DITCHING ZERO

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They keep telling us that abandoning climate targets and “ditching net zero” would somehow bring down power bills and ease the cost-of-living crisis. It’s a politically effective slogan because it taps into genuine public frustration over rising electricity prices, housing stress, food costs and stagnant wages. But slogans are not economic policy, and when examined closely, the claim simply doesn’t hold up.

The uncomfortable reality is that Australia’s energy prices are being driven by a combination of ageing coal infrastructure, global fossil-fuel markets, corporate profiteering, network costs, and years of policy instability. Net zero is not the primary driver of rising living costs. In many respects, the transition away from fossil fuels is one of the few realistic pathways available for reducing long-term energy costs.

The first thing often ignored in this debate is that renewable energy is now the cheapest form of new electricity generation in Australia. That is not an activist talking point. It is the consistent conclusion reached by the annual GenCost reports produced by CSIRO and the Australian Energy Market Operator. Their modelling repeatedly shows that wind and solar, even when combined with storage and transmission costs, remain the lowest-cost option for building a new electricity supply.

That matters because Australia’s coal-fired power stations are old, increasingly unreliable and expensive to maintain. Most were built decades ago and are approaching the end of their operational lives, whether governments like it or not. Keeping them running longer does not, by itself, produce cheap electricity. In fact, ageing coal plants suffer more breakdowns, require costly maintenance and expose Australia to volatile coal and gas prices. When fossil fuel prices surged globally following the war in Ukraine, Australian electricity prices exploded because the domestic market remains heavily tied to coal and gas pricing. Households effectively paid the price for international fuel shocks despite Australia being a major energy exporter.

This is one of the biggest misconceptions in the entire debate. People see their power bills rising during the transition to renewables and assume renewables are to blame. But correlation is not causation. Retail electricity bills include transmission costs, distribution costs, retailer margins, metering charges and government policies. Generation itself is only part of the bill. CSIRO notes that generation accounts for roughly one-third of retail electricity pricing, while network and distribution costs make up a very large share.

In other words, even if renewable generation becomes dramatically cheaper, consumers may not immediately see equivalent reductions on their bills because the pricing structure is more complicated than political slogans suggest.

There is also a deeper contradiction in the anti-net-zero argument. Critics often claim that renewables are both “too expensive” and “subsidised”. But fossil fuels have been subsidised and protected for generations through tax concessions, infrastructure support and regulatory advantages. Australia’s coal and gas industries have benefited enormously from public policy, while households continue to pay inflated prices to multinational energy corporations that export Australian gas overseas at premium rates.

Another inconvenient fact for opponents of net zero is that uncertainty itself increases costs. Investors need predictable policy environments before committing billions of dollars to energy infrastructure. When governments threaten to abandon climate targets every electoral cycle, investment slows, projects are delayed, and supply shortages worsen. That instability drives prices upward. Australia has already lost years of coherent energy planning because climate policy became a political battlefield rather than an infrastructure strategy.

The idea that abandoning net zero would somehow return Australia to an era of permanently cheap fossil fuel energy is economically unrealistic. Coal-fired electricity is not becoming cheaper. New coal plants are extraordinarily expensive to build, and private investors have shown little appetite for funding them without massive taxpayer support. Even conservative energy analysts acknowledge this. The same CSIRO modelling shows that coal, gas and nuclear costs are rising, while solar, wind and battery technologies continue to fall over time.

Nuclear power is often presented as the alternative by critics of renewables, but even the most optimistic estimates show that nuclear would take well over a decade to develop in Australia and would almost certainly lead to higher electricity costs than renewables. Meanwhile, households need affordable energy now, not sometime in the 2040s.

There is also a broader cost-of-living dimension that rarely gets acknowledged. Climate change itself carries enormous economic costs. Extreme weather events, floods, droughts, bushfires and heatwaves increase insurance premiums, damage infrastructure, reduce agricultural productivity and raise food prices. Australians are already paying these costs. Delaying emissions reduction does not eliminate economic pain; it simply shifts the burden elsewhere and often makes it worse.

This is particularly relevant in Australia, one of the most climate-vulnerable developed countries on Earth. Insurance costs in some regions are becoming unaffordable. Farmers face increasingly unstable growing conditions. Health systems absorb the costs of heat-related illness and disaster response. These are all cost-of-living pressures too, even if they are rarely framed that way in political debate.

Another point often overlooked is that electrification can reduce household costs over time. Rooftop solar, home batteries, efficient electric appliances, and electric vehicles can significantly reduce ongoing energy expenses for households that can access them. Australia now has one of the highest rates of rooftop solar adoption in the world, precisely because many families recognised the economic benefit long before politicians did.

None of this means the transition is painless or perfectly managed. Australians are justified in feeling frustrated about rising bills. Transmission infrastructure is expensive. Some renewable projects have faced delays and planning problems. Governments have often communicated poorly and overpromised short-term savings. But acknowledging these realities is very different from pretending that abandoning net zero would somehow solve the underlying structural problems in Australia’s energy market.

The truth is that many of the current price pressures stem from the old fossil fuel system itself: volatile fuel markets, ageing coal generators, privatised energy markets designed around profit extraction and decades of political paralysis.

Ditching net zero would not suddenly lower supermarket prices, reduce rents or make electricity cheap again. It would more likely prolong uncertainty, discourage investment, lock Australia into increasingly obsolete infrastructure and leave households even more exposed to fossil fuel volatility in the future.

Australians deserve an honest discussion about energy and living costs, not simplistic slogans designed for election campaigns. The evidence increasingly suggests that the cheapest long-term pathway is not abandoning the transition, but managing it competently and fairly, with serious investment in public infrastructure and household energy efficiency.