NSW has continued to reduce greenhouse gas emissions, but an independent report has found the state is no longer on track to achieve its legislated emissions reduction targets without a much faster pace of change.
The Net Zero Commission‘s 2026 Annual Progress Report found emissions are falling, but not quickly enough to achieve a 50 per cent reduction by 2030 and a 70 per cent reduction by 2035. According to the Commission, the NSW Government’s 2025 emissions projections show the gap to both targets has widened since the previous year’s projections.
The report estimates a projected shortfall of between 10 and 20 MtCO2-e in 2030 and between 21 and 24 MtCO2-e by 2035. To remain on course, annual emissions would need to fall to 75.9 MtCO2-e by 2030 and 45.6 MtCO2-e by 2035.
The Commission said NSW has reduced emissions by an average of 2.1 MtCO2-e each year since 2004-05, but reaching the 2030 target will require average annual reductions of 5.5 MtCO2-e from 2023 onwards.
Planning and infrastructure identified as priorities
The report sets out eight recommendations intended to close the emissions gap, beginning with changes to government decision making.
The Commission said planning decisions should give greater weight to the state’s legislated emissions reduction targets, including prioritising renewable energy and industrial decarbonisation projects while ensuring proposals such as coal mine extensions, expansions and data centres are assessed against those targets. It also called for better verified emissions data to improve decision making across government and supply chains.
The report also recommends reducing barriers that slow renewable generation, storage and transmission projects through planning, financing and construction, while improving energy efficiency and supporting greater use of distributed energy resources.
It says new industrial electricity demand, particularly from data centres, should rely on additional renewable energy and support the timely closure of coal-fired power stations.
Every sector has a role in emissions reduction
According to the Commission, around one quarter of Australia’s greenhouse gas emissions originate in NSW, with electricity and energy remaining the state’s largest source of emissions, followed by transport and agriculture.
While emissions from electricity and energy have declined for five consecutive years, the report states that much faster reductions are required because clean electricity will also enable emissions reductions across transport, buildings and industry through electrification. It found policy settings in the electricity sector are relatively well developed, but many projects continue to experience delays.
Beyond electricity, the report recommends faster uptake of electric vehicles, electrification of industrial process heat, improved building efficiency, lower methane emissions from landfills, agriculture and coal mining, and greater use of circular economy principles in government policies where they can reduce both emissions and waste generation.
Adaptation moves from planning to implementation
Alongside emissions reduction, the Commission said NSW must move from planning climate adaptation measures to delivering them.
The report states that key adaptation policies have been delayed and calls for clearer governance, defined responsibilities and greater investment to improve resilience as communities experience more frequent extreme weather events. It recommends stronger support for agencies and councils responsible for responding to climate risks, together with more transparent reporting of government adaptation spending.
First Nations knowledge recognised in climate response
The report identifies First Nations leadership as an important part of climate governance, recommending greater support for First Nations-led initiatives and broader consideration of cultural knowledge in climate policy and disaster resilience.
“Aboriginal peoples are not responsible for the climate crisis, but we are prepared to be part of the solution. We have land, knowledge, and commitment to care for Country. We must now be equipped and empowered to lead in this space.”
The statement was included in the report from a NSW Aboriginal Land Council submission to the Commission’s 2025 consultation.
Report to inform government response
The Annual Progress Report is the Commission’s second assessment prepared under the Climate Change (Net Zero Future) Act 2023. It was delivered to the NSW Minister for Climate Change on 1 July, with the Minister required to respond to the Commission’s recommendations within six months.
The report signals continued policy attention on project delivery, industrial decarbonisation, electrification, supply chain emissions reporting and climate resilience as government considers its response to the Commission’s recommendations.
