Australia: Climate Change Authority Consultation on emissions reduction policies in Australia

Introduction

Last month, the Climate Change Authority (Authority) released a consultation paper (available here) to support its work in updating its advice to the Australian Government on climate change policies to meet Australia's greenhouse gas (GHG) emissions reduction commitments under the Paris Agreement. The Authority is an independent statutory agency, which was established in 2012 to advise the Government on climate change policy.

The consultation paper notes that the Authority's previous advice has been provided in various reports over recent years, including notably its report on the policy toolkit to meet the Paris Agreement emissions reduction target of 2016 (see our legal update on that report here).

The Authority is aiming to provide its updated advice by the end of 2019, with a view to positioning Australia to "not only meet its 2030 emissions target, but also to meet targets with enhanced ambition that put Australia clearly and firmly on the path to net zero emissions."

There are five key issues that the consultation paper seeks to address:

  • the appropriateness of the Authority's previous recommendations;
  • pathways for achieving a net zero emissions economy in the long term;
  • the development of sectoral and economy wide policies;
  • the role of the Government in supporting innovation, finance and new industries; and
  • the use of international carbon units and Australia's carryover credits from its Kyoto Protocol commitments.

Submissions from interested organisations and individuals can be made until 23 August 2019.

Australia's commitments under the Paris Agreement

The overarching goals under the Paris Agreement are to:

  • limit global warming to well below 2°C and pursue efforts to limit the temperature increase to 1.5°C; and
  • achieve net zero emissions by 2050.

The Australian Government's current medium-term commitment under the Paris Agreement is to reduce our national GHG emissions by between 26 to 28 per cent below 2005 levels by 2030 (2030 Target). Australia's emissions are currently projected to be 563 Mt CO2-e in 2030 (7 per cent below 2005 levels), suggesting that Australia is currently not on track to meet its 2030 Target.1

In addition, Australia, along with all other signatories to the Paris Agreement, is expected to adopt a more ambitious GHG emissions reduction target under the Paris Agreement process in 2020. However, according to the consultation paper, the Authority "will not be making recommendations about the level of the Government's 2030 emissions reduction target" in 2019.

Relevantly, in its 2015 Final Report on Australia's Future Emissions Reduction Targets (available here), the Authority recommended an emissions reduction target of 40-60 per cent below 2000 levels by 2030, or 45 to 65 per cent below 2005 levels.

Australia's existing suite of climate change policies

In light of the 2020 deadline for Australia to submit its revised emissions reduction targets under the Paris Agreement, this review by the Authority comes at a critical time for the Australian Government in terms of assessing the effectiveness of its existing suite of emissions reductions policies. Current Australian Government policy primarily consists of the Carbon Farming Initiative and Emissions Reduction Fund (with additional funding through the Climate Solutions Fund), the Safeguard Mechanism and the Renewable Energy Target (see our previous update here).

Relevantly, a stocktake report published by the Authority in March 2019 (available here), indicated that Australia's existing suite of emissions reduction policies alone will not be sufficient to ensure that the 2030 Target is met.

According to the consultation paper, key advice previously given by the Authority in relation to Australia's climate change policy position includes:

  • enhancing the safeguard mechanism by declining safeguard baselines;
  • implementing an emissions intensity scheme or a low emissions target in the electricity sector;
  • introducing emissions reduction standards for light vehicles;
  • harmonising and enhancing regulation in the waste sector;
  • harmonising and enhancing energy efficiency schemes, and updating and expanding energy efficiency standards for appliances and buildings; and
  • supporting research and development of low emissions technologies and products.

However, a number of these recommendations have not been implemented by Government and do not form part of the current Government's policy position on climate change.

Key developments relevant to Australia's climate policy

The consultation paper notes that since the Authority's previous advice on Australia's climate policy position was issued, there have been:

  • changes in the costs of abatement technology and industry action on climate change;
  • advances in climate science and improvements in our understanding of climate change impacts and the emissions budget consistent with the Paris Agreement goals; and
  • growth in domestic and global emissions and changes in the rollout and impacts of climate change policies.

The development of the Authority's updated advice will also be informed by three stocktake reports recently released by the Authority (available here). The key findings of these reports are as follows:

  • Industry stocktake – there are a number of drivers which support reductions in GHG emissions from industry beyond what is required for compliance with current regulation and policies, including:
    1. shifts in consumer preferences and the prioritisation of low carbon opportunities by investors and for procurement purposes
    2. potential exposure to litigation (see our previous update here); and
    3. increasing investment by companies in low emissions and renewable energy generation, increased efficiency and practice improvements.
  • Australian stocktake – there are some GHG emissions reduction policies that operate across sectors of the economy and in all states and territories, while other policies focus on individual sectors. The energy sector is a particular focus of Australian GHG emissions reduction policy in Australia.
  • International stocktake – Australia produces around one per cent of global emissions and is the world's 15th largest emitter. 116 countries have some form of renewable energy target, 30 countries have committed to phase out coal power, 21 countries have implemented some form of carbon tax and 36 countries have implemented some form of emissions trading scheme. However, under current rates of ambition and action, the world will not meet the Paris Agreement's 2°C temperature goal.

Footnote

1 Australia's emissions projections 2018, Department of the Environment and Energy, Canberra

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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