Net Zero: A costly mirage for Australia’s energy and economy

Australia’s pursuit of net zero emissions by 2050 has been sold as a moral and economic necessity, a bold step toward a cleaner future. But beneath the glossy promises lies a troubling reality: net zero policies are set to drive up energy prices, burden households and undermine the nation’s economic strength. For a country built on affordable energy and resource exports this agenda risks becoming a self-inflicted wound. 

The energy price trap 

The transition to net zero hinges on phasing out coal and gas - Australia’s reliable and historically cheap energy sources - in favour of renewables like wind and solar. While the government touts’ renewables as ‘low-cost’, the reality is far messier. The Grattan Institute notes that large-scale renewable projects face cost overruns, delays and social license challenges, requiring hundreds of billions in investment to replace coal infrastructure. Add to this the need for expensive grid upgrades, battery storage and transmission lines and the price tag balloons. 

Households are already feeling the pinch. Energy prices are rising, squeezing budgets in regional communities like Parkes, where locals voice ‘widespread concern’ over soaring power bills. The Australian Bureau of Statistics confirms increased energy prices as a trend, driven partly by the shift to renewables and underinvestment in reliable base-load power. Policies like the Safeguard Mechanism and New Vehicle Efficiency Standard, while aimed at cutting emissions, add regulatory costs that trickle down to consumers and businesses. 

The government’s Powering Australia plan promises relief through rebates and community batteries, but these are band-aid solutions. A $300 household energy rebate and $3.5 billion in temporary relief over three years pale against the structural price hikes embedded in the net zero transition. Meanwhile, the closure of coal plants without adequate replacements risks blackouts, further eroding confidence in the energy system. 

Economic damage: Beyond the power bill 

The economic fallout of net zero extends far beyond energy costs. Australia’s economy has long relied on its fossil fuel exports - coal and liquefied natural gas (LNG) - which account for a significant share of GDP. The Reserve Bank of Australia warns that net zero policies in key markets like China, Japan and South Korea could reduce demand for these exports, hitting regional communities hardest where mining is a lifeline. While the government dreams of replacing coal with ‘green hydrogen’ or ‘green metals’, these industries remain nascent and unproven at scale. The Net Zero Australia study estimates $7-9 trillion in capital investment is needed by 2060 to decarbonise exports, a figure that dwarfs current economic capacity. 

Domestic industries face their own challenges. The Productivity Commission acknowledges that net zero policies vary in cost-effectiveness, with overlapping regulations burdening sectors like manufacturing and agriculture. Small businesses, already grappling with high energy costs, face further pressure from decarbonisation mandates. The Future Gas Strategy admits that industrial gas users, critical to manufacturing, will see only modest declines in demand by 2035, meaning higher costs for transitioning to alternatives like hydrogen or electrification. 

Then there’s the question of jobs. The government claims net zero will “create a boom in new jobs”, citing initiatives like the Capacity Investment Scheme. But the Net Zero Australia project highlights the risk of job losses in fossil fuel regions, with no guarantee that renewable jobs will match in scale or stability. Regional Australia, from Queensland’s coal fields to Western Australia’s gas hubs, faces economic disruption without a clear path to prosperity. 

A misguided priority? 

Proponents argue net zero is essential to combat climate change and seize global opportunities. Yet Australia’s contribution to global emissions is just 1.1% and unilateral action won’t move the needle when major emitters like China and India continue to expand coal use. The Climate Analytics report criticises Australia’s reliance on gas and offsets, but even it admits the power sector’s decarbonisation is the only area showing progress - largely due to state-level efforts, not federal mandates. 

The government’s Net Zero Plan promises a “coordinated, practical strategy,” but its heavy-handed policies risk alienating the very communities it claims to support. Former Nationals Senator Ron Boswell warned that sticking to net zero will weaken the economy and erode living standards, a sentiment echoed by MPs like Barnaby Joyce, who recently introduced a bill to repeal the policy. Their argument resonates: why sacrifice affordability and reliability for a target that may deliver negligible global impact? 

A better path forward 

Australia doesn’t need to abandon environmental responsibility, but it must prioritise pragmatism over ideology. Investing in gas as a transition fuel, as outlined in the Future Gas Strategy, could stabilise prices while reducing emissions more gradually. Carbon capture and storage (CCS), already used in projects like Chevron’s Gorgon LNG, offers a way to maintain fossil fuel exports while cutting emissions. Nuclear energy, though dismissed by some economists, deserves a serious look given its reliability - provided costs can be managed. 

Above all, policy must focus on keeping energy affordable and protecting jobs. The Grattan Institute warns against broad-based cash rebates, advocating targeted support like home insulation to lower long-term costs. Streamlining regulations and incentivising private investment in reliable energy could reduce the burden on taxpayers and consumers. 

Net zero, as it stands, is a noble but flawed vision. Its pursuit risks plunging Australia into an era of high energy prices and economic uncertainty, hitting hardest those least equipped to bear it. It’s time to rethink this agenda - not for the sake of denial, but for the sake of Australians who deserve a future that’s both sustainable and affordable. 

Graph Description: Rising Energy Prices in Australia (2015–2025) 

Title: Australia’s Energy Price Surge Amid Net Zero Transition