Albanese’s decisive victory strengthens Australia’s climate policy outlook

On the 3^rd of May, and in the days leading up to it, Australians handed in their verdict. In contrast to polls that suggested a close contest, the Australian Labor Party (ALP) has delivered a sweeping victory in the country’s federal election.

The ALP, led by current Prime Minister Anthony Albanese, will form the new government.

Albanese’s re-election matters to Australia’s asset owners who have increased their appetite for climate solutions. The election result has important implications for climate policy down under – continuity being key amongst them.

Policy contest

Over its term in office, the Albanese government had spearheaded a major shift in Australian climate policy.

Within 75 days of winning the previous election, the government introduced a climate change bill that enshrined an emissions reductions target of 43% by 2030 into law. Then, in 2023, the Parliament commissioned a review of Australia’s sector pathways which extinguished the feasibility of nuclear energy. Most recently, in January this year, a highly anticipated mandatory disclosure regime came into effect.

Investors welcomed it. “A generational shift”, they called it.

Australia’s opposition leader and Albanese’s primary political opponent – Peter Dutton – was critical of the government’s support for renewable energy. Dutton’s plan was to increase gas production and pivot to nuclear energy.

The future of Australia’s climate policy, therefore, was dependent on the ballot. On their part, investors made it clear that policy certainty was in their collective interest.

In March, a joint statement issued by investor groups called for bipartisanship in climate policy. In it, signatories highlighted the hard fought progress that had been made – targets were set, emissions were falling, and investor confidence was on the rise.

Signatories were counting on the new government, whoever that might be, to stay the course.

Albanese’s re-election and the fact that Dutton did not retain his seat, implies confident continuity in Canberra’s renewable energy plans.

Resume and accelerate

In addition to certainty and continuity, investors also expect progress from Albanese’s second tenure.

“Economic damages from growing extreme climate events remain the biggest risk to super funds and other investors being able to deliver sustainable returns for their 15 million Australian members”, says Rebecca Mikula-Wright, CEO of the Investor Group of Climate Change.

The IGCC’s list of recommendations for the new government includes setting an ambitious 2035 emissions reduction target, a national climate risk assessment and a comprehensive adaption strategy.

“As new and continuing MPs and senators return to Canberra in the coming months, investors will be very keen to resume and accelerate the progress Australia is making towards a net zero, climate resilient economy", Mikula-Wright adds.

Albanese’s re-election will calm some nerves around the certainty of climate policy down under. As the Albanese government prepares for its second term, investor expectations will be high.

Certainty and continuity will set the tone for a renewed conversation over accelerated progress.