Australia: Country snapshot: Australia

Last Updated: 15 November 2015
Article by Elisa de Wit

INDC

On 11 August 2015, the Australian Government announced that Australia will implement an economy-wide target to reduce greenhouse gas emissions so they are 26-28 per cent below 2005 levels by 2030. According to Australia's submission,

'the target approximately doubles Australia's rate of emissions reductions, and significantly reduces emissions per capita and per unit of GDP. ...Against 2005 levels, Australia's target represents projected cuts of 50-52 per cent in emissions per capita by 2030 and 64-65 per cent per unit of GDP by 2030.'

Australia considers this target to be 'an ambitious, fair and responsible contribution to global efforts'. Australia's 2020 target was to reduce emissions by 5% below 2000 levels; the Australian Government has stated that its new 2030 target is 'a significant progression beyond Australia's 2020 commitment'.

The target will cover the energy, industrial processes and product use, agriculture, land-use, land-use change and forestry and waste sectors. Australia intends to meet this target through its Direct Action Plan, comprised of its existing Emissions Reduction Fund (ERF) and the associated new Safeguard Mechanism. These will be complemented by a range of new policies,

'including a National Energy Productivity Plan with a National Energy Productivity Target of a 40 per cent improvement between 2015 and 2030, the investigation of opportunities to improve the efficiency of light and heavy vehicles, and the enhanced management of synthetic greenhouse gas emissions under ozone protection laws and the Montréal Protocol.'

The full text of Australia's INDC submission can be accessed here.

On 17 July 2014, following a change of Government, Australia's carbon price, the Carbon Pricing Mechanism (CPM), was repealed. All liabilities under the CPM ended from 1 July 2014 and companies who had previously had a liability for the 2013/2014 financial year had to meet their obligations by 2 February 2015.

As a consequence of the repeal of the CPM, there is currently no carbon price, nor is there a carbon tax or emissions trading scheme in place in Australia. As part of the Australian Government's Direct Action Plan policy, however, a 'baseline and penalty' mechanism, known as the Safeguard Mechanism, is currently being developed by the Government.

The Australian Government intends to finalise the Safeguard Mechanism in late 2015 and to implement it on 1 July 2016. At present, it is intended that the Safeguard Mechanism will apply to approximately 140 large businesses which have direct emissions of more than 100,000 tonnes of CO2-e, covering about half of Australia's total emissions. These businesses will be required to keep their future emissions below a set baseline. As currently designed, these baselines will be set at a high level so the Safeguard Mechanism is unlikely to act as a driver for emissions reduction activities within these facilities. Indeed, the Explanatory Statement which accompanies the Safeguard Mechanism Rules states that it "is designed to accommodate economic growth and allow businesses to continue to operate at business-as-usual levels".

The Mechanism will be administered under the National Greenhouse and Energy Reporting Act 2007 (Cth) and emissions baselines will be set using historical data reported under the National Greenhouse and Energy Reporting Scheme (NGERS). It is intended that the Safeguard Mechanism will be reviewed between 2017 and 2018, and the Government has indicated that it will consider the need for the use of international units as a compliance option at this time.

In late 2011, Australia implemented a voluntary domestic offset scheme known as the Carbon Farming Initiative (CFI). The CFI, legislated under the Carbon Credits (Carbon Farming Initiative) 2011 Act (CFI Act), allows farmers and land managers to earn Australian Carbon Credit Units (ACCUs) by storing carbon or reducing greenhouse gas emissions on the land through various eligible projects (such as new tree plantations or capturing landfill gas). Whilst the CPM was in place, entities who had a carbon price liability could purchase the ACCUs to satisfy their liability. ACCUs could also be sold to people and businesses wishing to voluntarily offset their emissions.

Following the repeal of the CPM in 2014, the CFI Act (which initially only covered land-based offset projects), was expanded to include additional sectors under the new ERF, such as energy efficiency, transport, mining, oil and gas. The ERF is regulated by the Clean Energy Regulator, a government body which has the role of registering eligible offsets projects and issuing ACCUs.

The Regulator also has the role of purchasing the ACCUs generated from registered projects and to date, has done this by way of reverse auctions. The Australian Government has committed $2.55 billion to the ERF and has recently announced a further funding amount of $2.4 billion (to be allocated from 2018-2030).

The first ERF auction was held on 15 and 16 April 2015. At this auction the Clean Energy Regulator purchased around 47 million tonnes of abatement at an average price of AU$13.95, with a total contract value of just over $660 million. The second ERF auction will take place on 4 and 5 November 2015.

There is also a Federal Government backed National Carbon Offset Standard (NCOS) which has operated since 1 July 2010. The NCOS provides a national standard for genuine voluntary carbon emissions offseting, setting 'minimum requirements for calculating, auditing and offsetting the carbon footprint of an organisation, product or event to achieve "carbon neutrality"'. It assists consumers in making informed choices and interpreting carbon neutral claims. As part of the NCOS, the Carbon Neutral programme is a voluntary scheme which allows for products, organisations and events to be certified as 'carbon neutral'.

Renewable energy

Australia's primary renewable energy policy is the Renewable Energy Target scheme (RET) (originally established in January 2001 under an earlier policy) which operates in two parts under the Renewable Energy (Electricity) Act 2000 (Cth): the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES).

On 23 June 2015, the Australian Government agreed to a new mandatory renewable energy target for large-scale generation of 33,000 GWh in 2020, which will amount to approximately 23.5% of Australia's electricity generation in 2020 from renewable sources. (Previously, the target had been legislated at 41,000 GWh, which would have generated around 26% of renewable energy by 2020). Like the ERF, the RET is regulated by the Clean Energy Regulator.

Under the LRET, financial incentives are provided for the establishment or expansion of renewable energy power stations, such as wind and solar farms or hydro-electric power stations. Large-scale Generation Certificates (LGCs) are created for these renewable energy power stations, where one LGC is equivalent to 1 MWh of eligible renewable electricity generated above the power station's baseline. LGCs can be sold to liable entities such as electricity retailers, and are then surrendered annually to the Clean Energy Regulator in order to demonstrate compliance with the RET's annual targets.

Similarly, RET-liable entities with an obligation under the LRET, are obligated to buy Small-scale Technology Certificates (STCs), which are surrendered to the Clean Energy Regulator on a quarterly basis. STCs are created under the SRES for eligible installations of solar water heaters, heat pumps and small-scale solar panel, wind and hydro systems by households, small businesses and community groups.

The Australian Government also has a Solar Town Programme, involving funding of $2.1 million (from 2014 to 2017) to support community organisations who wish to install solar photovoltaic panels or a solar hot water systems on existing buildings in the local community. Community sites and regions are preselected by the Australian Government and the second round (2015-2016) of the programme is currently open to community organisations operating within the City of Playford or the City of Salisbury in South Australia.

Energy efficiency

Australia does not have any Federal energy efficiency target in place. There are, however various State based schemes and targets; for example, the Victorian Energy Efficiency Scheme's 2012-15 target is 5.4 million tonnes CO2-e per year.

On 2 July 2009, the Council of Australian Governments (COAG) adopted the National Strategy on Energy Efficiency (NSEE). The NSEE was last updated in June 2010, and is part of a ten year strategy which focuses on improving energy efficiency across the Australian economy, with an aim to 'streamline roles and responsibilities across government by providing a nationally consistent and coordinated approach to energy efficiency.' The NSEE forms part of the National Partnership Agreement on Energy Efficiency. This Intergovernmental Agreement 'provides [the] overarching direction and objectives for the NSEE' that are to be undertaken by the Commonwealth, State and Territory governments.

While there are no national energy efficiency targets in place in Australia, under the ERF, energy projects can now earn ACCUs. Eligible projects must be carried out in accordance with recently introduced energy efficiency methodology determinations. There are now currently four energy efficiency methodology determinations, including projects which reduce emissions associated with:

  • Aggregated small energy users - the energy consumption of grid electricity or natural gas by groups of households and small businesses;
  • Commercial buildings - fuel combustion and electricity consumption in existing commercial building by improving their energy efficiency;
  • Commercial and public lighting - improving the energy performance of lighting systems in commercial and industrial buildings, as well as in public areas, such as pedestrian, street, and traffic lighting ; and
  • Industrial Electricity and Fuel Efficiency - the consumption of electricity and fossil fuels in the industrial sector, covering a broad range activities including lighting upgrades, heating, ventilation and cooling system upgrades, boiler upgrades and variable speed drive installation.

Financial support

Australia has a number of Federal and State-based financial initiatives in place to support clean energy investment, research and development. At a Federal level, the Clean Energy Finance Corporation (CEFC) was established to facilitate increased finance into the commercialisation and deployment of Australian based renewable energy, energy efficiency and low emissions technologies. The CEFC operates like a traditional financier and works with co-financiers and project proponents to determine ways to secure financing solutions for projects in the clean energy sector.

The CEFC is a statutory Commonwealth authority, which was established, and operates under, the Clean Energy Finance Corporation Act 2011 (Cth) (CEFC Act). CEFC investment opportunities are governed by the CEFC Act, any regulations made under the CEFC Act (of which there are currently none), the CEFC Investment Mandate and any policies made under the CEFC Act. The CEFC commenced funding investments from 1 July 2013 and has access to funding of $10 billion over a five year period, comprised of annual appropriations to the CEFC Special Account of $2 billion every 1 July from 2013 to 2017 inclusive. After its first full year in operation, the 2013-14 financial year, the CEFC contracted investments of over $900 million in projects totalling over $3 billion in value. Further information about the CEFC can be found here.

Another Federal initiative is the Australian Renewable Energy Agency (ARENA), a commercially oriented agency established on 1 July 2012 by the Australian Renewable Energy Agency Act 2011 (Cth). ARENA has two objectives:

  • to improve the competitiveness of renewable energy technologies; and
  • to increase the supply of renewable energy in Australia.

ARENA has approximately $2.5 billion of legislated funding until 2022 'to invest in projects and initiatives that hasten the commercialisation of renewable energy solutions and diversify Australia's energy mix.' Investments span the commercialisation pathway from research and development to demonstration and near-commercial deployment projects. ARENA also has a mandate to capture and share knowledge from projects, and each project includes a knowledge sharing plan for this purpose. Under ARENA's General Funding Strategy and Investment Plan, investment focus areas are identified, within which its priorities for new investment have been identified, including integrating renewables and grids, renewables for industrial processes, off-grid areas, fringe-of-grid and network-constrained areas and large-scale solar photovoltaics.

There are also various State-based initiatives in place to support clean energy investment, research and development. For example, under the Australian Capital Territory's (ACT) Government's legislated 90% renewable energy target (requiring 90% of Canberra's electricity supply to be from large-scale renewables by 2020), the ACT Government has implemented renewable energy reverse auctions. To date, there have been three ACT renewable energy auctions; one for large-scale solar projects (Solar Auction) and two for wind energy projects (Wind Auction).

For the Solar Auction, in January 2012, requests for proposals were issued by the Act Government for grants of Feed-in-Tariffs (FiT) in relation to projects of up to 40 Megawatts of large-scale solar generation in the ACT. At the completion of the Solar Auction process, three proposals were granted a FiT entitlement. The first Wind Auction was announced on 12 March 2014, for grants of 20 year FiT entitlements for up to 200MW of wind generation capacity under a reverse Wind Auction process. On 6 February 2015, three successful proponents were announced, amounting to $50 million of local investment in wind power generation. A request for proposals for the second Wind Auction, for a further total of 200MW of wind generation capacity, was announced by the ACT Government on 10 August 2015. The Request for Proposals period for the second Wind Auction closed on 30 September 2015.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Elisa de Wit
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.