NEG 26% Target Spells Trouble for Agriculture Sector

New analysis from the Australia Institute shows that requiring Australia’s agricultural sector to reduce emissions by at least 26 per cent by 2030 would impose significant costs and reduced production for the industry.

The federal government’s proposed NEG plans to lock in a 26 per cent reduction in the electricity sector, implying an intention to reach the Paris target using a proportional sector by sector approach, requiring each sector to reduce emissions by 26 per cent.

Key findings:

  • Our analysis shows the NEG 26% Target would require agriculture to reduce emissions per year by 18.7 million tonnes (Mt) of CO2e by 2030.
  • By 2030 there would be 9.1 Mt per year gap in required emissions reductions resulting in the need to reduce agricultural production, including significant reductions in livestock numbers. 
  • In 2030, this would include: 2.9 million fewer beef cattle, 8 million fewer sheep, 290,000 fewer dairy cows and 270,000 fewer pigs.

“Reducing emissions by 26 per cent in the agricultural sector would come at significant cost. This does not need to be the case,” said Matt Grudnoff, report author and Senior Economist at The Australia Institute.

“A sector by sector approach to emissions reduction will harm sectors like agriculture that have few cheap sources of abatement.

“Those who are concerned about the cost to the agricultural sector need to be concerned with the government’s plan to reduce emissions on a sector by sector basis.

“This approach imposes significant costs on agriculture and other sectors that do not have the existing commercially available technologies for emissions reduction that the electricity sector currently enjoys.

“Emissions reduction in the electricity sector above the 26 per cent target means sectors like agriculture would be required to do less, the more electricity generation reduces emissions, the less the agricultural sector needs to do.”

“The NEG mechanism could provide the basis for integrating climate and energy policy in Australia. However it will only achieve this if the target is lifted and the 10-year lock-in provision for raising the target is relaxed,” said Ben Oquist, Executive Director of The Australia Institute. 

“There is a long way to go in the NEG debate beyond the 10 August Energy Ministers COAG meeting with legislation at state and federal level not even drafted.

“The scheme must operate as a genuine floor — not a ceiling — to future emissions reductions or it will fail to deliver on the energy trilemma.”

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