Australia’s Liberal Party Drops Net-Zero Target, Shifting Focus to Energy Costs

Australia’s conservative Liberal Party has abandoned its commitment to reach net-zero emissions by 2050, marking a major shift in the country’s climate debate and aligning the party with its rural coalition partner, the Nationals. The decision follows months of internal divisions between moderates and right-wing members, culminating in a five-hour meeting where a majority voted to scrap the target.

Opposition Leader Sussan Ley announced the policy reversal on Thursday, saying a future Liberal government would prioritise lowering energy prices over long-term emissions goals. Ley said the party would dismantle the Labor government’s climate and energy policies, including legislated emissions reduction and renewable energy targets. However, she confirmed that Australia would remain a signatory to the Paris climate agreement.

“Today the Liberal Party has decided to put affordable energy first,” Ley said, adding that net zero would only be pursued “if we can get there with technology, with choice and voluntary markets.” The new approach includes preventing early coal plant closures, lifting Australia’s longstanding ban on nuclear energy, and expanding investment in new gas supply and infrastructure.

Ley insisted emissions would still fall “as fast as technology allows” and in line with comparable economies. But legal scholars warn the shift risks putting Australia at odds with its global obligations. Julia Dehm, associate law professor at La Trobe University, said abandoning net zero violates the Paris principle of progressive ambition, warning of potential reputational damage and even legal consequences.

The Liberal Party first adopted the 2050 target under former Prime Minister Scott Morrison in 2021. But internal tensions resurfaced after the party’s heavy defeat to Labor in the 2022 election. Meanwhile, the Labor government is moving in the opposite direction-aiming for a 62–70% emissions cut by 2035 and committing A$5 billion to industrial decarbonization.

The Liberals’ reversal now sets up a stark climate policy divide ahead of the next election.

Political-party net-zero backtracking creates real policy-risk uncertainty for Australian corporates planning long-horizon transition capex, even when the current government stays firm - boards have to plan for both possible next-election outcomes. Our climate-action and market-intelligence teams help clients build multi-scenario planning that stays robust across shifting political signals.