Australia: Climate change and policy in Australia

Environment & Planning National Review 2016
Last Updated: 5 September 2016
Article by Karen Trainor


United Nations Framework Convention on Climate Change adoption of the Paris Agreement

On 12 December 2015, the Paris Agreement was adopted under the United Nations Framework Convention on Climate Change (UNFCCC). Australia is a party to the UNFCCC.

The key elements of the Paris Agreement are:

  • commitment by signatories to hold the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels, and pursue a limit of 1.5 degrees Celsius;
  • parties must prepare, communicate and maintain nationally determined commitments;
  • every five years there will be a review which will take into account global stocktakes of the anticipated impact of those commitments. The first global stocktake is scheduled for 2018;
  • developed country parties shall provide financial resources to assist developing country parties to assist them in meeting their commitments. It is estimated that the amount of aid should reach US$100 billion annually by 2020; and
  • a recognition of the importance of averting, minimizing and addressing climate change-related loss or damage. This is the first time the concept of aversion has been incorporated into an international environmental agreement, but it rules out possibility of parties being liable for climate change-related "loss or damage".

The Paris Agreement opened for signature at the United National Headquarters in New York on 22 April 2016 and will close on 21 April 2017.

Australia signed the Paris Agreement on 22 April 2016; it has not yet ratified the Agreement.

The second and third Emissions Reduction Fund auctions

The second Emissions Reduction Fund auction was held on 4-5 November 2015. At that auction:

  • 129 contracts were awarded committing to purchase 45,451,010 tonnes of abatement;
  • contracts were awarded to 77 contractors (131 projects in total); and
  • the largest single contract was for 2.5m tonnes of abatement while the smallest was for 15,333 tonnes.

Unlike the first auction which imposed an 80% limit, the Clean Energy Regulator could accept anywhere between 50-100% of the volume of abatement offered at auction below the benchmark price.

The Clean Energy Regulator also announced additional funding for the Emissions Reduction Fund of $200m per year in 2018-2030, bringing the total amount of public money available to purchase reductions from domestic projects to $4.95bn.

While using international credits to meet the target remains an option, the new target will place increased importance on the effective role that can and should be played by the Safeguard Mechanism.

The third auction was held on 27-28 April 2016. At the third auction:

  • 73 contracts were awarded committing to purchase 50,500,000 tonnes of abatement; and
  • contracts were awarded to 33 contractors (73 projects in total).

After three auctions, a total of 309 carbon abatement contracts have been awarded to deliver more than 143 million tonnes of abatement under the Emissions Reduction Fund.

National Climate Resilience and Adaptation Strategy

On 2 December 2015 the Government released the National Climate Resilience and Adaptation Strategy. The strategy is part of the National Climate Adaptation Framework introduced in 2007 and the Government's commitment to meet the post-2020 emissions target. It gives an overview of Australia's current climate change initiatives and guides climate change adaptation through the following set of principles:

  • share responsibility amongst government, businesses, communities and individuals;
  • factor climate risk into decisions;
  • assist communities that are vulnerable to climate change;
  • adopt an evidence-based risk management approach;
  • collaborate with those affected and make value-based choices; and
  • revisit decisions and outcomes.

The strategy identifies key sectors of the environment which are vulnerable to climate change and proposes the following priorities to maintain and improve Australia's climate resilience and adaptation:

  • improve understanding and communication of the risks of climate change;
  • develop and implement co-ordinated responses to climate risk;
  • evaluate progress of climate change initiatives;
  • collaborate with government, communities and individuals to identify emerging risks and interdependencies and share learning.

Safeguard Mechanism

The Safeguard Mechanism is part of the Emissions Reduction Fund and is designed to ensure purchased reductions are not displaced by a significant rise in emissions above business-as-usual levels.

The Mechanism will commence on 1 July 2016. The following legislative instruments were introduced in 2015:

  • ..National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015;
  • ..National Greenhouse and Energy Reporting Amendment (2015 Measures No. 2) Regulation 2015; and
  • National Greenhouse and Energy Reporting (Audit) Amendment Determination 2015 (No. 1).

The mechanism will apply to facilities that emit more than 100,000 tonnes of greenhouse gas annually, but the applicable baselines vary, depending upon the sector. It is estimated that the Safeguard Mechanism will apply to approximately 140 businesses. The Safeguard Mechanism will apply to direct emissions.

Climate Change Authority releases a draft report for the Special Review

As part of a wide-ranging Special Review into Australia's climate change action, the Climate Change Authority has published a draft report summarising the options for carbon reduction policies.

The report was released at the start of the UNFCCC conference, and is a comprehensive overview of the principles for assessing climate policies, including:

  • mandatory carbon pricing;
  • voluntary carbon pricing; and
  • other mandatory price-based policies.

Submissions on the draft report closed on 19 February 2016 and the publication date for the final report has been postponed. The final report of the Special Review will be released after the Federal election.


Amendments to bring forward target of zero net emissions to 2050

On 13 May 2016, the Renewable Energy Legislation Amendment Act 2016 commenced, making amendments to the Climate Change and Greenhouse Gas Reduction Act 2010 and the Electricity Feed-in (Large-scale Renewable Energy Generation) Act 2011 (FiT Act) to meet the main aim of the Paris Agreement to keep global temperature rise this century well below 2 degrees Celsius, and to drive efforts to limit the temperature increase even further to 1.5 degrees Celsius above pre-industrial levels.

To meet this target in the ACT by mid-century, the Act amends the Climate Change Act to bring forward the target date for zero net emissions from 30 June 2060 to 30 June 2050. To meet the zero net emissions target a decade earlier than originally required under the Climate Change Act, it also amends the FiT Act to:

  • increase the total FiT capacity of the generating systems of large renewable energy generators in relation to which FiT entitlements may be held under the FiT Act from 550MW to 650MW; and
  • allow FiT entitlements to be granted to large renewable energy generators immediately after the total FiT capacity is increased (ie. upon commencement of the amending legislation.


Climate Action Plan

On 11 May 2016 a discussion paper Advancing Climate Action in Queensland: Making the transition to a low carbon future was released by Environment Minister Dr Steven Miles for public consultation.

The Queensland Government is currently working with leading science bodies to develop a detailed understanding of how global warming will affect Queensland in the future under different warming scenarios. This research supports the new Queensland Climate Adaptation Strategy, which is being developed in partnership with a wide range of sectors to address the risks to our economy, infrastructure, environment and communities from current and future climate impacts.

The Climate Action Plan is part of the Queensland Government's strategy to respond to our changing environment and contains examples of work being done by governments, businesses and individuals in Australia and elsewhere to illustrate what is possible in managing the transition to a low-carbon world. It outlines what Queensland is already doing in terms of climate adaptation, renewable energy, land sector management (ie a new Bill to reinstate the vegetation management framework), transport, built environment, energy efficiency and innovation.

The Climate Action Plan also contains a series of questions that the community and industry should consider and respond to in their submissions.

The submission period closes on 5 August 2016.


Draft climate change action plan

In December 2015, the Tasmanian Government released a draft climate change action plan, "Embracing the Climate Challenge 2016-2021", which seeks to focus on sensible and practical actions concerning:

  • meeting the climate challenge – managing climate risk;
  • maximising Tasmania's energy advantage – encouraging energy innovation and improving energy efficiency;
  • maximising Tasmania's business advantage – relying on Tasmania's status as a low emitter of greenhouse gases; and
  • maximising Tasmania's liveability advantage – enhancing Tasmania's naturally cool, temperate climate and liveability.

The submission period for the draft action plan concluded on 25 March 2016. The final action plan is expected to be released in September 2016. It will incorporate the results of stakeholder and community consultation, the implications of COP21 and the review of the Climate Change (State Action) Act 2008 which sets Tasmania's emissions reduction target.

Once finalised, the action plan will provide a framework for the Tasmanian Government's response to climate change, setting policy directions and priorities over a five-year period through to 2021.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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