Article by Matthew Cranston and Thomas Henry, courtesy of The Australian
05.12.2025
A former Treasury official has raised doubts about the department’s modelling on net-zero targets which claim green exports would exceed fossil fuel exports within seven years, even under a disorderly transition to net zero.
Former deputy secretary Luke Yeaman, who is now chief economist at the Commonwealth Bank of Australia, said the assumptions relied upon by Treasury in its modelling contained in its Australia’s Net Zero Transformation document, were likely to be off the mark.
His views come after National senators this week grilled Treasury officials over the department’s assertion that green exports would surpass fossil fuel exports so quickly.
Mr Yeaman said a “key risk” to the government’s emissions projections was that global demand for coal and liquefied natural gas (LNG) holds up better than expected.
“The Treasury modelling assumes a steep fall of 47 per cent in Australian coal mine output and 27 per cent in gas and LNG production from 2024-25 to 2034-35,” Mr Yeaman said.
“This was based on earlier IEA [Intenational Energy Agency] predictions that global demand for coal and gas would fall.
“However, more recent IEA analysis tells a different story.
“Global coal demand has remained strong and the IEA now projects it will stay at relatively high levels over at least the next few years.
“If Australia’s coal and gas production overshoot Treasury forecasts, then Australia’s mining sector is likely to remain a larger share of Australia’s economy and exports in coming years.
“This risk is more pronounced in the near-term given current demand trends but could very well extend to 2035.”
Treasury also make the assumption that so-called “green exports”, a large proportion for which includes critical minerals, will reach more than $60bn, passing fossil fuel exports by 2032.
Mr Yeaman questioned that forecast. “The shift to ‘green’ commodities also faces considerable hurdles. This puts at risk the notion that the value of ‘green’ commodity exports will rise as Treasury modelling suggests in their baseline scenario.”
Senators Susan McDonald and Matt Canavan raised their suspicions that the forecasts were wrong.
“The heart of the problem under this government is that it has adopted deeply flawed ideological models, not economic models, that means Australian taxes are being directed to low or no return investments at the same time that it attacks the wealth-generating coal and gas industry with actions such as signing the Belem [climate] agreement, and specific exclusions to making approvals harder for the coal and gas sectors in the EPBC [Environment Protection and Biodiversity Conservation Act],” Senator McDonald said.
“Not only do the Treasury forecasts show our terms of trade will decline year on year for the next four years, but at Estimates they made the stunning admission that ‘the terms of trade will not go into positive territory’,” the senator said.
“That goes to the heart of Australia’s future as an exporting country, and a prosperous nation; and it debunks the nonsense that some sort of renewables economy can replace the wealth and jobs of our coal and gas industry.”
Senator Canavan called for the government’s modelling on net zero to be reworked, after he grilled Treasury executives over discrepancies in its assumptions around global coal demand to 2050.
The Nationals senator, who has long campaigned for Australia’s net-zero targets to be scrapped entirely, said “yoghurt would have a longer use-by date” than the government’s current modelling on net zero, before calling for a rework of Treasury’s assumptions.
“Net zero means we have to fundamentally change everything we do in the space of a generation, to change how we drive, what food we eat, how we make things, how we generate electricity,” he said.
“Almost everything has to change in 25 years; net zero is the most radical agenda adopted by any government in Australian history.”
