Australian Carbon Policy: Changes Made and Details Still to Come

The amount of change in Australia’s carbon and climate change policies has left many tired of tracking the latest development.

Jacqui Bonnitcha and Tom Davies recently contributed to the Environment Institute of Australia and New Zealand (EIANZ) by summarising the latest developments in climate change policies.

There are many policies that are relevant to climate change but the most important can be grouped into two categories, reduction targets and reduction mechanisms.

Reduction Targets

Upon coming to power in 2007, one of the first acts of the Rudd Labour government was to ratify the Kyoto Protocol. This was Australia’s first commitment to an emissions reduction target and was seen as an important signal to the international community. In 2012 it was announced that Australia would join a second commitment period of the Kyoto Protocol and would reduce our emissions in line with the bipartisan goal of 5% below 2000 levels by 2020. The government also included options to move to larger reduction targets should international action meet certain conditions. A recent review by the Climate Change Authority confirmed that the governments conditions set to move beyond a 5% target have been met but that it was not clear that all the requirements for the 15% target have been met. The Abbott Liberal government has maintained their support for the 5% reduction target.

Reduction Mechanisms

In order to meet Australia’s reduction targets, policies that create reduction mechanisms are required. In September 2013 the Abbott Liberal government was installed and immediately began drafting legislation to repeal the Clean Energy Act. In December 2013 a Green Paper was released discussing the proposed Emissions Reduction Fund (ERF). The ERF is the centrepiece of the Direct Action Plan and it will have $1.55billion over 3 years but it is not known how this will be distributed or what the funding will be beyond 2017. There are many other details about the ERF which remain unclear:

  • The interaction between the baseline (or ‘safeguard’ as it is termed in the Green Paper) and the price of abatement units is not specified. It is also unclear if the baselines will be adjusted between now and 2020.
  • Furthermore, how the baselines are set (e.g. at a facility or activity level) is still uncertain.
  • A key to the ERF is ‘additionality’ that is, ensuring that emissions reductions paid for by the government are in addition to those that would occur normally. The Green Paper does not set out a methodology for determining additionality.
  • Detail of which organisations will be required to participate in the scheme has not been released.
  • The timing, frequency and volume of auctions remains unclear.
  • The penalty for not meeting reductions remains undetermined.

The full story is included in the March/April version of The Environmental Practitioner can be found here.

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