Australian Federal Government Energy Policy Reviews - 2026
Australian Federal Government Energy Policy Reviews - 2026
No carbon price but lots of Federal Policy
In 2026 there are three known official Federal Goverment policy reviews for which the outcome is uncertain. One,the EV FBT exemption review is “live” whereas the Safeguard Mechanism and the National EV strategy reviews are yet to formally commence. I expect there are also ongoing informal reviews, particularly of the effectiveness of the CIS in actually inducing new supply, then there is the Tomago-Snowy “back channel” policy.
On top of what the Federal Goverment is officially and even unofficially, there are also significant AEMC reviews and of course all the States have a bunch of policies and reviews.
Overview of Federal Review
| Gas Market | Implementation | Not open | ✗ | DCCEEW/DISR/ACCC | Domestic reservation scheme (15-25%); LNG netback methodology |
|---|---|---|---|---|---|
| DMO Framework | Implementation | Closed | ✓ | AER | Electricity price caps; tariff caps; embedded networks; Solar Sharer Offer |
| NEM Wholesale Market | Implementation | Closed | ✓ | Energy Ministers | Market liquidity; Market-Making Obligation; ESEM |
| Cheaper Home Batteries | Active | N/A | — | DCCEEW | ~200k installations; $7.2B program; 2M batteries by 2030 |
| Electric Car Discount | Review | Open | ✗ | Treasury/DCCEEW | FBT exemption effectiveness; $1.35B cost; PHEV eligibility |
| Review | Status | Submissions | Published | Agency | Key Focus |
| National EV Strategy | Pending | Not open | ✗ | DCCEEW | Uptake progress; charging infrastructure; regional equity |
| Safeguard Mechanism | Pending | Not open | ✗ | DCCEEW | Post-2030 decline rates; offset limits; 2035 NDC alignment |
: Source: Author compilation from government announcements
Much of this policy could have been minimised if Australia had stuck with the carbon tax. Abolishing the tax has in the end achieved little, coal generators are still going to close, EVs are still slowly gaining market share, renewable generation has grown steadily and its likely the seeds for further growth, in the form of FID for several GW of renewables, will be planted this year. The required transmission upgrades are mostly proceeding.
If we had done some of this work back when the carbon tax was in place and stayed ahead of the rest of the world it would have been a lot cheaper but to be fair the delay has enabled technology solutions like inverter based grids to move out of the lab into the actual grid.
Like every one else who looks at decarbonisation seriously you would conclude that from an economics and efficiency point of view a carbon price or carbon tax is clearly the correct choice. But as ever politics have degraded us to the point where second best policies are the tools available.
EVs and Safeguards
In this note I’ll discuss EVs You can consider them carrot and stick reviews.
Safeguards is about forcing big facilities to dcarbonise. These big facilities, often gas and coal, often export oriented, often energy intensive generally face difficult choices. If you are a gas producer you don’t want to decarbonise, it’s essentially saying that what you are doing, producing gas, is bad. Equally it’s all about big business politics. There are not many votes to directly win or lose in safeguards, but there are huge lobby groups.
National EV Strategy can be regarded as mass market politics opportunity. In my view the more people have EVs and report positive experiences the more political win to decarbonise. Cars are personal choices, not always about buying lowest cost. The home battery scheme has shown how popular mass market policies can be and what an impact they can have. Australia’s EV penetration is improving but remains low at ~8% by international standards.
Carbon scoreboard
Although you can make excuses about carbon by relating emissions to population and/or GDP, in the end the physics of carbon are driven entirely by the longer wave infra red absorption and rejection of the carbon in the atmosphere. More carbon more global warming, population and GDP be dammed.
Equally I have excluded land use and forestry from the Australian scorecard because I think they are used to make it seem that Australia is making more progress than it actually is.
Essentially there is progress in electricity but almost nowhere else. As electricity emissions come down the relative importance of Transport, stationary energy and agriculture will increase.
In general the accepted policy for decarbonisation in Australia is the same as for every other country. Decarbonise electricity then electrify everything. In this regard here’s a reminder of the primary energy fallacy which shows that when you electrify it’s not a joule for joule replacemen. 40% less energy in total is required in an electrified economy.
EV strategy
There are two separate reviews. In essence the FBT is a subset of the EV strategy. I write from the point of view of a household with two EVs and regular long distance trips, not just to capital cities but to regional NSW and Victoria, over 80,000 EV km so far.
In my view over and beyond pollution a higher EV share should be on the priority list for Australia because: (1) Our climate, generally temperate, and terrain, mostly flat, are ideal for EVs. (2) We have no domestic car industry so there is no manufacturing industry to protect, (3) Australia has lots of oil imports which are both a strategic risk in the time of conflict and hurt our trade balance, (4) China has a surplus of EVs and wants to sell them to us, we should strike while the iron is hot.
National Electric Vehicle Strategy Review
Overview
Australia’s first National Electric Vehicle Strategy was released on 19 April 2023 (Department of Climate Change, Energy, the Environment and Water, 2023). It established a framework to accelerate EV adoption, addressing Australia’s position as a laggard in electrification (3.8% EV share in 2022 vs ~9% global average).
Three key objectives:
- Increase the supply of affordable and accessible EVs
- Establish resources, systems and infrastructure for rapid EV uptake
- Encourage increased EV demand
Key policy elements:
| Element | Description |
|---|---|
| New Vehicle Efficiency Standard | Australia’s first mandatory CO2 emissions standard for vehicles |
| Charging infrastructure | National EV Charging Network investment |
| Electric Car Discount | FBT exemption and import duty waiver (existing policy) |
| Government fleet | Coordinated EV procurement across governments |
| Skills and training | EV technician training programs |
The New Vehicle Efficiency Standard (NVES)
The NVES is the strategy’s centrepiece supply-side policy. It commenced 1 January 2025 (Department of Infrastructure, Transport, Regional Development, Communications and the Arts, 2025).
How it works:
- Each manufacturer has an average CO2 emissions target across all vehicles sold
- Manufacturers beating targets earn tradeable “units”
- Manufacturers exceeding targets must acquire units or pay penalties
- Penalty: $100 per g/km of CO2 per vehicle exceeding target
- Three-year compliance window before penalties apply
| Year | Passenger Cars (Type 1) | Light Commercial/SUVs (Type 2) |
|---|---|---|
| 2025 | 141 | 210 |
| 2026 | 123 | 189 |
| 2027 | 102 | 168 |
| 2028 | 79 | 140 |
| 2029 | 58 | 110 |
: Source: Department of Infrastructure (Department of Infrastructure, Transport, Regional Development, Communications and the Arts, 2025)
Expected outcomes by 2030:
- 60%+ reduction in emissions from new passenger cars
- 50% reduction from light commercial vehicles
- 321 million tonnes CO2 avoided by 2050
- $95 billion fuel cost savings for motorists by 2050
Industry response: The NVES faced opposition from some manufacturers. Toyota, Mazda, and the FCAI advocated for weaker targets and additional flexibilities. Tesla and Polestar left the FCAI in March 2024, criticising its “demonstrably false” claims about price impacts (The Driven, 2024).
Progress Since 2023
| Metric | 2022 | 2024 | 2025 (H1) | Change |
|---|---|---|---|---|
| EV market share | 3.8% | 9.4% | 12.1% | +8.3 pp |
| Annual EV sales | 38,900 | 114,283 | 72,758 (6 months) | +194% (2022-24) |
| National EV fleet | ~130,000 | ~300,000 | ~410,000 | +215% |
| EV models available | 56 | 120+ | 153 | +173% |
| Fast-charging locations | ~600 | ~1,000 | ~1,310 | +118% |
: Source: FCAI VFACTS (Federal Chamber of Automotive Industries, 2025); DCCEEW Annual Updates (Department of Climate Change, Energy, the Environment and Water, 2025)
Charging Infrastructure
| Metric | Value |
|---|---|
| Public fast-charging locations | ~1,310 |
| High-power charging plugs | 4,192 |
| Growth rate (quarterly) | 8.5% |
| Largest network | Chargefox (950 sites) |
| Government commitment | $500+ million across programs |
: Source: DCCEEW (Department of Climate Change, Energy, the Environment and Water, 2025); ARENA (Australian Renewable Energy Agency, 2025)
Key infrastructure programs:
| Program | Funding | Purpose |
|---|---|---|
| Driving the Nation | $500 million | Highway fast-charging network |
| ARENA EV projects | $100+ million | Innovation and heavy vehicle charging |
| Hydrogen Highways | $75 million | Fuel cell vehicle infrastructure |
Document prepared: January 2026