under the International Energy Agency’s Announced Pledges Scenario, demand for lithium grows around sixfold from today to 2040 while graphite demand almost triples and demand for nickel and cobalt almost doubles. Rare earth elements also grow strongly, increasing around 65% by 2040. Copper demand is projected to grow by more than 30% over the same period (IEA 2024).

While volume is expected to increase, emissions are projected to be offset by key steps taken within industry to decarbonise. This means the overall sector’s emissions will decline as Australia becomes a leading supporter of global decarbonisation (Advisian 2022). 

Australia’s mineral resources will support the development of technologies that shape daily and industrial life in a net zero economy. Examples of demand drivers include:

  • Electric vehicles (lithium, graphite and rare earth elements)
  • Wind turbines (magnets from rare earths)
  • Home and grid‑scale energy storage (lithium and graphite)
  • Rooftop and utility‑scale solar systems (high purity silica)
  • Low‑emissions transport infrastructure (aluminium, silicon and rare earth elements)
  • Low‑emissions manufacturing systems (copper, nickel, cobalt, aluminium)

Australia is well positioned to meet this growing demand, with globally significant reserves of key minerals and metals, and a policy environment that supports expansion of supply capacity. 

The Future Made in Australia agenda is accelerating investment in critical minerals processing and refining, including through initiatives such as the Critical Minerals Production Tax Incentive and finance options such as the Critical Minerals Facility, managed by Export Finance Australia. These are designed to mobilise private capital and build sovereign capability in strategic supply chains.