Economic Perspective 6 February 2026

The Latest Trending Economic News Curated for You by Balmoral Group Australia

Good morning readers,

Today we’re looking at renewable energy, decarbonisation, and discussions over policy decision-making. First, an update on Australia’s energy system transition progress shows that output and grid storage are swelling while wholesale prices shrink. Then, new designs for the government’s Net Zero Fund have been revealed, including concession mechanisms and specific industry targets, while a new academic article establishes a novel method for allocating policy interventions by combining prescriptive treatment by recipient characteristics with treatment by self-selection.

Finally, a new report explores alternatives to pricing fossil fuel pollution. It proposes two policies that would levy fossil producers and importers, and gas exporters to increase Australian revenue while reducing emissions. This week's data visualisation expands on this analysis by comparing Australian tax revenue with Norway's, revealing Australia’s striking shortcoming.

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Renewables over 50%, wholesale prices down – is the energy transition... succeeding?

As of last quarter, renewables and energy storage supplied over 50% of Australia’s main grid. Wind generation is up 30%, grid solar is up 15%, and grid-scale batteries tripled their output, while gas fell 27% and coal fell 4.6%. Renewables are being slowed by delayed transmission line construction, meaning coal is needed longer, and gas will remain an essential backup. batteries are revolutionising the system – previously, grid energy could not be stored, but now 4000 megawatts of grid storage have come online since 2024, improving system resilience and efficiency. These changes have pressed down wholesale energy prices, although this will only effect retail energy bills if sustained, as wholesale prices only make up 40% of bills. Additionally Victoria, the most gas-dependent state, is running dry, but shifting to renewables will take time. Read more here.

Joint media release: Net zero fund's $5 billion of world-leading decarbonisation finance 

The design of the government’s Net Zero Fund, derived from the National Reconstruction Fund (NRF), has been announced. The fund will offer concessional financing for firms trying to decarbonise their most energy-intensive operational processes, and support up-scaling of domestic low-emission technology manufacturing. Concessions derive from the Fund’s lower targeted rate of return on investment (equal to the five-year government bond rate minus 1%), meaning the fund will take on more risk, crowding in private capital through risk-sharing. The fund will be operational by mid-2026. Read more here.

The Case for Pricing Pollution: Reducing emissions, strengthening the economy, and delivering a fair share for Australians 

A new report from the Superpower institute proposes two complementary policies for tackling the persistent Budget deficit, faltering productivity growth and poor national emissions reduction. First, the “polluter pays levy” would charge fossil fuel producers and importers and return the money to the public. This would apply to 140 sites operated by 60 companies, and raise national revenue by $22.5 billion per year on average. Second, the “Fair share levy” would tax gas exporters to keep gas export revenue in Australia. For example, Norway keeps around 90% of their gas revenue, while Australia keeps only 30%. This would deliver an additional $13 billion per year without discouraging investment or raise prices. Combined, these two policies would raise national revenue by $35 billion per year on average, returning the Budget to surplus years earlier. Read more here.

Choosing Who Chooses: Selection-Driven Targeting in Energy Rebate Programs 

A new study aims to develop an optimal policy assignment method by integrating policy targeting by “observables” or prescriptions based on recipient characteristics with targeting by self-selection, a more laissez-faire approach (e.g. government funding accessible through applications). The new method identifies subjects who should be treated with policy intervention, those who should not, and those who should self-select into treatments for any given policy. This allows policymakers to identify the best path for implementation. Read more here.

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Retention of fossil revenues between Norway and Australia

The following figure from the Superpower Institute's report "The Case for Pricing Pollution" depicts industry versus government tax revenue for both countries. Despite both Australian and Norwegian fossil fuel industries having comparable size, Australian government receipts were less than a third of Norway's, and did not even respond to jumps in commodity prices. 

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