Australians are struggling with the cost of living, and rising power bills are putting even more pressure on household budgets. Three in 10 parents say they’re struggling to afford food, power bills or insurance. The key question is: how did we get here, and what can actually be done about it?

While power prices are complex, the short answer is, Australia’s reliance on polluting and expensive coal and gas is a major driver of high power bills. They are driving up wholesale power prices (the prices our electricity retailers pay), which make up up to 40% of bills. 

key reasons your power bills are sky high

1. Australia’s energy system still relies too heavily on expensive fossil fuels 

Australia is adding renewable power, like solar and wind at record rates – but for now, the majority of our electricity still comes from expensive and polluting coal and gas. These days, electricity made from fossil fuels is far more expensive than renewable power. In 2025, the average price of electricity from fossil fuels is $123 per megawatt hour (MWh), almost twice the average price of electricity from renewables ($64 per MWh). Already, more than 40% of our power is from renewable sources, and adding more will avoid even larger power price hikes.

Fossil fuel prices are so high because on top of general inflation, coal and gas-fired power stations pay international prices for the fuels. Prices have eased since the extreme spikes driven by the Russia-Ukraine conflict in 2022, but are still high. As long as our energy system continues to rely on fossil fuels that are bought and sold as international commodities, we will remain at risk of sudden and unexpected spikes in power prices. In contrast, the wind and sun are free, and when backed up by storage like batteries, they can provide abundant, locally produced power forever.

Read more: An Aussie Roadmap: building a clean, reliable and low-cost electricity grid.

2. Gas companies export the vast majority of Australia’s gas for eye-watering profits, at the expense of Australian families and businesses

Fossil gas prices are high because we are one of the largest exporters of gas in the world, exporting around 80% of our gas, which means we have to compete with global export prices. Gas companies ship so much of their gas offshore because that’s how they maximise their profits. 

Companies exporting fossil gas have made close to $100 billion in profits since the Russia-Ukraine conflict began in 2022, at the expense of Australian families and businesses. More and more Australian households are struggling to stay on top of their power bills, and industries are under significant pressure, and even closing down, due to high gas costs. These multinational corporations are making billions while providing almost no benefit to our economy and costing us thousands of dollars every day. At the same time, they are responsible for huge amounts of climate pollution both in Australia and worldwide.

Because gas is so expensive, electricity made using gas has a disproportionate impact on overall power prices. Even though only about 5% of electricity in Australia’s main grid comes from gas, research from Griffith University shows that because gas is so expensive, gas prices drive 50-90% of pricing periods in Australia’s main grid.

Expensive gas often sets power prices

Read more: 5 reasons Australia needs to break up with gas.

3. Our ageing and unreliable coal-fired power stations are driving severe price spikes

Most of Australia’s coal generators are more than 40 years old, and their ability to reliably produce power has dropped off dramatically – driving severe price spikes when there are unplanned outages. For example, Australia’s largest coal-fired power station, the 43 year-old Eraring Power Station in NSW’s Hunter Valley, had more than 6,000 hours (250 days) of planned and unplanned outages in 2024. Yallourn in Victoria is limping to its retirement date, with at least one of its generators unexpectedly out of action for one-third of the year in 2024.

When there are coal outages, power prices go up due to reduced supply and the increase in expensive gas generation to meet our electricity needs.  Four of the most severe power price spikes in the past seven years have been driven by unplanned coal outages (Analysis by Baringa 2024). Coal outages contributed to yet another severe price spike in June this year. 

Building a diversity of projects, like solar, wind, and storage, in more places makes our grid more reliable. Instead of relying on a small number of large generators that must run constantly (no matter how much electricity we need), and cause huge shocks to the energy system whenever outages occur, renewables create a flexible, distributed system. Modern grids need a mix of technologies, not traditional baseload generation. 

Read more: Lights Out: Ageing Coal and Summer Blackouts.

Coal outages are driving major power price spikes

It’s not all bad news – here are two ways we can help keep power prices in check.

4. Replacing our ageing coal-fired power stations with renewables will save Australians billions on their power bills

We need to replace our ageing coal-fired power stations to keep reliably powering homes and businesses. Renewables are not only the least expensive option to build, but are also the lowest-cost source of power. This is because unlike fossil fuels, Australia’s abundant wind and sun provide locally produced power without needing to extract and burn expensive, polluting fuels.

Australia’s energy market operator is preparing for nearly all our coal-fired power stations to close by 2038, and 90% to shut down over the next ten years. We need new sources of electricity to keep the lights on. The fastest, lowest cost way to replace coal is with renewables and storage. CSIRO recently found for the seventh year in a row that renewables (wind and solar), including storage and transmission, is the lowest-cost option – far cheaper than gas and nuclear. 

As more and more lower-cost renewables enter our grid and displace coal and gas, this will help put downward pressure on power prices. Modelling shows that if we delayed the expected roll out of renewables and continued our reliance on coal and gas, power bills could be between $449-606 higher for households, and $877-$1,182 for small businesses in 2030. This adds up to between $4.5 – $6 billion in additional costs for households in Australia’s main grid in 2030.

Delaying the shift to renewables could cost Aussie households billions

Read more: What is the cheapest form of energy for Australia?

5. Aussie households can take control of their power bills by installing rooftop solar, switching to electric appliances and improving their energy efficiency    

The best way governments can help Aussies struggling with rising energy costs is to deliver more lower-cost, clean power, backed by storage like batteries, and make sure all Australians can access opportunities to reduce their energy bills and make their homes more comfortable and safe to live in. 

Electrifying our homes, improving their energy efficiency and increasing rooftop solar uptake will directly help households deal with the rising costs of living while cutting our climate pollution. Already, more than 4 million Australian households have already installed rooftop solar, with each saving on average more than $1000 on their power bills every year. Australians are also installing batteries in record numbers to store their cheap excess solar to use whenever they need it. Batteries can boost the savings of a solar system to more than $3000, depending on where you are in Australia and your energy use.

On top of this, households in all Australian capital cities could save between $500 and $1900 every year by getting off gas and switching to electric, efficient appliances. When combined with solar and batteries, all-electric homes could slash household energy bills by up to 90% in many parts of Australia.

Read more: Seize The Sun: How to supercharge Australia’s rooftop solar.

The post Five reasons why your power bills are sky high–and how we can help bring them down appeared first on Climate Council.

Read the original article. Written by Climate Council Fellow Wesley Morgan

Japan has a very clear vision of what the Asia-Pacific’s clean energy future looks like – decarbonisation, but done slowly and with a longer role for coal, oil and gas.

It was on full display this week as energy ministers from nine South-East Asian nations, Japan and Australia gathered in Jakarta to hash out a shared vision for Asia’s energy future, under Japan’s Asian Zero Emissions Community (AZEC) initiative launched last year.

But there’s a clear problem here. Japan’s vision clashes directly with Australia’s efforts to become a green export superpower. And worse, Japanese investment is a key reason why Australia has emerged as an unlikely gas export giant.

Energy security is front of mind for Japanese policymakers worried about keeping the lights on across their import-dependent archipelago. While Tokyo does have green energy plans, its short-term push is all about prolonging the life of fossil fuels – coupled with carbon capture.

Labor came to power promising to act faster on climate change. By decade’s end, Australia should be largely run on renewables, and Canberra wants to make clean exports a reality.

But Japan is making that harder by financing gas exploitation in Australia. This could lock our fast-growing and energy-hungry region into much longer reliance on dirty fossil fuels and questionable carbon capture plans.

There’s a real danger Australia’s green export plans could be washed away by a tide of new fossil fuels.

So what are Japan’s zero emission plans?

In 2022, the Japanese Prime Minister Kishido Fumio began promoting a triple breakthrough – efforts combining decarbonisation, economic growth and energy security. Fumio launched the Asian Zero Emissions Community to encourage the idea.

While these goals sound reasonable, the devil is in the detail. The world’s fourth-largest economy, Japan has long been dependent on imported coal, oil and gas – and more so after the 2011 Fukushima disaster forced nuclear plant shutdowns. Even as the world belatedly scrambles to tackle climate change, Japanese policymakers are still focused on keeping fossil fuels flowing. Many AZEC projects aim to use fossil fuels for electricity.

The government’s energy policies explicitly aim to secure long-term supplies of fossil fuels and encourage Japanese firms to be involved. Japan is now the world’s second-largest public financier of international fossil fuel projects, spending more than A$7 billion every year.

How does this align with net zero? Japan claims new fossil fuel plants can slash emissions by burning ammonia in coal plants, blending hydrogen with fossil gas in gas plants and ramping up carbon capture and storage.

Each of these technologies is expensive and largely unproven. They cannot cut emissions at anywhere near the scale or speed needed. And every million spent on propping up fossil fuels is a million not spent on renewables and storage.

Japanese funding makes Australian gas flow

Japan sees Australia as a friendly nation with huge fossil fuel resources and longstanding trade links.

Any changes to coal and gas extraction have been met with Japanese lobbying. When Queensland hiked coal royalties in 2022, Japan’s ambassador to Australia, Shingo Yamagami, pushed back hard. The move, he warned, could have “widespread effects on Japanese investment beyond the coal industry”.

When the federal government strengthened the Safeguard Mechanism, our main industrial emissions policy, costs increased for some gas projects. In response, Yamagami dialed up his rhetoric, warning the neon lights of Tokyo would go out without Australian energy exports.

Japan isn’t burning it all at home. It on-sells more liquefied natural gas (LNG) to other Asian nations than it imports from Australia. Without Japan’s funding on favourable terms, our LNG producers would not be able to compete with lower-cost producers such as Qatar.

Given a global gas glut is now forecast to arrive by 2026, Australia should be looking to dial down LNG. But Japan won’t let that happen.

Just this year, Japan loaned $2.5 billion to help Woodside develop Western Australia’s massive Scarborough gas field.

Independent and green – or dependent and dirty?

Domestically, Australia is greening. Coal is retiring as renewables and storage rush in. Last year, 40% of the power in our main grid came from clean energy and more than 80% of Australia’s total power needs should be provided by renewables by 2030. But internationally, we’re now the second-largest exporter of carbon emissions from fossil fuels.

With major reserves of critical minerals (essential for renewables and batteries) and world class renewable resources, Australia is ideally placed to export green commodities to the region.

The Albanese government is promoting Australia as a “renewable energy superpower” and will invest public money through the Future Made in Australia plan to give local green industries a chance of global success.

But Japan has a different vision. Funding flows from Tokyo have already distorted Australia’s energy market and boosted demand for gas in the region. Worse, it has made it harder for Australian leaders to create future-focused industries. New gas projects pull investment, workers and supply-chain capacity away from clean energy industries.

It’s not that Japan is anti-renewable. It’s just slow to move. Tokyo has ambitious plans to become the world’s top producer of energy from offshore wind.

Recent modelling shows Japan could achieve 90% clean energy by 2035, gaining far greater energy independence and slashing reliance on expensive fossil fuels. If Japan took this route, we would likely see its Australian investments shift from gas to green exports.

But right now, Japan’s focus is on keeping fossil fuels flowing.

Australia has to help shape Asia’s energy transition. If we don’t, we risk our future being made in Tokyo.

The post Which future? Japan’s net zero vision for the region boosts gas and threatens green exports in Australia appeared first on Climate Council.

This budget makes clear the very real costs of climate change, highlighting confronting figures like a potential 7% drop in Gross Domestic Product over the remainder of this century due to temperature rises if we fail to act.

The Climate Council welcomes promised funding for renewable energy infrastructure, green skills and electric vehicles, in line with the government’s pre-election campaign. These initiatives will help to ramp up the urgent transformation of our energy and transport systems and create more clean jobs across Australia. These decisions finally put Australia on the path to start seizing the opportunities that come from transitioning to a zero-emissions economy. 

It’s a step in the right direction but there’s still a marathon ahead. Australia must ramp up its renewables transition to ease the pain of rapidly rising bills and stop new fossil fuel projects if we are to rapidly cut our emissions this decade. 

Here is the Climate Council’s top three highlights and lowlights from climate spending in this budget:

Highlights

1. Increased investment in renewables 

To transform the energy system, we need to build the infrastructure capable of transporting much higher volumes of renewable electricity across the system, increase energy storage and upskill tens of thousands of workers for a zero-emissions economy.

• $20 billion is allocated to urgently upgrading Australia’s electricity grid so that it can handle and distribute more renewable power across Australia. 
• $102 million will help establish a Community Solar Banks program to build community scale solar and clean energy technologies. This will help drive down energy prices, reduce emissions, and assist up to 25,000 households that are traditionally unable to install rooftop solar to take advantage of low cost, clean energy.
• $224 million will go towards the deployment of 400 community batteries across Australia to lower bills, cut emissions and reduce pressure on the electricity grid by allowing households to store and use excess power they produce. 
• $100 million to the New Energy Apprenticeships and New Energy Skills programs. The programs will help apprentices acquire necessary skills by developing a new mentoring program and providing up to $10,000 for each apprentice in a clean energy role.

2. More support for the Pacific

The Australian Government is working to reaffirm its place as the security partner of choice for the Pacific, and so far, the Pacific has welcomed Australia’s new climate targets. Now Australia will use $900 million to demonstrate its commitment and rebuild its international development program, enhancing regional security and cooperation.

3. Further investment in the Climate Change Authority

The Climate Change Authority was established as an independent statutory body in 2011 to provide expert advice to the Australian Government on climate change policy. Under the previous government it lost credibility as its resources were slashed and the Board was stacked with big business appointees lacking genuine climate science expertise. $42 million will see the continued restoration of the Climate Change Authority and its ability to provide credible science-backed advice to the Federal Government.

“From a climate perspective, this Budget is a refreshing change from what we have had to endure for many years now. Climate change was mentioned 220 times – it’s not front and centre – but it’s a vast improvement on recent years.” – Climate Councillor and leading economist Nicki Hutley. 

Lowlights

1. $1.9 billion for the polluting Middle Arm project

The precinct will be a petrochemicals and gas Carbon Capture and Storage (CCS) hub, and will be used to process fracked gas from potential future fields in the Beetaloo Basin for export. Carbon Capture and Storage is used as a licence to ramp up emissions. In Australia, the coal and gas industry is pushing for CCS so it has a licence to keep its polluting projects going, not because it wants to cut emissions.

2. $65 million for polluting gas

Australia needs to be working to decarbonise our energy systems as quickly as possible. Last year Australia exported 4,314 petajoules of gas – just under four times the amount actually consumed within Australia. There is not a shortage of gas supply in Australia, and demand will decline further over time as we transition to renewable energy.

3. Ongoing fossil fuel subsidies

The Federal Government’s first budget is a missed opportunity to start phasing out subsidies which sustain and underpin fossil fuel use, like the Fuel Tax Credit. Australia needs to electrify transport as soon as possible, but subsidies for petrol and diesel skew the incentives for pursuing clean alternatives. Here is our analysis about what the $11.6 billion Australia spent last financial year on subsidising fossil fuels could buy us in renewables initiatives instead – like free solar on every public housing building in the country, or replacing Sydney, Melbourne and Brisbane’s entire bus fleets with electric buses!  

Extreme weather events are becoming more common because of climate change, as Australia’s East Coast is experiencing right now. The Government’s new investments in disaster preparedness are important for protecting the lives and livelihoods of Australians in the short term. But the only way we can truly address this risk is to rapidly drive down emissions this decade.       

Australia is a major polluter, as one of the world’s largest exporters of fossil fuels. Emissions from Australian coal and gas burned in other countries are more than double our domestic emissions, plus Australia still has dozens of new coal and gas projects in the pipeline.  We have a responsibility to rapidly phase down fossil fuels and ramp up the export of clean energy instead. 

Continuing to subsidise fossil fuels – including by failing to phase down fuel tax credits and directly investing in projects like the Middle Arm Industrial Precinct – means Australia will continue to play an outsized role in fuelling the climate crisis globally. 

The post The Federal Budget: three highlights and lowlights for climate appeared first on Climate Council.

The budget was another blow for climate action with big spending in the works for gas and no significant additional spending for renewable energy. There was absolutely nothing new in the budget outline the government’s overall plan to get Australia to net-zero emissions.

Here’s the lowdown on what last nights budget announcement means for the climate:

The Bad

Gas

In the twelve months since the Prime Minister’s announcement of a ‘gas-fired recovery’ (a widely deplored strategy of burning more fossil fuels to ‘save the economy’) we’ve witnessed dizzying sums of taxpayer money sacrificed to keep this costly, polluting industry on life support—and the Federal Budget 2021 is no different.

There was new funding of $58.6 million announced which will be going towards things such as fast-tracking pipelines, gas field trials, gas production and storage projects, and a proposed LNG import terminal.

$30-million was also allocated to early works on a new gas generator in Port Kembla.

But there was nothing in the budget about a taxpayer-funded new gas-fired power station, which the Federal government has been threatening to build at Kurri Kurri in the Hunter region of NSW. Again, any new gas—be it stations, prospecting, or lines—is a poor investment, a costly, polluting sunken cost, which only continues to endanger our public and our atmosphere.

The Good

Renewable Energy

Although renewables were deemed a ‘budget loser’ overall there were a few pieces of good news in the mix such as $30 million to support a big battery and the roll-out of microgrids in remote NT Indigenous communities – though this had already been announced before last night—and $19.3 million to support a renewable energy microgrid incorporating hydrogen in the Daintree. 

Bushfire recovery and extreme weather defence

Around $600 million will be granted to the ‘National Recovery and Resilience Agency’, a new agency designed to support local communities during the relief and recovery phases following extreme weather events such as bushfires and floods. The new agency will reportedly undertake activities such as:

• Upgrade threatened houses with bushfire- and cyclone-resistant infrastructure.
• Build levees in disaster-prone areas
• Bolster communication systems in the event of extreme weather

The creation of this agency is one of the recommendations ELCA—the Emergency Leaders for Climate Action—called for in their Bushfire & Climate Plan following the Black Summer disaster. And while such an initiative is vital, it is no substitute for addressing the root cause of extreme weather: climate change. It is addressing the symptoms rather than the illness. Until a substantial sum is committed to curbing emissions or supporting renewables, similar programs will be akin to investing in cold flannels instead of the required antibiotics for treating a bacterial infection.

ELCA has called on the new Coordinator-General of the Agency, Shane Stone AC QC to take a strong public stance on the need for action on climate change and reducing greenhouse gas emissions. Mr Stone has been ambiguous about human-induced climate change in the past and he must now clarify his position.

Environment spending

There were some good initiatives, such as money for restoring ocean ecosystems like seagrass and mangroves, expanding the marine park network, improving the health of coastal environments, protecting native species and habitat, and improving recycling.

And there’s money to help northern Australians afford cyclone insurance, funding to make regional Australia more resilient to drought, money for community and household projects that mitigate the impact of natural disasters, and improve the internet and mobile coverage in bushfire prone areas.

Importantly though, these initiatives won’t amount to much if Australia doesn’t considerably step up its action of reducing greenhouse gas emissions here and overseas.

The bottom line

Overall the budget is a big failure for climate action. There were no additional spending announcements for things we’d really love to see, such as large scale renewable energy projects, or big plans to electrify industry or transport. It failed to capitalise on Australia’s natural renewable energy advantages, or set us up as an emerging renewable energy powerhouse.

In terms of fighting climate change in this urgent, critical decade, this budget is deeply disappointing.

The post Federal Budget 2021: What does it mean for action on climate change appeared first on Climate Council.