"The NSW Government's target to reduce greenhouse gas emissions 70% off 2005 levels by 2035 is impressively ambitious, but achieving it will require the State to work well beyond the electricity sector to help industry and others to make major transitions," Helen Waldron, NSW Head of national employer association Ai Group, said today.
"Transforming our power sector is critical not just to cutting emissions but also to minimising costs and maintaining reliability, as this past winter's coal generation outages and current global fuel price pressures attest. This is a delicate transition to deliver, and it is important that other States and the Commonwealth are now working closely with NSW to achieve it.
"However while the power sector is important in its own right and a key tool for other sectors to cut emissions, it's only around a third of NSW's recent emissions. The new target also requires increasing the pace of reductions across the economy. Opportunities in industry, transport, agriculture and more will need to move from 'emerging' to 'business as usual' over the next thirteen years. That is no small task.
"Successful industry transitions will need especially astute policy and strong cooperation with the Commonwealth and other states. Plausible pathways are as diverse as industry itself, but several major challenges stand out.
"Natural gas is an important input to many businesses for heat, power and feedstock. We'll need to rapidly scale up alternatives like electrification, bioenergy and hydrogen; make sure investment in electricity and gas networks matches our needs; and ensure that those gas users who have the least potential to switch are not disadvantaged.
"Regulatory policies from different levels of government will need to fit together, not overlap with or contradict each other. In particular, the NSW EPA's plan to add greenhouse gas management to site licenses should defer to the Federal Safeguard Mechanism where a facility is covered by both policies.
"Transitioning to clean production processes will take a lot of investment. NSW will need not only to maintain its status as a good place to do business, but to extend the kinds of investment risk-reduction policies it has developed for electricity to other sectors. The NSW Hydrogen Target is an example, but backup contracting or public procurement can also play roles in making transformative investments in clean materials viable.
"Whoever prevails at the 2023 State Election, the next three NSW Governments will face hard work to deliver the 70% cut. They will need to work closely with other Australian governments, who are increasingly moving at the same pace. And they will need to put industry at the heart of the effort," Ms Waldron said.
