2025 Federal Election: Distinctly Different Energy Policies

As Australia approaches its 2025 federal election, energy policy has emerged as a critical policy divide between the major parties, shaping voter’s choice, and more importantly, setting the trajectory for the country’s energy system over the next few decades. The policy platforms from Labor and the Coalition present starkly different pathways with implications for generation investment, grid stability, emissions profiles, and regulatory risk.

The divergence is not merely about speed of decarbonisation or consumer energy prices. At stake is the underlying architecture of the future system: whether Australia continues toward a predominantly renewable-powered, and more decentralised model; or whether it pivots back to a more centralised model built around baseload generators through the introduction of nuclear plants.

Labor’s Incremental Acceleration

The Labor Party’s energy strategy is for a continuation of the current trajectory: a further expansion of renewables, and storage, backed by government mechanisms like the Capacity Investment Scheme with guidance from an expert panel on the shape of the National Electricity Market’s wholesale market settings. The panel is expected to provide its recommendations to Government and the Energy and Climate Change Ministerial Council later this year.

Labor has recommitted to its ambitious 82 per cent renewable target for the National Electricity Market (NEM) by 2030. Central to this is expansion of Renewable Energy Zones (REZs) and transmission buildout supported by the $20 billion Rewiring the Nation fund. Transmission is a critical bottleneck, and Labor’s further commitment of $15 billion toward priority interconnectors signals an understanding that without faster network augmentation, renewable project congestion will continue to not just impact investors but also the pace of the transition.

One key addition to Labor’s energy plans is the pledge of a $2.3 billion Cheaper Home Batteries Program, which aims to accelerate the uptake of household batteries. The initiative, which is set to commence as of July 2025 – if Labor is returned to office – will provide subsidies covering up to 30 per cent of the cost of a ‘typical’ home battery system – which it estimates will save around $4000. The program aims to encourage one million home batteries by 2030, with eligibility criteria requiring that all systems be Virtual Power Plant (VPP) ready and paired with new or existing rooftop solar. According to Labor’s modelling, participating households could save up to $1100 per year on electricity. Small businesses and community facilities will also be able to access the subsidy.[i]

On affordability, Labor’s election commitment to extend household energy rebates — an extra $150 per eligible household — acknowledges that short-term cost relief remains politically critical.

Notably, Labor legislated a 43 per cent emissions reduction target by 2030, with the strengthening of the Safeguard Mechanism a key part of encouraging economy-wide reductions.

A returned Labor government is offering a continuation of its current policies: steady renewables growth, grid reinforcement, and the need for battery and dispatchable plant to support reliability.

The Coalition’s Nuclear Bet

In a sharp break with past platforms, the Coalition under Peter Dutton is proposing to shift course, promising a grid anchored around seven government-owned nuclear generators.

The Coalition’s nuclear plan would see the nuclear reactors — five large-scale reactors, and two small modular reactors (SMRs) - replace coal-fired power stations, using existing grid and workforce infrastructure[ii]. This approach seeks to introduce large-scale dispatchable, zero-emissions baseload generation to a grid increasingly characterised by variable renewables.

Critically, nuclear development timelines pose the greatest challenge to this strategy. Even under optimistic assumptions, a first operational plant is unlikely to enter service before the late 2030s. This leaves a decade-long gap where the existing energy transition will continue. The Coalition intends to keep coal plants in the system longer than currently envisaged to bridge the gap to nuclear.  

Financially, the Coalition claims nuclear can be deployed for $116 billion. However, CSIRO's GenCost modelling, cited, albeit contested, during the campaign, suggests total system costs would likely be double that of renewable energy[iii].  Based on the Frontier Economics modelling undertaken for the Coalition, renewables would make up 54 per cent of the grid capacity, nuclear 38 per cent, and around 8 per cent made up of storage and gas. It has been reported that the 54 per cent would be a cap, but the Coalition’s Energy spokesperson Ted O’Brien has made it clear these figures do not represent caps on technology types. Without detailed transitional policies, there will remain some uncertainty as to how this would play out with the timing of nuclear plant developments and coal plant closures unclear.

Alongside nuclear, the Coalition maintains strong support for new gas supply development, particularly the Beetaloo Basin and offshore basins. Gas is framed as a transitional fuel, offering system security as renewable deployment continues and while nuclear capacity is commissioned. The Coalition also has promised to introduce an East Coast Gas Reservation, which would “deliver between 50-100 petajoules of additional gas to the domestic market in the first full year of operation, which is equivalent to a further 10 to 20 per cent of current domestic demand.”[iv] The Coalition’s modelling suggests this would lead to a 23 per cent reduction in wholesale prices and a 3 per cent reduction in household electricity prices.[v]  It has also committed to incentivising more gas generation by adding gas to the Capacity Investment Scheme and stating it would deliver more gas generation if the private sector “fails to step up first”[vi]. In terms of getting gas to where it’s needed, the Coalition would establish a $1 billion Critical Gas Infrastructure Fund to support investment in high priority pipeline and supply infrastructure projects, It would also reinstate the National Gas Infrastructure Plan to support long term planning for gas infrastructure, including storage facilities in the southern states.

In terms of grid infrastructure, the Coalition has signalled a shift in priorities for the Rewiring the Nation program. While it does not plan to abolish the program outright, the Coalition proposes redirecting portions of the $20 billion fund toward network upgrades specifically required to support nuclear generation. This would include reinforcing high-voltage transmission around legacy coal plant sites — where it is aiming to locate future nuclear reactors — and expanding interconnection to support firm dispatchable capacity flows across the NEM. The Coalition has also indicated that future funding would be scrutinised through a "technology-neutral" lens, with a likely reduction in support for REZ-specific assets unless they align with broader system reliability goals. This would mark a significant reorientation of the program away from its original function as a renewables enabler, and would introduce new commercial uncertainty for solar and wind projects relying on coordinated transmission investment.

For the energy sector, a Coalition government would represent a major strategic pivot. Investment priorities would likely tilt toward firming capacity and gas development, while renewable energy proponents could encounter new policy and market challenges as attention shifts toward nuclear infrastructure. Critically, the absence of an established legislative and regulatory framework for nuclear power would amplify long-term uncertainty, complicating investment decisions and risk assessments across the industry.

The Greens, Teals and Independents

There remains the potential for a minority government of some persuasion and the positions of the independents, the Teals, and the Greens could become a point of discussion if that eventuates. As we’ve noted, while for the most part the crossbench have presented themselves as very pro-climate, and keen to fast track the transition, there is very little detail to allow genuine analysis on practical steps to enable their delivery. The one exception to this is Allegra Spender’s proposal to provide zero interest loans for electrification to provide permanent bill relief and the Greens have certainly set an aggressive decarbonisation agenda.

The Greens, led by Adam Bandt, have platformed the most aggressive energy transformation agenda. Their policy calls for 100 per cent renewable electricity by 2030 and net-zero economy-wide emissions by 2035[vii]. They argue that the climate crisis demands a wartime-scale mobilisation of resources and political will.

A key feature of the Greens’ energy plan is the legislative banning of new coal, oil, and gas projects. The Greens also advocate for a managed, legislated phase-out of existing fossil fuel operations, viewing ongoing extraction as fundamentally incompatible with Australia’s global obligations.

Public ownership is central to the Greens’ model. They propose renaming Snowy Hydro's retail businesses PowerAustralia with a new mandate to work in the public interest to deliver not-for-profit, low-cost energy and drive competition, with the majority of profits given back to consumers in the form of cheaper energy bills. They claim their plan would see electricity bills fall by $270 per annum for PowerAustralia customers. Additionally, The Greens will rename Snowy Hydro to the Commonwealth Electricity Corporation, separate from PowerAustralia, with it focusing on two specific tasks: administering the Renter’s Right to Solar, and investing $30 billion in new wind, solar and storage capacity.[viii]

Specific commitments include an $8.1 billion policy to support households and businesses to install home batteries and electrify appliances, funded through progressive taxation measures.[ix] This initiative is framed as both an energy security measure and a cost-of-living intervention.

From an engineering perspective, the Greens' targets would require unprecedented acceleration in grid-scale storage, transmission build-out, and demand management technologies. Given the persistent regulatory and community friction around transmission projects, achieving 100 per cent renewables by 2030 would demand sweeping reform to planning laws and social license processes.

Market dynamics would also shift significantly under the Greens' model. Large-scale public ownership could deter some private investment, particularly if government-backed projects outcompete unsubsidised market entrants. Managing the balance between public and private development would be a complex regulatory challenge.

Conclusion

The 2025 Australian federal election offers fundamentally different visions for the future energy system from the major parties: a continuation of a renewables-led transition (Labor), and a pivot to a nuclear-backed grid (Coalition).

For investors, developers, retailers, and system planners, understanding the policy risk, transitional gaps, and infrastructure demands associated with each pathway is essential. Australia’s energy sector has already weathered decades of policy volatility; the choices made on 3 May 2025 will now set the deep structural contours of the next energy era.

[i] https://alp.org.au/news/labor-to-deliver-one-million-energy-bill-busting-batteries

[ii] https://www.theguardian.com/australia-news/2025/feb/04/nuclear-power-liberal-coalition-energy-power-plan-details

[iii] https://www.abc.net.au/news/2024-12-09/nuclear-power-plant-twice-as-costly-as-renewables/104691114

[iv] https://www.liberal.org.au/2025/04/09/australian-gas-for-australians

[v] https://www.frontier- economics.com.au/assessment-of-coalition-gas-policy-proposals

[vi] Our Plan to Deliver Australian Gas for Australians - Liberal Party of Australia

[vii] https://greens.org.au/portfolios/climate-change-energy

[viii]  https://cdn.greens.org.au/cdn/ff/fk0q_VgBQA5t00ZlhkPcF6i2IEZByQHBjpMq1g6YdVQ/1744244709/public/2025-04/2035%20Powering%20Past%20Coal%20%26%20Gas.pdf

[ix] https://greens.org.au/news/media-release/greens-launch-electrification-plan-get-homes-and-businesses-gas-reduce-emissions