I was wrong about the 2025 election.
I was expecting a Labor minority government; in fact, I have been expecting it since 2022. First term governments go backwards when they seek re-election, and the myriad of challenges the Albanese government faced over the last three years gave me no reason to think they could buck the trend.
And yet here we are. The chaos agent that is Donald Trump, a disciplined Labor campaign and an opposition that lost touch with Australia’s political centre has resulted in not just re-election, but a thumping win and a majority much bigger than anyone expected.
This could be a great thing for climate and energy. It could enable a ramp up in ambition and action at the exact moment we need it. But there are plenty of traps for the government and the country, and they are worth calling out early.
Let’s start with the hits and misses of the last term. Chris Bowen has been the most effective climate and energy minister in at least two decades, ably supported for much of the last three years by Jenny McAllister. He has been methodical and relentless, repeatedly succeeding in locking in big reforms that have eluded his predecessors.
Bowen started in exactly the right place with the Climate Change Act, an overdue refurbishment of the basic governance architecture of Australian climate policy. The revamped Safeguard Mechanism, vehicle efficiency standards and the Capacity Investment Scheme were all complex and critical reforms, shoring up decarbonisation effort in key economic sectors.
But there were some major misses as well. When one of the biggest elephants in the energy policy room was raised – the future of the gas network – the government shrugged and pointed to the states.
The National Energy Performance Strategy, meant to drive the agenda on efficiency and electrification, was little more than a pamphlet. The Commercial Building Disclosure program, wildly successful at driving down emissions in offices, is yet to be expanded to other building types. For energy intensive businesses below the Safeguard threshold, there was effectively no emissions reduction policies or programs at all.
What about the forward agenda on climate and energy the Labor Party took to the election? In a word, threadbare. A $2.3 billion household battery program was the only big new idea floated during the election, and while it should help with minimum demand issues on the grid, it won’t do much for the renters and low-income households struggling with cost of living.
The government chose to play it safe on emissions targets, kicking a decision on a 2035 target down the road, along with the sectoral decarbonisation plans that are supposed to drive the next big tranche of emissions reduction across industry, resources, buildings, transport, agriculture and energy.
The paucity of this agenda is particularly worrying given the big decisions before the government. The Climate Change Authority hasn’t made its formal recommendation on a 2035 target yet, but last year it indicated a reduction somewhere between 65-75% below 2005 levels would be the right balance of ambition and achievability.
Let’s say the government goes with a 70% target, probably table stakes for an advanced economy like Australia wanting to do its fair share globally. If we hit our 2030 target – which appears likely – we’ll have managed to reduce our emissions by 43% on 2005 levels in the space of 25 years. A 70% target would see us cutting another 27% in five years.
And remember, most of the emissions reductions we’re expecting between now and 2030 are being delivered through renewables replacing aging coal capacity. Post 2030, that way of cutting carbon will be largely tapped out. That means any sort of ambitious 2035 target will need to be delivered through a big ramp up on the demand side of the energy system, especially energy efficiency and electrification.
What does that mean in practice? We will need a massive scale up in efforts to get households and commercial buildings off gas. We will need to support for manufacturers and food processors using low temperature process heat to electrify.
We will need an ambitious energy efficiency target to manage the new load we’re putting on the grid. We’ll also need big reforms to our energy markets to value energy flexibility to help keep energy bills low as we work through this transformation.
The thing about all these efforts is that they take time to ramp up. Viable businesses, supply chains, and skilled workers do not appear out of thin air. The demand side can deliver big emissions reductions by 2035 – and importantly enable us to overperform on our 2030 target – but only if we start now.
And therein lies the trap in this victory. With a majority this big and the progressive crossbench largely sidelined in the lower house, the government may feel like it can coast, deliver the things that are already on the go and take its time contemplating what is next.
That would be a fatal mistake. This historic election gives Labor the political space to do the heavy lifting, to work with business and households to drive down our domestic emissions, with the confidence there will be the time to bed down new policies and programs so that voters see the benefits.
It also provides the opportunity to match the Future Made in Australia rhetoric with the serious dollars necessary to secure the clean export industries of the future. Indeed, it is hard to think of a better time to lean in on this, with the prospect of COP31 in Adelaide next year giving us the ideal platform to secure the trading partnerships that will make that investment stack up.
Put simply, this victory provides the Labor Party with a once in a generation opportunity to lock in an economic transformation that would dwarf the achievements of Hawke and Keating in the 1980s.
Labor won the election. It was a mighty victory. Now it is time to win the future.
Luke Menzel is CEO of the Energy Efficiency Council and co-host of the Let Me Sum Up podcast.
