Australia’s climate targets expose risks to nature, and need stronger environmental policy

Last week was significant for Australian climate policy. On Monday, the first comprehensive National Climate Risk Assessment outlined the severe and compounding impacts on our social, economic and natural systems that we can expect as climate change worsens.

Australia’s natural environment, which underpins all other social and economic systems, and which is already highly degraded, was singled out as facing the highest risks.

Read more: Is this Australia’s climate wake-up call? A hotter, harder future looms

Then, on Thursday, the Australian government announced its 2035 climate target – to reduce greenhouse gas emissions by 62% to 70% from 2005 levels – and released the Net Zero Plan to achieve this.

The plan relies heavily on emissions removals in the land sector, to be achieved largely through revegetation, restoration, and conservation of forests and other natural ecosystems.

The announcements highlight a paradox within Australian climate policy: While natural ecosystems are increasingly threatened by climate change and other human activities, they’re also central to our climate mitigation and adaptation efforts.

This demands far more attention to avoid trade-offs and to foster synergies between climate and nature policy. Here, we unpack some of the inconsistencies and risks within Australia’s current policy settings, highlighting opportunities for improved integration.

An ambitious climate target?

Despite the government’s claims of high ambition, Australia’s 2035 target falls short of what science shows is needed to prevent dangerous climate change.

Read more: What Australia’s climate targets mean for our health

Indeed, an ambitious, science-aligned target for Australia would be more like net zero by 2035 or 2040. This would also be consistent with requirements under the international Paris Agreement for Australia, as a wealthy, developed nation, to take the lead in delivering economy-wide emissions reductions.

Australia has missed an opportunity to demonstrate real leadership and ambition at the upcoming international climate COP in Brazil. This is even more concerning considering the severe climate impacts outlined the National Climate Risk Assessment.

Weak climate targets mean more global warming and catastrophic impacts

The National Climate Risk Assessment presents a frightening outlook on how Australia will fare under global warming, with devastating impacts to our communities, health and social systems, primary industries and food supply, economy, infrastructure and national security.

Our natural environment is already in a state of serious decline, with limited capacity to adapt to a changing climate. As climate change intensifies, we can expect further loss and collapse of natural systems, threatening the ecosystem services on which we rely (clean water, clean air, healthy soil, pollination, pest control, raw materials, protection from extreme weather events, and more).

The ability of forests, wetlands and oceans to store carbon from the atmosphere is also compromised by climate change. 

Mitigation and adaptation policy rely heavily on nature

One of the five priorities outlined in the Net Zero Plan to achieve Australia’s climate targets is to scale up net carbon removals, through technologies, methods and practices that extract carbon dioxide directly from the atmosphere and store it in oceans, on land, or underground. Land sector methods, such as reforestation and regeneration, are identified as the most cost-effective opportunities.

Yet, the capacity of these methods to achieve and sustain carbon removal is questionable under future climate change scenarios.

For example, the National Risk Assessment found that forests are at risk from rising temperatures, more frequent and intense fire conditions, and shifting patterns of rainfall and drought.

Extreme events – such as like severe bushfires – could lead to major changes in ecosystems, potentially transforming them entirely.

Australia’s National Adaptation Plan, also released last week, clearly acknowledges that our natural environment supports and provides services to all other systems, particularly primary industries. Healthy-functioning ecosystems are the necessary foundation for adapting, as far as possible, to climate change impacts.

However, while some new nature-focused investments are proposed, overall, this high-level plan fails to propose the bold measures urgently needed to deliver nature repair.

Rethinking policy settings to better-integrate nature and climate

As we outline in forthcoming research, there are immediate opportunities to scale up and galvanise our policy responses to climate change and nature conservation in Australia, and in particular to better integrate nature into climate policy.

Here we outline three priorities for reform that form a foundation for longer-term development of a more integrated nature and climate strategy.

Strengthening the safeguard mechanism to deliver decarbonisation in high-emitting industries

The Net Zero Plan highlights the role of the Safeguard Mechanism (our emissions trading scheme) and the Australian Carbon Credit Units (ACCU) Scheme (an associated carbon market) in meeting our climate targets.

The Safeguard Mechanism requires our largest industrial “facilities“ – which emit more than 100,000 tonnes of CO₂-e in Scope 1 emissions per year in mining, oil and gas, manufacturing, transport and waste sectors – to reduce their net emissions progressively each year.

Yet this mechanism also includes flexible compliance options that disincentivise direct decarbonisation in high-emitting industries.

Facilities can meet their emissions reduction obligations by purchasing and surrendering carbon credits generated under the ACCU scheme. Currently, there’s no limit on how many credits can be used.

In theory, this approach offers a cost-effective way to achieve overall emissions reductions by allowing regulated emitters to offset their emissions through equivalent reductions in unregulated sectors.

However, heavy reliance on ACCU purchases may divert resources and attention away from internal decarbonisation efforts within high-emitting industries, potentially delaying critical emissions reductions.

As the Safeguard Mechanism primarily places obligations on sectors central to Australia’s transition to net zero, depending on ACCUs risks postponing urgent mitigation actions – especially those focused on reducing fossil fuel emissions.

Data from the Clean Energy Regulator shows that in the early years of the Safeguard Mechanism, ACCUs have been heavily relied on to meet compliance obligations. Most ACCUs are generated through vegetation and agricultural methods, many of which have faced heavy criticism for failing to deliver real, additional, and permanent carbon abatement.

Moreover, these methods are vulnerable to the impacts of climate change, which may further undermine their effectiveness.

As the 2026 review of the Safeguard Mechanism approaches, the government should consider restricting the use of ACCUs for compliance purposes to ensure more direct and immediate emissions reductions from heavy-emitting industries.

Improving integration of carbon and biodiversity markets

The Net Zero Plan emphasises the role of Australia’s national voluntary biodiversity market – the Nature Repair Market – and how it can complement the ACCU scheme to incentivise carbon removals while delivering positive biodiversity outcomes. The National Adaptation Plan also highlights the role of the Nature Repair Market in facilitating greater private sector investment in nature to support climate change adaptation.

However, the ACCU scheme and Nature Repair Market have mostly been developed to function independently, with limited focus on enhancing potential synergies.

The ACCU scheme includes basic guardrails to protect biodiversity from negative impacts of carbon projects. For instance, it prohibits projects that involve planting invasive weed species, clearing native forests, or draining wetlands to grow new vegetation.

Similarly, the Nature Repair Market requires project proponents to explain how they will manage risks to biodiversity outcomes caused by climate change. However, neither market explicitly recognises and values co-benefits in ways which would incentivise projects that are both good for the climate and for nature.

Not all carbon credit projects offer positive biodiversity outcomes, and indeed some methods (such as monocultural plantings) represent missed opportunities for biodiversity gains, and in some cases can even lead to biodiversity loss.

There is, therefore, an opportunity to improve ACCU methods to recognise, enhance and protect nature.

Additionally, developing landscape-scale plans for restoration could guide the operation of these environmental markets to better contribute to strategic nature conservation priorities.

Reforming Australia’s nature laws to halt biodiversity loss and support restoration

While the Nature Repair Market seeks to direct new investment into nature restoration, the loss and further fragmentation of natural ecosystems continues to be approved under both national and subnational laws.

At the national scale, reforms to the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) are long overdue. A 2020 independent review found that the law has failed to protect nationally significant biodiversity.

This is due largely to the highly discretionary, project-by-project approach to development decision-making, under which most projects are approved, with a heavy reliance on inadequately regulated biodiversity offsets, and little attention to cumulative impacts.

The Net Zero Plan recognises the urgent need for EPBC Act reform, noting this is essential to streamline approval processes for the major clean energy infrastructure projects essential to achieving a net zero economy. Reforms are expected to be introduced later this year.

This is another crucial opportunity to ensure climate policy does not come at the expense of nature. Australia’s new environmental laws need to establish strong protections for areas and habitat that are irreplaceable, tighter constraints on the use of biodiversity offsets, and strategic frameworks for nature conservation and restoration across landscapes. 

Climate policy must protect, not degrade, nature

Australia stands at a critical crossroads in aligning its climate ambitions with the urgent need to protect and restore nature.

Last week’s announcements underscored both the severity of climate risks and the reliance on natural ecosystems as a cornerstone of climate change mitigation and adaptation efforts. Yet current policies reveal significant gaps – in ambition, integration and guardrails – that risk undermining both climate and biodiversity outcomes.

The reforms explored above should be the foundation for a broader discussion about integrating Australian climate and nature policy.