Australia's greenhouse gas emissions drop as renewable energy, batteries surge

Australia's emissions drop, pointing to green shoots in the country's most polluting sectors. (ABC News illustration: Alex Lim)

Australia's greenhouse gas emissions have dropped, showing signs of a turning point in the country's most polluting sectors.

Emissions are at their lowest point since the COVID pandemic shut down the economy, dropping 2.1 per cent over the year to December 2025, according to the latest national greenhouse gas inventory update.

The significant drop is largely driven by clean energy replacing fossil fuels in electricity generation, but transport emissions also continued to fall, year-on-year, for the second quarter in a row since the pandemic.

That drop doesn't yet account for the surging demand for electric vehicles (EVs) since the start of the year.

The Federal Chamber of Automotive Industries reported EV sales have doubled in the past year, hitting a record high of 20 per cent of new car sales in May.

That figure more than doubles again if you include hybrid and plug-in hybrid electric vehicles, with the share of all electrified vehicle sales hitting 46 per cent.

"Our transport activity is going up; however, emissions have started to fall," said Anna Malos, a climate policy expert at the Climateworks Centre, an independent research body at Monash University.

In the first quarter, transport sector emissions declined by 0.6 per cent, a small but telling figure according to Malos.

"It's a shift in particular from petrol vehicles to electric vehicles, and if that continues, then that is really the first time outside of COVID that we've had that fall in transport," she said.

"There are really hopeful signs in that latest report that Australia is making progress towards its emissions reduction targets."

Under the Paris Climate Agreement, Australia has committed to cutting emissions by 43 per cent below 2005 levels and by 62-70 per cent by 2035.

But the latest data highlights the scale of the challenge, particularly when it comes to decarbonising heavy industry.

Despite the overall drop in emissions, Australia has already used 58 per cent of its Paris emissions budget, with only 55 per cent of the period remaining.

Electricity remains the largest source of emissions, accounting for 31.8 per cent. But emissions from the sector peaked in 2009 and have continued to fall since, down 3.8 per cent to December 2025 and 25.8 per cent since 2005.

"Good progress over the year, in particular in decarbonisation of electricity supply," was how Dr Frank Jotzo described it, a professor of climate change economics at the Australian Nat