Liberals want to ditch net zero but IEA report says it's cheaper and cleaner

The International Energy Agency (IEA) didn't deliberately time its annual flagship report to coincide with the great climate showdown unfolding in the Liberal Party of Australia.

But its 2025 World Energy Report, packed with useful data, forecasts and cold hard facts has dropped at a most opportune moment for any politician weighing which direction Australia should pursue.

This lengthy report makes three main points relevant to the current debate in Australia.

The first is that the Coalition is not alone in wanting to tap the brakes on climate ambition.

"There is less momentum than before behind national and international efforts to reduce emissions, yet climate risks are rising," the IEA says.

Donald Trump's move to pull the US out of the Paris Climate Agreement is the most obvious example of this shift.

The second point is that energy demand is only growing and will accelerate in the years ahead. This is partly driven by the rise of artificial intelligence and the ballooning number of electricity-hungry data centres. 

All forms of energy production reached record highs last year, including nuclear, which is "making a comeback". The IEA says: "Global nuclear power capacity is set to increase by at least one-third by 2035."

The third powerful point made by the IEA will be more difficult reading for those wanting to slow down the net zero transition.

For advanced economies, the World Energy Report clearly finds that following a pathway to net zero emissions by 2050 is the best way to deliver lower household bills.

Three transition scenarios

The IEA lays out three scenarios. A slow, medium and faster version of the transition away from fossil fuels.

The "current policies scenario" involves sticking with the slower pace witnessed since Trump's return to the White House. The "stated policies scenario" is based on the best laid policy commitments. Then there's the "net zero by 2050 scenario", which as the name suggests, lays out a more ambitious pathway.

Although the net zero scenario requires "higher up-front spending", it leads to "a clear decline in total household energy bills in advanced economies".

Electricity bills may not move much, as we use more of it to charge cars and heat homes. But as we use less petrol and gas, overall household bills are forecast to fall.

Indeed, the IEA believes significant savings will be felt within 10 years for advanced economies that stick to the net zero pathway. By 2050, household bills will have roughly halved, exceeding the benefits of any other scenario.

There are, understandably, all sorts of uncertainties, including geopolitical risks to the supply of critical minerals required for the renewables rollout. But this is the most authoritative snapshot of where the global energy transition is going.

Gloves off in the climate debate

Liberal conservatives who want to join their National Party counterparts in ditching net zero argue the move would give them a much clearer point of difference to Labor. It would empower them, finally, to take the gloves off in the climate debate.

The hard reality is voters might be losing enthusiasm for net zero but are yet to be convinced there's a cheaper alternative. The IEA certainly doesn't think there is one over the long term.

Yesterday's Liberal partyroom meeting opened with a presentation from the party's federal director Andrew Hirst on the findings of focus group research. He told the room most voters wanted sensible action on climate change and saw net zero as a proxy for just that.

He pointed out voters did not currently blame net zero for higher power prices; they blamed a range of other factors.

The federal director didn't state a position on what the party room should do, but argued voter attitudes could potentially shift with a concerted campaign linking net zero to higher costs.

For that to happen, voters would need to be convinced there was an alternative that led to lower household bills.

That's the missing piece of the puzzle for the Coalition right now. How would its policy cater for the accelerating demand for energy over the years ahead?

Shadow Energy Minister Dan Tehan has spoken about finding more gas, pushing back the closure of coal-fired power plants and lifting the moratorium on nuclear power — all things Peter Dutton promised before the election. Voters weren't convinced.

Shadow Industrial Relations Minister Tim Wilson, by contrast, warns against being "National Party lite" and champions an alternative course that involves proceeding with the renewables rollout in the interests of maintaining Australia's economic strength: "We can fight for hope and opportunity and building out and re-industrialising our country with the energy sources that we need."

Wilson's stated vision is for a "clean industrial future".

After everyone had their say at yesterday's gathering, Liberal members of the shadow cabinet will meet today to finalise a position. Whether the words "net zero" are expunged from the policy entirely or survive in some vague form, the party will still need to answer the big question: how does it plan to build more energy supply and bring bills down?

And more specifically, does it want more renewables and transmission lines built or not?

Even with Trump hitting the brakes on the energy transition in the US, the global shift is clear. The International Energy Agency says renewables will continue to "grow faster than any other major energy source" under any of its scenarios, driven by cheap solar power.

As Liberals were told yesterday, ditching net zero will only work politically if voters can be convinced it will bring prices down. That requires an alternative policy that stacks up and yet another messy debate over where renewables fit into that picture.

David Speers is national political lead and host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.