Transition Pathways in Regional Australia

Overview

This report explores how regional Australia can transition to net zero emissions by 2050, focusing on communities and businesses outside major fossil fuel-producing areas. It highlights the importance of place-based strategies, community leadership, and tailored support to ensure a just and effective transition. Drawing on international case studies from the UK and Germany, the report emphasizes the need for timely government intervention to avoid long-term social and economic decline. Regional cities are identified as key players due to their diversified economies and potential for innovation. However, consultations revealed that many regional communities lack clear information and practical guidance on transitioning. The report presents a transition framework developed by Transition & Recovery Australia, outlining conditions for success such as local engagement, inclusive partnerships, and long-term sustainability planning. Case studies from Yarram, Korumburra, Katanning, and Ulverstone showcase successful community-led and business-driven initiatives in timber, food manufacturing, and energy. These examples demonstrate the value of collaboration, innovation, and targeted investment. The report calls for improved data availability, stronger policy support, and better coordination between governments and communities. It stresses that decentralisation and local ownership of energy systems can empower regions and enhance resilience. Without adequate support, vulnerable communities risk depopulation and economic hardship. The report concludes that Australia’s transition must be inclusive, strategic, and locally informed to succeed.

The Regional Australia Institute acknowledges our funding partners: Australian Government Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts; Queensland Government Department of Regional Development, Manufacturing and Water; South Australian Government Department of Primary Industries and Regions; Victorian Government Department of Jobs, Skills, Industry and Regions; and Western Australian Government Department of Primary Industries and Regional Development.

The views expressed in the report are those of the authors and are not necessarily those of our funding partners.

Key Findings

Place-Based Transition is Essential
Regional communities require tailored, locally informed strategies rather than one-size-fits-all solutions. Decentralisation and community ownership of energy systems are central to successful transitions.

Community Leadership Drives Success
Local momentum, internal drivers, and community-led initiatives are critical. Government support is important, but local leadership and vision are often the catalysts for action.

Information Gaps Persist
Many regional communities lack clear, accessible information about what net zero means for them and what practical steps are available. This hampers readiness and engagement.

Timely Support is Crucial
International case studies (e.g., UK coalfields vs. Germany’s Ruhr Valley) show that delayed government intervention leads to long-term negative outcomes. Early, inclusive, and well-resourced support is vital.

Regional Cities Hold Untapped Potential
Despite their economic diversity and strategic importance, regional cities have largely been overlooked in national transition planning. They are well-positioned to lead with the right support.

Business Cases Matter
Transition initiatives succeed when there is a clear return on investment. Support mechanisms like seed funding, innovation networks, and regulatory certainty help build viable business cases.

Technological Transformation Will Be Imported
Most of the technology needed for net zero will come from overseas. Australia must focus on effective rollout, especially in vulnerable communities, through grants, financing, and demonstration projects.

Policy Must Be Inclusive and Scalable
A “just transition” requires inclusive policies that consider small and remote communities, not just major fossil fuel hubs. These policies must be scalable and adaptable to local contexts.

Framework for Transition is Available
The report introduces a seven-domain framework developed by Transition & Recovery Australia, offering a structured approach to assess and guide regional transitions.

Case Studies Show What Works
Examples from Yarram, Korumburra, Katanning, and Ulverstone demonstrate how innovation, collaboration, and local knowledge can drive effective decarbonisation in small towns and industries.

Policy Recommendations

Recommendation 1
Improve Regional Data Access

•  Governments should provide accurate, region-specific data on electricity flows and fuel mixes to enable genuine place-based planning and policy development.

Recommendation 2
Strengthen Regional Focus in National Transition Plans

• The Net Zero Authority and other relevant bodies must place greater emphasis on regional Australia's unique needs and opportunities in the transition to net zero.

Recommendation 3
Promote Knowledge Sharing

• Support mechanisms should include sharing case studies and best practices, especially around repurposing legacy fossil fuel infrastructure (e.g., coal plants and mines).

Recommendation 4
Ensure Timely Labour Market Support

• Retraining packages and employment transition programs must be in place before the closure of legacy industries, particularly in vulnerable communities with limited alternatives.

Recommendation 5
Adopt Bottom-Up, Inclusive Approaches

• Economic diversification strategies should be co-designed with communities, ensuring local voices are central to planning and implementation.

Recommendation 6
Support Technology Rollout in Vulnerable Regions

• Governments should facilitate renewable technology adoption through:
  • Recoverable grants 
  • Demonstration and commercialisation funding 
  • Underwriting offtake agreements 
  • Low-interest project financing

Recommendation 7
Clarify Incentives for SMEs

• Small and medium enterprises need clearer, more accessible government incentives to take practical steps toward decarbonisation.

Recommendation 8
Provide Regulatory Certainty

• A stable and predictable regulatory environment is essential to attract investment and enable long-term planning for businesses and communities.

Recommendation 9
Invest in Innovation Networks

• Collaborative R&D, seed funding, and innovation hubs should be expanded to help build viable business cases for transition initiatives.

Recommendation 10
Establish a Carbon Pricing or Trading System

• Australia’s enabling environment would benefit from a national carbon pricing mechanism to drive emissions reductions and investment in clean technologies.