Australia's emissions dip as renewables boost transport shift to electric vehicles

Australia’s greenhouse gas profile showed a measurable improvement in the year to September 2025, driven by record renewable supply and an emerging bend in transport emissions as electric vehicles (EVs) gain market share.

According to the government’s Quarterly Update of the National Greenhouse Gas Inventory, national emissions fell 1.9 per cent over the year to September 2025 to 444.3 million tonnes of CO₂‑e, putting the country 27.4 per cent below 2005 levels. The Department of Climate Change, Energy, the Environment and Water earlier reported a 1.4 per cent decline for the year to March 2025, underscoring a sustained downward trajectory across multiple reporting periods. The minister for climate and energy, Chris Bowen, linked the progress to “record renewable generation, reduced gas use and the increased adoption of electric vehicles”, and added: “We are on track to meet our climate targets if we stay the course and continue to lift our efforts.”

Electricity was the largest contributor to the fall, with emissions from the sector easing as wind and solar output displaced coal-fired generation. Fugitive emissions and stationary energy also declined, driven in part by lower natural gas venting and the early deployment of carbon capture and storage projects in some locations.

For the first time since the COVID period, transport emissions recorded a year‑on‑year reduction. The inventory shows transport fell 0.4 per cent to 100.6 million tonnes CO₂‑e, with lower petrol consumption offsetting rises in diesel use and domestic aviation. The report does not attribute the change to a single measure; nevertheless, the timing aligns with rapid EV uptake and targeted policy incentives.

Industry and regulatory data paint a consistent picture of vehicle fleet transition. The National Transport Commission reports a 3.9 per cent reduction in emissions intensity for vehicles first registered in 2024 and notes over 600,000 hybrid vehicles plus some 240,417 battery electric vehicles are now on Australian roads. The NTC also documents a marked shift away from petrol‑only registrations, with hybrids and EVs accounting for a growing share of new car sales.

Policy measures appear to be supporting that shift. The federal NVES CO2 reduction scheme and the Electric Car Discount , which removes fringe benefits tax on eligible novated lease EVs , have been credited by leasing and fleet bodies with improving affordability and stimulating demand outside inner‑city markets. Analysis cited by the National Automotive Leasing and Salary Packaging Association estimates the Electric Car Discount accounted for roughly 105,500 additional EVs between 2022 and 2024, with those vehicles projected to avoid about 160,000–200,000 tonnes of CO₂‑e annually as fleet turnover continues.

Despite the recent improvement, transport remains a difficult sector to decarbonise: emissions from transport have risen substantially since 2005 and still constitute a major portion of national emissions. Industry analysts and government projections stress that continued progress will depend on the pace of fleet electrification, further decarbonisation of grid electricity and policies that address heavier vehicles and freight, where diesel remains dominant.

Longer‑term modelling published by the Department suggests current policies and planned measures could put Australia on a path to substantially deeper cuts, projecting a 48 per cent reduction from 2005 levels by 2035 and 53 per cent by 2040. For industrial decarbonisation stakeholders, the near‑term signal is clear: renewable generation and early electrification of light vehicles are beginning to yield measurable emissions benefits, but achieving economy‑wide targets will require sustained policy support, accelerated uptake in harder‑to‑abate transport sub‑sectors and continued investment in low‑carbon infrastructure.