A closer look at the government’s climate risk, adaptation and net zero plans

A year of rigorous analysis, expert workshops, stakeholder engagement, and public consultation recently resulted in the mid-September release of the government’s new:

• National Climate Risk Assessment and National Adaptation Plan – centred around building resilience and protecting against current and future climate risks.
• Net Zero Plan – focused on Australia’s transition to renewable energy and improving energy efficiency to reach our target of net zero greenhouse gas emissions (GHGs) by 2050.

Combined, they aim to reinforce Australia’s commitment to reducing global warming and fulfilling its obligations under the Paris Climate Agreement. While the target to reduce GHGs to 43% by 2030 remains, the new Net Zero Plan now introduces a second milestone: to achieve a 62%-70% reduction by 2035. However, the Climate Change Authority’s 2025 Annual Progress Report states Australia must triple its current reduction pace to reach net zero targets. This begs the question:

Is current policy delivering strong and stable support, and are government and institutional financing mechanisms enabling the rapid scale-up of technology and covering the substantial costs required in the complex transition toward a lower-emissions future?

Greater investment in climate-related initiatives 

As we explore the National Climate Risk Assessment, National Adaptation Plan, and Net Zero Plan, one factor stands out as essential for driving tangible change: finance. 

The main financial commitments detailed in the plans include:

• An overall commitment to adaptation and resilience measures to the tune of $9bn.
• A new $5bn Net Zero Fund to support major investment in industrial decarbonisation and clean technology manufacturing.
• A further $2bn allocation to the Clean Energy Finance Corporation to advanced renewable energy initiatives.
• Approximately $1bn towards hydrogen and clean fuels development.
• More than $170m to help households and communities improve energy efficiency. 

These investments are designed to support industries driving climate solutions and sectors navigating transition pressures. Yet, the question remains: are these commitments enough to meet the plans’ ambitions?

While these measures signal progress, the current financial foundation is still evolving and will need reinforcement. Increasingly, private finance is stepping in through sustainability-linked loans and green bonds, which tie capital to robust KPIs and science-based targets. This growing market demonstrates how financial institutions can complement government efforts. Notably, it is identified as a critical instrument for advancing the net zero agenda, with emphasis on expanding, reforming, and developing the Australian Sustainable Finance Taxonomy, alongside mechanisms that promote climate adaptation and resilience. 

Another point raised by the Climate Change Authority’s recent report was the role of materiality of climate benefits in government decision making. When making approval decisions around energy projects, only these factors are considered:

• Ecologically sustainable development.
• Social benefits.
• Matters of national environmental significance.

Though important, the critical factor of climate benefit is not included in materiality assessments. For initiatives such as the Capacity Investment Scheme to be implemented with the pace and scope needed to reach net zero targets, climate benefits must be considered in materiality assessments.

Ultimately, achieving the scale of change required will depend on a coordinated structure where policy, public investment, and private capital work together – aligning incentives and accelerating Australia’s transition to a low-carbon economy.

The role of industry and cross-sector partnerships in decarbonisation

Blockers to decarbonisation often come from within sectors themselves and overcoming them requires comprehensive transition planning across industries. 

While all sectors face unique challenges in reducing emissions, the transition cannot occur in isolation – it relies on deep cross-sector engagement and collaboration. 

For example, agriculture’s ability to decarbonise hinges on progress in other sectors: low-emission farming practices require access to renewable energy for irrigation and processing, as well as green ammonia for fertilisers, which depends on innovations in the chemical and energy industries. This interconnected process underscores a fundamental truth: innovation in one sector often hinges on progress in another.

Funding and policy support are essential to scale these solutions and enable industries to reach the starting line of transition planning. Without coordinated investment across electricity, resources, transport, agriculture, and the built environment, Australia’s pathway to net zero risks fragmentation rather than acceleration.

Shared responsibility, coordinated action

Australia has laid strong foundations through policy and funding, but projections show these efforts need to accelerate significantly to meet 2030 and 2035 climate targets. 

Innovation is the bridge that connects ambition to action – enabling technologies like electrification and advanced batteries to transform industries. But funding is the key. Government and private capital must work together with sectors to scale these innovations and align investment with clear, measurable KPIs. At the same time, companies must remain accountable for their own transition plans, ensuring credible progress within their operations and value chains. Support and accountability must go hand in hand. Without both, Australia risks falling short of its climate goals. The transition will succeed only through purposeful investment, strong policy, and collaboration across every level of the economy.

RSM is working closely with our clients in all sectors to ascertain the risks and opportunities that arise from the government’s new risk assessment, adaptation strategy, and net zero plan. In the coming weeks, we will dive deeper with sector-specific analyses to show how the government’s plans affect industry and what your organisation can do to stay prepared. 

FOR MORE INFORMATION

If you would like to learn more about the topics discussed in this article, please contact your local RSM office.