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Australia steps into 2026 facing a climate crisis that has shifted from an abstract threat to a tangible strain on households, finances and public institutions.4
Years of record-breaking heat, damaging fires, severe floods and shifting rainfall have begun to redraw maps of where Australians can live, work and insure property.1
At the same time, the country remains one of the world’s largest exporters of coal and liquefied natural gas, locking in emissions overseas even as domestic climate goals tighten.2
The choices made now about energy, land, finance and social protection will reverberate through a hotter, more volatile mid-century Australia.3
These choices are not only technical or economic; they are deeply social, cultural and ethical, cutting to questions of fairness, responsibility and power.
They also carry regional weight, as Pacific neighbours confront sea-level rise and climate damage that is already existential for some communities.5
This feature sets out the defining climate questions for Australia in 2026, interrogating what leaders across society must now confront rather than prescribing the answers.
Social
How will climate risk be shared between those who can move and those who cannot.
As extreme heat, coastal flooding and fire weather intensify, some households have the resources to relocate or retrofit, while others are effectively trapped in high-risk suburbs, towns and regions.1
This raises difficult questions about who is left behind on the most exposed floodplains, fire fronts and coastlines, and what support they can expect.4
Leaders in government, finance, planning and community organisations must decide how to balance voluntary retreat, insurance withdrawal, public investment and social housing in a way that does not harden existing inequalities.
The consequences of inaction include deepening geographic segregation, growing resentment and escalating disaster recovery costs that fall disproportionately on lower income households.
What does a fair safety net look like in an era of rolling climate disasters.
Disaster relief, income support and mental health services are already under strain as more frequent and intense events compound on communities that have not fully recovered from previous floods or fires.7
The question for 2026 is whether Australia’s social protection architecture is designed for occasional shocks or for a new normal of overlapping, climate-driven disruptions.
Leaders must weigh how far to reorient welfare, health and community services toward prevention, long-term recovery and psychosocial support in places facing repeated loss of homes, jobs and social fabric.
Without such rethinking, climate impacts risk entrenching trauma, housing insecurity and chronic disadvantage in already marginalised communities.
How will health systems cope with a hotter, smokier and more disease-prone climate.
Rising temperatures, heatwaves and worsening bushfire smoke are increasing hospital admissions, straining emergency departments and exacerbating respiratory and cardiovascular disease across Australia.1
Changes in rainfall and temperature also alter patterns of infectious disease, including mosquito-borne illnesses in northern regions.10
Health leaders must decide how to invest in heat-safe housing, urban shade, early warning systems and climate-informed public health planning to keep people well, especially older Australians, outdoor workers and people with chronic illness.
If this question is ducked, the health burden of climate change will grow, increasing costs for taxpayers and widening gaps in health outcomes between communities.
Can communities maintain social cohesion as climate impacts intensify.
Disasters often bring moments of solidarity, yet repeated shocks, rising insurance costs and perceived unfairness in recovery funding can lead to anger, division and declining trust in institutions.6
Leaders in local government, civil society, unions and faith communities face the challenge of sustaining cooperation across generations, incomes and regions as more people feel directly affected by climate risk.
This includes deciding how to involve residents in planning for retreat, rebuilding or transformation of their neighbourhoods, and how to recognise lived experience as a form of expertise.
Failing to address this risks a more fragmented Australia, where climate decisions are seen as imposed rather than negotiated, undermining legitimacy and compliance.
Economic
How will Australia manage the collision between cost-of-living pressures and the pace of the energy transition.
Households and businesses are grappling with high energy prices at the same time as the electricity system shifts toward more renewables, storage and transmission infrastructure.3
Leaders must decide how quickly to change the grid and transport systems while managing short-term bill impacts, reliability concerns and the risk of stranded assets.
This involves trade-offs between accelerating investment in clean technologies, protecting vulnerable consumers, and maintaining confidence among workers and industries that depend on existing fossil fuel infrastructure.
The consequences of mismanaging this balance could be public backlash, slower emissions reductions and lost opportunities in emerging clean industries.
What is the plan for regions whose economies depend on coal, gas and high-emissions industry.
Australia remains among the world’s leading exporters of coal and liquefied natural gas, with large regional workforces and revenue streams tied to these sectors.2
Global energy markets are shifting as trading partners pursue their own net zero targets, creating uncertainty about the lifespan and profitability of export-focused projects.5
Leaders in industry, unions and government must articulate how affected communities will diversify their economies, protect workers’ livelihoods and manage declining fossil fuel demand without abrupt social dislocation.
Ignoring this question risks abrupt closures, stranded assets and a narrative of abandonment in some of the communities most central to Australia’s energy story.
How will the financial system price climate risk and opportunity.
Banks, insurers and superannuation funds are increasingly recognising climate change as a material financial risk, affecting everything from mortgage lending to portfolio allocation.11
As physical risks rise and global standards on disclosure tighten, Australian institutions must decide how quickly to adjust valuations, underwriting and investment strategies.
For leaders, the question is whether to move early, potentially reshaping housing markets, business models and infrastructure plans, or to move slowly and risk disorderly repricing later.
The path chosen will determine who bears the cost of climate damage, and whether Australia attracts or repels capital in a decarbonising global economy.
Can Australia seize clean industry opportunities without repeating past boom-bust cycles.
The country has world-class solar and wind resources, significant mineral reserves for batteries and clean technologies, and research strengths that could underpin new industries.3
Yet Australia also has a history of resource booms that left some regions exposed when prices fell and value was not widely shared.
Leaders must determine how to balance export ambitions in green hydrogen, critical minerals and low-emissions manufacturing with domestic value-add, workforce development and environmental safeguards.
Without clear answers, there is a risk that new climate-aligned industries could reproduce old patterns of uneven benefits and environmental harm.
Environmental
Which areas of Australia are still defendable, and where will retreat become unavoidable.
Sea-level rise, coastal erosion, riverine flooding and extreme heat are already making some locations more dangerous and expensive to inhabit.1
At the same time, infrastructure, cultural heritage and emotional ties bind people to these places, complicating any discussion of relocation.
Environmental and planning leaders must ask where investment in protection and adaptation can realistically keep pace with escalating hazards, and where planned retreat may ultimately be the safer option.
Delaying this conversation risks chaotic, inequitable retreat triggered only after repeated disasters and insurance withdrawal.
How will Australia confront accelerating biodiversity loss in a changing climate.
Climate change is amplifying existing pressures on ecosystems, including habitat clearing, invasive species and altered fire regimes, pushing many species closer to collapse.4
Extreme heat, drought and more intense fires are altering forests, reefs, wetlands and rangelands, with cascading effects on water, soils and livelihoods.
Leaders in conservation, agriculture and resource management must decide how to prioritise limited funds between protecting intact ecosystems, restoring damaged landscapes and facilitating species’ movement as climatic zones shift.
Choices made now will shape whether future Australians inherit functioning ecosystems or a patchwork of degraded environments.
Can water security be maintained under more variable rainfall and higher evaporation.
Long-term drying trends in parts of southern and western Australia, alongside more intense downpours elsewhere, are putting new strain on rivers, dams and groundwater.1
Higher temperatures increase evaporation, further reducing available water for towns, agriculture and ecosystems.
Water managers and political leaders must confront how to balance allocations between irrigation, urban use, cultural values and environmental flows in a climate where historical averages are an increasingly unreliable guide.4
Failing to adjust could fuel conflict between regions and sectors, and deepen stress on rivers and wetlands already under pressure.
What role will land use change play in Australia’s climate future.
Changes in land management, including deforestation, reforestation, savanna burning and agricultural practices, have significant implications for emissions, carbon storage and biodiversity.10
Climate change in turn affects productivity, fire risk and pest dynamics on farms and pastoral land.
Leaders in agriculture, forestry, First Nations land management and conservation must decide how to integrate carbon, food security and nature goals in landscapes already under economic and climatic stress.
The outcomes will shape not just national emissions accounts but also the resilience of rural communities and cultural landscapes.
Political and governance
How will a liberal democracy navigate climate decisions that create winners and losers.
As climate impacts and transition measures touch more aspects of daily life, decisions about who pays, who profits and who is protected become more visible and contested.
Australia is already experiencing declining trust in political institutions, amplifying scrutiny of how climate decisions are made and whose voices are heard.6
Leaders must decide how to build legitimacy for difficult choices on issues such as fossil fuel approvals, transmission lines, planning rules and disaster funding.
Without transparent, inclusive governance, climate policy risks becoming another front in a broader crisis of trust, slowing action and deepening polarisation.
What does responsible leadership look like for a major fossil fuel exporter.
Australia’s coal and gas exports contribute far more emissions overseas than the country produces domestically, even though these exported emissions do not count in national targets.2
Trading partners’ commitments under the Paris Agreement and net zero pledges are likely to reduce long-term demand for these fuels, challenging Australia’s economic model.5
Leaders must grapple with how to align domestic climate ambition with export decisions and international climate diplomacy, under scrutiny from investors, allies and Pacific neighbours.
Answering this question will shape Australia’s reputation as either a climate laggard or a country managing an orderly shift away from high-emissions exports.
Can institutions keep up with the speed and scale of climate risk.
Climate change cuts across portfolios that were not designed to work together, from energy and housing to health, defence and foreign affairs.
Recent years have shown how quickly compounding disasters and supply chain shocks can overwhelm fragmented decision-making structures.7
Leaders in parliaments, public services, regulators and local government must decide whether existing institutional arrangements are adequate, or whether deeper reforms to planning, budgeting and accountability are needed.
Without governance that matches the complexity of climate risk, policies may remain piecemeal even as impacts accelerate.
How will Australia define its role in Pacific climate security.
Pacific Island countries consistently describe climate change as their most serious security threat, encompassing sea-level rise, extreme weather and loss of livelihoods.5
Australia has signalled support through climate finance, adaptation initiatives and new security and mobility arrangements, but expectations in the region continue to grow.3
Political and defence leaders must clarify how climate risk will be integrated into regional partnerships, humanitarian responses and long-term planning for possible displacement.
The answers will influence regional stability, diplomatic relationships and Australia’s credibility as a partner that listens and responds to Pacific priorities.
Cultural, ethical and intergenerational
How will First Nations knowledge and custodianship shape Australia’s climate response.
Aboriginal and Torres Strait Islander peoples have managed Country for tens of thousands of years, using practices that can reduce fire risk, support biodiversity and strengthen cultural connections.10
Climate change is damaging many of the places, species and cultural sites at the heart of this custodianship.
Leaders across governments, industry and conservation must decide whether First Nations knowledge will be treated as an add-on or as a central framework for land and sea management, adaptation and cultural resilience.
The ethical stakes include recognition of sovereignty, self-determination and the right to maintain living cultures in a rapidly changing climate.
What do current decisions owe to young Australians and future generations.
Children and young people will live with the consequences of today’s emissions, infrastructure and land use decisions for far longer than those making most of the choices.
Many are already experiencing anxiety, anger and grief about climate change, and questioning whether institutions are acting with their interests in mind.6
Leaders in politics, education, business and culture must confront how to weigh long-term climate risk against short-term costs and electoral cycles.
This includes grappling with whether existing legal and policy frameworks adequately reflect duties to those who cannot yet vote or have not yet been born.
How will narratives about Australian identity adapt to a climate-changed continent.
Stories about the bush, the beach and the suburban backyard are deeply woven into ideas of what it means to live in Australia.
Yet intensifying heatwaves, coastal erosion, water stress and fire seasons are altering many of these landscapes and the activities they support.1
Cultural leaders, storytellers, journalists and educators must consider how to reflect these changes honestly while avoiding fatalism, and how to include diverse experiences of climate impact and resilience.
The narratives that take hold will influence public willingness to accept difficult decisions and to imagine different ways of living well on a hotter continent.
How will responsibility and solidarity be understood in a region of unequal climate vulnerability.
Australia’s per capita emissions and historical contribution to climate change are high compared with many of its neighbours, yet the most severe near-term impacts fall on countries with far fewer resources.2
Pacific leaders have been clear that climate justice, loss and damage, and the protection of sovereignty and culture are central to their expectations of larger emitters.5
Australians in politics, business, philanthropy and civil society must decide how far solidarity with more vulnerable neighbours should shape domestic debates on emissions, climate finance and mobility.
The ethical framing chosen will influence not only policy but also how Australians understand their place in a warming world.
What the next five years demand
The next five years will test whether Australia can move from reactive climate management to a more anticipatory, whole-of-society approach that matches the scale of the challenge.10
Regional planners and policymakers will need to integrate climate risk into every major decision about housing, transport, water, energy and land, treating future extremes as central assumptions rather than outliers.1
They will have to weigh the stability of communities currently tied to high-emissions industries against the opportunities of emerging low-emissions sectors, while managing the distributional impacts on workers and households.2
They will also need to deepen collaboration with First Nations communities and Pacific neighbours, recognising that decisions about land, sea and emissions have cultural and geopolitical consequences well beyond national borders.5
Above all, the questions outlined here demand that climate risk be treated not as a single policy issue but as a defining context for how Australia governs its economy, cares for its people and honours its responsibilities to future generations.
- Australia's changing climate - CSIRO
- Australia's massive global carbon footprint set to continue with fossil fuel exports - Climate Analytics
- Australian Energy Commodity Production and Trade 2025 - Geoscience Australia
- The State of the Climate report: what it says for Aussies - Climate Council
- How to scale up Australia's investment in Pacific climate adaptation - Lowy Institute
- An opportunity for climate leadership and stronger ties - Lowy Institute
- The State of Weather and Climate Extremes 2023 - National Council of Resilience
- State of the Climate - CSIRO and Bureau of Meteorology
- APRA publishes guidance on climate-related financial risks



