Australia has suffered more than a decade of policy uncertainty on climate change. Despite increasing international ambition and increasingly urgent calls for action, political differences between and within Australia’s major parties have held back progress.

Nevertheless, converging international and domestic political pressures have created a window of opportunity for progress on climate change policy. Political reality means the best policy – a single, economy-wide emissions price – is out of reach for the foreseeable future. Therefore, the most pragmatic approach is a combination of sector-based, technology-driven policies that will create momentum towards greater ambition at a later date.

In the second half of 2021, Grattan Institute is publishing a series of five reports identifying the options for practical emissions reductions in key sectors. The first report, examining transport emissions, was published in July. This report – the second in the series – focuses on emissions from the industrial sector.