For more than a decade, Australia's emissions reductions have been driven not by the federal government but by the states and territories, often in relative obscurity.
State governments took the lead in driving rapid uptake of renewable energy, driving emissions down even as the federal " climate wars " raged.
But the heavy-lifting era of the states may be coming to an end. Reaching the goal of cutting emissions by 62-70% (relative to 2005 levels) in less than a decade will require much stronger leadership at a federal level.
States drove the first renewable surge
From 2013 to 2022, Australia endured a " lost decade " on climate policy, as successive federal Coalition governments struggled to build durable national climate policy.
But emissions fell regardless. From September 2013 - when Coalition leader Tony Abbott became prime minister - until September 2019, national emissions fell by almost 12%. Emissions then fell sharply as COVID restrictions began in 2020, before a slight bounce, but overall emissions fell almost 20% during 2013-22.
Since then, however, our emissions haven't changed much at all. Between September 2024 and September 2025, they fell just 1.8%.
What happened during the supposedly lost decade? States took the lead through initiatives such as large-scale renewable energy rollouts in South Australia and Victoria, market-shaping reforms in New South Wales, and a more recent renewables surge in Queensland.
Aided by the federal Clean Energy Finance Corporation, these efforts reshaped the electricity sector. National emissions cuts were delivered to Canberra on a silver platter, making it easier to meet national targets without substantial federal effort.
When the Albanese government came to power, it set a legal target to cut emissions 43% (from 2005 levels) by 2030. But this measure was made possible largely by state action.
State efforts also underpinned the new 2035 targets as well. Modelling last year by Climateworks suggested existing state and territory policies could - by themselves - deliver national emissions reduction of 66-71% by 2035.
But just six months later, these assumptions look shaky. While some state governments have hit sectoral speed bumps, others have shifted to outright backsliding.
What's happening with the states?
In Western Australia and the Northern Territory , previously debated 2030 targets now lie abandoned.
In Queensland, signs of climate backsliding are clear in the new government's Energy Roadmap , laying out plans to keep coal power until mid-century. The government has cancelled large renewable projects and wants new gas-fired power stations to fill the gap. The state will likely still reach its 2030 emissions targets, but the 2035 goal now seems close to impossible.
South Australia has long been a leader on renewables. In 2007, renewables supplied just 1% of the state's power. This year, renewables are forecast to supply 85%. But its efforts to build a green hydrogen industry as a way to create new exports and cut industrial emissions have hit a very rocky patch.
The SA government has disbanded its Office of Hydrogen Power and signed a ten-year contract to power the Whyalla Steelworks with gas . State Treasurer Tom Koutsantonis has acknowledged there are no government-led plans to develop green hydrogen left.
The state's success in cutting emissions from electricity means transport and farming are now the largest emissions sources. Emissions from these sectors will be much harder for the state to bring down alone.
New South Wales faces a different challenge: whether it can reach its legislated state targets in time. It has to roughly double its current rate of emissions reductions to do so, and questions remain over how fast it can roll out renewables - as well as whether it can cut emissions from coal mining.
The state's huge Eraring coal station was slated to close in August last year, but this has been pushed back twice and it is now meant to close in 2029. The owners of Vales Point Power coal station similarly hope to extend its life.
Victoria's nation-leading efforts to move away from gas have reduced fossil fuel emissions 22% since 2005. But the state's overall emissions have been increasing since 2021 . While offshore wind farms may offer new opportunities in the longer term, local and interstate transmission lines , transport and agriculture emissions will remain critical challenges.
Time for federal leadership
The 2035 emissions target is just six months old. But the federal government already faces a real challenge of its convictions.
On May 12, Treasurer Jim Chalmers will hand down his budget. Given the fuel crisis, increases in military spending and cuts to the NDIS, it's unlikely we'll see a big boost to renewables.
This would be a missed opportunity, given renewables produce energy locally, boost energy security and act against inflation .
The next test for the government will be the Safeguard Mechanism review in July. This scheme has led to some emission cuts from big industrial facilities, though most cuts come from closures and operational shifts rather than direct reduction on site .
The mechanism could do much more. If the review leads to targeted sectoral reforms, a focus on onsite emissions intensity reductions and long-term signals providing clear investment horizons for onsite mitigation, it may just shift the needle towards real industrial transitions.
States can't do it all
Australia is at a tricky stage. Federal climate progress has long been underwritten by a free dividend of emissions reductions delivered by state governments.
Going forward, the federal government will likely need to shoulder much more of the heavy lifting and become more willing to intervene - especially as some states baulk at the challenge.
Chris Wright is the Principal Analyst for CarbonBridge, a decarbonisation consultancy. Past research has received funding from the Australian Government's Research Training Program.
