CEDA Says We’re Drifting.Net Zero Is How We Sink.

At some point a national delusion meets a spreadsheet. That moment has arrived for net zero.

CEDA’s new State of the Nation is supposed to be a sober economic stocktake, and in one respect it is. It says productivity is languishing, business dynamism is falling, business entry rates have collapsed from 15.1 per cent to 10.7 per cent over two decades, and regulatory restrictions affecting Australian industries have risen 39 per cent.^[1] In other words, Australia is becoming slower, heavier and less competitive at exactly the moment it is attempting the largest industrial remake in its history.

That remake is the net-zero transition, and the numbers are now impossible to conceal. My earlier paper set out the brutal arithmetic from the updated Net Zero Australia work: about $1.6 trillion in capital investment, around 300 gigawatts of renewables, and a requirement to roughly double gas-fired power capacity anyway to keep the whole contraption standing.^[2] This was marketed as emancipation from fossil fuels. It looks increasingly like a more expensive route back to them.

CEDA tries to keep one foot in realism and the other in official optimism. It says the energy transition is “mostly progressing” because emissions fell 2.2 per cent in 2025 and renewables now supply about 40 per cent of electricity. Fine. But it also admits electricity prices remain near all-time highs and that hitting the 2035 target requires doubling the rate of decarbonization, six-fold growth in utility storage, four times more wind power and a tripling of utility solar. That is not progress in any ordinary sense. That is a giant unfinished bill with a press release attached.

The real absurdity is that this debate is already out of date. AI has changed the electricity equation, and much of Canberra is still talking as if power demand belongs to the old world. My earlier paper pointed to projections of global AI-driven data-center demand reaching 945 terawatt-hours by 2030. CEDA rightly says AI is central to productivity and should be adopted faster across the economy. But computers do not run on policy papers. They run on constant, dense, reliable power, the very thing a more intermittent, transmission-heavy and backup-dependent system struggles to provide at scale.

This is the scam at the heart of the net-zero sales pitch. The public is shown targets, not trade-offs. It is promised virtue, not invoices. It is told that technology will solve everything, while the actual system requires more land, more wires, more subsidies, more approvals, more delay and, in the end, more gas.

CEDA’s report is especially revealing on regulation. It says the rise in legal and regulatory restriction is not coincidental with the fall in business formation and investment growth. Exactly. Yet net zero has become the great regulatory machine of our age: approvals stacked on approvals, transmission corridors mired in conflict, investment dependent on political underwriting, and delivery schedules stretched by bureaucratic incapacity. Australia cannot seriously complain about low productivity while building an energy policy that institutionalizes delay.

There is also a class dimension to this that polite reports glide past. Net zero has become a prestige belief for people insulated from its costs. It flatters elites who want to appear morally advanced while outsourcing the bill to households, industry and future taxpayers. A country with weak productivity, high housing costs, stagnant competitiveness and mounting social strain should not be indulging in infrastructure vanity on this scale. CEDA’s own report says Australia is drifting on too many fronts already.

The defenders of this agenda claim the critics are fighting yesterday’s battles. Nonsense. The truly backward-looking idea is that a country can weaken its energy economics while rivals prepare for AI, strategic industry and harder geopolitical competition. Cheap, reliable, scalable power is not a talking point. It is the foundation of serious national capability.

Australia needs to decide whether it wants an economy or an exhibition. If it wants an economy, it must stop pretending that a $1.6 trillion transition, still dependent on more gas and still struggling with cost and delivery, is some painless glide path to modernity. CEDA has supplied the diagnosis of national drift. Net zero is not the answer to that drift. It is becoming the mechanism by which it is entrenched.