Watt’s next in federal energy policy?

After a landslide election win, Labor is poised to deliver its ambitious plans for energy and the environment.

With Labor forming a majority government after their decisive victory in the federal election, they’re now in a strong position to make good on their energy objectives. As detailed in our pre-election article, the key priorities for the ALP are:

1. Support for Capacity Investment Scheme (CIS), National Reconstruction Fund (NRF), Rewiring the Nation Fund (RNF) and emissions reduction commitments.
2. A $2.3 billion investment to support residential battery adoption.
3. A $2 billion recapitalisation of the Clean Energy Finance Corporation (CEFC).
4. A $1.8 billion extension of household energy rebates until the end of 2025.
5. Strengthening domestic gas capacity through the Future Gas Strategy (FGT).
6. Continuing its commitment to a net zero by 2050 emissions target.

Labor’s second-term energy and climate agenda reflects a continuation and expansion of its existing decarbonisation and energy transition framework.¹ Below we explore the practical steps to implement these policies and their implications for the industry.

Practical steps to policy implementation

Conquering the Senate

Labor is expected to hold 28 seats in the Senate, and when combined with the Greens’ 11 seats, this gives the government a viable path to pass legislation without needing additional crossbench support.²

The Greens are likely to play a key role in the upcoming parliament. Having opposed new gas developments, they are expected to push for strong safeguards in exchange for their support.³ This could complicate the passage of policies, such as those related to domestic gas security.

As a result, Labor’s ability to implement its energy agenda will depend not only on its numbers but also on the political and policy compromises it may need to make. Given the composition of the Senate this term, it is likely that key initiatives will be reshaped, delayed or reframed.

Labor’s immediate energy commitments

To support the rollout of residential batteries, the government will need to accredit installers, define minimum standards for virtual power plant compatibility, and coordinate uniform installation rules across jurisdictions.⁴

In order to fund the $2 billion CEFC recapitalisation, Labor must uphold its promise in the 2025–26 Budget and collaborate with the CEFC Board to align and update financing priorities with emerging gaps in the market.⁵

Strengthening domestic gas capacity will require activating the reformed Australian Domestic Gas Security Mechanism, running quarterly supply assessments, and taking measures that demand close coordination with state regulators and gas producers.⁶

Energy rebates, announced in the 2025-2026 Budget, will provide immediate support to all grid-connected homeowners with an electricity bill, while eligible small businesses (those meeting the legal definition) will also benefit. The government will direct providers to automate payments to apply $75 quarterly credits from July.⁷

Labor’s ongoing energy commitments

To meet its clean energy and emissions targets, Labor must align investment, planning, and policy delivery across a suite of complex programs.

The Clean Energy System (CES) requires project prioritisation through AEMO’s Integrated System Plan,⁸ streamlined environmental approvals, and rapid workforce development.⁹ However, progress be hindered by grid access disputes and community opposition to transmission projects.¹⁰ The NRF requires clear funding criteria, coordination with CEFC and ARENA, and a strategy to navigate overlapping state schemes.¹¹

The RNF will involve offering concessional loans for key interconnectors, harmonising landholder consultation rules, and supply chain constraints.¹² Achieving net zero by 2050 will require coordinated emissions reductions across six major sectors (energy, transport, industry, agriculture, resources, and the built environment) through detailed sectoral plans.¹³ Implementation will involve expanding the electricity grid with renewable generation, electrifying transport and industry, scaling low-carbon fuels, and investing in carbon removal technologies.

Successfully managing this transition will also require workforce reskilling and regional transition planning to attract private capital.¹⁴ Ultimately, success will depend not just on effective planning, but on sustained political and financial commitment through to 2050.

Policy impact on the new energy landscape

Investment vehicles

The continued growth and expansion of investment vehicles like the CEFC, NRF, and CIS will accelerate the deployment of renewables, grid upgrades, and battery storage, driving immediate economic activity, particularly in rural Australia.

These first term Labor policies are expected to sustain investment in large-scale renewable energy technologies and key transmission infrastructure, such as the VNI West and Marinus Link, which are partially funded by RNF and CEFC.¹⁵ These projects enhance energy interconnection between Australian states, with a focus on national electrification.¹⁶

Moving forward, ongoing investment from the CEFC and NRF will not only support the growth of the renewables industry but also help advance the development of clean energy generation resources. However, this progress will require a nationally coordinated decommissioning process, including guidelines for deconstruction, recycling and replacement, despite the absence of any such plans to date.

Home battery subsidy

The home battery subsidy scheme is expected to be launched parliamentary term.¹⁷ It will provide direct incentives to consumers, although many details are still unclear and may change. It is likely that consumers will benefit through a means-tested rebate or zero-interest loans.

The program aims to encourage rapid adoption of batteries, especially as they become more affordable and widely available. In addition to helping households achieve greater energy independence, the scheme seeks to shift consumer focus from solar PV adoption (which is relatively high) to the combined adoption of solar and battery systems.

As more batteries are installed, Australia may see a shift from large-scale, centralised energy generation to a more distributed model, where individuals generate their own power. This shift will create ‘prosumers’ – people who both produce and consume energy.¹⁸

Household rebates

The extension of household energy rebates aims to provide direct relief to consumer energy bills in quarterly instalments. This approach is designed to maintain public support for the energy transition while also helping to stabilise national energy costs amid a volatile market.¹⁹ However, the long-term effectiveness of these rebates remains uncertain, as the ALP has yet to clarify whether they will be extended beyond their current expiration at the end of the year.²⁰

Gas supply

The shoring of gas supply, especially in offshore Western Australia and the wider Beetaloo Basin, aims to offset any potential generation and supply shortfalls during the energy transition.²¹ With an increase in domestic gas production and the possibility of tighter export controls under the Australian Domestic Gas Security Mechanism, it is likely that the gas will be used as a backup resource to help prevent brownouts, address intermittency issues, and reduce and grid disruptions.

These policies cumulatively seek to position Australia as a low-emissions, high manufacturing economy that intends to meet the global 2050 net zero emissions target.

Moving forward

Labor’s strengthened position in the 48th Parliament offers an opportunity to implement a coherent and nationally integrated energy transition strategy. While short-term policies will focus on affordability, grid reliability, and accelerating clean energy deployment, long-term success will hinge on reforming industrial supply chains, managing social and workforce transitions, and coordinating emissions reduction across every sector of the economy.

For more information, please get in touch with Matt Baumgurtel and Adriaan van der Merwe.

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¹Clean Energy Council, ‘Australian Election delivers mandate for clean energy’, 4 May 2025, <https://cleanenergycouncil.org.au/news-resources/australian-election-delivers-mandate-for-clean-energy>.

²Rosie Lewis, ‘Anthony Albanese Handed Easier Senate in Second Term and May Need Only Greens Support’, The Australian (online, 5 May 2025) <https://www.theaustralian.com.au/nation/politics/anthony-albanese-handed-easier-senate-in-second-term-and-may-need-only-greens-support/news-story/7a715f301c75f508a8e0995f0aae57ad>.

³Adam Morton, ‘Australia Has Backed a Rapid Shift to Renewable Energy – and Given Labor a Chance on Climate. How Will It Act?’, The Guardian (online, 6 May 2025) https://www.theguardian.com/australia-news/commentisfree/2025/may/06/australia-has-backed-a-rapid-shift-to-renewable-energy-and-given-labor-a-chance-on-climate-how-will-it-act; The Greens, ‘Greens to demand Climate Minister exercise powers to stop new coal and gas in minority Parliament’, 28 April 2025, <https://greens.org.au/news/media-release/greens-demand-climate-minister-exercise-powers-stop-new-coal-and-gas-minority>.

⁴Daniel Mercer, ‘Government’s Home Battery Discount Explained’, ABC News (online, 7 May 2025) <https://www.abc.net.au/news/2025-05-07/government-home-battery-discount-explained/105257914>.

⁵Clean Energy Finance Corporation Investment Mandate Direction 2023 (Cth); Clean Energy Finance Corporation, ‘CEFC Welcomes Additional $2 Billion Capital Allocation from Australian Government’ (Media Release, 14 May 2024) <https://www.cefc.com.au/media/statement/cefc-welcomes-additional-2-billion-capital-allocation-from-australian-government>.

⁶Department of Industry, Science and Resources (Cth), ‘Securing Australian Domestic Gas Supply: Australian Domestic Gas Security Mechanism’ (Web Page, 2025) <https://www.industry.gov.au/mining-oil-and-gas/oil-and-gas/securing-australian-domestic-gas-supply#australian-domestic-gas-security-mechanism-1>.

⁷Department of Climate Change, Energy, the Environment and Water (Cth), Energy Bill Relief Fund (Web Page, 2025) https://www.energy.gov.au/energy-bill-relief-fund; Australian Government, Small Business FAQs: Energy Bill Relief Fund (Factsheet, 25 March 2025) 2.

⁸Australian Energy Market Operator, 2024 Integrated System Plan: Overview (Report, 2024) <https://aemo.com.au/-/media/files/major-publications/isp/2024/2024-integrated-system-plan-overview.pdf>.

⁹Perry Williams, ‘Australian Energy Market Operator Warns We Need Electricians in Rush to Meet Renewables Goals’, The Australian (online, 5 March 2024) <https://www.theaustralian.com.au/business/australian-energy-market-operator-warns-we-need-electricians-in-rush-to-meet-renewables-goals/news-story/520678ff65e809f7390224d8df6f0a08>.

¹⁰‘Construction of Australia’s Largest Transmission Project is Powering Ahead’, Switchgear Magazine (online, 11 March 2024) <https://switchgear-magazine.com/tm-news/business/construction-of-australias-largest-transmission-project-is-powering-ahead>.

¹¹Peter Roberts, ‘CEFC Points the Way to NRF Effectiveness’, @AuManufacturing (online, 15 November 2023) <https://www.aumanufacturing.com.au/cefc-points-the-way-to-nrf-effectiveness>; National Reconstruction Fund Objectives’, Australian Institute of Company Directors (online, 10 August 2023) <https://www.aicd.com.au/economic-news/australian/infrastructure-projects/national-reconstruction-fund-objectives.html>.

¹²Chris Bowen, ‘Joint Media Release: Rewiring the Nation Plugs Marinus Link and Tasmanian Jobs’, Minister for Climate Change and Energy (online, 19 October 2023) <https://minister.dcceew.gov.au/bowen/media-releases/joint-media-release-rewiring-nation-plugs-marinus-link-and-tasmanian-jobs>.

¹³Department of Climate Change, Energy, the Environment and Water (Cth), Net Zero (Web Page, 2024) https://www.dcceew.gov.au/climate-change/emissions-reduction/net-zero.

¹⁴Ibid.

¹⁵Office of the Prime Minister of Australia, ‘Rewiring The Nation Plugs In Marinus Link And Tasmanian Jobs’, 19 October 2022, <https://www.pm.gov.au/media/rewiring-nation-plugs-marinus-link-and-tasmanian-jobs>; Clean Energy Finance Corporation, ‘VNI West (NSW) to provide essential infrastructure for net zero transition’, December 2024 <https://www.cefc.com.au/case-studies/vni-west-nsw-to-provide-essential-infrastructure-for-net-zero-transition/>.

¹⁶Green Building Council Australia, ‘Electrification’, January 2025, <https://new.gbca.org.au/green-star/green-star-strategy/electrification/>.

¹⁷Labor, ‘Labor to deliver one million energy bill busting batteries’, 6 April 2025, <https://alp.org.au/news/labor-to-deliver-one-million-energy-bill-busting-batteries/>.

¹⁸Enel Green Power, ‘Prosumers: when energy consumers become energy producers’, 8 March 2023, <https://www.enelgreenpower.com/learning-hub/gigawhat/search-articles/articles/2023/03/prosumers-energy>.

¹⁹ABC News, ‘Labor promises to shave $150 off energy bills in fresh election pledge’, March 2025, <https://www.abc.net.au/news/2025-03-22/labor-promises-to-shave-150-off-energy-bills/105084994>.

²⁰Ibid.

²¹Australian Government, ‘Future Gas Strategy’, June 2024, <https://www.industry.gov.au/publications/future-gas-strategy>.