Greenhouse Gas Emissions 2021

In 2018–19, NSW recorded net greenhouse gas emissions of 136.6 million tonnes carbon dioxide equivalent (CO₂-e). Emissions peaked in 2007 and were 17% lower in 2019 than in 2005. Emissions have declined across most economic sectors, with the exception of transport, which has undergone almost uninterrupted growth in emissions.

By 2030, with current NSW Government policies implemented, greenhouse gas emissions are projected to fall to 78.9–87.6 million tonnes CO₂-e, a 47–52% reduction from 2005 levels. Electricity generation emissions are forecast to reduce significantly as a result of an increased share of renewable energy as the state’s coal-fired power stations are retired.

Why managing greenhouse gas emissions is important

Burning and extracting fossil fuels and certain chemical processes release greenhouse gases which build up in the atmosphere causing extra heat to be trapped by the atmosphere and resulting in global warming. Human activities are estimated to account for global warming of between 0.8°C and 1.3°C above pre-industrial levels. Unless deep reductions in greenhouse gas emissions occur, global warming will exceed 1.5–2°C during the 21st century ().

Managing the amount of greenhouse gas emissions released and sequestered will be vital to the ongoing health of our state’s ecosystems and viability of key economic sectors.

The impacts of increased greenhouse gas concentrations and climate change to NSW are explored in the topic.

Status and Trends

In 2018–19, per capita NSW greenhouse gas emissions, including land use, land-use change and forestry, were 16.9 tonnes CO₂-e. While this is below the national average of 20.9 tonnes per capita, both are much higher than the global per capita average of 6.6 tonnes last recorded in 2014.

Stationary energy, primarily from electricity generation, is the largest source of greenhouse gas emissions in NSW at 38%, followed by emissions from transport (20%), agriculture (12%), industrial processes and product use (9%) and fugitive emissions from coal and gas (9%) (Spotlight figure 5). The land use, land-use change and forestry sector is currently a carbon ‘sink’ as it stores more carbon than it emits and thus reduces the state’s emissions by 3%.

By 2030, emissions from electricity generation are expected to fall substantially as initiatives to increase renewable energy take effect. These initiatives are projected to reduce NSW greenhouse gas emissions by 23–31%. Transport is projected to become the largest source (33–36%) of NSW emissions by that time, with emission reductions from the uptake of light duty electric vehicles and the electrification of buses offset by increasing emissions from aviation and trucks. Emissions from agriculture will represent 18–20%, fugitive emissions from fuels 12–14% and industrial processes and product 9–10% of NSW emissions. Net carbon sequestration by the land sector is projected to increase, reducing NSW emissions by 8–9%.

Pressures

Economic activity and population growth are key drivers of greenhouse gas emissions. Most emissions are from energy use, transport, land clearing and agriculture.

Responses

The Net Zero Plan Stage 1: 2020–2030 () sets out the NSW Government’s long-term objective to achieve net zero emissions by 2050. Base case trends in NSW emissions, and initiatives under the plan’s first stage are projected to achieve a 47–52% reduction in emissions by 2030, compared with 2005 levels as reported in the Net Zero Plan Stage 1: 2020–2030 Implementation Update ().

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Since the beginning of the industrial era around the mid-18^th century, the increased use of fossil fuels, along with agricultural and land-use changes, have led to a build-up of greenhouse gases in the atmosphere. These gases, including carbon dioxide (CO₂), methane and nitrous oxide, are causing extra heat to be trapped by the atmosphere. Human activities are estimated to account for global warming of between 0.8°C and 1.3°C above pre-industrial levels. Unless deep reductions in CO₂ and other greenhouse gas emissions occur, global warming will exceed 1.5–2°C during the 21st century ().

While global average temperature increases of 1.5°C are expected between 2030 and 2040, the rate of warming varies between regions (). Australia’s climate has already warmed on average by 1.4 ± 0.24°C since 1910, with an increase in heat events and extreme fire weather and changes in rainfall patterns (). Greenhouse gases resulting from human activity will persist in the atmosphere for centuries to millennia, causing further long-term changes to the climate system if emissions continue unabated. The impacts of increased greenhouse gas concentrations and climate change to NSW are explored in the topic.

The human activities that cause an increase in greenhouse gases and global warming also directly impact air quality. Transport is a major source of both greenhouse gases and air pollution in NSW. So too are bushfires, with smoke-related health impacts from the Black Summer bushfires of 2019–20 estimated to have cost $1.95 billion across Australia (). See the topic for further information on air pollution.

Carbon dioxide (CO₂) is an important greenhouse gas. When referring to the range of greenhouse gases, estimates are expressed in carbon dioxide-equivalent (CO₂-e) to account for the global warming potential of each gas compared to CO₂.

Global emissions have risen by about 50% between 1990 and 2018 from 32.6 gigatonnes (Gt) of CO₂e to 48.9 Gt CO₂e () – see Figure 5.1. Energy, namely fuel combustion for power generation and transport, contributed on average 74% of annual global emissions over that period while agriculture accounted for 14%. Industrial processes and product use, waste and land-use change and forestry each contributed around 4% of annual global emissions.

Global fossil fuel use declined in 2020 due to the COVID-19 pandemic, but this is expected to have a negligible effect on the impact of climate change (). Atmospheric concentrations of CO₂ continue to increase with fossil fuel emissions projected to remain the principal driver of this growth.

More than half of all CO₂ emissions from human activities are being absorbed by land and ocean sinks (). Despite this slowing the rate of increase in atmospheric CO₂, greenhouse gas concentrations remain at their highest levels in at least the past two million years.

In 2019, mean annual global concentrations of CO₂ reached 410 parts per million (ppm) and the CO₂-e of all greenhouse gases 508 ppm (). Measurements from Antarctic ice cores indicated that CO₂ concentrations averaged around 280 ppm for most of the last 2000 years but rapidly increased from 1850 onwards to reach present day concentrations.

A total of 529 million tonnes (Mt) CO₂-e of greenhouse gases were emitted in Australia during 2018–19, based on the estimation and reporting rules of the Intergovernmental Panel on Climate Change (IPCC) and the United Nations Framework Convention on Climate Change (UNFCCC) ().

Preliminary estimates of national emissions for the years to June 2020 and 2021 were 512 Mt CO₂-e and 500 Mt CO₂-e, respectively (). The emissions for 2021 are the lowest on record for the National Greenhouse Gas Inventory and are about 20% below 2005 levels. These lower emissions reflect ongoing reductions in emissions from electricity generation, lower fugitive emissions partly due to a fall in coal production and a reduction in transport activity because of COVID-19 restrictions.

While its contribution to global emissions is small, Australia is one of the highest per capita emitters of greenhouse gases in the world (). Australia’s per capita emissions from fuel combustion (15.3 tonnes CO₂-e per person in 2019) were significantly higher than the Organisation for Economic Cooperation and Development (OECD) average of 8.7 tonnes CO₂-e per person ().

Australia has committed to the Paris Climate Agreement () and set its Intended Nationally Determined Contributions target to reduce emissions by 26–28% below 2005 levels by 2030. More detail on the Paris Agreement and its aims is provided in the context section of the topic.

In financial year 2018–19, NSW net greenhouse gas emissions were 136.6 Mt CO₂-e, which was 17.2% lower than 2005 levels (). Using the estimation and reporting rules of the IPPC and the UNFCCC, the state’s emissions predominantly arise from the energy sector, which incorporates stationary energy and transport emissions, followed by agriculture, industrial processes and waste. Emissions in NSW peaked in 2006-07 and have since fallen mainly due to reductions in emissions from stationary energy (mostly electricity) and the land sector (Figure 5.2).

From 20015–16 to the present, NSW net emissions have been moderated by the effect of the land use, land-use change and forestry (LULUCF) category gradually becoming a net sink of emissions rather than a source (Figure 5.2).

In the absence of further government action, NSW emissions are projected to reduce to about 30% below 2005 levels by 2030. However, NSW Government policies under the Net Zero Plan Stage 1: 2020–2030 () aim to accelerate the reduction in the state’s emissions, with emissions projected to reduce to 78.9-87.6 Mt CO2-e by 2030, which is 47–52% lower than 2005 levels (central estimates shown in Figure 5.1 and referred to in the related text). These projections were reported in the Net Zero Plan Stage 1: 2020–2030 Implementation Update ().

Following a peak in 2008, emissions from electricity generation have since fallen due to the increased share of renewable energy. This sector accounted for 51.9 Mt CO₂-e or 38% of NSW emissions in 2018–19. Electricity generation emissions are projected to decrease significantly as a result of strategies in the NSW Electricity Infrastructure Roadmap () and an extension of the Energy Savings Scheme. By 2030, emissions from electricity generation are forecast to fall by 76–91% compared to 2005 levels.

Stationary energy (excluding electricity generation) includes on-site fuel combustion in manufacturing, energy and primary industries and the commercial and residential sectors. Emissions from this sector have fallen moderately in recent years due to increases in power generation efficiency and renewable energy, more energy-efficient equipment and appliances and fuel switching. In 2018–19, stationary energy (excluding electricity generation) accounted for 15.2 Mt CO₂-e or 11% of NSW emissions and 13% below 2005 levels. Emissions from this sector are projected to persist with modest growth over the medium term without NSW Government policies. This sector is explored further in the Emissions from energy production and combustion by fuel type and Pressures sections below.

Transport emissions include fuel combustion emissions from road, domestic aviation, rail, domestic shipping, off-road recreational vehicle activity and gas pipeline transport. Emissions from the supply of the energy which powers rail and electric vehicles are accounted for in the electricity generation sector. Transport emissions have increased by 1.4% year-on-year since 1990, with 2018–19 emissions 50% higher than in 1990 and 16% higher than 2004–05 levels. In 2018–19, NSW transport emissions reached 27.6 Mt CO₂-e which was 20% of the state total. Road transport was responsible for 88% of the emissions, split between cars and light commercial vehicles accounting for 65% and heavy duty vehicles 23%. Aviation emissions are the next largest source of transport emissions (7%), with smaller contributions from other modes. See the Transport topic for more details.

Although transport emissions are estimated to have fallen in 2020 and 2021 due to the impact of COVID-19 on aviation and light duty vehicle activity, emissions are expected to rebound in 2021–22 and continue increasing alongside population and economic growth. Under current policies, emission reductions due to the uptake of light duty electric vehicles and the electrification of buses will help offset overall increases in transport emissions. These are projected to peak in 2025–26 at 29.7 Mt CO₂-e) before falling to 28.7 Mt CO₂-e or 34% of NSW emissions in 2029–30. While light vehicle emissions are likely to reduce in the second half of the decade with the move to electric vehicles supported by the NSW Electric Vehicle Strategy (), emissions from heavy duty road transport and aviation are projected to continue to grow.

Agricultural emissions accounted for 16.3 Mt CO₂-e in 2018–19. This was 12% of NSW emissions and 26% lower than 2005 levels. Emissions from agriculture generally vary from year to year due to the influence of drought on livestock numbers and crop production. Cattle and sheep production accounted for over three-quarters of NSW agriculture emissions in 2019, mainly due to the methane generated as these ruminant animals digest their food. This enteric fermentation will remain the major source of agricultural emissions to 2030, with emissions projected to grow in the near term as the state recovers from drought. Although current policies will address agricultural emissions, they are projected to persist with the sector accounting for a greater proportion (19%) of NSW emissions by 2029–30 due to reductions in the contributions of other sectors, notably electricity generation.

In 2018–19, emissions from industrial processes and product use (IPPU) were estimated to produce 12.8 Mt CO₂-e, equal to 9% of the NSW total. Metal production (iron, steel, ferro-alloys, aluminium and others) accounted for 55% of the sector’s emissions, with smaller contributions from the minerals (10%) and chemicals industries (9%). Another major emission source is halocarbon replacements for ozone-depleting substances, such as refrigerant gases in imported equipment, which accounted for 25% of sector emissions in 2018–19. The Commonwealth Government has a program to phase down the import of goods containing halocarbons with high global-warming potential. The target is to reduce emissions to 15% of the 2019 baseline level by 2036 (). Without NSW Government action, future emissions for the IPPU sector are projected to be relatively static, increasing by about 1% to 2029–30. Industrial process emissions will be addressed under the Net Zero Plan through the Net Zero Industry and Innovation Program announced in March 2021, the NSW Hydrogen Strategy () announced October 2021, and related actions.

Fugitive emissions are a by-product of coal mining and natural gas extraction, processing, transmission and distribution. These emissions accounted for 12.7 Mt CO₂-e in 2018–19 – 9% of total NSW emissions and 36% below 2005 levels. Emissions are expected to grow due mainly to increased coal mining activity and natural gas developments, such as the Narrabri Gas Project. Without reductions, fugitive emissions from fuel are projected to reach 13.7 Mt CO₂-e in 2029–30, representing 12% of NSW emissions at that time. Fugitive emissions will be addressed by the Net Zero Plan with estimated annual emission reductions of 2–3 Mt CO₂-e by 2030. Emissions and drivers for fugitive emissions are further explored in the Emissions from energy production and combustion by fuel type and Pressures sections below.

The shift of the land use, land-use change and forestry sector (LULUCF) from a net source of emissions to a net sink is an important contributor to the overall reduction in the state’s net emissions. Emissions from land converted to grassland and cropland have halved since 2005. While CO₂ uptake or sequestration by plantations, natural regeneration and regrowth on deforested land have increased 1.6 fold since 2005, the sequestration by ‘forest remaining forest’ has halved over the same period. Combined, these factors have resulted in a decline in the forest sink by around 14% in 2018–19 relative to 2005.

Without further action, the net LULUCF sink is estimated to peak in 2022 and then decline as emissions from grassland and cropland remain stable while forest land sink decreases. Policies under the Net Zero Plan aim to enhance carbon sequestration by the land sector with the potential of increasing the net LULUCF sink to 7 Mt CO₂-e by 2029–30 to help offset emissions from other sectors.

Waste emissions accounted for 4.8 Mt CO₂-e in 2018–19, making up 3.5% of NSW emissions and 14% below 2005 levels. Three-quarters of waste emissions were due to solid waste disposal with much of the remainder from domestic and industrial wastewater. The decrease in emissions was due in part to the use of landfill gas (methane) capture technology, which allow the gas to be used for power generation, transferred off-site or flared on-site (where the methane is combusted to carbon dioxide, a much less potent greenhouse gas). The fall in emissions was also due to reduced waste generation per capita and increased recycling rates and diversion of waste away from landfills. These trends are projected to be accelerated under the NSW Government Waste and Sustainable Materials Strategy 2041: Stage 1 – 2021–2027 () announced in June 2021.

Wastewater-related emissions have increased by 3% since 2005. Domestic and industrial water utilities have implemented technologies, such as gas engines that use methane emissions produced by the anaerobic digestion of wastewater to generate on-site power and gas-flaring. These actions have moderated the rise in wastewater emissions from growing populations and economic activities.

Current and projected climate change impacts for NSW from increasing greenhouse gas emissions are discussed in the Climate Change topic.

Further detail on NSW emission projections and Net Zero Plan initiatives are outlined in the Net Zero Plan Stage 1: 2020–2030 topic.

In 2018–19, the largest contributor of greenhouse gas emissions by economic or end-use sector in NSW was electricity, gas, water and waste services (see Figure 5.3). This sector accounted for 54.6 Mt CO₂-e of NSW’s direct emissions (37% of the total) and 6.5 Mt CO₂-e (12%) of the state’s indirect emissions from purchased electricity.

The residential sector was the next largest contributor: 17.9 Mt CO₂-e of NSW’s direct emissions (12% of the total) and 15.9 Mt CO₂-e (28%) of the state’s indirect emissions from purchased electricity.

Third was the manufacturing sector, responsible for 16.5 Mt CO₂-e (11%) of NSW’s direct emissions and 12.8 Mt (23%) of the state’s indirect emissions from purchased electricity. In order, the commercial services, mining and agriculture, forestry and fishing sectors closely followed.

With fuel production and combustion in NSW accounting for almost 80% of NSW emissions in 2018–19, a more detailed look at emissions by fuel type is warranted.

Coal production and domestic coal combustion remains the largest contributor to NSW emissions by fuel type, despite the fall in coal-related emissions from 87 Mt CO₂-e in 2006–07 to 65 Mt CO₂-e in 2018–19 (Figure 5.4). Coal combustion in stationary energy processes emitted 52.5 Mt CO₂-e in 2018-19 with 96% of emissions from coal-fired powered stations and the remainder from industrial coal use, such as in iron and steel making and cement and chemical production.

Coal extraction by mining releases methane. These fugitive emissions arise from underground mine ventilation, venting and post-mining processes (such as from coal stockpiles). Fugitive emissions from coal mining accounted for 12.2 Mt CO₂-e in 2018–19. Given that methane has a global warming potential of 28 times that of CO₂, the abatement of fugitive emissions is becoming increasingly important. Coal production also requires the combustion of significant quantities of diesel, primarily for transport at open-cut mines and for on-site power generation. Diesel combustion from coal mining emitted 3.4 Mt CO₂-e in 2019, representing 17% of total diesel emissions in NSW.

Natural gas combustion (including coal seam and town gas) for stationary energy purposes emitted 5.6 Mt CO₂-e in 2018-19. Of these emissions, residential use was the largest source (26%), followed by gas-fired electricity generation (19%), commercial and institutional use (11%) and chemical manufacture (9%). The remainder of the emissions came from a variety of industries including iron and steel, cement, ceramics, food and paper manufacture.

Fugitive emissions of methane from natural gas extraction, processing, storage, transmission and distribution emitted 0.5 Mt CO₂-e in 2018-19. Only small quantities of natural gas were produced in NSW, with most gas imported from South Australia and Victoria. With the advent of major coal seam gas developments, such as the Narrabri Gas Project, NSW emissions associated with natural gas are projected to increase notably.

With the closure of the Kurnell oil refinery in 2014, NSW no longer produces liquid fuels. NSW emissions from oil-related fuels are therefore primarily due to fuel combustion, emitting 36.2 Mt CO₂-e in 2018-19. Emissions from the use of gasoline were primarily from transport-related combustion. Diesel consumption and related emissions have increased significantly since 2005 with 62% of 2018-19 emissions from transport and the remainder from stationary energy.

Other fuels include fuel oil, liquefied petroleum gas (LPG), kerosene, petroleum oils and greases. These were primarily used for stationary energy purposes. Biomass use as fuel is relatively small, with most emissions produced from residential wood burning, with pulp and paper production and biomass combustion for electricity generation more minor sources.

Carbon dioxide is the most important greenhouse gas leading to human-induced climate change and is responsible for about three-quarters of the change in climate observed since pre-industrial times (). The last time CO₂ concentrations were comparable to modern levels was some 2.6 million years ago, when global temperatures were, on average, 3–6°C warmer than at present and sea levels were much higher ().

Consistent with global trends, CO₂ is the dominant greenhouse gas emitted from human activities in NSW (Figure 5.5). Between 2005 and 2019, almost 70% of NSW greenhouse gas emissions were in the form of CO₂ which is produced by burning coal, natural gas, oil, wood and solid waste, as well as by some chemical reactions in industrial processes.

While plants, soil and oceans remove CO₂ from the atmosphere, human activities, including the burning of fossil fuels for energy and land clearing, have resulted in CO₂ addition at a rate much higher than its removal by all the natural sinks. This results in an enhanced greenhouse effect and the acidification of the planet’s oceans. For more information, see the and topics.

Methane (CH₄) is the second most important greenhouse gas contributing to human-induced climate change. Methane has a global warming potential 28 times larger than CO₂ for the time horizon of 100 years. It has been responsible for around 23% of global warming since 1750 ().

Methane is also the second most dominant greenhouse gas emitted in NSW, accounting for 26% of the state’s greenhouse gas emissions between 2005 and 2019. Methane is emitted during the production and transport of coal, natural gas and oil. It is also produced by ruminant animals, such as cattle and sheep, through enteric fermentation as they digest their food and during the decay of manure or crop residue on farmland. The breakdown of organic waste in landfills and wastewater treatment plants are also sources of methane emissions.

Nitrous oxide (N₂O) has 265 times the global warming potential of CO₂ for the time horizon of 100 years. In NSW, this gas has accounted for 3% of emissions over the 2005–2019 period, being emitted during the burning of fossil fuels and solid waste and the breakdown of manure and nitrogen fertilisers.

Synthetic gases, such as fluorinated gases and other halocarbons, are emitted by a variety of industrial processes. They have no natural sources and were absent in pre-industrial times. These gases have very high global warming potentials and, due to their potential to destroy the ozone layer, have been tightly regulated under the Montreal Protocol. The effectiveness of the protocol is an outstanding example of how emissions of atmospheric pollutants can be effectively managed on a global scale.

Black carbon emissions have been linked to both climate warming and adverse health effects and have become a focus in recent years. ‘Black carbon’ refers to small airborne particles emitted by combustion processes. Although these particles remain in the air for shorter periods (days) – when compared to greenhouse gases which persist for tens to hundreds and even thousands of years – they still cause short-term warming of the atmosphere and impact human health.

About 51 kilotonnes of black carbon was estimated to have been emitted in NSW in 2018-19, with 67% of emissions coming from the land sector (see Figure 5.6). Land sector emissions of black carbon are due to bushfires and land management activities, including land clearing and post-harvest fires and hazard reduction burns. Transport was the second largest source, emitting 26% of black carbon emissions. Transport-related black carbon emissions have increased over time, driven largely by the increased use of aviation fuel and growing diesel consumption by road transport. For further information see the topic.

In the state of the environment framework, the economy and population are seen as drivers of environmental change rather than direct pressures. More specific issues, such as energy use and transport, are described as ‘pressures’. These account for the bulk of greenhouse gas emissions in NSW and Australia. Figure 5.7 shows the relationship between economic growth, population, energy use and greenhouse gas emissions from 1990 until the present.

Economic activity generates environmental pressures through the production, distribution and transport of resources, services and waste. However, economic growth does not necessarily mean an increase in emissions or vice versa. Figure 5.7 illustrates the decoupling of economic growth (gross state product or GSP) from greenhouse gas emissions in the NSW economy over the past 30 years and this is discussed in more detail in the topic.

Since 1990, greenhouse gas emissions per dollar of GSP in the NSW economy has fallen by 63% (Figure 5.7) from 0.6 to 0.2 kg CO₂-e per dollar of GSP (Figure 5.8).

While the use of transport and stationary energy has increased, the emission intensities of those activities trended down (Figure 5.7). Improved fuel efficiencies of vehicles and lower fuel consumption per tonne-kilometre of loads carried due to freight fleet changes have reduced the emission intensities of road transport. The lower emission intensity of stationary energy is a product of improved power generation efficiencies, increases in the share of renewables, greater energy efficiency and fuel switching.

In terms of coal mining, the NSW Treasury Intergenerational Report reference case forecast shows coal production remaining relatively stable over the medium term at 200 Mt per year. From 2030 onwards, coal production declines year-on-year to less than half current production volume (). This outlook for coal production is accounted for in the projection of fugitive emissions from coal mining in NSW (see Figure 5.2).

For iron and steel production, the Office of the Chief Economist () in its Resources and Energy quarterly predicts only modest growth of 6.7% in 2022–23, relative to 2019–20. Aluminium production grows by 0.2% over the same period. This is reflected in a projected gradual decline to 2030 in emissions from the industrial processes and product use sector due to greater energy and processing efficiencies (see Figure 5.2).

Generation of commercial and industrial (C&I) waste, which contains organics, is assumed to grow at a similar rate to GSP for emission projection purposes. Construction and demolition waste (C&D) is expected to grow at the same rate as building activity, which is on average 1.2% per annum over 2020–2030. However, this waste has virtually no organic content and is mostly inert (i.e. metal, soil, glass and masonry).

In 2019–20, the NSW economy experienced a recession, contracting for the first time since records began in 1990 due to the COVID-19 pandemic, drought and bushfires. Transport and stationary energy emissions are projected to have decreased in 2020 and 2021 as a result of the pandemic, whereas agricultural emissions declined in 2020 due to the impact of the drought on livestock numbers and crop productivity.

The NSW population has been growing steadily since 1990 from 5.8 million to 8.1 million in 2019, an increase of about 40% (Figure 5.7). A growing population comes with greater resource use and increased transport, waste generation and production of goods and services. However, advances in technology and structural shifts across the economy can bring reductions in the emissions per capita and per GSP (Figure 5.8).

Despite the relationship between levels of energy use and population growth, emissions per capita have reduced by 46% since 1990. In 1989–90, NSW emissions per capita stood at 31 tonnes CO₂-e but by 2018–19 they had fallen to 17 tonnes CO₂-e (Figure 5.8). Similarly, emissions per dollar of GSP dropped from 0.6 to 0.2 kg CO₂-e.

By 2021, the estimated population of NSW had reached 8.2 million (), a 1.0% growth of 80,153 people over 2019–20and slower than the five-year average rate of 1.4%. The COVID-19 pandemic is expected to have a continued effect on population growth in NSW. State intergenerational modelling shows that by 2061, the NSW population will be around half a million people less than it would have been without COVID-19 (). This reduced population growth will result in lower than expected emissions for certain sectors, including passenger vehicles, domestic wastewater, residential electricity consumption and municipal solid waste disposal. The topic has further details.

The production and use of energy from non-renewable sources are the main causes of greenhouse gas emissions in NSW. In recent years, the state’s electricity consumption has declined due to a variety of factors, including increased local generation from renewable sources by residential and commercial users and improvements in energy efficiency. This has been reflected in a decline in the emissions intensity of the power sourced from the National Electricity Market (NEM). According to the Australian Energy Statistics, renewable generation contributed an estimated 19% of energy generated in NSW in 2019–20 ().

Although population and economic growth from 2019 to 2037 will increase the use of electricity, the demand for power from the grid is expected to reduce over the coming decade as consumers increasingly opt for greater on-site power generation and storage. Emissions from the NSW electricity generation sector are expected to decline by about 80% over the coming decades with the announced closure of coal-fired power stations with a capacity to supply 4.64 gigawatts of energy. The development of new electricity infrastructure in NSW to replace those retiring power stations will be supported by the NSW Electricity Infrastructure Roadmap.

The scale and transformation of Australia’s natural gas sector, including demand, supply, consumption and storage capacity, are highly uncertain. The Australian Energy Market Operator notes that electrification, fuel-switching to hydrogen and biofuels and numerous initiatives underway at both federal and state government level could change the gas landscape in NSW (). In particular, the Commonwealth Government’s gas-fired recovery plan will influence future development needs and opportunities for natural gas as an energy source ().

Two developments will substantially change the domestic gas market in NSW and potentially reduce the risk of gas shortfalls (). These are the Narrabri Gas Project and the Port Kembla Gas LNG re-gasification terminal. The Narrabri project will involve extracting and processing gas for the domestic market, producing up to 50 petajoules (PJ) per annum, according to NSW Government projections. The Port Kembla project will re-gasify LNG shipped from other markets and could inject up to 95 PJ per annum into the domestic gas grid.

Transport is the largest and fastest growing sector for energy use in NSW, accounting for 47% of the total in 2018–19. Much of the growth over the 1990 to 2019 period was due to increases in automotive diesel consumption by road transport, including heavy and light duty vehicles, and the growing consumption of aviation fuel. Gasoline use has decreased since 2005. Transport emissions are projected to peak in 2026 under current policy settings.

For more information on electricity and transport, see the topic.

Land clearing for agricultural activities and other development is a major source of greenhouse gas emissions. While the clearing of primary forest (land which has been a forest since 1972) has declined since 1990, secondary forest clearing (or clearing of regrowth) has remained high. Considered together with forest regrowth, only five of the last 14 inventoried years have seen more areas of regrowth than clearing. Recent secondary clearing is thought to have been carried out by graziers to maintain rather than expand their agricultural base. Harvesting of logs in forestry and on private holdings are not included as there is no change in the ongoing land use.

Primary forest clearing remains an important focus for addressing greenhouse gas emissions in the near term with rates of re-clearing affecting the future potential for sequestration by the land sector. See also the topic.

Agricultural activity for the production of both crops and livestock are projected to grow in the near term as NSW recovers from the recent drought and favourable seasonal conditions return. Unlike the other sectors, agricultural productivity and thus emissions are highly dependent on climate. It is difficult to account for the impact of climate change on agricultural production in the absence of spatially-explicit emissions and activities data. However, current projections indirectly account for some of the impacts of climate change by assuming a return to long-term average activity (2010-2019) in 2050. This decade recorded substantially more extreme temperature and rainfall extremes than the preceding decade () and an agricultural drought period.

There are two main strategies for responding to climate change – mitigation and adaptation.

Mitigation of climate change describes the actions taken to limit or reduce the extent of global warming by cutting the levels of human-induced greenhouse gas emissions; this is known as ‘abatement’. There are also actions taken to remove greenhouse gas emissions from the atmosphere called ‘sequestration’. This section outlines the key mitigation responses to greenhouse gas emissions in NSW, with some further policies and programs outlined in the and topics.

‘Adaptation’ refers to the actions taken to reduce, moderate or adjust to the expected or actual negative effects of climate change and take advantage of new opportunities. Adaptation responses to climate change are outlined in the Responses section of the topic.

NSW Climate Change Policy Framework

The NSW Climate Change Policy Framework () was released in March 2016 and includes objectives to achieve net zero emissions by 2050 and make NSW more resilient to a changing climate. The framework states the NSW Government’s endorsement of the Paris Climate Agreement () and sets out policy directions for mitigation, such as boosting energy productivity to reduce greenhouse gas emissions and put downward pressure on household and business energy bills.

NSW Climate Change Fund

The NSW Climate Change Fund was established in 2007 under the Energy and Utilities Administration Act 1987 to provide funding that reduces greenhouse gas emissions and the impacts of climate change associated with water and energy activities. In 2019–20, the fund invested $229 million to deliver programs that support households, businesses and communities to reduce energy consumption and carbon emissions and become more resilient to a changing climate.

Net Zero Plan Stage 1: 2020–2030

Released in March 2020, Net Zero Plan Stage 1: 2020–2030 () is the foundation for NSW action on climate change. It supports the objective of net zero emissions by 2050.

Net zero emission objectives have been integrated into other strategic planning documents including the State Infrastructure Strategy 2018–2038 (), Future Transport Strategy 2056 (), NSW Electric Vehicle Strategy (), Waste and Sustainable Materials Strategy (), NSW Hydrogen Strategy () and Greater Sydney Region Plan () and other regional plans.

The Net Zero Plan Stage 1: 2020–2030 Implementation Update () published in September 2021 includes an NSW Government objective to reduce emissions by 50% below 2005 levels by 2030. This objective is supported by the emission reductions to be delivered by the Plan and broader decarbonisation trends in the NSW economy.

The topic has more about how the NSW Government is implementing the plan’s initiatives.

Electricity Infrastructure Roadmap

The NSW Government’s Electricity Infrastructure Roadmap () sets out to overcome some of the challenges facing the state’s energy supply system. Four of the five coal-fired power stations that currently provide around three-quarters of the state’s energy supply are scheduled to close within the next 15 years. The roadmap will directly support the development of new electricity infrastructure in NSW, while driving coordinated investment in large-scale electricity infrastructure to replace those retiring power stations.

A key component of the roadmap will be the establishment of five Renewable Energy Zones across the state which will capitalise on economies of scale to deliver cheap, reliable and clean energy to households, businesses and industry. This will support the private sector to bring 12 gigawatts of renewable energy and two gigawatts of storage online by 2030.

The roadmap will also help NSW deliver on its ambitions to reach net zero emissions by 2050 by reducing NSW electricity emissions by 90 million tonnes by 2030.

The Electricity Infrastructure Roadmap is enabled by the Electricity Infrastructure Investment Act 2020 and builds on the foundations of the 2019 Electricity Strategy and 2018 Transmission Infrastructure Strategy.

Government Resource Efficiency Policy

The NSW Government is leading by example through its Government Resource Efficiency Policy (GREP), which was introduced in 2014 and updated in 2019 (). GREP commits all NSW Government agencies to implement energy efficiency projects and adopt renewable energy initiatives across government facilities. This includes setting minimum standards, targets and measures to drive efficiency in energy and water use, waste management and air quality. For example, GREP includes a target to accelerate the rollout of solar panels on government buildings, such as schools and hospitals. The Net Zero Plan increased this target to 126,000 megawatt-hours a year by 2024.

NSW Waste and Sustainable Material Strategy 2041

Under the Net Zero Plan, the NSW Government is committed to setting a target of net zero emissions from organic waste to landfill by 2030.

The NSW Waste and Sustainable Materials Strategy 2041 () is based on NSW transitioning to a circular economy over the next 20 years. Key reforms for reducing greenhouse gas emissions from the waste sector include mandating the separation of food and garden organics by households and selected businesses and incentivising the generation of biogas from waste materials.

While many NSW landfills already have infrastructure in place to capture landfill gas (methane) for flaring or power generation, the strategy outlines how the waste sector can further reduce its methane emissions.

NSW Electric Vehicle Strategy

Under the NSW Electric Vehicle Strategy (), launched in June 2021, EVs are expected to make up more than 50% of new light vehicle sales by 2030–31. The Strategy also sets an objective for the vast majority of new light vehicle sales to be EVs by 2035, helping NSW achieve net-zero emissions by 2050.

The strategy builds on the 2019 NSW Electric and Hybrid Vehicle Plan (), which helped kick-start the EV market in the state and build critical supporting infrastructure. See the topic for more information.

NSW Hydrogen Strategy

The NSW Hydrogen Strategy (), launched in October 2021, brings together the NSW Government's existing and new policies into a framework to support the development of a commercial hydrogen industry in NSW. This strategy aims is to develop low emissions industries that sell clean fuels and products to the world. It includes a number of stretch targets to be achieved by 2030 including the production of 110,000 tonnes of green hydrogen per year from 700 MW of electrolyser capacity for under $AU2.80 per kg. The Strategy also outlines measures and targets to support the use of green hydrogen by industry and transport such as the blending of hydrogen in the gas network and the development of a hydrogen refuelling network for heavy vehicles along major highways.

The following programs are being delivered in response to the need to reduce greenhouse gas emissions.

Lower emissions energy network

The NSW Government is delivering a range of clean energy initiatives to help the private and public sector and communities develop and accelerate clean energy technology.

The Electricity Infrastructure Roadmap () will deliver five Renewable Energy Zones (REZ) located in the Central-West Orana, New England, South West, Hunter-Central Coast and Illawarra regions of NSW. REZs are the modern-day equivalent of a traditional power station. They will combine renewable energy generation, such as wind and solar, storage-capable batteries and high-voltage transmission lines to deliver energy to homes, businesses and industries.  See the Transport topic for more details.

The NSW Government is aiming to establish a strong and stable domestic market for green hydrogen in NSW with $70 million committed to the development of hydrogen hubs. NSW has set an aspirational target of up to 10% hydrogen blending in the gas network by 2030. See the Industry section below for more information.

NSW is working with the Commonwealth and other jurisdictions to deliver actions identified in the National Hydrogen Strategy, including reviews on the applicability of national gas laws.

See the topic for more information.

Energy demand reduction

Support for households, communities and businesses is available on the NSW Government’s Energy Saver website, including information about how to save energy and money on bills and access to rebates for low income households.

Since April 2018, the Household and Small Business Upgrade Program has helped those eligible save energy and money by providing incentives to upgrade to energy-efficient equipment, such as lighting and commercial fridges and freezers. The program has delivered over $8.5 million in funding to more than 6,500 households and 2,000 businesses.

Incentives for households and businesses to reduce their energy use are also available under the Energy Savings Scheme (ESS), the longest running energy efficiency certificate trading scheme in Australia. The ESS creates a competitive market for energy efficiency, which encourages the private sector to develop products and services that are scalable for the lowest cost. Between 2009 and 2019, the scheme has saved an estimated 15 million tonnes of greenhouse gas emissions. The ESS forms part of the new Energy Security Safeguard announced under the Net Zero Plan.

The Energy Management Services program provides blended online learning, training, coaching and technical support to assist businesses and service providers adopt proven energy management practices that reduce energy use and associated emissions. The program participates in industry engagement, partnership development and dissemination of information to showcase best practice in energy management.

Sustainability Advantage works with organisations to solve complex sustainability challenges. The program collaborates with businesses on innovative projects and shows how they can be leaders in their communities. Members of the program achieve savings of more than $100 million every year through sustainability initiatives.

Industry

In March 2021, the NSW Government launched the Net Zero Industry and Innovation Program. This $750-million flagship program being delivered under the Net Zero Plan will support NSW industry and business to capitalise on the opportunities in the global transition to net-zero emissions.

The NSW Hydrogen Strategy is a plan to support scientists, researchers and industries, to rapidly increase the scale and competitiveness of green hydrogen in NSW. In addition to delivering $70 million to develop the State’s hydrogen hubs in the Illawarra and the Hunter, the Strategy will provide up to $3 billion in support in support for the hydrogen industry through:

• Exemptions for green hydrogen production from government charges;
• A 90% exemption from electricity network charges for green hydrogen producers who connect to parts of the network with spare capacity;
• Incentives for green hydrogen production; and
• A hydrogen refuelling station network to be rolled out across the State.

The Strategy is expected to attract up to $80 billion of investment to NSW and to drive deep decarbonisation.

Manufacturing efficiency funding is available to assist manufacturing businesses save energy and money by installing energy-efficient equipment and metering technology to help track their energy use. This is helping the businesses involved save an estimated 18,000 megawatt-hours of electricity, 108,000 gigajoules of gas and 19,000 tonnes CO₂-e per year, while cutting energy costs by $4.1 million.

Established in 2008, Coal Innovation NSW is an advisory council made up of representatives from the coal and energy industries, research institutions and the NSW Government. It provides strategic advice and administers the $100-million Coal Innovation NSW Fund which supports research, development and the demonstration of low-emission coal technologies for future commercial application.

Transport

Initiatives under the NSW Electric Vehicle Strategy () will help reduce emissions in the transport sector by supporting the uptake of EVs. Under the Strategy, stamp duty on EVs will be phased out and rebates will be available to make purchasing EVs more affordable. Investments in fast charging infrastructure are also being made to create a network charging stations across metropolitan Sydney and major highways in regional NSW.

Positioning NSW to take advantage of opportunities to reduce fuel consumption can help reduce greenhouse gas emissions from the transport sector. The NSW Future Energy Strategy and Future Energy Action Plan outlines Transport for NSW’s commitment to securing energy needs from sustainable sources and supports the transport sector’s transition to net-zero emissions by 2050. This includes using electric and hydrogen fuel cell vehicles and adopting systems that improve the operational efficiency of passenger and freight transport (see the Transport topic).

NSW also has set targets for 6% of the total volume of petrol sold in NSW to be from ethanol and 2% of diesel to be from biodiesel. Biofuels, such as ethanol and modified vegetable oil (biodiesel), can reduce greenhouse gas emissions, create jobs in regional NSW, help farmers and reduce reliance on foreign fuel imports.

See the topic for more information.

Built environment

The NSW Building Sustainability Index (BASIX) aims to deliver cost-effective, low-emission residential buildings. BASIX requirements for water and energy use and thermal comfort apply to all residential dwelling types and are part of the development application process in NSW for new developments and major renovations.

The National Australian Built Environment Rating System (NABERS) is a rating system that measures the energy, water, waste and indoor environmental impact of buildings in Australia using a six-star scale. NABERS can be used to rate a variety of buildings, including offices, apartments, shopping centres, hotels and data centres. Since the highly regarded initiative began in 1999, NABERS has helped users save over $1 billion in energy bills, cut their water use by 6 billion litres and removed 7 million tonnes of CO₂ emissions – equivalent to one year’s worth of power from 93,430 homes (based on Office Energy ratings only). Currently, 78% of Australia’s office space is rated with NABERS.

Low Emission Building Materials is a partnership with industry to grow the demand for these building materials in the construction and infrastructure sectors by driving the modification, adoption and use of voluntary standards. As part of this, professionals from the building industry and government have formed the Materials Embodied Carbon Alliance (MELCA). Organisations that are big purchasers of steel, concrete and other materials are actively participating in the development of agreed standards for low-emission alternatives.

The NSW Department of Planning, Industry and Environment (DPIE) is working with the housing industry to build the consumer awareness of sustainable homes. Collaborative research with the has demonstrated latent consumer demand for sustainable homes. DPIE is working to upskill the volume builder market to take advantage of this demand and also supports the implementation of voluntary ratings for existing homes in NSW.

Land use

Careful land management can avoid greenhouse gas emissions by sequestering (storing) carbon in the plants and soil. It can also protect biodiversity, maintain landscape values and build resilience to climate change.

The Commonwealth Government’s Emissions Reduction Fund provides incentives for storing carbon in the agriculture and forestry sectors as well as for emissions avoidance across the economy. Over 290 ERF projects in NSW are sequestering carbon in vegetation and soils.

Through the Climate Solutions Fund, NSW is partnering with the Commonwealth to support NSW businesses, farms and land managers to take practical, low-cost actions that reduce emissions. This commitment from the Commonwealth will provide important environmental, economic and social benefits to local businesses and communities.

Under the Net Zero Plan, the NSW Government is also working to improve the management of carbon across all public lands and in land covered by agreements for private land conservation.

The Climate Change Research Strategy, with funding of $29.2 million from the NSW Climate Change Fund, is investing in projects to support primary industries prepare for climate change and transition to a low-emissions future. Through research and innovation, the strategy seeks to identify:

• energy supply and demand solutions
• carbon market and emission reduction opportunities
• climate resilience building programs.

Government leading by example

The NSW Government is committed to improving resource efficiency from its operations, limiting its impact on the environment and encouraging local councils to follow suit.

The Sustainable Government program works closely with NSW Government agencies and local councils to help them lead the way on sustainability action and reduce the impact of government activities. It provides tailored services and support to help agencies develop sustainability plans and embed sustainability leadership.

Local councils have been supported to upgrade energy inefficient street lighting, such as high energy-use mercury vapour lights, to LEDs (light-emitting diodes). Since this initiative was launched in 2019, lights have been replaced with energy-efficient LEDs across 145 NSW councils, exceeding the original 60,000 target.

In addition, NSW is piloting the rollout of 2,500 LEDs with smart controllers in three local councils across pedestrian and vehicle category roads. It is estimated the smart controllers will save a further 10% beyond that achieved by LEDs and lead to significant improvements in reporting and billing accuracy.

The NSW Government is also equipping local councils to embrace the opportunities that achieving net-zero emissions will present by providing them with a range of strategic projects and capacity-building resources. The resources, information and case studies are available online and include:

• Net Zero Emissions Guidance for NSW Councils (), which provides a step-by-step guide to develop a community net-zero strategy
• Net Zero Emissions for Local Councils, which highlights the work of four unique councils and their inspiring progress towards net-zero emissions.

Aerial image of Eurobodalla; a council that participated in the Department video series on NSW local council action on net zero emissions.

As part of the NSW Electric Vehicle Strategy and Future Transport Strategy 2056, Transport for NSW is transitioning the state’s 8000 buses to zero-emissions technology. Over 50 electric buses were rolled out across Sydney in early 2021 in the first phase of this work. Announced under the Future Energy Action Plan, there is also a target of net-zero emissions from the electricity used to run Sydney Trains and NSW TrainLink by 2025. This will be achieved progressively over the next four years, starting by offsetting all emissions from the electricity used by train stations by 2022.

As part of the NSW Electric Vehicle Strategy, the NSW Government will use its bulk purchasing power to incentivise importers to increase the range of EV models they sell in the state. The Net Zero Plan set a target of electrifying NSW Government passenger vehicle fleet procurement by 2030, following an interim target of 50% by 2026.

Globally, commitments by governments to reduce greenhouse gas emissions are growing as more countries pledge to achieve net zero emissions by 2050 or sooner. As nations around the world transition their economies to net zero, NSW will increasingly gain access to new technologies and markets for low-emission goods and services ().

A report by the International Energy Agency () notes the technologies already on the market today will provide most of the global emission reductions up to 2030. In the decades from 2030 to 2050, almost half the reductions needed to get to net zero will come from technologies that are currently at the demonstration or prototype phase. This means that major innovation efforts must take place this decade to develop new technologies and bring them to market in time.

To inform NSW Government policy and programs, the Office of the NSW Chief Scientist and Engineer (OCSE) will report every two years on emerging technologies that reduce emissions and are commercially competitive. The OCSE published the first of these reports, the Decarbonisation Innovation Study (), in August 2020.

The study found that the decarbonisation of the NSW electricity grid will create opportunities for further emission reductions. This will support emissions-intensive industries, such as steel, aluminium and ammonia production, to reduce their carbon footprint. The demand for energy from renewables and other sources will increase, particularly with the uptake of electric vehicles and digitised mobility networks. This will enable the growth of new low-emissions industries and power sources, such as green hydrogen production ().

The study also identified emerging opportunities for NSW in the land and agricultural sector. For example, increased participation in carbon markets could provide alternative income streams for landholders. Technological innovations may improve soil sequestration, reduce methane emissions from livestock, nitrous oxide emissions from nitrogenous fertilisers and potentially improve productivity (). Under the Net Zero Plan, the NSW Government is working to improve the management of carbon across all public lands and on land covered by agreements for private land conservation.

For the built environment, decarbonisation will come from improvements in building efficiency and the development of net-zero emission precincts. A precinct is a unified area of urban land with a clearly defined geographic boundary that may contain shared private and public infrastructure (Low Carbon Living CRC 2018). If planned according to sustainable and low-emission design principles, a precinct, such as a mixed-use residential and retail neighbourhood or industrial manufacturing hub, could significantly reduce emissions across all sectors of the economy.

To support the net-zero transition of the built environment, a new Design and Place State Environmental Planning Policy (SEPP) is being prepared. This will provide a framework for new urban developments that enable healthy and prosperous places which support the wellbeing of people, community and Country and reduce emissions. The draft SEPP is due to be released for public consultation in late 2021.

Along with the Design and Place SEPP, additional provisions for the Apartment Design Guide () and improvements to the Building Sustainability Index (BASIX) are also planned. Updates to BASIX will be informed by the National Construction Code (NCC), which is scheduled to be substantially reviewed with the inclusion of further energy efficiency provisions for residential buildings in 2022.

The NSW Government will routinely update existing policies and strategies to incorporate the state’s emission reduction goals and targets. Stages 2 and 3 of the Net Zero Plan will be developed ahead of 2030 and 2040, respectively. Updates to the State Infrastructure Strategy (), Future Transport Strategy 2056 (), Greater Sydney Region Plan () and other regional plans will also occur to ensure they continue to deliver on good environmental outcomes.