Published

10 months ago

June 30, 2025

Alice Rush

Jonathan Brearley became chief executive of the UK’s energy regulator Ofgem in 2020.

Since then, he has seen the organisation through the Covid-19 pandemic, the impact of Russia’s war in Ukraine and the subsequent energy crisis.

In January, it was announced that Brearley will continue in the role until 2030, the target date for the UK’s electricity system to run on clean power.

This gives him an important position in overseeing the country’s electricity and gas networks, as well as the energy markets, retailers and consumer prices during a period of huge transition.

Carbon Brief sat down with Brearley to discuss the energy network, “zonal” pricing, the Spanish blackout and what is next for protecting customers from high energy prices.

On the next decade: “If you fast forward to 10 years’ time…our energy is going to come from lots of different places.”
On electricity network rollout: “We should have built the network faster.”
On Ofgem’s scope: “If I think back to…2020, I don’t think I’d have imagined how fast we would change the things that we do.”
On price control frameworks: “If we get that right, if we get that infrastructure on time, then that takes the country to a much more stable and secure place.”
On zonal pricing: “There are benefits, economic benefits, from single pricing, but it brings uncertainty…[I]t’s a balanced judgment. It’s not just a slam dunk.”
On the clean-power 2030 goal: “The interaction between zonal and clean power is this question of cost of capital and uncertainty.”
On protecting customers: “We are trying to have a stable system…one that allows us to manage this international volatility that, quite frankly, no government or regulator can control.”
On the Spanish blackout: “I think we’ll all have to be vigilant.”

On zero-carbon power: “The job for all of us is to be really careful about the security of supply.”
On “rebalancing” energy-bill policy costs: “We’ll all have to be mindful of the distributional consequences of any change.”
On equity in the transition: “There’s a really big challenge for all of us, [around] how are we going to get some of this kit into people’s homes.”
On energy bills: “There’s greater awareness and I think greater importance in people’s lives.”
On misinformation: “We see part of our job as being that sort of authoritative voice.”
On the role of gas: “It’s about diversifying [the energy system] so that, were a shock to hit, we would be in a much more attenuated place.”
On wind “constraint” costs: “The best way to avoid constraint costs is to have the network to transport the electricity, ”
On customers and the energy transition: “There is a really interesting discussion we should have publicly, about how customers are going to see this change.”

Carbon Brief: How do you think the UK’s energy system will look in a decade and what will it mean for consumers?

Jonathan Brearley: So, I might answer that by just stepping back and thinking about how it’s already changed, and therefore how it might change in the future.

If you go back to 10 years ago when we started this low-carbon transition journey really, it was all about growing energy at the back end. So different forms of power generation, in particular, and to be honest, my life, your life, everyone’s life, has not really changed much in the way we use energy. Most of us still heat our homes using the same kind of heaters, usually gas heaters. We still use electricity in the same way we did, frankly, in the 70s and 80s.

But if you fast forward to 10 years’ time – and you’re beginning to see this already, actually increasingly – our energy is going to come from lots of different places. So it’s going to come, for example, from solar panels, which we may have on our roofs. We may be using our cars both for sourcing their fuel from electricity, but also being used to help us manage our own energy within our homes.

So I think this is all going to become very real and very visible for families and for businesses.

I think the question for me is, how do we make sure that that transition is a positive one, and how can we make sure that people get the benefits of that? And I think the benefits could be really big.

CB: Sort of implicit in what you just said is a bit of the fact that we thought a lot about the generation, we thought about the renewables, but the networks for something that feels like it’s only really become a focus in the last couple of years.

Do you think that we should have paid more attention to that sooner? Or do you think lots of people were, but it just wasn’t getting the sort of media attention that renewables were?

JB: So I think, without a doubt – and I’ve said this many times with hindsight – we should have built the network faster. You know, it’s clear that we now need to build fast to meet the ambition of renewables that we have.

Now, some of that is about how those ambitions change over time. But quite frankly, we’ve got a huge task now to get our networks in place. And you know, in a system where the place we generate is going to change, the type of generation we have is going to change, we need the network to match. And that’s really what Ofgem’s focus has been for a number of years now, to try and get that going. And quite frankly, I think it is going quite fast.

CB: Do you think that Ofgem’s scope and focus have changed an awful lot, in even just the last five years or since the energy crisis?

JB: Hugely. I mean, I think it’s changed hugely. Even if I think back to when I was CEO in 2020, I don’t think I’d have imagined how fast we would change the things that we do.

So take that network’s kind of piece. Even in 2020, we were still running price controls pretty much in the way we’ve run them before, [whereas] right now, our network regulation is starting from the understanding that pace is important. The speed at which we move, the speed at which we get investment in the system, is the best way we are going to protect customers.

So with something we called ASTI, the accelerated strategic transmission investment program. We have a whole programme now focused on making sure that, as far as possible, our kind of regulation of the money doesn’t get in front of project development.

Now, quite frankly, we’re about to come out with RIIO, our price control settlement. I think what we will say to the industry, to ourselves, to industry and to government, is, “look, there’s a massive challenge now. We’re making this money available, but we have to deliver, and that means making sure we get that network on time so that this new system we’re building works for the whole country.”

CB: How’s RIIO going to change from previous price framework periods?

JB: Well, I think there are two elements for me. First of all, we have to make sure that we invest in the system that we have. So all infrastructure regulators, in my opinion, need to learn the lessons from the last 10 years to make sure that the system we have maintains high [level of] security of supply and delivers high-quality services to customers.

But also, we are sort of embarking on this big build program to make sure that we are ready to take on all of this new generation.

Now, if we get that right, if we get that infrastructure on time, then that takes the country to a much more stable and secure place, which is something that I think in today’s world that customers will value extremely, hugely.

CB: With talking about the networks and how much is changing, you previously said you would support a shift to zonal pricing. Given how fraught the debate is, could you give me some of the core reasons behind backing such a shift?

JB: So look, I’ve shared my personal view on this and, quite frankly, that’s a Jonathan Brearley view, not a view of the whole organisation. And the reason I say that is because this is a really balanced argument.

So the problem we will all have is how to make sure we can run this new system as efficiently as possible. So, how do we minimise payments to generators to switch off because we simply can’t move their power around? And how do we make sure that the operation of our batteries, our interconnectors and our generators all fit together?

There are basically two options. There’s zonal pricing, which I prefer, because I think when you get there – even though it’s a long journey – this adapts more organically and more easily.

But there is a path you take where you adapt the national system that we have. You probably have to change your transmission charging and probably have to do more planning of infrastructure that could take you to somewhere near the same place.

Now I know the secretary of state is balancing those two things together. The argument is fairly simple in my mind: there are benefits, economic benefits, from single pricing, but it brings uncertainty. The question is, does that uncertainty drive up the cost of capital so much that it actually outweighs the benefits that you might get? And that’s what he’ll be grappling with.

Either way, we’ll support him in that delivery. I’ve given my view, but it’s a balanced judgment. It’s not just a slam dunk.

CB: You mentioned within that, that zonal pricing is a long journey. Do you think that the timeframe within which it could be implemented could potentially jeopardise [the government’s target of] clean power by 2030?

JB: So I think the interaction between zonal and clean power is this question of cost of capital and uncertainty. That’s the same trade-off I’ve just laid out and that’s where I think will be on the secretary of state’s mind when he makes that decision.

CB: In the shorter term, we’ve already touched on how things have changed since the energy price crisis and that being driven by surging gas prices in particular.

How much can Ofgem do to protect customers and consumers from similar situations in the future, given that gas still has such a role in setting wholesale market prices?

JB: Well, look, I mean I think that’s our mission. We’ve all got to learn collectively from the last few years. When you distill it back – all the regulatory detail, all of the conversations about how we manage technically – we found ourselves in a situation where this country’s energy needs were, in the vast majority, being provided by an international gas market that we don’t control.

Now, we saw the impact when we had to withdraw from Russia as a major supplier and we saw the price spikes we saw in 2022-24. What all of us want to do is build a system where we never face that kind of situation again.

So the thing about building the infrastructure we’re talking about, both through networks and through the upcoming auctions for offshore wind and onshore wind, is that we will have a system that is much more stable.

So there’s some very early analysis that we’re doing that I don’t have sort of full figures for, that asks the question, “Well, imagine we had a gas crisis in 2030 when this is all built”. And the early indications from that analysis are actually [that] we would be a lot better off as a country.

The main thing we are trying to do is have a stable system, a system that’s more within our domestic control, not totally within our domestic control, but one that allows us to manage this international volatility that, quite frankly, no government or regulator can control.

CB: Talking about international volatility, we’ve had the report this week from the Spanish government into the causes of the blackout. Then we’ve also had [grid operator] Redeia sort of pushing back against certain elements of it.

What is Ofgem taking from that situation, to learn about how it could manage potentially similar situations in the UK?

JB: Well, I think it’s still early days. We’re still digesting the report and we will make sure that we, the system operator and the network companies and indeed, the generators learn from what happened in Spain.

I guess, stepping back from the specifics, there are some reasons to take comfort. I think we have thought a lot about things like system inertia and some of the problems you might get when you see thermal generation declining, but I think we’ll all have to be vigilant. This is a big change and we’ll have to make sure the system works in all scenarios.

And look, the thing about incidents such as what happened in Spain is that they are great ways for us to make sure our system is more resilient. But there’s nothing I’ve seen from the reports yet that makes me think that there’s something we’re absolutely missing in the UK. But as I say, early days and much more work to do to get through that.

CB: With Britain being an islanded grid, it strikes me as being very different from the one in Spain.

Are there any particular countries that Ofgem can look at, sort of learn lessons from, or do you always sort of have to take a step back and go, but we are an island, we don’t have the level of interconnection that other places do, and we do need to be slightly more independent because of that.

JB: Well, that’s an interesting question. I suppose that as we look at our interconnection program, we’re going to build out up to roughly around 18 gigawatts (GW) of interconnection. So I don’t think we are going to be an island in 10 years’ time, coming back to sort of where we started.

There is always a question, if you are more separate from another market, as to how you manage, particularly looking back at the gas crisis. If you look at our gas market and how we connect to Europe, and what we might need from them. But I don’t think we’re so different that we can’t take lessons from European countries either.

And actually, I think when you look at Spain, Portugal and their interaction with France, one of the things I hear is a question that’s being asked is, should you have more interconnection for Spain, because, actually, there weren’t many outlets to begin to share some of these sorts of factors that play.

CB: That’s interesting, because I think lots of the focus has just been on how Spain was interconnected with Portugal, and that was almost a problem for Portugal.

JB: Well, that’s right, but if you look at the two of them together and how they connect to the rest of Europe, I don’t know the numbers, but I would imagine it’s a million miles away from where we are.

CB: With Britain expected to have periods of zero-carbon electricity generation for the first time this year, what are the biggest challenges Ofgem is facing in facilitating this transition?

JB: Well, I think it’s a really positive step. Now, let’s be clear, we will all be vigilant. And I imagine Fintan [Slye] and the system operator will be super vigilant, to make sure they understand how the system will work and how they’ll manage some of the changes that a zero-carbon system brings.

But it’s a great step forward and I think as we gradually get into this, the job for all of us is to be really careful about the security of supply, to remember that that is always the customer’s number one concern, and to begin to learn the lessons.

The thing for me is this great change that Ed Miliband is instituting through 2030, the new generation, the new network. For me, it’s all now about the efficiency of that. Making sure that’s efficient, economic and delivers what customers need.

Now the other thing, I think from the gas crisis is, although there are still tensions between the trilemma – I think we can’t pretend the trilemma has completely gone away – they are much lower than when I started 10 years ago, where we had a real sort of trade off between very high cost renewables and very low cost thermal.

So I think there’s a lot of work for us to do, but look, I’m glad we’ve made that step, and I hope it continues to do so.

CB: Do you think there needs to be work to rebalance the levies on electricity bills to sort of continue to tackle some of these core imbalances in the cost to consumers?

JB: So another trilemma is levies on electricity, what you might put on gas and what a taxpayer might take. You know, as a regulator without a fiscal mandate, of course I would love the taxpayer to take more of the burden, but I don’t face the challenges that the chancellor faces.

I think there is always going to be a question in the current system as to how, if you want people to take up electricity as their option for heating and for transport, how you make that economic, particularly through heating. But the thing we’ll all have to be mindful of is the distributional consequences of any change.

So what we think broadly is actually what you’ve got to do is step back and think about those customers that are really struggling. So, if you have low-income customers that are finding it hard in today’s market as is, how are you going to protect them through any transition?

And I think that goes beyond the question about levies actually. I think systemically, we need to do more for affordability, to give ourselves flexibility, to make changes like that that might make the system more efficient.

CB: Do you think the energy industry as a whole is doing enough to ensure that everyone is brought along with the transition? That everyone gets the benefits of being able to charge an EV at home and stuff like that, even if it requires quite a big upfront cost. Are we doing enough overall?

JB: So the thing I want to recognise is that, particularly for suppliers, but actually across the industry, people have worked really hard to protect vulnerable customers. You know, we’ve had things to work through, like prepayment meters, but most companies now have really focused on trying to make sure they understand customers in difficult financial circumstances, for example.

Now there’s always more we can do, and as a regulator, we’re always going to be pushing to make that response better. So [things like a] quick response to people in debt, making sure that you get them onto an affordable repayment plan and you work hard with those families to get them back in a more stable position.

I’m really pleased with the government’s announcement today [19 June 2025] that there’s more people going to get the “warm home discount”, and we’re going to play our part in that. We’re going to introduce debt relief initiatives that tackle the stock of debt that’s been left over since the crisis. So things are beginning to move.

In the short term, I think that as we make this transition, there’s a really big challenge for all of us, which you’ve highlighted, which is how are we going to get some of this kit into people’s homes, for people that aren’t able to finance that themselves? So I’m looking to the “warm homes plan”. I was pleased to see that was money allocated in the spending review [for the warm homes plan], where we will actually be [able to] support some of the most vulnerable customers to benefit from this.

And look, there’s a myth out there that I think we should challenge, that poorer or lower-income households and vulnerable customers don’t want to engage with this market.

I mean, interestingly, I’ve talked to a lot to [EV] charging companies for example, and they’ll point out to me, they’ll point out to me that a lot of EV users are people who’ve got those through disability payments and are engaging in a more flexible market and are seeing those benefits.

So the more of that we can create, the better I think it will spread the benefits of the change.

CB: It’s interesting. Why do you think there is less awareness that people who are considered sort of lower income aren’t as engaged?

JB: So there is some evidence, actually. So some of the consumer work we’ve done does say that, in general, if you have vulnerabilities, you might engage less with things like switching. But I think we’ve got to be imaginative about this. And if you have policy and policy funding, then there must be a much better way to get people involved.

Like I say, when you see people getting electric vehicles, for example, through personal independence allocations, things like that, then you can see people do engage. So there’s plenty of scope there to do more.

CB: Do you think there’s a greater awareness of what goes into energy bills than there was five years ago or before the energy crisis? And does that change how consumers then interact with you and what they call for from Ofgem?

JB: Well, I’ll tell you one thing that I’ve done now for three or four years, which is, I’ve phoned customers up individually. And so my teams find me someone – they do pre-warn them – and I phone them up and ask very general questions.

So I don’t go in there with a series of specifics, I just say, “how do you feel about your energy company? How would you feel about your energy provision? And what would you change?”

And I guess that the change that I am noticing, for understandable reasons, is that it’s much more front of mind than it’s ever been before.

So I think back to sort of when I started in Ofgem in 2015, I told people what I did, there was sort of moderate interest, put it that way. Now, everybody has an opinion about what should happen and the way we should configure the system.

So I think there’s, there’s greater awareness, and I think greater importance in people’s lives. You know, people have seen the impact of high prices, and most people have the question, well, how do I help myself get out of that?

CB: From Ofgem’s point of view, are there any specific areas where you think there’s mis- or disinformation that’s particularly harming your work, particularly in the media?

JB: So, you know, there is [currently] a much wider debate now about net-zero, and I think that is a shift. So right the way back when we developed the Climate Change Act in 2006/7, we had a House of Commons that I think had five dissenting votes out of the whole House – something like that, certainly less than 10. [Five Conservative MPs voted against the bill.]

So we are seeing a much more vigorous debate about what we should do. Now my view is we should also welcome that we all need to test our plans and test what we’re doing, but I think we have to be careful to ground that, as far as possible, in the analysis.

What we do, when we talk about the impact of what we do, we try and ground that as best we can within the economics we have within this building and the things that we see outside of there. I think that’s hard when the debate becomes more emotional, but that is, we see part of our job as being that sort of authoritative voice, basing things as far as we can on the evidence that we see.

CB: Do you think it would be useful if there was a clearer presentation of things like curtailment costs in the media?

JB: So the system operator does do work on sharing the curtailment costs, so they do and will share their analysis around this. I think the question is, how those might change over time, and being clear on the range of possibilities there.

The problem we have – and look, I’ve been around this very long time, is that projections are just projections. So I was looking back at some projections on constraint costs from 10 years ago, and put it this way, they were way out.

You know, I also always talk about my time in the department in the early sort of 2010s we thought the idea that solar was going to take off in the UK to be completely mad, because it was six times the market price and we have no sun in Britain. That was a kind of general statement. And both of those things have turned out to be wrong.

So one of the things I think we’re all going to have to get used to is understanding that the range of possibilities is still quite wide, and it’s how you have the debate within that, how you talk about how you manage risks.

The thing that we focus on as a result of that is to say, “look, let’s have a look at our portfolio of energy”. As I say, it’s majority gas. What we’re doing, I think, through the infrastructure bill that we’re putting in place, is really moving to a place that’s more stable.

There’s not going to be no gas in 2030, there’s plenty of gas in both our heating system and indeed, there’ll still be gas in our electricity system. But it’s about diversifying that so that were a shock to hit, we would be in a much more attenuated place. And I think that’s better for all customers.

CB: So I know I asked you what the UK energy system will look like in the next 10 years, but what’s on Ofgem’s plate for the near future? What’s next for you? What’s your biggest focus?

JB: Well, our big thing in the next couple of weeks will be RIIO. Now that is on network price control.

To be open, when I first came into Ofgem in 2016, that was a large part of my job. I came as networks director at that point, or networks partner, I think it was called.

And what we’re going to see, I think again, is the regulator moving fast to unlock the investment we need to build this system. So we’ve worked very hard for the companies, now we are always, unashamedly going to challenge them on the amount of money they need and the returns that they get, but equally, we are thoughtful about the pace at which we need to put this infrastructure in place.

As I say, coming out of this will have an impact on customers’ bills, because we have to fund the infrastructure that we are paying for. But we do think that is offset, really, by two things.

First of all, a reduction in those constraint costs, because the best way to avoid constraint costs is to have the network to transport the electricity, but also to get out of this volatility, so to be away from a place where we are as vulnerable as we were in 2022. So that’s what’s on our mind in terms of the conclusions that we’ll come out with.

But it’s a big challenge. The challenge is to us, to industry, to government. Now, what do we need to do? We need to unlock the money as those projects progress. The government needs to make sure that planning permission is there, that we have nothing in terms of the sort of wider regulatory landscape that gets in the way. And the network companies need to deliver, [as] we are giving them a vast amount of money on behalf of customers. This would be fantastic for customers if those projects get in the ground, but if they’re delayed, then I think customers have a right to be asking the question why.

CB: Is there anything else you like to add? Anything you think more people should talk about that no one ever asks you about?

JB: Oh, that’s a very good question. What should people talk about that they don’t ask about? I’ll tell you what we should talk about is – almost going back to the first question – I think there is a really interesting discussion we should have publicly, about how customers are going to see this change.

You know, how is it going to look and feel? Where regulators are terrible is in thinking about the shape of services. You know, how do you design something that people really want? You’ve got some great companies out there doing it. A lot of the retailers are now getting involved in this conversation. You’ve got a lot of small startups.

But I do think, once we continue the debate about the investment that we need, the next question is, “well, how does this work for people?” So I’m really excited by things like the government’s “warm homes plan”, because I think that is a really good way to get a conversation about what infrastructure do we need, how do we best use it, and how do we change all of our lives for the better?

The interview was conducted by Molly Lempriere at Ofgem’s head office in Canary Wharf, London, on 19 June 2025.

The post The Carbon Brief Interview: Ofgem CEO Jonathan Brearley appeared first on Carbon Brief.

The Carbon Brief Interview: Ofgem CEO Jonathan Brearley

Climate Change

The 2026 budget test: Will Australia break free from fossil fuels?

Published

6 days ago

April 29, 2026

Alice Rush

In 2026, the dangers of fossil fuel dependence have been laid bare like never before. The illegal invasion of Iran has brought pain and destruction to millions across the Middle East and triggered a global energy crisis impacting us all. Communities in the Pacific have been hit especially hard by rising fuel prices, and Australians have seen their cost-of-living woes deepen.

Such moments of crisis and upheaval can lead to positive transformation. But only when leaders act with courage and foresight.

There is no clearer statement of a government’s plans and priorities for the nation than its budget — how it plans to raise money, and what services, communities, and industries it will invest in.

As we count down the days to the 2026-27 Federal Budget, will the Albanese Government deliver a budget for our times? One that starts breaking the shackles of fossil fuels, accelerates the shift to clean energy, protects nature, and sees us work together with other countries towards a safer future for all? Or one that doubles down on coal and gas, locks in more climate chaos, and keeps us beholden to the whims of tyrants and billionaires.

Here’s what we think the moment demands, and what we’ll be looking out for when Treasurer Jim Chalmers steps up to the dispatch box on 12 May.

1. Stop fuelling the fire
2. Make big polluters pay
3. Support everyone to be part of the solution
4. Build the industries of the future
5. Build community resilience
6. Be a better neighbour
7. Protect nature

1. Stop fuelling the fire

Action Calls for a Transition Away From Fossil Fuels in Vanuatu. © Greenpeace — The community in Mele, Vanuatu sent a positive message ahead of the First Conference on Transitioning Away from Fossil Fuels. © Greenpeace

In mid-April, Pacific governments and civil society met to redouble their efforts towards a Fossil Fuel Free Pacific. Moving beyond coal, oil and gas is fundamental to limiting warming to 1.5°C — a survival line for vulnerable communities and ecosystems. And as our Head of Pacific, Shiva Gounden, explained, it is “also a path of liberation that frees us from expensive, extractive and polluting fossil fuel imports and uplifts our communities”.

Pacific countries are at the forefront of growing global momentum towards a just transition away from fossil fuels, and it is way past time for Australia to get with the program. It is no longer a question of whether fossil fuel extraction will end, but whether that end will be appropriately managed and see communities supported through the transition, or whether it will be chaotic and disruptive.

So will this budget support the transition away from fossil fuels, or will it continue to prop up coal and gas?

When it comes to sensible moves the government can make right now, one stands out as a genuine low hanging fruit. Mining companies get a full rebate of the excise (or tax) that the rest of us pay on diesel fuel. This lowers their operating costs and acts as a large, ongoing subsidy on fossil fuel production — to the tune of $11 billion a year!

Greenpeace has long called for coal and gas companies to be removed from this outdated scheme, and for the billions in savings to be used to support the clean energy transition and to assist communities with adapting to the impacts of climate change. Will we see the government finally make this long overdue change, or will it once again cave to the fossil fuel lobby?

2. Make big polluters pay

Activists Disrupt Major Gas Conference in Sydney. © Greenpeace — Greenpeace Australia Pacific activists disrupted the Australian Domestic Gas Outlook conference in Sydney with the message ‘Gas execs profit, we pay the price’. © Greenpeace

While our communities continue to suffer the escalating costs of climate-fuelled disasters, our Government continues to support a massive expansion of Australia’s export gas industry. Gas is a dangerous fossil fuel, with every tonne of Australian gas adding to the global heating that endangers us all.

Moreover, companies like Santos and Woodside pay very little tax for the privilege of digging up and selling Australians’ natural endowment of fossil gas. Remarkably, the Government currently raises more tax from beer than from the Petroleum Resource Rent Tax (PRRT) — the main tax on gas profits.

Momentum has been building to replace or supplement the PRRT with a 25% tax on gas exports. This could raise up to $17 billion a year — funds that, like savings from removing the diesel tax rebate for coal and gas companies, could be spent on supporting the clean energy transition and assisting communities with adapting to worsening fires, floods, heatwaves and other impacts of climate change.

As politicians arrive in Canberra for budget week, they will be confronted by billboards calling for a fair tax on gas exports. The push now has the support of dozens of organisations and a growing number of politicians. Let’s hope the Treasurer seizes this rare window for reform.

3. Support everyone to be part of the solution

As the price of petrol and diesel rises, electric vehicles (EVs) are helping people cut fuel use and save money. However, while EV sales have jumped since the invasion of Iran sent fuel prices rising, they still only make up a fraction of total new car sales. This budget should help more Australians switch to electric vehicles and, even more importantly, enable more Australians to get around by bike, on foot, and on public transport. This means maintaining the EV discount, investing in public and active transport, and removing tax breaks for fuel-hungry utes and vans.

Millions of Australians already enjoy the cost-saving benefits of rooftop solar, batteries, and getting off gas. This budget should enable more households, and in particular those on lower incomes, to access these benefits. This means maintaining the Cheaper Home Batteries Program, and building on the Household Energy Upgrades Fund.

4. Build the industries of the future

Protest of Woodside and Drill Rig Valaris at Scarborough Gas Field in Western Australia. © Greenpeace / Jimmy Emms — Crew aboard Greenpeace Australia Pacific’s campaigning vessel the Oceania conducted a peaceful banner protest at the site of the Valaris DPS-1, the drill rig commissioned to build Woodside’s destructive Burrup Hub. © Greenpeace / Jimmy Emms

If we’re to transition away from fossil fuels, we need to be building the clean industries of the future.

No state is more pivotal to Australia’s energy and industrial transformation than Western Australia. The state has unrivaled potential for renewable energy development and for replacing fossil fuel exports with clean exports like green iron. Such industries offer Western Australia the promise of a vibrant economic future, and for Australia to play an outsized positive role in the world’s efforts to reduce emissions.

However, realising this potential will require focussed support from the Federal Government. Among other measures, Greenpeace has recommended establishing the Australasian Green Iron Corporation as a joint venture between the Australian and Western Australian governments, a key trading partner, a major iron ore miner and steel makers. This would unite these central players around the complex task of building a large-scale green iron industry, and unleash Western Australia’s potential as a green industrial powerhouse.

5. Build community resilience

Believe it or not, our Government continues to spend far more on subsidising fossil fuel production — and on clearing up after climate-fuelled disasters — than it does on helping communities and industries reduce disaster costs through practical, proven methods for building their resilience.

Last year, the Government estimated that the cost of recovery from disasters like the devastating 2022 east coast floods on 2019-20 fires will rise to $13.5 billion. For contrast, the Government’s Disaster Ready Fund – the main national source of funding for disaster resilience – invests just $200 million a year in grants to support disaster preparedness and resilience building. This is despite the Government’s own National Emergency Management Agency (NEMA) estimating that for every dollar spent on disaster risk reduction, there is a $9.60 return on investment.

By redirecting funds currently spent on subsidising fossil fuel production, the Government can both stop incentivising climate destruction in the first place, and ensure that Australian communities and industries are better protected from worsening climate extremes.

No communities have more to lose from climate damage, or carry more knowledge of practical solutions, than Aboriginal and Torres Strait Islander peoples. The budget should include a dedicated First Nations climate adaptation fund, ensuring First Nations communities can develop solutions on their own terms, and access the support they need with adapting to extreme heat, coastal erosion and other escalating challenges.

6. Be a better neighbour

The global response to climate change depends on the adequate flow of support from developed economies like Australia to lower income nations with shifting to clean energy, adapting to the impacts of climate change, and addressing loss and damage.

Such support is vital to building trust and cooperation, reducing global emissions, and supporting regional and global security by enabling countries to transition away from fossil fuels and build greater resilience.

Despite its central leadership role in this year’s global climate negotiations, our Government is yet to announce its contribution to international climate finance for 2025-2030. Greenpeace recommends a commitment of $11 billion for this five year period, which is aligned with the global goal under the Paris Agreement to triple international climate finance from current levels.
This new commitment should include additional funding to address loss and damage from climate change and a substantial contribution to the Pacific Resilience Facility, ensuring support is accessible to countries and communities that need it most. It should also see Australia get firmly behind the vision of a Fossil Fuel Free Pacific.

7. Protect nature

Rainforest in Tasmania. © Markus Mauthe / Greenpeace — Rainforest of north west Tasmania in the Takayna (Tarkine) region. © Markus Mauthe / Greenpeace

There is no safe planet without protection of the ecosystems and biodiversity that sustain us and regulate our climate.

Last year the Parliament passed important and long overdue reforms to our national environment laws to ensure better protection for our forests and other critical ecosystems. However, the Government will need to provide sufficient funding to ensure the effective implementation of these reforms.

Greenpeace has recommended $500 million over four years to establish the National Environment Agency — the body responsible for enforcing and monitoring the new laws — and a further $50 million to Environment Information Australia for providing critical information and tools.

Further resourcing will also be required to fulfil the crucial goal of fully protecting 30% of Australian land and seas by 2030. This should include $1 billion towards ending deforestation by enabling farmers and loggers to retool away from destructive practices, $2 billion a year for restoring degraded lands, $5 billion for purchasing and creating new protected areas, and $200 million for expanding domestic and international marine protected areas.

Conclusion

This is not the first time that conflict overseas has triggered an energy crisis, or that a budget has been preceded by a summer of extreme weather disasters, highlighting the urgent need to phase out fossil fuels. What’s different in 2026 is the availability of solutions. Renewable energy is now cheaper and more accessible than ever before. Global momentum is firmly behind the transition away from fossil fuels. The Albanese Government, with its overwhelming majority, has the chance to set our nation up for the future, or keep us stranded in the past. Let’s hope it makes some smart choices.

The 2026 budget test: Will Australia break free from fossil fuels?

Climate Change

What fossil fuels really cost us in a world at war

Published

6 days ago

April 29, 2026

Alice Rush

Anne Jellema is Executive Director of 350.org.

The war on Iran and Lebanon is a deeply unjust and devastating conflict, killing civilians at home, destroying lives, and at the same time sending shockwaves through the global economy. We, at 350.org, have calculated, drawing on price forecasts from the International Monetary Fund (IMF) and Goldman Sachs, just how much that volatility is costing us.

Even under the IMF’s baseline scenario – a de facto “best case” scenario with a near-term end to the war and related supply chain disruptions – oil and gas price spikes are projected to cost households and businesses globally more than $600 billion by the end of the year. Under the IMF’s “adverse scenario”, with prolonged conflict and sustained price pressures, we estimate those additional costs could exceed $1 trillion, even after accounting for reduced demand.

Which is why we urgently need a power shift. Governments are under growing pressure to respond to rising fuel and food costs and deepening energy poverty. And it’s becoming clearer to both voters and elected officials that fossil dependence is not only expensive and risky, but unnecessary.

People who can are voting with their wallets: sales of solar panels and electric vehicles are increasing sharply in many countries. But the working people who have nothing to spare, ironically, are the ones stuck with using oil and gas that is either exorbitantly expensive or simply impossible to get.

Drain on households and economies

In India, street food vendors can’t get cooking gas and in the Philippines, fishermen can’t afford to take their boats to sea. A quarter of British people say that rising energy tariffs will leave them completely unable to pay their bills. This is the moment for a global push to bring abundant and affordable clean energy to all.

In April, we released Out of Pocket, our new research report on how fossil fuels are draining households and economies. We were surprised by the scale of what we found. For decades, governments have reassured people that energy price spikes are unfortunate but unavoidable – the result of distant conflicts, market forces or geopolitical shocks beyond anyone’s control. But the numbers tell a different story.

Apr 28, 2026

News

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Apr 24, 2026

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What we are living through today is not an energy crisis. It is a fossil fuel crisis. In just the first 50 days of the Middle East conflict, soaring oil and gas prices have siphoned an estimated $158 billion–$166 billion from households and businesses worldwide. That is money extracted directly from people’s pockets and transferred, almost instantly, into fossil fuel company balance sheets. And this figure only captures the immediate impact of price spikes, not the permanent economic drain of fossil dependence. Fossil fuels don’t just cost us once, they cost us over and over again.

First, through our bills. Every time there is a war, an embargo or a supply disruption, fossil fuel prices surge. For ordinary people, this means higher costs for energy, transport and food. Many Global South countries have little or no fiscal space to buffer the shock; instead, workers and families pay the price.

Second, through our taxes. Governments around the world continue to pour vast sums of public money into fossil fuel subsidies. These are often justified as a way to protect the most vulnerable at the petrol pump or in their homes. But in reality, the benefits are overwhelmingly captured by wealthier households and corporations. The poorest 20% receive just a fraction of this support, while public finances are drained.

Third, through climate impacts. New research across more than 24,000 global locations gives a granular account of the true costs of extreme heat, sea level rise and falling agricultural yields. Using this data to update IMF modelling of the social cost of carbon, we found that fossil fuel impacts on health and livelihoods amount to over $9 trillion a year. This is the biggest subsidy of all, because these massive and mounting costs are not charged to Big Oil – they are paid for by governments and households, with the poorest shouldering the lion’s share.

Massive transfer of wealth to fossil fuel industry

Adding up direct subsidies, tax breaks and the unpaid bill for climate damages, the total transfer of wealth from the public to the fossil fuel industry amounts to $12 trillion even in a “normal” year without a global oil shock. That’s more than 50% higher than the IMF has previously estimated, and equivalent to a staggering $23 million a minute.

The fossil fuel industry has become extraordinarily adept at profiting from instability. When conflict drives up prices, companies do not lose, they gain. In the current crisis, oil producers and commodity traders are on track to secure tens of billions of dollars in additional windfall profits, even as households face rising bills and governments struggle to manage the fallout.

Fossil fuel crisis offers chance to speed up energy transition, ministers say

This growing disconnect is impossible to ignore. Investors are advised to buy into fossil fuel firms precisely because of their ability to generate profits in times of crisis. Meanwhile, ordinary people are told to tighten their belts.

In 2026, unlike during the oil shocks of the 1970s, clean energy is no longer a distant alternative. Now, even more than when gas prices spiked due to Russia’s invasion of Ukraine in 2022, renewables are often the cheapest option available. Solar and wind can be deployed quickly, at scale, and without the volatility that defines fossil fuel markets.

How to transition from dirty to clean energy

The solutions are clear. Governments must implement permanent windfall taxes on fossil fuel companies to ensure that extraordinary profits generated during crises are redirected to support households. These revenues can be used to reduce energy bills, invest in public services, and accelerate the rollout of clean energy.

Second, we must shift subsidies away from fossil fuels and towards renewable solutions, particularly those that can be deployed quickly and equitably, such as rooftop and community solar. This is not just about cutting emissions. It is about building a more stable, fair and resilient energy system.

Finally, we need binding plans to phase out fossil fuels altogether, replacing them with homegrown renewable energy that can shield economies from future shocks. Because what the current crisis has made clear is this: as long as we remain dependent on fossil fuels, we remain vulnerable – to conflict, to price volatility and to the escalating impacts of climate change.

The true price of fossil fuels is no longer hidden. It is visible in rising bills, strained public finances and communities pushed to the brink. And it is being paid, every day, by ordinary people around the world.

It’s time for the great power shift.

Full details on the methodology used for this report are available here.

The Great Power Shift is a new campaign by 350.org global campaign to pressure governments to bring down energy bills for good by ending fossil fuel dependence and investing in clean, affordable energy for all

Logo of 350.org campaign on “The Great Power Shift”

The post What fossil fuels really cost us in a world at war appeared first on Climate Home News.

What fossil fuels really cost us in a world at war

Climate Change

Traditional models still ‘outperform AI’ for extreme weather forecasts

Published

6 days ago

April 29, 2026

Alice Rush

Computer models that use artificial intelligence (AI) cannot forecast record-breaking weather as well as traditional climate models, according to a new study.

It is well established that AI climate models have surpassed traditional, physics-based climate models for some aspects of weather forecasting.

However, new research published in Science Advances finds that AI models still “underperform” in forecasting record-breaking extreme weather events.

The authors tested how well both AI and traditional weather models could simulate thousands of record-breaking hot, cold and windy events that were recorded in 2018 and 2020.

They find that AI models underestimate both the frequency and intensity of record-breaking events.

A study author tells Carbon Brief that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.

AI weather forecasts

Extreme weather events, such as floods, heatwaves and storms, drive hundreds of billions of dollars in damages every year through the destruction of cropland, impacts on infrastructure and the loss of human life.

Many governments have developed early warning systems to prepare the general public and mobilise disaster response teams for imminent extreme weather events. These systems have been shown to minimise damages and save lives.

For decades, scientists have used numerical weather prediction models to simulate the weather days, or weeks, in advance.

These models rely on a series of complex equations that reproduce processes in the atmosphere and ocean. The equations are rooted in fundamental laws of physics, based on decades of research by climate scientists. As a result, these models are referred to as “physics-based” models.

However, AI-based climate models are gaining popularity as an alternative for weather forecasting.

Instead of using physics, these models use a statistical approach. Scientists present AI models with a large batch of historical weather data, known as training data, which teaches the model to recognise patterns and make predictions.

To produce a new forecast, the AI model draws on this bank of knowledge and follows the patterns that it knows.

There are many advantages to AI weather forecasts. For example, they use less computing power than physics-based models, because they do not have to run thousands of mathematical equations.

Furthermore, many AI models have been found to perform better than traditional physics-based models at weather forecasts.

However, these models also have drawbacks.

Study author Prof Sebastian Engelke, a professor at the research institute for statistics and information science at the University of Geneva, tells Carbon Brief that AI models “depend strongly on the training data” and are “relatively constrained to the range of this dataset”.

In other words, AI models struggle to simulate brand new weather patterns, instead tending forecast events of a similar strength to those seen before. As a result, it is unclear whether AI models can simulate unprecedented, record-breaking extreme events that, by definition, have never been seen before.

Record-breaking extremes

Extreme weather events are becoming more intense and frequent as the climate warms. Record-shattering extremes – those that break existing records by large margins – are also becoming more regular.

For example, during a 2021 heatwave in north-western US and Canada, local temperature records were broken by up to 5C. According to one study, the heatwave would have been “impossible” without human-caused climate change.

The new study explores how accurately AI and physics-based models can forecast such record-breaking extremes.

First, the authors identified every heat, cold and wind event in 2018 and 2020 that broke a record previously set between 1979 and 2017. (They chose these years due to data availability.) The authors use ERA5 reanalysis data to identify these records.

This produced a large sample size of record-breaking events. For the year 2020, the authors identified around 160,000 heat, 33,000 cold and 53,000 wind records, spread across different seasons and world regions.

For their traditional, physics-based model, the authors selected the High RESolution forecast model from the Integrated Forecasting System of the European Centre for Medium-Range Weather Forecasts. This is “widely considered as the leading physics-based numerical weather prediction model”, according to the paper.

They also selected three “leading” AI weather models – the GraphCast model from Google Deepmind, Pangu-Weather developed by Huawei Cloud and the Fuxi model, developed by a team from Shanghai.

The authors then assessed how accurately each model could forecast the extremes observed in the year 2020.

Dr Zhongwei Zhang is the lead author on the study and a researcher at Karlsruhe Institute of Technology. He tells Carbon Brief that many AI weather forecast models were built for “general weather conditions”, as they use all historical weather data to train the models. Meanwhile, forecasting extremes is considered a “secondary task” by the models.

The authors explored a range of different “lead times” – in other words, how far into the future the model is forecasting. For example, a lead time of two days could mean the model uses the weather conditions at midnight on 1 January to simulate weather conditions at midnight on 3 January.

The plot below shows how accurately the models forecasted all extreme events (left) and heat extremes (right) under different lead times. This is measured using “root mean square error” – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy.

The chart on the left shows how two of the AI models (blue and green) performed better than the physics-based model (black) when forecasting all weather across the year 2020.

However, the chart on the right illustrates how the physics-based model (black) performed better than all three AI models (blue, red and green) when it came to forecasting heat extremes.

Accuracy of the AI models (blue, red and green) and the physics-based model (black) at forecasting all weather over 2020 (left) and heat extremes (right) over a range of lead times. This is measured using “root mean square error” (RMSE) – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy. Source: Zhang et al (2026).

The authors note that the performance gap between AI and physics-based models is widest for lower lead times, indicating that AI models have greater difficulty making predictions in the near future.

They find similar results for cold and wind records.

In addition, the authors find that AI models generally “underpredict” temperature during heat records and “overpredict” during cold records.

The study finds that the larger the margin that the record is broken by, the less well the AI model predicts the intensity of the event.

‘Warning shot’

Study author Prof Erich Fischer is a climate scientist at ETH Zurich and a Carbon Brief contributing editor. He tells Carbon Brief that the result is “not unexpected”.

He adds that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.

The analysis, he continues, is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.

AI models are likely to continue to improve, but scientists should “not yet” fully replace traditional forecasting models with AI ones, according to Fischer.

He explains that accurate forecasts are “most needed” in the runup to potential record-breaking extremes, because they are the trigger for early warning systems that help minimise damages caused by extreme weather.

Leonardo Olivetti is a PhD student at Uppsala University, who has published work on AI weather forecasting and was not involved in the study.

He tells Carbon Brief that “many other studies” have identified issues with using AI models for “extremes”, but this paper is novel for its specific focus on extremes.

Olivetti notes that AI models are already used alongside physics-based models at “some of the major weather forecasting centres around the world”. However, the study results suggest “caution against relying too heavily on these [AI] models”, he says.

Prof Martin Schultz, a professor in computational earth system science at the University of Cologne who was not involved in the study, tells Carbon Brief that the results of the analysis are “very interesting, but not too surprising”.

He adds that the study “justifies the continued use of classical numerical weather models in operational forecasts, in spite of their tremendous computational costs”.

Advances in forecasting

The field of AI weather forecasting is evolving rapidly.

Olivetti notes that the three AI models tested in the study are an “older generation” of AI models. In the last two years, newer “probabilistic” forecast models have emerged that “claim to better capture extremes”, he explains.

The three AI models used in the analysis are “deterministic”, meaning that they only simulate one possible future outcome.

In contrast, study author Engelke tells Carbon Brief that probabilistic models “create several possible future states of the weather” and are therefore more likely to capture record-breaking extremes.

Engelke says it is “important” to evaluate the newer generation of models for their ability to forecast weather extremes.

He adds that this paper has set out a “protocol” for testing the ability of AI models to predict unprecedented extreme events, which he hopes other researchers will go on to use.

The study says that another “promising direction” for future research is to develop models that combine aspects of traditional, physics-based weather forecasts with AI models.

Engelke says this approach would be “best of both worlds”, as it would combine the ability of physics-based models to simulate record-breaking weather with the computational efficiency of AI models.

Dr Kyle Hilburn, a research scientist at Colorado State University, notes that the study does not address extreme rainfall, which he says “presents challenges for both modelling and observing”. This, he says, is an “important” area for future research.