Australian 2022 Federal Election greenslide: implications for the new Labor Government and business - Climate Change

The results of the 2022 Federal Election have made one thing clear - Australians want greater action on climate change. In what many are calling an election 'greenslide', the election saw an unprecedented increase in votes for the Greens and teal independents, who centred their campaigns around more ambitious climate policies.

With Labor forming government, it is important for businesses to reflect on the party's proposed climate policies and consider the impact that this 'greenslide' movement may have on any forthcoming legislation and policies.

While the final makeup of the new Parliament is not yet known, it is clear that climate change was at the forefront of many voters' minds this election and the new government has a firm mandate to implement its already-announced policies.

Even if Labor forms a majority government, the presence of the Greens (who may hold the balance of power in the Senate) and teal independents has effectively created a 'supermajority' of support for climate action, which could compel or encourage Labor to increase its ambition. Stronger climate action could be a condition of the crossbench's support on other key Labor policies.

In this Insight, we recap Labor's key pre-election commitments on the environment and climate change and consider how the composition of the new Parliament may influence its current policy platform.

Emissions reductions targets

Like the outgoing Government, Labor has committed to net zero emissions by 2050. To achieve this goal, Labor has pledged a more ambitious emissions reduction target of 43% by 2030, based on 2005 levels. This will bring Australia into line with other key trading partners, including Canada, South Korea and Japan. However, research from Climate Analytics suggests this target is still consistent with global warming of 2 degrees Celsius, above the Paris Agreement's target of 1.5 degrees Celsius.

It is likely that the crossbench will press for stronger emissions reductions targets that are more in line with this 1.5 degree goal. The Greens seek to reach net zero emissions by 2035 and a 74% reduction in emissions by 2030. The teal independents accept the 2050 target for net zero, but advocate for 60% emissions reduction by 2030.

Policies to achieve net zero

Labor's 'Powering Australia' plan outlines the following key strategies, which focus on emissions management, energy policy and supporting new technologies:

gradually tighten emissions limits on the 215 large emitters covered by the Emissions Reduction Fund (ERF) Safeguard Mechanism, which Labor has said that it will do without legislative change, to take effect from 1 July 2023;
implement other changes to the ERF Safeguard Mechanism to incentivise private demand for carbon credits (ACCUs);
review Australia's carbon offsets regime to improve its effectiveness and integrity;
invest $20 billion in new transmission infrastructure, to upgrade the electricity grid so that it is better able to tolerate and transmit renewable energy. This is in support of the ALP's goal of securing 80% renewable energy into the electricity market by 2030;
install 85 ultra-low cost solar banks and 400 community batteries around Australia to improve access to solar energy;
incentivise the purchase of electric vehicles by removing taxes and tariffs on lower-cost electric vehicles to make them more affordable, and develop Australia's first National Electric Vehicle Strategy; and
support industrial and agricultural sectors low-carbon transition by allocating up to $3 billion to invest in green metals (steel, alumina and aluminium), clean energy component manufacturing, hydrogen electrolysers and fuel switching, and the reduction of methane and waste.

The Greens and teal independents' campaigns canvassed several policies that were more ambitious than those announced by Labor. Some of these, such as the Greens' proposed ban on approving new coal, oil and gas projects, seem unlikely to become government legislation. Others, though, such as the teals' target for 76% of all new vehicle sales to be electric by 2030, could gain traction due to its closer alignment to Labor's strategy.

Acknowledging the clear mandate provided by the Australian electorate, the Labor Government has already signalled that it wishes to achieve consensus on climate change action with the US Government. Labor has indicated that climate change and in particular, clean energy opportunities, will be the focus of discussions with US President Joe Biden following the Quad summit in Tokyo this week.

Review of Commonwealth environmental legislation

Labor has committed to providing a full response to the 2020 Samuel's Review of the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), which contained 38 recommendations aimed at strengthening the effectiveness of existing environmental protections and improving the efficiency of assessment timeframes.

As part of this process, the Greens are likely to press for a climate trigger to be included in the EPBC Act, so that large scale projects with high levels of emissions automatically require Commonwealth assessment.

It is unclear who will coordinate this response as Labor's Shadow Environment Minister Terri Butler was not re-elected to her inner-Brisbane seat, which passed to a new Greens MP.

National Environment Protection Authority (EPA)

On the day before the election, Labor announced that it would establish a national, independent EPA to "restore trust and confidence in environmental decision-making".

The EPA would contain two divisions: one focused on enforcement of Commonwealth environmental laws (including the EPBC Act) and compliance assurance, and the other for environmental data collection and analysis.

Heightened disclosure obligations for business

New Treasurer Jim Chalmers signalled late last year that Labor, if elected, would seek to create clearer guidance for corporates about when and how they must disclose their exposure to climate risk.

It is not yet clear what form this guidance would take, but specific new mandatory disclosure rules around climate risk are likely to be one of the options considered by the new Government.

Key Takeaways

In view of the above, businesses and organisations should position their internal policies and decision-making processes to prepare for more rigour in relation to emissions reductions and sustainability performance than has historically been the case. In particular, the following should be anticipated:

a shift towards greater transparency and disclosure in relation to scope 1, 2 and 3 emissions, emissions reductions and offsetting commitments;
new national regulator oversight of the development, implementation and enforcement of Commonwealth environmental obligations, particularly in relation to energy consumption/emissions reduction and biodiversity commitments; and
much greater alignment with international commitments on emissions reductions and sustainability matters, particularly with our key trading partners.

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.