Decarbonising Infrastructure

This report sets out a high-level assessment of the policy action required to decarbonise Australia’s infrastructure sector, across its asset classes. It covers energy, transport, and asset management during construction, operation and waste.

budget season header image

Recommendations to decarbonise Australia’s energy

What needs to change

Change barrier

Actions required

What needs to change

A consistent lack of national leadership and coordination on the energy transition has resulted in a patchwork of overlapping and competing strategies and policies across the country, causing substantial policy and investor uncertainty.

Change barrier

Actions required

Policy Readiness
Regulatory Readiness

The Federal Government should coordinate with state and territory governments to create a clear, national energy transition plan with solar and wind as the backbone of energy supply, an appropriate mix of firming technologies, and adequate transmission network capability. This plan should empower industry to act within a clear framework and an ambitious timeline for action.


Policy Readiness
Regulatory Readiness

Pursuit of a net zero emissions by 2050 target will be enhanced by interim targets along the way – including, in the first instance, a reduced emissions by 2030 target.


Policy Readiness
Regulatory Readiness

Industry and government stakeholders should improve coordination and engagement to augment the role of existing mechanisms, like REZs, in the energy transition.


What needs to change

The transmission grid was built for a different type of energy production in another era, and has become constrained with what low- to zero-emission sources can contribute to its electricity supply.

Change barrier

Actions required

Policy Readiness

National leadership needs to empower Australia’s energy market bodies to take accountability for the delivery of a grid that supports a decentralised, low-emission electricity system, and ensure market participants are able to attract the necessary capital and resources to make the transition.


Policy Readiness
Regulatory Readiness

Regulators and policy makers should seek to accelerate and simplify planning and regulatory approvals for transmission upgrades required to support the energy transition. They should also undertake reform to ensure that regulated transmission network projects needed for the transition are commercially-viable so they can proceed with certainty.


What needs to change

The precise mix of generation sources, firming and storage technologies in a low-emission energy system is unclear.

Change barrier

Actions required

Policy Readiness
Commercial Readiness
Technology Readiness

A national transition plan should capitalise on commercially-viable solutions in the near term, while supporting studies and pilots to accelerate development of currently sub-commercial solutions, including green hydrogen, over the medium- to long-term. Planning should not wait for these technologies to emerge, but plan for their integration within an already rapidly decarbonising energy system.


What needs to change

The absence of a plan for existing fossil fuel assets that may be stranded in the wake of the energy transition.

Change barrier

Actions required

Policy Readiness
Regulatory Readiness

Governments should adopt a hold-and-transition-fossil-fuel-assets approach for responsible owners to follow, requiring the orderly withdrawal of coal and fossil fuel-based energy production, followed by the transition of sites to renewable generation or storage facilities. Clear retirement timeframes within a national agenda will allow industry to plan for the future of their assets.

Recommendations to decarbonise Australia’s mobility fleet

What needs to change

Change barrier

Actions required

What needs to change

Australia’s light vehicle transition is slower than other countries, despite availability of low- to zero-emission vehicle technology in the market.

Change barrier

Actions required

Policy Readiness
Regulatory Readiness

The Federal Government should explore the economic benefits and costs of policy or regulatory interventions – beyond those already announced by state and territory governments – to expedite the uptake of new low- or zero-emission light vehicles. This includes introducing national standards on vehicle emissions, bringing Australia into line with other countries, while also working with commercial providers to address gaps in urban and regional charging networks.


What needs to change

Left unchecked, rapid uptake of EVs could place local electricity systems under strain.

Change barrier

Actions required

Regulatory Readiness

State and territory governments should work with distribution network providers to identify potential shortcomings in infrastructure, regulations and planning to cater to increased demand from EV uptake.


Commercial Readiness

All governments should continue to support trials and pilots of distributed energy technologies and pricing arrangements to optimise integration of EVs within local grids.


What needs to change

The majority of public transport buses are diesel-powered and emission-intensive. Many heavy passenger rail services draw large volumes of electricity from the grid, much of which remains non-renewable.

Change barrier

Actions required

Policy Readiness

State and territory governments should – if they have not already – commit to transition their bus fleets to zero emissions and set a target for full transition.


Commercial Readiness

Bus operators should work with energy distribution companies to ensure adequate, reliable supply of electricity to zero emissions bus depots.


Commercial Readiness

Passenger train and metro operators should sign Power Purchase Agreements to support uptake of renewable electricity generation and certify their services as zero emissions.


What needs to change

Transport and land use planning in many parts of the country remains highly disconnected and fails to efficiently connect people to services and jobs, or encourage users to take the most efficient mode of transport.

Change barrier

Actions required

Policy Readiness

State and territory governments should look to build on the positives to emerge during the COVID-19 pandemic, including growth in the popularity of walking and cycling and implementing measures to encourage peak spreading, while continuing to enhance transport users’ experience to encourage efficient, lower-emission trips.


Regulatory Readiness

State and territory governments should work closely with local governments to address gaps in transport provisions and ensure the provision of new housing supply is coordinated with adequate transport capacity, particularly in outer urban areas, to ensure residents have access to alternatives to private vehicles.

Recommendations to decarbonise Australia’s freight fleet

What needs to change

Change barrier

Actions required

What needs to change

There is no national transition plan for heavy vehicles and the role of Australia’s transport networks in a decarbonised future.

Change barrier

Actions required

Policy Readiness

Federal and state bodies through National Cabinet should develop, consult with industry on, and implement a cohesive national plan for the decarbonisation of freight transport. This should provide a pathway to reduce end-to-end emissions across supply chains, with short-, medium and long-term actions to support change, and the role of intermodal networks will be fundamental to this work.


Commercial Readiness

Governments should build on the work in the National Freight and Supply Chain Strategy to identify and address gaps and deficiencies in nationally significant freight corridors and locations. This includes resolving planning and investment issues to provide efficient connections to Inland Rail in line with its completion, as well as support for the development of new hubs and intermodal terminals, and addressing last mile and urban encroachment issues.


What needs to change

The local and last-mile freight task is growing rapidly in line with the popularity of e-commerce, bringing increased emissions, pollution and noise in urban areas.

Change barrier

Actions required

Policy Readiness
Commercial Readiness

Governments can support and accelerate electrification of the local freight fleet. For instance, where appropriate, authorities should allow electric trucks to make deliveries outside of regular hours. State and territory governments should consider providing special access to designated low-emission zones in urban areas.


What needs to change

The vast majority of freight haulage relies on fossil fuel-powered vehicles, but the timeline for a commercially-viable transition to zero-emission heavy vehicle technology is uncertain.

Change barrier

Actions required

Policy Readiness
Commercial Readiness
Technology Readiness

While governments should avoid ‘picking winners’ among zero-emission technologies for long-haul freight, they should bring forward the development curve for a range of potential solutions by supporting real world deployment. These could be better coordinated among academic, public and private sector stakeholders by tying research to common national objectives.


Policy Readiness

As technologies approach commercial viability, governments should enable pilots and trials within flexible regulatory arrangements, and look to accelerate the transition of fleets to lower-emission solutions. This may include applying incentives for the adoption of low- or zero-emission technologies, or through phasing out schemes that support fossil fuel powered heavy vehicles.


Regulatory Readiness
Technology Readiness

Regulators should work with industry to identify potential barriers to implementation of zero-emission freight in future, and ensure these are addressed before enabling technologies become commercially available.

Recommendations to decarbonise infrastructure construction, operation, and waste

What needs to change

Change barrier

Actions required

What needs to change

Procurement is underutilised as a tool for incentivising innovation in design and construction to drive decarbonisation across asset lifecycles.

Change barrier

Actions required

Policy Readiness
Regulatory Readiness
Commercial Readiness

Governments need to determine the assets they want to buy (being lower-carbon infrastructure), in line with their macro commitments (net zero emissions by 2050), and set these as clear outcomes sought in procurement processes, letting the private sector compete for this lower-carbon work.


Policy Readiness
Technology Readiness

Public procurement agencies should seek and support bids which use of digital design and planning tools to test new methods, optimise the efficiency of construction and the whole-of-life emissions of assets, as well as bids which incorporate lower-carbon materials and products in construction.


Policy Readiness

Public sector institutions need to adopt new risk appetites, agreeing to innovative solutions that will reduce emissions embedded in the projects they sign off on.


What needs to change

Regulation of existing assets may inhibit owners and operators from implementing improvements to reduce emissions through technology, construction, or pricing solutions.

Change barrier

Actions required

Regulatory Readiness

Regulators should provide an avenue for asset owners and operators to propose measures that would reduce emissions, provide pricing incentivises for more efficient customers, or prepare for use of networks by lower-emission customers.


Regulatory Readiness

Asset regulation should focus on outcomes in relation to emissions and energy use, rather than restrictive measures that are prone to being made obsolete through technological change or may create perverse incentives for inaction.


What needs to change

Emissions data for construction, operation and waste lacks detail, clarity, and reliability, including assessment of supply chain and material-related emissions.

Change barrier

Actions required

Regulatory Readiness

Governments should work with industry to develop agreed reporting guidelines for calculating emissions from infrastructure construction, operation and waste activities, and report quarterly or biannually, tracking progress against long-term targets and commitments.


Regulatory Readiness

The Federal Government should introduce reporting requirements on Scope Three emissions under the National Greenhouse and Energy Reporting Scheme to increase visibility of emissions generated through the operation and use of infrastructure and track performance over time.


What needs to change

Australia’s construction standards do not sufficiently integrate or promote sustainability and decreased emissions – or address embedded emissions across the construction supply chain.

Change barrier

Actions required

Regulatory Readiness
Technology Readiness

Governments, through National Cabinet, should undertake a review of construction standards to ensure they reflect global best practice and promote the use of more sustainable, lower-emission methods and materials. These reforms should allow for innovation and piloting new techniques and materials, with a focus on the integration of reused or recycled materials.


Policy Readiness

Governments must ensure that policy and regulatory reform is accompanied by a transformation in risk-adverse practices within public sector institutions, who need to adopt risk-friendly appetites towards projects proposing innovative low-carbon solutions.


What needs to change

Australia’s regulations provide barriers to the development of infrastructure technologies and facilities that have proven successful in reducing emissions in other parts of the world.

Change barrier

Actions required

Regulatory Readiness

State and territory governments should review and update regulatory and planning frameworks to remove barriers to the development of technologies and facilities that can reduce emissions, are supported by strong evidence, and provide clear guidance to their respective planning and environmental protection agencies. This includes providing clear guidance and planning arrangements in relation to how and where these facilities can be developed.


Regulatory Readiness

Where new technologies and facilities are introduced in Australia and best practice standards for the operation exist, these should be adopted and applied through nationally consistent regulation, unless there is legitimate cause for variation.


Commercial Readiness

State, territory, and local governments should support the development of energy-from-waste facilities by providing nationally consistent regulations for feedstock, and supporting the development of a market for byproducts.


What needs to change

Private investment in infrastructure is under utilised as a driver of decarbonisation, and Australia risks missing out on access to ESG-focused global capital unless it sharpens its focus on providing a solid, politically-neutral commitment to achieving net zero-emission infrastructure.

Change barrier

Actions required

Policy Readiness

Governments should look to tap into the global capital available to finance decarbonisation by providing greater confidence to investors about Australia’s longterm commitments and transition strategies. Public procurement agencies should support this by routinely considering whether there is a role for private finance to accelerate investment in zero-emission initiatives, unlock innovation and support a greater focus on whole-of-life outcomes.


Regulatory Readiness

Infrastructure investors should integrate ESG factors within their investment and asset management frameworks.


Policy Readiness
Regulatory Readiness

Federal and state governments need to actively work with the private sector to encourage and incentivise investors to define a transition pathway for existing assets, instead of selling them off.

For more information
please contact

Mollie Matich
Director, Policy and Research
Infrastructure Partnerships Australia
[email protected]

Jon Frazer
Director, Policy and Research
Infrastructure Partnerships Australia
[email protected]

For media enquiries contact:

Michael Player
Director, Communications and Engagement
Infrastructure Partnerships Australia
[email protected]