The Abbott Government's Direct Action plan has at its centre
the repeal of the carbon price mechanism (CPM) and the introduction
of the emissions reduction fund (ERF), which aims
to deliver on a commitment to reduce carbon emissions by five per
cent on 2000 levels by 2020.
The Climate Institute has estimated that the repeal of the CPM
and its replacement with the ERF will have a negative fiscal impact
of more than $15 billion over the forward estimates.
Norton Rose Fulbright partners
Elisa de Wit and
Noni Shannon note that the ERF may provide opportunities for
private and public sector organisations to receive a form of
government funding to implement registered emissions reductions
projects. This could involve those in the land, waste, industrial,
mining, commercial building, housing, transport and government
Those organisations involved in the CPM should monitor the
repeal of legislation, especially those that have entered into
contracts with carbon price pass-through provisions.
"Any business which has passed through the carbon price
down the supply chain will also need to be aware of the role that
the Australian Competition and Consumer Commission will play in
monitoring prices, costs and profits associated with the supply of
regulated goods (such as natural gas, electricity, synthetic
greenhouse gases) by corporations and the supply of goods by liable
entities under the CPM," Ms de Wit said. The legislative
process for, and potential benefits from, the ERF should also be
monitored closely by business over coming weeks.
The government has also confirmed that it intends to abolish the
Australian Renewable Energy Agency (ARENA) to achieve expected
savings of $1.3 billion over five years from 2017-18. Ms Shannon
says that this may lead to an interesting few months, as any such
abolition will require the repeal of the Australian Renewable
Energy Agency Act 2011. The legislation to abolish ARENA is
unlikely to be presented until the new Senate is installed on 1
July 2014 and, even then, it is not clear at this stage whether a
majority of the Senate would support such legislation.
Aside from the unresolved question of its immediate future, Ms
Shannon highlighted the tensions between budget announcements and
the spending obligations of agencies under their legislation and
the impact this can have on industry. As ARENA chief executive,
Ivor Frischknecht, has noted in the press prior to the budget, his
organisation may find itself caught between its legislative
obligations to fund (and continue to fund) renewable energy
projects and the government's announcement tonight of the
changed policy. In terms of future funding, $1 billion over eight
years will remain available to support existing priority projects
although it is not clear at this stage which projects will qualify
as a "priority project".
In further changes to the administration of climate change
policy in Australia, funding will be reduced for the National
Greenhouse and Energy Reporting Scheme (savings of $2.0 million
over four years) and the Carbon Capture and Storage Flagships
Programme (savings of $459.3 million over three years from 2017
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