So far, only the largest polluters in the private sector are subject to carbon emission regulation under the Climate Change Act 2022. However, with pressure mounting to extend the reach of the legislation in order to achieve 'net zero' carbon emissions by 2050, it is only a matter of time before other businesses – including agribusiness – will be required to take further action.
Which Australian businesses are currently subject to carbon emission regulation?
Currently, only private sector facilities producing more than 100,000 tonnes of carbon dioxide equivalent emissions per year are subject to an emission cap at a level set by the Clean Energy Regulator. But these thresholds – both in relation to the level of emissions that trigger regulation and the cap itself – are likely to be lowered, with groups such as the Business Council of Australia supporting the move. Even without a net zero mandate, market forces are influencing a shift towards lower carbon emissions for many businesses. With both corporate governance and public relations benefits, companies comprising around half of the collective ASX200 market value are now committed to achieving net zero, and over 400 Australian brands have achieved Climate Active certification under a federal government initiative. If a commitment is made to achieving net zero, it is critical that you base this on credible policies implemented in the company. Otherwise, you run the risk of 'greenwashing' and being held accountable by the regulator for misleading the public.
Net zero opportunities and challenges for the agricultural sector
While the future of emission reduction poses some risk and uncertainty for agribusiness, it also represents a substantial opportunity, including in relation to carbon farming initiatives and transition to other low emission technologies. This can enable agribusinesses to diversify by providing opportunities for investment from other industries to offset their emissions (through direct investment in carbon farming projects or the purchase of the resulting carbon credits). Broadly, most carbon farming projects comprise either:
- vegetation methods – revegetation and afforestation projects to remove carbon dioxide from the air
- agricultural methods – changing stock management practices to reduce methane and nitrous oxide production.
Having regard to low emission technologies, Australia's Long-Term Emissions Reduction Plan identifies priority technologies for government investment, with the hope of driving down the costs of these technologies so they become industry standard. Key technologies identified for the agricultural sector include land-based solutions, (including soil carbon methods) and other emerging technologies, such as livestock feed supplements.
Cautious approach recommended for agribusinesses
Sensibly, agribusinesses should be considering carbon farming opportunities and ways to transition to low emission technologies. Of course, emission reduction initiatives for agribusiness are not without challenges and risks. Given that legal and commercial frameworks for carbon farming and other associated initiatives are in their infancy and relatively untested, it is critical that agribusinesses obtain technical, financial and legal advice. For more information about how your business can achieve net zero emissions, contact partner Leanne O'Neill.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.