Work

Characterising the supply- and demand-sides of the net-zero transition to inform sectoral decarbonisation policy

Year: 2026

Type: article

Abstract: Whilst demand- and supply-side interventions are both essential for energy system decarbonisation, most energy system modelling used to inform policy development focuses on supply-side actions. This work therefore first presents optimised pathways for Australia to reach net-zero emissions by 2050, followed by analysis and discussion of both the demand- and supply-side costs and emissions in four end-use sectors, i.e. residential and commercial buildings, transport and industry. This includes a discussion of the staging of actions and their costs over the net-zero transition by sector. This granular sectoral and sub-sectoral understanding of cost drivers is intended to support the development of staged and targeted policies for system-wide decarbonisation. For example, this work shows that whilst demand and supply-side interventions contribute similarly to the overall costs of a net-zero transition, there are significant sectoral differences in these costs and their associated capital intensities, their avoided greenhouse gas emissions and their best timing for different abatement actions. This analysis therefore suggests that industry and transport decarbonisation should be priorities, accounting for about 80 % of the total net-zero abatement task and with about half of the industry's emissions potentially abated at lower costs than those of the transport and residential sectors. • Sectoral breakdown of demand- and supply-side energy system decarbonisation costs. • Transport and Residential sectors require 90 % of demand-side capital investment. • Two-thirds of supply-side investment is attributed to Industry and Transport. • Small increases in electricity supply cost are found over the net-zero transition. • Policy examples to suit the revealed sectoral cost/emissions drivers are provided.

Source: Energy Policy

DOI: 10.1016/j.enpol.2026.115130