Between the catastrophists and the sceptics, modern day life is now dominated by national attempts to move from emissions generating fossil fuels to renewables or nuclear power. But as power bills rise, with the need to build new infrastructure with renewables, the question arises – with net zero by 2050 – can we afford it? On Wednesday 13 August 2025, The Sydney Institute heard two differing views on the prospects of Net Zero. Ed Cavanough – Chief Executive Officer with the McKell Institute – joined Aidan Morrison – Director of Energy Research at the Centre for Independent Studies to discuss the issues.

NET ZERO: TWO VIEWS

AIDAN MORRISON

Speaking at the 2025 Diggers and Dealers Conference in Kalgoorlie — one of the largest mining conferences in the world — I stated that net zero is intellectually dead. There is now no self-respecting way of maintaining it is possible to reach the end of that pathway. And this paper will extend that statement further to say that net zero is morally dead as well.

It has become very clear now that the proposed cure is worse than the disease we are trying to solve. That sounds like a high burden of proof, but I will outline it with the recent things that are starting to become settled, and dawning on the public consciousness. These have been present in some veins of analysis for quite some time. However, as they’re increasingly exposed, they will change massively how we consider Labor’s target of “net zero by 2050”.

The disease

First, let’s briefly look at the disease. In the popular narrative, this has been stated as if we a very high degree of control over something that has a very high impact — a catastrophic impact, in fact. That is typically how the general narrative has been described. And broadly speaking, it is wrong.

It is true we have high certainty about some things. But we do not have a high certainty of having a high degree of control over a lever that leads to a highly impactful or catastrophic event in the near future. We’re quite certain, for example, of the mechanism by which the greenhouse effect leads to carbon dioxide increasing the warming in the atmosphere. That’s something we know, fairly certainly. There’s also a lot of evidence (from carbon-14 for example), that fossil fuels are a big contribution to atmospheric carbon. But what that then does to the climate is where all the narrow bounds of high confidence start to disappear, because the Earth is an extremely large and extremely complex system.

Increasingly, people who are serious about climate science are now admitting that the corpus of scientific work describes a future that is not, in fact, catastrophic for human existence. This is not a terminal disease that leads to the end of life as we know it on Earth. It can lead to change, it can lead to risk, it can lead to complexity. But it does not mean we abandon all cost-benefit analysis and consider that any price is worth paying to meet some alleged existential threat deadline.

The Secretary of the U.S. Department of Energy, Chris Wright, recently released a major report.^[1] Amongst the authors are people like Steve Koonin, who worked in the Obama administration as a climate expert. In the executive summary, the report argues that “carbon dioxide also acts as a greenhouse effect exerting a warming influence on the climate and weather”. It goes on to say that the “global climate models generally run ‘hot’ in their description of the climate over the past few decades”, and that “most extreme weather events in the US do not show long term trends”.

This is the start of a pushback that is very serious about the climate science, but very low on the catastrophisation of it. We’re not expecting a catastrophe and that means we do not need to become hysterical. This trend of commentary is just starting to emerge: that it is possible to be serious about climate science, and assess climate change as a risk and a serious cost, but not as an immediate and existential threat. Which means, however, we need to soberly assess the costs of the policies we’re proposing to address it.

To highlight that a bit further, the Intergovernmental Panel on Climate Change (IPCC) has produced some detailed documents in recent years. About 1500 pages into the AR6 chapter on Impacts, Adaptation and Vulnerability, there is some analysis about the weather trends. The report says “there has been a decline in tropical cyclone frequency near Australia”.^[2] The same report stated that “data representing tropical cyclone landfall frequency over Australia shows a decreasing trend in eastern Australia since the 1800s. A paleo climate proxy reconstruction shows that recent levels of tropical cyclone interactions along parts of the Australian coastline at their lowest in the past 550 to 1500 years”.^[3]

So, the answer is that we have a complex system, and indicators are mixed — some trending worse, others not. It does not paint the picture of imminent certain catastrophe on every metric with high confidence that we can attribute it all to human contributions.

Figure 11.12 in that report shows some of the tables that discuss the confidence about the frequency and intensity of meteorological droughts.^[4] We have medium confidence of decreases in most of Australia. We have low confidence of there being intermediate trends and even the rare ones, that do have some medium confidence of increases, have a low confidence or limited evidence of human contribution to that trend.

This is the science, as written up by the IPCC. Yet this does not spell the narrative of imminent, certain disaster tightly tied to human contributions, which has been widely portrayed to us in popular commentary.

The cure

If the disease is not imminently fatal, we then have to assess costs and side-effects of the treatments carefully. We have new and very serious information emerging about the costs. That evidence has been discussed and advocated for many people. But now it is becoming unavoidable for us to acknowledge that the costs are simply unbearable without catastrophic degrowth, if we’re attempting to meet net zero by 2050.

The big picture is this: our human emissions comprise broadly three parts, which are roughly evenly split in terms of the path to decarbonisation. The first is electricity. Our current use of electricity is dominated at the moment by coal in Australia and indeed in most of the world. Second, there are a host of heating functions and certain transport functions that we propose to basically decarbonise by switching them to electricity. And the remaining third are typically thought to comprise somewhat “hard to abate” sectors. These involve certain heavy transport applications and also a range of chemical industrial processes and feedstocks, for which the plan is to basically use hydrogen as a substitute to existing fuels and feedstocks.

So, we have our own electricity, which is the first third. Then electrifying everything, which means much more electricity again. Then we’re going to use hydrogen for all those difficult and chemical feedstock processes, which requires truly prodigious amounts of electricity.

The problem is this. We were told that the first third would not just be cost free but save us money on our energy costs because renewables were so cheap and abundant. That has now been shown to be a blatant falsehood. We cannot ignore the evidence that the move towards renewable energy — to squeeze out coal from our system — is going to drive higher costs. If you take the premise that we have higher-cost electricity based on our renewable energy and you plug that into your “electrify everything” step, you end up with massive problems. If you plug them into your hydrogen step, you end in utter disaster.

Spelling this out in a little more detail, there are now basically no studies except for CSIRO’s Gencost that demonstrate renewable energy, adopted to a very high level of penetration, is still the cheapest way to go. I cannot find any piece of literature that now confirms what Gencost asserts.

I have issues with Gencost that I will detail here briefly. First, if you’ve read the headlines that renewables are still the cheapest,^[5] that is simply not the case based on the lowest credible costs in CSIRO’s modelling. They actually have coal at their lowest cost being cheaper than the integrated firmed renewables.^[6] So, it is a great disappointment that the CSIRO has not substantially revised its conclusion when the facts in its own report support the opposite.

Secondly, the latest report from CSIRO’s GenCost has revised substantially its own assessment of integration costs. Let me emphasise this. This is its own assessment of what the integration of renewables needs to make them firm and reliable. Energy from the weather is “feast and famine” energy. But to transform that into the reliable, on-demand energy — the energy we’ve built our society around — takes extra investment. CSIRO acknowledges that. Six months ago, those extra investments cost between $42 and $48 per megawatt hour.^[7] This time CSIRO says it’s between $48 and $64.^[8] There is now no overlap. In six months, CSIRO has basically said its entire previous estimate range was wrong.

What about the capacity factor that’s used to generate the range of different things? CSIRO’s lowest particular capacity factor for renewables is only 10 per cent below the average they assess today.^[9] The problem with this is that as we add more and more renewables, we necessarily get much higher degrees of spillage, for which CSIRO appears to have a lower estimate at 90 per cent renewables than even that of the market Operator for this year and next.^[10]

CSIRO has not substantially changed its storage estimates in the recent times, even though alternative estimates are much higher, including from Alex Wonhas. A former employee of CSIRO and Aurecon, Wonhas has said we may need to double the amount of storage we include in our integration pathway for several reasons, including because we haven’t got the optimal balance of wind and solar.^[11]

Then there is transmission. CISRO’s Gencost includes the same stack of costs in one of its tables for the committed anticipated projects.^[12] It does not seem to account for the fact that AEMO has already reported up to a 55 per cent increase.^[13] In addition, a week after Gencost was announced, it turned out there was a 100 per cent increase for one of Australia’s largest transmission projects.^[14]

While coal was assessed as being plausibly cheaper than the lower-bound of integrated renewables, it is really the upper end of the cost-range GenCost provides that warrants attention. The low end of the ranges assumes implausible wind capacity factors of 48 per cent; the high end assumes just 10 per cent less than today’s average around 33 per cent. Once we add in 10 per cent for transmission losses (which GenCost ignores) the upper bound is really a more-credible minimum. Since prime sites are already taken, performance can only degrade from here. If we push all our heating and all that transport onto electricity at those prices, we can expect catastrophic economic degrowth.

What about hydrogen? Hydrogen is, of course far, far worse. We now have evidence of this we absolutely cannot ignore from the latest subsidy deal that has been agreed to by Energy Minister Chris Bowen.^[15] This deal is with Orica, which produces ammonia, mostly for explosives to support the mining sector. Orica does not have to store or transport hydrogen anywhere, as the company converts it straight into ammonia. It is the easiest possible use case. If green hydrogen doesn’t work in this application, it does not work anywhere. And what are the subsidies that have been allocated to it?Over $500 million to reduce just 7.5 per cent of Orica’s natural gas demand. If we scale that up to replace all the natural gas demand, it will cost $6.5 billion. If we were to scale that up to meet what we’d project to be required in the Integrated System Plan it would cost somewhere well over $100 billion.^[16]

The cost of decarbonisation for this project is not $30 per tonne of carbon abated or e$40, which is what the cost of Australian carbon units currently are. It’s closer to $1100 or $1200.^[17] This is an insane degree of subsidy. Rather than actually looking at this and saying “there’s some hope for hydrogen”, this should be the ultimate, final nail in the coffin. It says hydrogen cannot, and will not, ever work. Even if the electrolysers are completely free, you need electricity somewhere around $20 a megawatt/hour instead of $200 a megawatt/hour to make hydrogen that can actually compete with the current steam methane reformation process.

To conclude: is net zero worth the cost, given we do not have a terminal, fatal, imminent disease?

Think about the example of a toilet. Have you ever encountered a net zero toilet before? Challenge to the reader: hold in whatever is in your guts for today until you get yourself to a net zero toilet. No ceramics, no plastics, no steel. Think about the pipes that take it away. Think about how this system would work, if toilets and sewage infrastructure was made of unvarnished wood, or unfired clay.

There are still around a billion people that don’t have adequate sanitation in the world today, and around one million people every year die from preventable diseases that arise from that. If we are proposing — as Labor’s current plan does — to decarbonise the basic inputs and building blocks of our life like steel, ceramics, cement, fuel, mobility, shipping, food supply, this will make all those things between three and 20 times more expensive. Are we doing something good for humanity or bad for humanity?

Since we now know renewables are very expensive. There is no intellectual or moral case to continue supporting net zero.

ENDNOTES

1. United States Department of Energy, Climate Working Group, 29/07/2025, ‘A Critical Review of Impacts of Greenhouse Gas Emissions on the U.S. Climate’, https://www.energy.gov/sites/default/files/2025-07/DOE_Critical_Review_of_Impacts_of_GHG_Emissions_on_the_US_Climate_July_2025.pdf ↑
2. IPCC, ‘Climate Change 2022: Impacts, Adaptation and Vulnerability’, Chapter 11 – Australasia, p. 1587, https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter11.pdf ↑
3. IPCC, ‘Climate Change 2021: The Physical Science Basis’, Chapter 11: Weather and Climate Extreme Events in a Changing Climate, p. 1586, https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Chapter11.pdf ↑
4. Ibid, p. 1662 ↑
5. CSIRO, ‘CSIRO releases final 2024-25 GenCost report following consultation’, https://www.csiro.au/en/news/all/news/2025/july/2024-25-gencost-final-report ↑
6. CSIRO, Gencost 2024-25, ES Figure 0-2, p. xiv, https://www.csiro.au/en/research/technology-space/energy/Electricity-transition/GenCost ↑
7. CSIRO, ‘Gencost 2024-25 Consultation Draft’, S6.2.3, p. 64, https://publications.csiro.au/publications/publication/PIcsiro:EP2024-6152 ↑
8. CSIRO, ‘Gencost 2024-25’, S6.2.3, p. 75, https://www.csiro.au/en/research/technology-space/energy/Electricity-transition/GenCost ↑
9. Ibid, p. 71 ↑
10. AEMO, Integrated System Plan 2024, Appendix 4, Figure 7. ↑
11. Parkinson, Giles, Renew Economy, ‘Australia may need twice as many big batteries to make up for lost wind’, https://reneweconomy.com.au/australia-may-need-twice-as-many-big-batteries-to-make-up-for-lost-wind/ ↑
12. CSIRO, ‘Gencost 2024-25’, S6.2.2, Table 6-2, p. 72, https://www.csiro.au/en/research/technology-space/energy/Electricity-transition/GenCost ↑
13. AEMO, ‘AEMO publishes electricity network options report for consultation’, https://www.aemo.com.au/newsroom/news-updates/aemo-publishes-electricity-network-options-report-for-consultation ↑
14. Macdonald-Smith; Angela, Cropp; Ryan; Ilanbey, Summeyya, ‘VNI West costs double amid calls to scrap major energy projects’, https://www.afr.com/companies/energy/vni-west-costs-double-amid-calls-to-scrap-major-energy-projects-20250731-p5mj6t ↑
15. Orica, ‘Orica awarded $432 million ARENA Headstart funding’, 4/7/25, https://www.orica.com/news-media/2025/orica-awarded-432-million-arena-headstart-funding ↑
16. Blik, Jude, The Centre for Independent Studies, ‘Green Hydrogen: Are we betting on a dead horse?’.
    This is a forthcoming paper. ↑
17. Ibid. ↑