Climate Change Authority Progress Report: What You Need to Know
In and amongst the noise of the past week, the Climate Change Authority delivered its 2025 Annual Progress Report. It provides one of the most comprehensive assessments of Australia’s climate trajectory to date. (1) As per the full Annual Progress Report, 2024 was the hottest year on record globally, reaching 1.5 °C above pre-industrial levels for the first time, and Australia’s 2024–25 financial year was also the warmest on record. In our view, these conditions frame the urgency of accelerating national decarbonisation.
What the Report Is
The Annual Progress Report is the Authority’s statutory review of how Australia is tracking against its 2030, 2035 and 2050 targets. It informs the Minister’s Annual Climate Change Statement to Parliament. According to the At a Glance summary document, 2025 saw substantial policy movement including the New Vehicle Efficiency Standard, expansion of the Capacity Investment Scheme, mandatory climate risk disclosures from January 2025, the establishment of the 2035 target and Net Zero Plan, and EPBC Act reform introduced to Parliament in November 2025 .
These developments signal that implementation rather than aspiration is now driving the transition.
Key Findings: Emissions Are Falling but Not Fast Enough
The full Annual Progress Report confirms that Australia’s emissions fell by 10 Mt CO2-e in 2025. It also states that the average annual reduction over the past five years has been 8 Mt CO2-e per year . However, this pace is well short of what is required.
The same report outlines the scale of the challenge. Australia must achieve annual emissions reductions of at least 18 Mt CO2-e per year to meet the 2030 target and between 20 and 25 Mt CO2-e per year to reach the upper range of the 2035 target .
Reporting by the AFR reinforces this finding, noting renewable energy currently supplies just over 40 percent of grid generation and must reach 82 percent by 2030 to remain aligned with the government’s Electricity and Energy Sector Plan. (2)
The Authority also confirms that most of the emissions reductions in 2024–25 came from the electricity and energy, resources, and industry and waste sectors . These sectors are progressing, but large gaps remain across transport, agriculture and industrial processes.
Structural Constraints Slowing Progress
As per the report, five structural barriers continue to slow the transition. These include community acceptance, supply chain pressures, slow environmental approvals, a remaining green premium on low emissions technology, and an ongoing shortage of skilled labour in clean energy industries .
The full report expands on these concerns, highlighting that delays compound over time, making later reductions more expensive and harder to achieve.
Policy Directions to Watch Closely
Two policy mechanisms stand out in the full report.
The Authority states that the Capacity Investment Scheme is central to achieving the government’s target of 82 percent renewable electricity by 2030 and should be extended beyond 2027 to provide longer term investment certainty. As per the full report, extending the scheme avoids a pause in renewable investment and ensures stable long term planning for developers, operators and financiers .
The full report also notes that emissions in the resources sector fell by 2 percent in 2025 due in part to reduced fugitive emissions, increased uptake of CCS and a slight fall in coal production . The Safeguard Mechanism remains the key policy tool driving this decarbonisation.
What the Findings Mean for Future Investment
For investors, the Annual Progress Report explains that the scale of investment required must increase rapidly across both mitigation and adaptation. The electricity and energy sector alone needs faster emissions reductions than any other sector over the next five years. The full report’s electricity sector charts show that the steepest decline in emissions needs to occur between now and 2030, making renewable energy deployment and storage central to the national task .
Adaptation is also highlighted as a rising priority. The full report references the National Climate Risk Assessment, noting that Australia faces increasingly severe and frequent climate impacts and requires urgent reforms to land use planning, building resilience and infrastructure design .
For investors, this means the adaptation economy is becoming as material as the mitigation one.
Opportunities for Investors in the Environment Right Now
Renewable generation and storage
The distance between current renewable penetration and the 82 percent requirement is substantial. Projects in utility scale wind, solar and long duration storage remain well supported, underpinned by stronger policy settings and falling technology costs. The full report acknowledges electricity sector progress but states clearly that the pace must accelerate.
Electrification technologies
Electrification remains essential across residential, commercial and industrial sectors. From heat pumps and induction cookers to EVs and heavy transport, the transition is picking up speed. As electricity becomes cleaner, the economics of electrification strengthen further.
Adaptation and resilience
As per the full report’s section on adaptation finance, governments cannot cover the costs of climate resilience alone, and investors are needed to fund community level adaptation, upgraded infrastructure and climate risk mitigation measures. The report suggests considering adaptation in the Clean Energy Finance Corporation’s mandate, broadening the investment universe for institutional capital .
Australia’s competitive position
The full report notes that Australia is well placed to lead in regional decarbonisation and low emissions export markets, providing a longer term macro tailwind for investors focusing on clean industrial value chains .
The Bottom Line
The Climate Change Authority’s latest progress report highlights both the momentum and the remaining challenge in Australia’s decarbonisation pathway. Emissions are falling but not fast enough. Policy is strengthening but structural barriers persist. For investors, this is not a moment to wait. It is a moment to position for the scale of capital deployment required across renewable energy, storage, electrification, industrial transformation and climate adaptation. The investment opportunity is already here, as the urgency outlined in the full report should be matched by decisive capital allocation.
References
Climate Change Authority, 2025 Annual Progress Report. https://www.climatechangeauthority.gov.au/2025-annual-progress-report
Cropp, R. The Australian Financial Review, “Slow renewables rollout dragging down Labor climate goals” 27 November 2025 https://www.afr.com/policy/energy-and-climate/australia-way-off-track-to-meet-2035-emission-goal-20251127-p5nivd
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