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The power sector exercises huge impacts on global warming through emitted greenhouse gases (GHGs), with Australia not an exception. Over the years, the effectiveness of policies that have emerged to curtail GHGs emissions from electricity generation seem barely investigated. To address this gap, the study identifies potential energy reduction policies and climate change scenarios for the Australian power sector by applying approaches from combined backcasting and exploratory scenario. The Long-range Energy Alternative Planning (LEAP) system and its integrated Open Source Energy Modelling System (OSeMOSYS) was used for optimisation analysis. Results identified cost optimisation scenarios as a least-cost generation pathway with less climate change impact, followed by renewable energy target and energy productivity scenarios. Economic analysis shows that emission reduction policy will result in added cost to the economy, while carbon tax policies will yield economic benefit in installation cost, resource savings and environmental externalities reductions by 2050. The environmental analysis reveals that emission reduction policy will increase cumulative emissions, while future temperatures may double the emissions from the base case scenario. We conclude that future low-carbon pathways lie in clean energy substitutions and innovative energy policies, while global warming raises the need to switch to clean energy technologies early.