Australia needs $530bn investment to reach 2035 climate target

Thursday 04 September 2025 - 16:30

By: Sahili Aya

Australia needs $530bn investment to reach 2035 climate target

Australia would need as much as $530 billion in capital investment to cut its greenhouse gas emissions by more than 70% by 2035, according to new modelling commissioned by the Business Council of Australia.

The analysis, carried out by consultancy firm McKinsey, examined three possible scenarios for emissions reduction: a cut of around 50%, a cut of about 60%, and a more ambitious goal of 70% or higher. Achieving the most ambitious pathway would require significant investment, major policy reforms, and a rapid expansion of renewable energy capacity.

Under the highest target, the electricity sector would need to generate 90% of its power from renewable sources by 2035, relying heavily on wind, solar, and new transmission infrastructure. However, the scenario also factors in a potential decline in coal and liquefied natural gas exports, which could reduce Australia’s export revenues by up to $150 billion annually.

The Business Council’s report comes just as the Climate Change Authority prepares to advise the Albanese government on its official 2035 target. Preliminary advice from the authority suggested that a reduction of 65% to 75% was both “ambitious and achievable.” The government is expected to finalize its decision ahead of Prime Minister Anthony Albanese’s participation in the upcoming UN General Assembly summit in New York.

While the Business Council has not endorsed a specific target, it argues that ambitious but realistic goals are essential for Australia’s long-term competitiveness. Its chief executive, Bran Black, called for reforms to accelerate project approvals, warning that the country’s existing environmental laws are slowing down the clean energy transition.

The council’s stance is closely watched by both industry and environmental groups, as it has shifted considerably in recent years. After once dismissing stronger climate targets as damaging to the economy, the group now acknowledges the need for decisive action and large-scale investment.