Sector Pathways Review project

A ‘technology transition and emission pathway’ describes a set of technological and operational changes that could take place over a period of time and the amount of greenhouse gases that would be emitted and removed as a result. 

The authority has been asked to review potential pathways for 6 sectors that ‘will best support Australia’s transition to net zero emissions by 2050’. Australia’s best route to the target is the combined best effort of each sector. Each sector can support Australia's transition in various and significant ways, but not all of them will achieve net zero emissions by 2050 without support from other sectors, for example through trade in carbon offsets. Sectors will need to support one another and transition on a pathway together.

Consequently, in addition to investigating how each individual sector can support Australia’s transition, we are examining the interdependencies between them. For example, electric vehicles are important for decarbonising the transport sector, but their contribution depends on the electricity sector rapidly increasing renewable electricity generation, energy storage and transmission.   

Some sectors, like the electricity sector, will be able to achieve emissions reductions much more quickly than others, and some – particularly the land sector – can achieve net negative emissions by removing more carbon than they emit.

For Australia to achieve net zero emissions economy-wide by 2050, any residual emissions that remain after every sector has made its best efforts will need to be countered by removing and storing carbon from the atmosphere. The reality is that some emissions are harder to avoid than others, but no sector is exempt from pulling its weight.

This review will identify existing and prospective technologies and operational changes and focus on those most important to support Australia’s transition to net zero emissions by 2050. We will be investigating barriers, workforce matters, public and private finance, and the opportunities new industries can bring.

The Australian Government is currently developing sector plans that outline how the transition to a net zero economy can be achieved. These will underpin the government’s Net Zero Plan(Opens in a new tab/window) and will focus on how government policy can drive the transition to net zero emissions.

The authority's review will provide an evidence base and independent expert advice on the existing and prospective technologies and operational changes most important to support Australia’s transition to net zero emissions by 2050. It will also consider barriers that might stand in the way, workforce matters to plan for, sources of public and private finance, and opportunities new industries can bring.

The government will decide how it makes use of the authority’s findings. Under the Climate Change Authority Act 2011, as soon as practicable after receiving the report, the Climate Change Minister must cause to be prepared a statement setting out the Commonwealth Government’s response to any recommendations.

We intend to provide useful, evidence-based input for the government to consider in developing its net zero plans. To that end, we will consult widely and collaborate with government agencies on consultation processes where we can. 

The Climate Change Authority and the Net Zero Economy Agency share the vision of an orderly and equitable transition to a prosperous and resilient net zero Australia. Where we differ is that the Climate Change Authority is tasked with providing the government evidence-based advice on the response to climate change, whereas the Net Zero Economy Agency works directly with regions, investors and workers to coordinate and facilitate an orderly and positive economic transformation.

As our work is complementary, the Climate Change Authority is collaborating with the Net Zero Economy Agency and the government departments developing Australia’s net zero plan on consultation processes where we can.  

The 6 sectors identified in the parliamentary referral cover the entire Australian economy and take in all major sources of greenhouse gas emissions and removals therein. All major emissions sources from Australia’s National Greenhouse Gas Inventory will be mapped to the 6 sectors and will be considered in the authority’s review.

Scope 1, 2 and 3 is a way of categorising greenhouse gas emissions based on where they occur in a company, sector or nation’s value chain. These categories are commonly used to measure and report an organisation’s carbon footprint. In this review, we use these categories to distinguish between the emissions that occur directly from the activities in a sector (scope 1), the emissions that occur in producing the energy the sector uses (scope 2), and the emissions that occur elsewhere in the sector’s value chain (scope 3).

Scope 1 emissions are those released to the atmosphere as a direct result of an activity, or series of activities. Scope 1 emissions are sometimes referred to as direct emissions. Emissions from the combustion of gas to cook food or petrol to power a car are common examples of a household’s scope 1 emissions. Emissions from the combustion of fossil fuels to generate electricity are scope 1 emissions for the energy sector.

Scope 2 emissions are the emissions released to the atmosphere from the indirect consumption of an energy commodity. For example, coal is an energy commodity that is consumed directly to produce electricity. The resulting emissions are scope 1 for the energy sector and scope 2 for sectors that use the electricity.  

Scope 3 emissions are indirect emissions (other than scope 2 emissions) that are generated at other points in a value chain, such as in producing the inputs, transporting a product for sale, or the customer’s consumption of the final product.  

• Upstream scope 3 emissions for a sector occur in another sector producing supplies for the first sector (also known as ‘embedded’ emissions). For example, the emissions from manufacturing steel are ‘embedded’ in new vehicles made from using that steel.
• Downstream scope 3 emissions occur in a sector’s consumption of another sector’s goods or services. For example, emissions from the combustion of coal in a power generator are:
  • scope 1 for the electricity sector
  • scope 2 for sectors using the electricity generated
  • downstream scope 3 emissions for the mining sector that extracted the coal.

For each sector, the authority’s quantitative analysis of emissions will focus on scope 1 (direct greenhouse gas emissions) in each sector and the economy as a whole.

Emissions from electricity use (scope 2) will also be analysed where particularly relevant. For example, the built environment sectoral pathway will include analysis of the opportunity to reduce that sector’s scope 2 emissions through energy efficiency.

Potential process and technology changes to address scope 3 emissions will be considered in ‘user sectors' where it makes sense to do so. For example, process and technology changes in the built environment sector could play an important role in addressing that sector’s upstream Scope 3 emissions from cement and steel.

The authority will analyse emissions that occur in the countries that consume Australia’s exports (international downstream scope 3 emissions), focusing on fossil fuel and green economy exports such as clean energy, green materials, and critical minerals. This is to inform our assessment of what global decarbonisation means for the Australian economy and people.

The authority is not considering international upstream (embedded) scope 3 emissions in this review.

The Sector Pathways Review is one of four pillars of analysis that will inform the authority’s advice on ambitious and achievable 2035 emissions reduction targets. You can read more about the 2035 Targets Project here.