11 JUNE 2025

Welcome to our news round-up. See previous issues here.

THIS IS ONE TARIFF THE WORLD NEEDS – AND AUSTRALIA SHOULD LEAD

June 2025 saw Energy Minister Chris Bowen flag that Australia is considering imposing a carbon border adjustment mechanism (CBAM) on imports such as cement and steel – a significant signal of intent to increase the scope and rigour of Australia’s carbon pricing regime. 

Our new CEF report finds that carbon border tariffs in international trade are urgently required to put a price on the carbon emissions embedded in industrial commodities such as iron and steel, aluminium and cement, which make up 15% of global emissions – and that Australia is well placed to lead the development of a path towards a regional Asian CBAM.

The systematic market failure to price carbon has exacerbated the climate crisis. Pricing emissions is key to the urgent challenge of industrial decarbonisation, accelerating climate ambition and ensuring economic resilience and security across Asia-Pacific in a decarbonised global economy.

The report ‘A Price on Carbon: Building Towards an Asian CBAM’, led by net zero transformation analyst Matt Pollard, argues that:

• There should be an initial focus on pricing carbon in regional trade involving China, Australia, Japan, South Korea and Singapore via an Asian CBAM, extending the European Union CBAM. 

• The Australian government should lead on advocating for and facilitating an Asian CBAM as it bids to host COP31 in late 2026. 

• An Asian CBAM would be pivotal to the development of green commodity industries in Australia, including green iron, a $100bn pa economic opportunity.

Private finance can’t be mobilised at speed and scale into green commodity opportunities unless a carbon signal is priced-in to corporate balance sheets to catalyse investment. 

Unlike the erratically-applied, economically-destructive and investment-deterring tariffs imposed by the US, targeted CBAMs drive private finance into the green transformation of energy systems and industrial bases – including Australia’s. This in turn underpins our future economic resilience, prosperity and energy security as the world economy approaches net zero, and our historic overdependence on fossil fuels inevitably declines.

The Albanese federal government enjoys an overwhelming mandate from its recent reelection for its green superpower agenda, enabling it to advocate for an Asian CBAM in the run-up to COP31.

It has a time-critical opportunity to leverage its political influence as a middle power in the Asia-Pacific and the resources and energy trading partner of choice for much of the region’s industrial base, its abundance of renewables and energy transition minerals, and its status as the world’s largest exporter of iron ore.

Baethan Mullen, CEO of The Superpower Institute, said: 

“Carbon pricing is the most efficient policy tool available for addressing the harm caused by carbon emissions. It is essential that Australia plays its part in the development of an international system of carbon prices. TSI welcomes this important piece of work by CEF. It is clear and compelling in its analysis and provides a prescription for Australia to integrate with the world’s move to carbon prices and CBAM.”

UNSW Professor of International Political Economy, Elizabeth Thurbon, Director of the Green Energy Statecraft Project, said:

“The report addresses the fundamental market formation challenges currently preventing investment in clean commodity production, providing the long-term policy solutions needed to seize the once in a generation economic, environmental and geostrategic opportunities facing Australia... 

“The forward-looking approach to international engagement on carbon pricing as laid out by CEF will allow Australia to shape emerging markets rather than simply respond to them. It exemplifies the sophisticated green energy statecraft needed to speed up the global energy transformation and maximise its national benefits.”

Charlie Caruso, General Manager (WA) of Smart Energy Council, said:

“This report highlights that building towards an Asian CBAM is not only a statement of climate ambition, but a strategic move to harmonise decarbonisation efforts, reward low-emissions production, and embed carbon integrity in our exports.

"The SEC welcomes this timely and insightful contribution… a compelling roadmap for how Australia can lead the region in embedding carbon integrity into international trade. As global markets pivot to cleaner supply chains, this work provides the policy clarity needed to align decarbonisation with trade competitiveness, and to strengthen Australia’s position as a clean energy superpower in the Asia-Pacific.”

>>> Read the full report and the media release with quotes from report authors.

>>> See our media on the report, including Canberra Times (syndicated across 100+ mastheads), an interview with Tim on Sky News, our op ed in Renew Economy, and coverage in The Energy, Carbon Pulse, FS Sustainability, Eco-Business, AAP , Reccessary and Accounting Times.

>>>See an op ed in the AFR from Elizabeth Thurbon and Oliver Yates on Australia's clean commodity export potential citing CEF’s work, and an excellent Green Energy Statecraft proposal for a new Japan-Australia carbon collaboration by Moksha Watts & Manik Mahajan.

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CHINA MONTHLY ENERGY UPDATE: EMISSIONS FALL FOR FIRST TIME, AS 45GW SOLAR ADDED IN APRIL

With 2025 being the last year of China’s 14th Five Year Plan for Renewable Energy Development, renewable energy capacity expansion is accelerating at historic pace. 

In the first four months of 2025:

☀️ 105GW of new solar installed — 8x more than coal power, 5x wind

📈 45.2GW of this in April alone — more than Australia’s entire solar fleet

⚡ Wind + solar = 89% of new power capacity

🔥 Coal plant utilisation hits a record low average of just 46.4%

🔆 Solar generates 11% of China’s power — a first over any 4-month period.

Clean power caused China's CO₂ emissions to fall over the last year for the first time, whilst also delivering strong economic growth, a globally significant development for international climate efforts from the world’s biggest emitter, now leading the globe on every energy transition front. We discussed this in a recent SMH report.

>>> Read the full China update here. We have also made a number of presentations to various Chinese delegations seeking to partner and collaborate with Australia in decarbonisation opportunities.

>>> Tim was privileged to speak at the May 2025 TEDx Sydney conference, and talked to the massive employment, export and investment opportunities for stronger Australia-China collaborations in pursuit of energy, mining and industry decarbonisation.

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IEA FINDS ENERGY INVESTMENT AT NEW HIGH, DRIVEN BY RENEWABLES

Meanwhile the International Energy Agency’s (IEA) World Energy Investments 2025 Report finds that  China is by far the largest energy investor globally, spending twice as much on energy as the EU – and almost as much as the EU and US combined. Over the past decade, China’s share of global clean energy spending has risen from a quarter to almost a third, underpinned by strategic investments in solar, wind, hydropower, nuclear, batteries and EVs. 

Globally, power sector investment reached a new high of US$1.5 trillion in 2024, driven primarily by record investment in low-emissions generation, grids and battery energy storage systems (BESS). BESS is set to overtake total fossil fuel generation investment in advanced economies in 2025, and will be triple that of 2022. Upstream oil and methane investment is set to fall for the first time since 2020, by 4%.

Renewable power to fossil fuel power investment in advanced economies is a rounding error, a 12:1 ratio. In China it is a lower but still very robust 6:1 ratio.  While China is still building thermal capacity in 2025, the first four months saw its thermal fleet run at a record low 46% utilisation rate nationally, as it strategically builds flexible new coal plants to balance the ever-increasing share of renewable energy.

Follow the money, disregard the vested interests’ claims. Investment trends show solar + BESS + EV = Accelerating Global Energy System Transformation.

>>> See Tim's commentary in The Energy.

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WITH POWER PRICE SPIKES UP TO 9%, TIME TO ACCELERATE BATTERY DISRUPTION & CER

The Australian Energy Regulator has finalised its Default Market Offer (DMO) for 2025/26: retail electricity prices up 8-9% for NSW, 2-3% for South Australia, and 3-4% for SE Queensland.

Australia has been smashed for three years by record high coal and gas prices. For all the vested interests’ misinformation associating higher electricity prices with renewables, the majority of our grid is powered by fossil fuels. Australians pay export prices for our coal and gas, despite being one the world’s top producers. Our governments have repeatedly failed to prevent the multinational gas cartel’s price gouging. 

Grid transmission and distribution (T&D) costs are up significantly, reflecting higher long term interest rates and investment to modernise the grid, necessary as end of life coal power clunkers are retired. 

It is time to leverage the massive battery disruption underway. The Albanese government’s brilliant $2.3bn 30% residential battery subsidy will leverage the existing grid T&D and crowd batteries into the system, which in turn crowds-in expanded renewables capacity, utility scale and distributed, eg. rooftop solar. We need to Renew Australia For All, to ensure renters and social housing and apartment dwellers also benefit, alongside a progressive electrification of everything. This will permanently lower real electricity prices over the long term.

AEMO should update its Integrated System Plan (ISP) to reflect the doubling of grid T&D new-build costs and the halving of battery prices in the last few years. It was good to see for the first time in AEMO’s May Draft 2025 Electricity Network Options Report a recognition of grid-build cost hyperinflation and the increasingly critical role of batteries and distributed CER in our national electricity roadmap.

>>> Hear Tim Buckley’s commentary on the AER’s DMO on ABC Radio National’s The World Today and see the report in ABC online business.

>>> See Tim’s commentary on AEMO recognising the role of batteries in The Nightly and on the big battery investment boom reported in the Clean Energy Council’s latest energy snapshot, in The Guardian.

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LNG EXPORTS SHOULD BE CONDITIONAL ON LOW PRICED SUPPLY OF 16% OF OUR GAS TO DOMESTIC MARKET

With reports that the Albanese government is considering an east coast gas reservation, we’ll say it again: there is zero shortage of methane. East Australian production is up 300% in the last decade. The problem is that the multinational gas cartel is currently free to starve the domestic market by exporting 84% of this, meaning we pay some of the world’s highest domestic methane prices.

The role of government is to regulate industries and vested private interests to protect the public interest. A decade of gas cartel gouging using our public assets is more than enough.

Energy Minister Chris Bowen has tried to play nice with the cartel, but his A$12 cap is entirely ignored. Export LNG should be conditional upon the supply of 16% of our public gas to the domestic market at an acceptable price, say a 50% premium to the domestic US price, currently US$3.14/MMBtu (million British thermal units), A$5. This would put east Australian methane prices at A$7.50 – half the current wholesale price according to the ACCC.

Expect the usual self-serving squeals of 'sovereign risk' from the gas cartel and from Japan’s Ambassador as it continues to interfere in Australia's sovereign domestic interests, even as it re-exports 'our' LNG into ASEAN. 

We constantly hear about the unavailability and unaffordability of methane in east Australia gutting our domestic downstream industries. Extortionate domestic prices also drive the energy cost of living crisis, inflating gas bills and driving up wholesale electricity prices. Gas electricity generators charged an average A$200/MWh in 1HCY2025, double the $100/MWh NEM average. The sooner we enable the battery revolution, the sooner we permanently scale down the gouging by methane peaker plants.

Any gas reservation policy could not be an excuse to approve more gas production, exploration and development given the three-fold increase in production over a decade as the climate emergency gets worse, exacerbating the cost to taxpayers directly and via our skyrocketing insurance bills.

>>> See our media commentary including in Michael West Media and The Nightly.

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ALBANESE GOVERNMENT DETONATES COLOSSAL WOODSIDE CARBON BOMB 

At the end of May, Federal Environment Minister Murray Watt approved a 40 year extension to 2070 of the colossal climate bomb that is Woodside’s North West Shelf LNG facility off WA’s Pilbara. This is unconscionable.

The Woodside project is estimated to produce 4.3 billion tonnes of climate-destroying emissions during its lifetime, the overwhelming majority of them Scope 3 exported emissions, as the global climate crisis escalates and our collective window of opportunity to avoid climate breakdown narrows. 

There is an irreconcilable tension at the heart of Australian climate and energy policy – great progress on Australia’s reinvention as a renewable energy-powered minerals and metals export superpower, coupled with continued policy support for coal and gas. Greenlighting Woodside is the latest and arguably most egregious example.

Australia’s exported Scope 3 emissions are already triple our domestic emissions and have been increasing consistently over the last decade, as the Albanese government has continued to approve major fossil fuel projects.

As Tim Buckley commented for The Energy:

"The Safeguard Mechanism only accounts for Scope 1 direct emissions, and Woodside reports that Scope 3 is 93% of CY2024 total emissions (Scope 1-3). So, the vast majority of the massive nature of the climate bomb that is the North West Shelf is the exported emissions beyond the scope of the Safeguard Mechanism, including the methane burned in the electricity generation for the processing of methane into LNG. 

“Woodside could progressively decarbonise their electricity emissions by incorporating solar, wind and BESS, but there is zero interest from the board or management leadership to do this so far.

“Assuming Minister Bowen progressively tightens up ACCUs and the Safeguard Mechanism ratchets down 4.9% per year, this will hopefully see the price of carbon credits rise, and provide Woodside a financial motive to stop its climate denialism.

“But overall, until North Asia embraces aggressive electrification and decarbonisation like China is rolling out, Woodside will stand behind the drug pusher’s argument – if not our LNG, someone else will supply it – like the climate-denying US government.” 

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EMISSIONS REDUCTION DATA COMES UNDER SCRUTINY 

Newly released government emissions data shows Australia’s emissions increased fractionally last year, by 0.5% driven by coal fired power and transport, including the highest levels of consumption of aviation fuel and diesel on record (see item below on need to reform fuel tax credits). 

While the longer term trend of falling electricity-generated emissions is expected to resume this year, an important review by Emma Lovell of UNSW and Jessica Allen of University of Newcastle in Renew Economy showed that without factoring in avoided land use changes, Australia’s emissions have only decreased 3% since 2005, way below the 27% claimed by Energy Minister Chris Bowen. As Minister Bowen said, the government has more to do to ensure it is delivering downward pressure on emissions across the economy.

We need to accelerate the decarbonisation and electrification of everything, and pivot our export sector, aligning our efforts to value-add our commodity exports powered by renewable energy to help our key trade partners deliver jointly on their climate goals. 

It is beyond time we rigorously priced-in carbon pollution. The Safeguard Mechanism needs to continue to ratchet-up, include credible real time monitoring, reporting and verification, and eliminate self-serving industry guesstimates and massive fugitive emissions under-reporting, plus a lowering of the threshold from 100ktpa to 25ktpa. Methane must be accounted for on the basis of its global warming impacts over 20 years (GWP20), which far exceed those of CO2.  And carbon credit offsets must be tightened and reformed, alongside fossil fuel subsidy reform.

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FORTESCUE ADVOCATES REFORM TO DIESEL TAX CREDIT, CEF REPORT FORTHCOMING

This week saw Fortescue launch a fresh campaign to transition Australia’s largest fossil fuel subsidy, the Fuel Tax Credit Scheme (FTCS) – which has rapidly grown to a top 20 annual budgetary expense – from a headwind to a tailwind driving electrification and decarbonisation of heavy haulage in commodities production. It proposes that the government introduce a $50m annual cap per consolidated group on the diesel rebate, with anything above the cap distributed back to beneficiaries on the condition that it is spent on investments enabling decarbonisation. 

This call reflects the key recommendation of our 2023 report, Fuel Tax Credit Scheme and Heavy Haulage Electric Vehicle Manufacturing in Australia, which found that this cap would raise >$14bn in revenue over FY24-FY30 that could be deployed to accelerate decarbonisation and electrification of haulage.

Fortescue CEO Dino Otranto believes it can convince the Albanese government to reform the scheme: “We’ve started the engagement process, and over the next month we’re really going to ramp that up. What I’m seeing and hearing is [the government] is doubling down on the renewable energy transition and this is a critical element that needs to be addressed.”

The Labor government has an overwhelming mandate to accelerate climate action and turbocharge the net zero transformation, yet the current FTCS significantly undermines the Safeguard Mechanism – its flagship industrial decarbonisation policy – with the carbon price paid by emitters under the mechanism falling far below the carbon subsidy miners receive from the diesel rebate.

Worth considering CATL founder’s forecast that half of all trucks sold in China will be electric-powered by 2028! The old excuse that the technology is not scaleable or commercially viable is wearing very thin.  

>>> Building on CEF’s work in recent years on reforming the fossil fuel subsidy, CEF will soon publish updated analysis on the FTCS and a proposal to introduce a Transition Tax Credit Initiative to phase-out the rebate, and dispel the mis- and disinformation on the objectives of the scheme spread by its largest beneficiaries and their fossil fuel lobbyists.

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AJ for Tim, Matt, Caroline and Fatima at CEF.

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