Australia – the luckiest country

Australia possesses world-class renewable energy resources, including solar and wind generation capacity that significantly exceeds domestic requirements. Its low population density has historically resulted in high per-capita energy distribution costs for gas pipelines and electricity transmission networks. This contributes to Australians paying more for these services compared to countries with higher population densities, such as the United States. However, the nation’s largely suburban development and large rooftops provide a unique advantage for local energy generation.

Electrifying end-uses, including driving, heating, and cooling, and powering them with renewables is identified as a universal recipe for emissions reduction. Because Australian solar is already cheap and the climate is generally mild, households can save money sooner than those in other major economies. Australia is also rich in critical minerals like lithium, copper, and uranium, which are in high demand for the global race to decarbonise.

Savings in the suburbs

The report identifies significant economic benefits for the typical Australian household. By 2030, the average household stands to save between $5,000 and $6,000 per year in energy and vehicle costs relative to 2021 expenditures. While the economic impact over the next few years depends on individual purchasing preferences, savings are expected to be universal across the board by 2025. Policy environments must be designed immediately to enable this transition.

It is vital that the electrification revolution remains equitable, ensuring that all households, regardless of socioeconomic status, can access the economic benefits delivered by mid-decade. The study notes that while capital costs for upgrading a home in 2021 were high, falling costs for electric vehicles (EVs), rooftop solar, and residential battery storage make the transition increasingly viable for most Australians.

National and state-by-state results

Australian households are responsible for approximately 42% of domestic emissions, excluding export-related figures. Collectively, the nation could save around $40 billion per year by 2030 through aggressive decarbonisation. The average Australian household currently spends $5,248 on energy, including electricity, natural gas, and transport fuels. State-level analysis shows varying energy profiles and costs:

New South Wales households currently spend $4,922 on energy, with a grid that is 76.7% coal-based. In Victoria, homes have the largest energy consumption in the country, heavily driven by gas heating needs and a grid that is 70.2% coal-based. The Australian Capital Territory also has significant gas consumption for space heating, with households spending an average of $5,737. Tasmania boasts the greenest grid at over 94% renewables, though it has the largest proportion of wood heating in the country.

South Australia features the lowest average household energy consumption due to low grid generation waste and a renewables-driven grid. Conversely, Western Australia’s unique electricity grid has the highest proportion of natural gas use in the country. The Northern Territory benefits from lower energy consumption than most states due to significantly lower heating requirements, with households spending $5,149 on average.

Emissions

Emissions are categorised into three sectors: domestic economy emissions, export services, and exported fossil fuels burned abroad. This study focuses on the domestic economy, where individual household decisions and small machine purchases determine the majority of outcomes. Household energy emissions specifically account for 33.5% of domestic totals. When combined with the commercial sector, which has similar loads for building heating and vehicles, these sectors account for approximately 70% of Australia’s domestic emissions. Replacing fossil fuel-burning machines with electric equivalents at the end of their service life is essential for hitting aggressive climate targets.

Climate urgency

The analysis argues that there is no time left to wait before beginning a massive shift in global energy infrastructure. To hit targets of 1.5°C to 2°C, human emissions must be halved by 2030. If the transition had started in 2000, a 4% annual reduction would have sufficed; starting in 2020 requires a reduction rate of approximately 10% per year. The report advocates against relying on unproven negative emissions technologies and instead suggests using currently available technology like solar, batteries, and heat pumps.

A 100% adoption rate is required, meaning every machine must be replaced with a zero-carbon solution when it reaches retirement. Since market forces alone take decades to achieve dominance, mandates and government interventions are necessary to meet the timeline. The report states that the free market is not up to the task of keeping warming below critical thresholds without significant policy support.

Methodology

The study models a mythical average Australian household using Residential Baseline Study data and ABS Survey of Motor Vehicle Use statistics. The analysis assumes 80% of electricity is self-generated by solar and 50% is stored in batteries. Financing is modelled with a 4% interest rate for appliances and solar, and 6% for EVs. Capital cost differences are calculated by subtracting the cost of conventional fossil fuel replacements from electrified versions. The model also accounts for ongoing efficiency gains in appliances and projected price declines for rooftop solar and residential battery storage through to 2035.