A captain for the energy transition ship: the Federal Government announces a new Net Zero Authority

Articles Written by Samantha Daly (Partner), Angus Hannam (Senior Associate), Heather Pym (Associate)
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On 5 May 2023, the Federal Government announced that it will legislate a new national Net Zero Authority (NNZA) to reduce national emissions and help industry, communities and workers manage the energy transition.

The NNZA will drive action towards Australia reaching its Nationally Determined Contribution (NDC) under Article 4 of the Paris Agreement, updated 16 June 2022, to reach net zero before 2050 and a reduction in greenhouse gas emissions of 43% below 2005 levels by 2030. This NDC was enshrined in the Climate Change Act 2022, which came into effect on 14 September 2022. The NNZA will focus on eliminating hurdles and promoting the opportunities afforded to Australian regions, industries and economies through a global and national transition to a net zero economy. It will coordinate with other federal agencies and state, territory and local governments, regional bodies, unions, industry, investors and First Nations groups to achieve these outcomes.

The three core functions of the NNZA will be to:

  • Support workers in emissions-intensive industries to find new jobs, skills and support;
  • Create inter-governmental programs and policies to support regions and communities to engage in new clean energy industries; and
  • Assist investors and companies to identify and invest in net zero opportunities.

The announcement also includes a $400 million Industrial Transformation Stream to help fund the decarbonisation of regional businesses.

Impact of the NNZA on regional communities

Making the announcement in front of the recently retired Liddell power station in the Upper Hunter region of NSW, previously Australia’s oldest coal-fired plant, the Minister for Climate Change and Energy Chris Bowen said the NNZA will guide coal-reliant regions towards renewable energy.

A 2022 report by the Grattan Institute on The next industrial revolution: Transforming Australia to flourish in a net-zero world noted that Australia’s coal mines are heavily concentrated in Central Queensland’s Mackay region and the Hunter Valley of NSW. Within these regions, the percentage of workers directly employed in mineral and energy resources is significantly higher than the national average of 1.7 percent, for example more than 60 percent in Isaac, Queensland or 40 percent in Singleton, NSW. The report noted that job losses in these regions resulting from the energy transition will have a significant impact on their respective regional economies if not properly managed.

A report issued in June 2022 by the Australian Industry Energy Transitions Initiative[1] contemplated how industrial regions can be set up for net zero. The report contemplates the key opportunities and challenges that need to be overcome in each of Australia’s key industrial precincts. In the Kwinana region of Western Australia, for example, a total abatement potential of 2.1 metrics tonnes of carbon emissions can be achieved with, among other things:

  • Coordinated planning and development of multi-user infrastructure;
  • Regulatory changes to facilitate hydrogen and carbon dioxide transmission and storage;
  • Policy development to further stimulate near-term hydrogen demand; and
  • Investment into the delivery of decarbonised energy in the region.

The estimated jobs opportunity in a decarbonised Kwinana region is estimated by the report to be between 15,000 and 31,000.

While each region is unique in its context, stakeholders, advantages and challenges, one common theme was the need for greater coordination between stakeholders in industrial regions, and the alignment of policy, regulation and programs across levels of government to create clear goals and a common vision.

There remain a number of unknowns as to how the Authority will operate within state-regulated schemes and policies. The success of the NNZA will be determined by how well it coordinates with other regimes and brings together stakeholders in industrial precincts for a common vision of transition towards decarbonisation.

Investment and the NNZA

This announcement will be welcomed by businesses operating in emissions-intensive sectors, as the NNZA focuses on seeking to ensure that workforces will not be left behind in the energy transition. It may also provide opportunities for businesses to diversify their operations and reduce the impact on their bottom line. The new NNZA will be equally beneficial for private investors looking to support the decarbonisation of the economy. The coordination of governmental support by a single agency should offer a boost of confidence for efficient co-investment by governments into necessary infrastructure to bring new renewables projects online.

An interim NNZA within the Department of Prime Minister and Cabinet is planned to commence work on 1 July 2023, with an independent chair supported by an advisory board that will refine the functions and powers of the NNZA. The Federal Government will seek to legislate the agency within the next 12 months by recommending the establishment of the Authority to the Governor-General. The NNZA will consult across government and stakeholders to refine the functions and powers of the authority before legislation is developed.


[1] With industry partners Australian Gas Infrastructure Group, APA Group, Aurecon, AustralianSuper, BHP, BlueScope Steel, bp Australia, Cbus, the Clean Energy Finance Corporation, Fortescue Metals Group, HSBC, Orica, National Australia Bank, Rio Tinto, Schneider Electric, Wesfarmers Chemicals, Energy & Fertilisers, Westpac and Woodside Energy.

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