Australia

Climate change has been a contentious issue since the late 1990s. In 1998, the government set up the Australian Greenhouse Office (AGO), the world’s first national government agency dedicated to reducing GHG emissions, and the National Carbon Accounting System (NCAS). Australia signed the Kyoto Protocol in 1998, but did not ratify it until 2007. Controversy over the introduction of federal legislation to limit GHG emissions became particularly acute from 2009, with the major parties (the Australian Labor Party or ALP, and the Liberal-National Party coalition) advocating different approaches.

In 2007, the LNP coalition government introduced the National Greenhouse Energy and Reporting (NGER) Act, which established a single national reporting framework for GHG emissions and energy use and production, in part to provide information to underpin a future emissions trading scheme (ETS). The Garnaut Climate Change Review (released 2008, updated 2011) indicated that an ETS could help to “decarbonise” the economy, and would not be inflationary if permit revenue were used to compensate households. Major political controversy surrounded the first attempt (by the ALP government) to introduce an ETS through the Carbon Pollution Reduction Scheme Bill (CPRS), which was twice defeated in the Senate in 2009, giving rise to a trigger for a double dissolution election. In 2010, it was announced that the CPRS would be put on hold until 2012.

However, after a federal election in 2010, the new minority ALP government (which relied on the Greens to pass bills in the Senate) began anew to introduce climate change legislation. A new package of 18 bills to combat climate change, headed by the Clean Energy Act 2011, was passed by the House of Representatives and by a narrow majority in the Senate. The Clean Energy Legislative package created a carbon pricing mechanism that began in July 2012, with the price to be paid by the largest business emitters fixed for the first three years before moving to a floating price ETS.

Ongoing issues related to the carbon pricing mechanism included the potential effects on emissions-intensive industries, and the effects on household electricity and general consumption bills. As a result, the package included transitional assistance for “emissions-intensive trade-exposed industries” and substantial cuts to income tax, particularly for low-income earners, and increases to the pension and allowances in order to compensate for any price rises. Household transportation fuel consumption and emissions from agriculture and other land-based activities were exempt from the carbon price.

In 2012, the Minister for Climate Change and Energy Efficiency and the European Commissioner for Climate Action announced their intention to connect the Australian ETS to the European Union ETS, through an interim one-way link from 1 July 2015 and a full two-way link from 2018. The intent to link with the EU ETS was formalised with the passage of the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and six related bills, which, in addition to amending Australia’s emissions unit registry to permit the use of European Union Allowances[1], introduced two main changes to the Australian scheme: first, removal of the price floor on carbon credits; second, the application of a new sub-limit to the use of eligible Kyoto credits. With a change of Prime Minister in July 2013, the ALP signalled its intention to bring forward by one year the move from a fixed price on carbon to a floating price ETS. Bills to implement this intent were never introduced to parliament due to a change of government, as the Tony Abbot-led coalition was elected in the general election of 2013. One of the major pre-election promises of the coalition was to revoke the carbon tax and in July 2014 the Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 was passed by the Senate.[2]

In place of the Clean Energy Act and the carbon tax, the government has passed the Carbon Farming Initiative Amendment Bill 2014, which implements the Emissions Reduction Fund (ERF). The ERF is intended to contribute towards the government’s commitment to reduce GHG emissions by 5% below 2000 levels by 2020. This target is a bipartisan target i.e. supported by both the Australian Labor Party and the coalition government and represents the equivalent of a reduction of 19% against business-as-usual levels in 2020. Through the ERF the government will purchase low-cost abatement through reverse auctions. It consists of three parts: crediting emissions reductions that have been certified by the Clean Energy Regulator, and based on methods considered by an independent assurance body; purchasing credited reductions by the Regulator through auctions where the lowest bids are bought first and payment under the contract is tied to delivery of reductions; and safeguarding of public money spent on reductions by setting emissions baselines for large facilities. The safeguard mechanism will apply from July 2016 and is intended to protect taxpayer funds by ensuring that emissions reductions paid for are not displaced by a significant rise in emissions elsewhere in the economy.

Australian carbon credit units will be issued for emissions reductions estimated and verified in accordance with approved ERF methods. This will provide legal certainty about the ownership of emissions units and reduce the risk of double-counting and fraud. The Kyoto-compliant Australian National Registry of Emissions Units (ANREU) remains in place as the framework for rules around issuance, holding and transfer of emissions units.

Public consultation on ERF methods is ongoing, with 17 priority methods already released for comment. These include: destroying the methane component of coal mine waste gas by operating one or more methane destruction devices; treating eligible organic waste at an alternative waste treatment facility rather than disposing of it in landfill; and combusting methane from landfill gas using a flare, boiler, or internal combustion engine.

A bill to abolish the Climate Change Authority was rejected in the Senate in March 2014, but a second version of the bill, the Climate Change Authority (Abolition) Bill 2013 [No. 2], is currently before the Senate.[3] However, as part of the political agreement to pass the Carbon Farming Initiative Amendment Bill 2014, the government has abandoned its pre-election pledge to scrap the Climate Change Authority. As such, the Climate Change Authority (Abolition) Bill 2013 [No. 2] is on hold. It also appears that the government will not further progress bills currently before Parliament to abolish the Clean Energy Finance Corporation (the Clean Energy Finance Corporation (Abolition) Bill 2014) and the Australian Renewable Energy Agency (ARENA) (the Australian Renewable Energy Agency (Repeal) Bill 2014). ARENA was established in 2012 as an independent statutory authority to increase the supply of renewable energy and improve its competitiveness by funding development projects and research activities.

Australia’s greenhouse gas emissions are estimated as a nation, by state and by industry. The National Greenhouse Accounts, which track national emissions from 1990 onwards, are published quarterly to meet reporting commitments under the UNFCCC. The National Greenhouse Accounts are supported by company emissions measurement rules, legislated under the National Greenhouse and Energy Reporting (Measurement) Determination. These reporting rules are reviewed annually.

The framework for the measurement, reporting and verification of emissions is the National Greenhouse and Energy Reporting Scheme (NGERS). NGERS sets out the rules for how emissions must be measured and reported. NGERS will underpin the ERF in that credits for abatement achieved will be based on the same rules for how emissions must be measured and reported and then audited. Credits will only be issued if they have been verified by an independent auditor.

The Clean Energy Regulator remains the government body responsible for implementing climate change mitigation laws. The Regulator will take on implementation of the ERF, in addition to ongoing implementation of other programs such as the Renewable Energy Target, legacy Carbon Farming Initiative projects, the NGERS and ANREU.

As a further part of recent changes to climate change policy, the Australian Climate Change Science Programme, which had been operating since 1989 and which provided fundamental climate system science to support decision-making, has been dissolved and merged with the National Environmental Research Programme into a new National Environmental Science Programme (NESP). The NESP will receive AUD25.5m (USD21.99 million) per annum and will require groups of research institutions to form research hubs and apply, via a competitive process, for funding on the following six topics: clean air and urban landscapes; earth systems; marine biodiversity; Northern Australia environmental resources; threatened species recovery; and tropical water quality. Climate change science will be addressed by the earth systems research hub.

The Climate Change Research Strategy for Primary Industries (CCRSPI), operating since 2007 under a mandate from the Primary Industry Ministerial Council and Primary Industry Standing Committee, leads the national collaboration, co-ordination and communication of climate change research, development and extension activity for primary industries. Research programmes such as the Climate Change Research Programme and Carbon Farming Futures (CFF) – Filling the Research Gap, Action on the Ground and Extension and Outreach programmes are led by the Department of Agriculture. The government has approved 200 grants worth AUD138.9m (USD119.8m) under these CFF programmes. These projects are supporting research, trials and extension of the ways farmers and land managers can reduce agricultural GHG emissions, increase storage of carbon in soil, and maintain productivity while adapting to a changing climate. Adaptation-related research is also carried out through the National Climate Change Adaptation Research Facility, which was recently provided with grant funding of AUD9m (USD7.76m) over three years.

In addition to domestic efforts to tackle climate change, Australia is involved in many regional and global activities, providing opportunities to build stronger political relationships and influence other countries’ climate change policies, and for capacity building in developing countries. It is involved in setting up REDD+ projects and has an allocated budget towards supporting adaptation efforts in developing countries.

Sub-national level

Several states have climate legislation and emission reduction targets. South Australia set ambitious targets in its 2007 legislation – reducing emissions to 40% under 1990 levels by 2050; and production and consumption of at least 20% renewable energy by 2014. Victoria’s Climate Change Act 2010 came into effect in 2011. Following federal legislation, the Act was reviewed and “found no compelling case to maintain the (Victorian) target” when a national scheme was in place. State emission reduction targets (which are more ambitious than the federal targets) will be repealed from the state legislation; however, other elements of the legislation, including adaptation plans, will remain intact (and a Victorian Climate Change Adaptation Plan was published in response in 2013). New South Wales produced several plans, which include a commitment to be net carbon neutral by 2020, as well as other targets and measures with regards to energy consumption and supply and transportation. The Australian Capital Territory also introduced ambitious legislation including net carbon neutrality by 2060. It remains to be seen how the results of the 2013 general election and the subsequent shift in national policy, will affect sub-national activity.

Energy demand

The overarching framework for energy efficiency is the National Strategy on Energy Efficiency (NSEE), updated in 2010 and published by the Council of Australian Governments (COAG). This strategy builds on the National Framework for Energy Efficiency, published in 2004, and which now exists as a sub-set of the NSEE.

However, in December 2014 the COAG Energy Council committed to develop a new policy framework for energy productivity to co-ordinate nationally across both energy efficiency and energy market reform.  This relates to a government proposal in the 2014 Energy Green Paper to consider a “National Energy Productivity Plan”. It is expected therefore this new framework will emerge and may replace the NSEE within 2015.

While the previous government outlined plans for a national Energy Savings Initiative (ESI), designed to tie in with carbon pricing measures under the Clean Energy Act, this has not been taken forward. A national ESI would have placed obligations on energy retailers to implement energy savings in households and businesses, and would have assisted consumers to save money through energy efficient technologies.

In the 2012‑2013 financial year, the government provided funding of AUD37.1m (USD31.2 million) over four years (between 2012‑2013 and 2015‑2016) to assist in establishing a nationally-consistent legislative framework to regulate the energy efficiency of equipment and appliances.  This addresses two policy objectives of improving energy efficiency and reducing GHG emissions by consolidating seven state and territory legal frameworks into a single piece of Commonwealth legislation. The Greenhouse and Energy Minimum Standards Act 2012 (the GEMS Act) aims to promote the development and adoption of products that use less energy and produce fewer greenhouse gases. The main policy tools to achieve these objectives are mandatory Minimum Energy Performance Standards and Energy Rating Labels for appliances and equipment. The budget also included AUD2.8m (USD2.4m) in additional funding for a range of building energy efficiency activities, including maintenance and improvement of current building regulatory schemes.

An Energy Efficiency Opportunities programme was launched to encourage large energy-using businesses to improve their energy efficiency. Large corporations (either individually or as part of a corporate group) that used over 0.5 petajoules of energy per year were mandated to participate, with medium users able to participate voluntarily. However, due to the passing of the Energy Efficiency Opportunities (Repeal) Bill 2014, the programme has ceased.

To drive energy efficiency in the commercial building sector specifically, in 2010 the government launched the Commercial Building Disclosure (CBD) programme. The CBD programme requires most sellers and lessors of large office spaces to provide energy efficiency information to prospective buyers and tenants. The government collects and publishes this information to make available clear and credible energy efficiency and greenhouse emissions data. The policy intends to result in a more informed commercial property market, with a focus on energy efficient buildings and reduced emissions. The programme is underpinned by the Building Energy Efficiency Disclosure Act 2010 and sub-ordinate legislation.

Energy supply

Australia has had legislation in place to incentivise increased renewable energy generation since 2000 (the Renewable Energy [Electricity] Act 2000), with a Mandatory Renewable Energy Target (MRET) commencing in 2001. From 2009, the MRET was expanded to the Renewable Energy Target (RET) Scheme, designed to ensure that 20% of the nation’s electricity supply will be generated from renewable sources by 2020. As of 2011-12, around 9.5% of electricity generation comes from renewable sources. Hydroelectricity, bagasse (a by-product of sugarcane), wood and wood waste together account for 85% of renewable energy production. Wind and solar are rapidly growing sectors and in 2011-12 made up 25% and 6% of generation respectively.

In 2010 the Parliament passed legislation to split the RET into a Large-scale Renewable Energy Target (LRET) and Small-scale Renewable Energy Scheme (SRES), effective from 2011. The two schemes recognise differences between large-scale operations (such as renewable energy projects, and energy suppliers) and small-scale renewable energy systems (such as house­holds, small businesses and communities). Under the amended legislation, liable entities (normally electricity retailers) are required to purchase renewable energy certificates (RECs) from renewable energy providers. This is intended to provide a financial incentive for investment in renewable energy systems. LRET and SRES are overseen by a statutory authority (the Clean Energy Regulator).

REDD+ and LULUCF

In 1990 land use change emissions were 27% of the UNFCCC inventory total. However by 2011 this proportion had decreased to 9% due to a long term trend of declining land-clearing in Australia dating back to the 1970s. The government established the National Carbon Accounting System (NCAS) in 1998 to provide a complete accounting and forecasting system for human-induced sources and sinks of GHG emissions from land-based activities. Reporting capabilities include emissions from LULUCF, as well as projections for future emissions from these categories. Carbon pools that are covered through NCAS include soil carbon and biomass (both above-ground and below-ground). The NCAS is considered one of the leading programmes worldwide in accounting for carbon emissions and sequestration from land-based activities.

The Carbon Farming Initiative, established by the Carbon Credits (Carbon Farming Initiative) Act 2011, allows for emissions reduction or sequestration projects in the land sector, and from landfill waste emissions. The projects earn carbon credits that can be sold to those wishing to offset their GHG emissions. The initiative covers land-based sequestration activities, native forest protection and emissions avoidance projects. As noted above, the Carbon Farming Initiative Amendment Bill 2014 has been passed by Parliament.

Transportation

Transportation emissions account for approximately 16% of Australia’s UNFCCC GHG inventory for 2012, with cars contributing nearly 57% of road transport-related emissions. By 2020, GHG emissions from transport are projected to be 97 Mt CO2-e, 29% higher than in 2000. The Green Vehicle Guide, an initiative of the Department of Infrastructure and Regional Development, provides ratings on new vehicles based on GHG and air pollution emissions.

Adaptation

Between 2007 and 2013 the government allocated AUD126m (USD108.7m) to a National Climate Change Adaptation Program (CCAP), and allocated a further AUD44m (USD37.9m) to establish the CSIRO Climate Adaptation Flagship. In 2007 a National Climate Change Adaptation Framework was agreed to by a now-disbanded committee of COAG but does not have any legislative or executive force. In 2009 a National Coastal Risk Assessment was published, with a supplement published in 2011, the ‘Climate change risks to coastal buildings and infrastructure report’. In 2010, the government published a position paper ‘Adapting to climate change in Australia’, identifying six national priority areas for action: water, coasts, infrastructure, natural ecosystems, natural disaster management and agriculture. The paper emphasised responsibility sharing between government and private parties, and allocation of responsibilities among different levels of government.

In 2014, the government committed funding of AUD9m (USD7.76m) to the National Climate Change Research Facility to maintain key research networks, synthesise the considerable body of adaptation research already undertaken, and develop a coastal climate risk management framework to support local decision making.

[1] At first indirectly, through a ‘shadow units’ system, and then directly when a full two-way link was in place.

[2] Other associated Acts that were also passed as part of the abolition of the carbon tax are the: Customs Tariff Amendment (Carbon Tax Repeal) Act 2014; Excise Tariff Amendment (Carbon Tax Repeal) Act 2014; Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment (Carbon Tax Repeal) Act 2014; Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment (Carbon Tax Repeal) Act 2014; True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Act 2014; True-up Shortfall Levy (General) (Carbon Tax Repeal) Act 2014; and the Ozone Protection and Synthetic Greenhouse Gas (Import Levy) (Transitional Provisions) Act 2014.

[3] Some minor laws related to the original 2011 Clean Energy Act are currently still in force, namely the: Clean Energy (Consequential Amendments) Act 2011; Clean Energy (Household Assistance Amendments) Act 2011; Clean Energy (Tax Laws Amendments) Act 2011; and the Clean Energy Regulator Act 2011.