This snapshot of some environmental law highlights is contributed by the editors of the National Environmental Law Review, the official journal of the National Environmental Law Association of Australia (NELA).
NELA brings together environmental lawyers and related professionals to foster discussion, learning and harmonisation of environmental law in Australia; exchange information and ideas on best practice environmental regulation in Australia and the Asia-Pacific; and strengthen environmental law networks in Australia and internationally. For more information see www.nela.org.au
This contribution focuses on greenhouse gas (GHG) emission reduction initiativesas that has been the key issue in Australian environmental law in the first half or soof 2011. It suggests that the outlook for progress in international climate change treaty negotiations has brightened this year. It introducesvery briefly a selection of the many climate scienceand impact assessment reports that have informedthe development of federal law and policy on climate mitigation and adaptation. It then provides a skeletal overview of the proposed national carbon pricing mechanism, including its legislative framework.
A glimmer of optimism for global treaty negotiations
The outlook for the 2011 United Nations Climate Change Conference in Durban, South Africa, is more optimistic now than it was after the 2009 Copenhagen conference when countries could not agree on the Bali Road Map for climate change mitigation beyond 2012. The Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), Christiana Figueres, told the Africa Carbon Forum in July 2011 that the world was making progress toward reaching a binding agreement on greenhouse gas emission reduction targets in Durban later this year, and that crucial support was being offered to developing countries to assist with adaptation and mitigation efforts.
The main aim for the Durban conference is to secure a global climate agreement that will continue beyond the expiry of the Kyoto Protocol’s first five-year commitment period in 2012.
The 2011 United Nations Climate Change Conference will run from 28 November to 9 December. It will be 17th session of the Conference of the Parties (COP 17) to the UNFCCC, and the 7th meeting of the Parties to the Kyoto Protocol to the UNFCCC (CMP 7). The UNFCCC is the international treaty agreed at the Earth Summit in 1992 that aims to reduce global warming and manage its adverse effects. The Kyoto Protocol to the UNFCC, which entered into force in 2005, is a legally binding instrument that creates a transparent model for country reporting and accountability based on common but differentiated responsibilities for reducing greenhouse gas emissions.
If the first commitment period under the Protocol expires in 2012 without new targets being agreed, the outwork for the world’s climate will be grim.
The Protocol commits 37 industrialised countries and the European Community to reducing their greenhouse gas emissions against 1990 levels over the period 2008–2012 by about five percent when averaged, excluding emissions frominternational aviation and shipping. Australia’s Protocol target permitted an increase of 8% in emissions on 1990 levels.
Progress had been made at the 16th Conference of the Parties to the UNFCC in December 2010in Cancún, Mexico, when all industrialised countries agreed to formalise their emission reduction targets, and 44 developing countries agreed to formalise nationally appropriate mitigation actions. Countries also agreed to tackle deforestration and emphasised the importance of accountability measures. The pledges made were insufficient to guarantee a maximum temperature rise of less than two degrees on pre-industrial levels so as to avoid catastrophic climate-related outcomes, but more effort had been evident than under the first commitment period of the Protocol. Clear signals had also been communicated to the private sector that the world was transitioning toward lower-carbon economies and that marketbased emission trading mechanisms were part of the solution. The Technology Mechanism and the Green Climate Fund agreed in Cancun would help to finance both adaptation and mitigation efforts.
Hopes have been raised that the UNFCC is on track to see those institutions operationalized in Durban.
The UNFCC Executive Secretary has warned however, that current commitments, even if complied with, only amount to about 60 per cent of what the scientific community says is required by 2020 for global temperatures to increase by less than two degrees, and that emissions need to peak by 2015 to limit the climate mayhem otherwise forecast.
The trends in emission trading that Figueres has welcomed include:
- The extension of the European Union’s emissions trading scheme beyond 2012, independently of UNFCC developments.
- Emission trading being introduced to New Zealand.
- Progress at the state and city levels in the United States and Canada.
- Progress with voluntary schemes in Japan.
- Interest in emissions trading in China, India South Korea, Mexico, Brazil and Chile.
- Market opportunities in Africa.
UN News Centre, ‘UN climate change chief urges governments to quickly implement Cancún accords’, http://www.un.org/apps/news/story.asp?NewsID=37658&Cr=climate+change&Cr1 UNFCC, Statement by Christiana Figueres, Executive Secretary, United Nations Framework Convention on Climate Change, Africa Carbon Forum Marrakech, 4–6 July 2011, http://unfccc.int/files/http://unfccc.int/files/press/news_room/statements/application/pdf/110706_speech_ carbon_forum_marrakech.pdf
Climate science reports inform Australian policy development
Various reports in recent months and earlier have highlighted Australia’s exposure to climate change impacts, and the progress being made towards lowering emissions by some of Australia’s major trading partners. The lack of consensus between the Coalition and Labor at the federal level on the best policy responses to climate change has dominated the media in recent months, but this has not yet thwarted the development of major reform policies, which responds to the scientific advice received.
In May 2011 Australia’s Climate Commission released The Critical Decade: Climate Science, Risks and Responses. The report’s key messages include that it is undeniable that the earth’s climate is warming as a result of human activities, and that the warming of the earth’s climate is already having significant social, economic and environmental impacts. These effects include an increased number of hot days during the past 50 years in Australia, global sea level rises of 20cm since the beginning of the nineteenth century and an expectation of anequivalent increase by 2050, and nine bleaching events affecting the Great Barrier Reef over the past 31 years. The report notes that human activities, and particularly the combustion of fossil fuels and deforestation, are the main contributors to climate change. It says that ecisions that are made during the current decade (2010–2020) will determine the severity of the impacts of climate change up to 2050. The Commission called for the rapid decarbonisation of the Australian economy with the effect that GHG emissions peak within the next few years and then decline strongly.1
The independent Climate Commission was launched in February 2011 by the Minister for Climate Change and Energy Efficiency. It is headed by Professor Tim Flannery, with Professor Will Steffen, Professor Lesley Hughes, Dr Susannah Eliott, Mr Gerry Hueston and Mr Roger Beale its other members.
The Climate Commission is charged with holding a series of public outreach events to explain:
- The science of climate change and issues raised by climate scientists.
- The magnitude of the challenge in addressing climate change.
- The role of a carbon price in tackling climate change.
- The contribution of other emerging policies.
- How a carbon price works and its interaction with the economy and the community.
- The opportunities for Australian firms and communities in moving to a low carbon future.
The Commission will produce targeted information products to help inform the public and build community support for climate change efforts, and engage in other community forums and public debate as required2.
In June 2011 the Productivity Commission’s report Carbon Emission Policies in KeyEconomies found that a number of Australia’s major trading partners have an implicit carbon price as a result of the different regulatory tools used to reduce emissions, even if carbon emissions were not priced directly. It found that an emissions trading scheme (ETS) is the most efficient means to reduce GHG emissions and complementary measures (such as renewable energy programs) increased the cost of abatement. It noted that a number of Australia’s major trading partners have, or are currently contemplating the introduction of an ETS.3
Professor Ross Garnaut’s report, Australia in the Global Response to Climate Change, released in May 2011 concludes his series of updates on this 2008 Review. Garnaut concluded that the climate science indicates that average temperatures on earth are rising, and that human-induced increases in greenhouse gases are making major contributions to those rises. Both developed and developing nations must contribute to the reduction of the world’s GHG emissions.Australia should adopt a carbon price, initially with a fixed price (tax) that transitions into a fully flexible trading scheme. The revenue generated from the carbon price should be reinvested to support technology development, efficiency improvement, and provide assistance to certain emissions-intensive industries to avoid an uneconomic reduction of production. This report also noted that an integrated adaptation response with clear priorities would be particularly important where there are longlived decisions to be made on land-use planning and major infrastructure development4.
The Department of Climate Change and Energy Efficiency released the National Greenhouse Accounts including Accounting for the Kyoto Target 2009 and the December Quarter 2010 latest trends in April 2011. According to the accounts, Australia’s GHG gas emissions for the 12 months to December 2010 were 0.5% higher than for the previous 12 months. This was due largely to the recovery in industrial activity from the low levels experienced during the economic slowdown in 2009. In addition, the quarterly data shows trend emissions falling by 1.2% in the December quarter as emissions from electricity generation continue to be affected by fuel switching from black coal to gas and hydro generation and cooler temperatures5.
The Investment Reference Group’s (IRG) report, Investment Reference Group Report: a Report to the Commonwealth Minister for Resources and Energy, considers the nature of carbon policy uncertainty and its consequences for the electricity generation sector, as well as describing the features of a policy that will promote efficient investment. The IRG is chaired by the Secretary of the Department of Resources, Energy and ourism and includes investors and operators of electricity generation assets, energy market bodies, project financiers and state government participants. The report noted the negative impacts of policy uncertainty and identified the features for an effective policy regime capable of delivering efficient investment in the electricity generation sector. These included:
- Setting a long-term emissions reduction target and trajectory that can be factored into investment decisions.
- Providing a clear understanding of the transition mechanism and criteria for the introduction of the carbon tax and for moving from an initial carbon tax to an ETS.
- Establishing a manageable domestic cap which, if required, allows for the use ofinternational emissions permits.
- Providing for adjustment mechanisms that maximise long-term business and community support.
- Establishing and maintaining an appropriate framework of complementary measures to ensure that the Australian economy can transition to a low-carbon economy in a measured manner.
- Providing for a comprehensive risk assessment framework that is capable of managing the potential large-scale exit of existing generation from the market and the need to encourage significant levels of new investment in low-carbon or renewable electricity generation technologies7.
To complement the IRG report, Minister Ferguson also commissioned Deloitte to undertake an independent review of investment activities in the Australian electricity generation sector. This report, Electricity Generation Investment Analysis, was made available by the Department of Resources, Energy and Tourism in May 2011.
The major findings of the Deloitte report included that:
- Shifts in fuel and technology have already taken place in the Australian electricity generation sector, manifest in investment trends and the generation mix that reflects a paradigm shift from coal to gas during 2000– 2005, followed by gas and renewables.
- Policy uncertainty around carbon pricing and, to a lesser extent, the renewable energy target, are the most significant concerns affecting investment decisions in base load gas generation8.
In January 2011 the Coasts and Climate Change Council’s end of term report was provided to the Minister for Climate Change and Energy Efficiency. The report notes that many coastal assets – critical infrastructure, beaches and public open spaces, public facilities, homes and commercial interests – are at risk from rising sea levels and other impacts of climate change. The report states that there is an urgent need for Australian Government leadership on coastal adaptation to drive collaboration and consistent approaches across all levels of government. The Council proposes that a 10-year national agenda for coastal adaptation should be defined with the following four priority areas:
- Accessible and consistent information for coastal communities.
- High quality and regionally targeted data for decision-makers.
- Clarification of legal liability for local governments.
- Greater policy and regulatory consistency for local governments and professions9
Sea level rise predictions
A new interactive visualisation tool which identifies the potential future impacts of climate change on some of Australia’s coastal regions was released in December 201010. The inundation maps show three sea level rise scenarios: low (0.5m), medium (0.8m) and high (1.1m), projected to the year 2100. The maps illustrate the type of flooding event that could be expected to occur at least once a year for the three different sea level rise scenarios. The maps are intendedto provide information to help communities understand the potential impacts of sea level rise. They are also designed to assist in informing governments and decision makers about the risks through the application of nationally consistent sea level rise predictions across Australia’s coastal regions11.
Biodiversity and climate change
Earlier reports focussed on biodiversity and climate change are also likely to have influenced the development of the new carbon pricing mechanism. These include the 2009 report to the Natural Resource Management Ministerial Council, Australia’s Biodiversity and Climate Change: A strategic assessment of the vulnerability of Australia’s biodiversity to climate change, distributed by CSIRO Publishing. Hyder Consulting’s report to the Department of Climate Change and the Department of the Environment, Water, Heritage and the Arts in March 2008 TheImpacts and Management Implications of Climate Change for the Australian Government’s Protected Areas may also have caused concern. As may have Michael Dunlop and Peter R. Brown’s Implications of Climate Change for Australia’s National Reserve System: A preliminary assessment in 2008.
In July 2011 the Commonwealth announced a Biodiversity Fund of $946m over six years to protect Australia’s unique species from climate change impacts through on-ground actions including landscape restoration and management, reforestation and revegetation in areas of high conservation value, and the protection of biodiverse ecosystems. Other budget announcements are summarised in 2011: 2 National Environmental Law Review.
National carbon pricing mechanism announced
On 24 February 2011, the Multi-party Climate Change Committee (MPCCC) released the ‘broad architecture’ for a carbon pricing scheme in Australia which is scheduled to commence on 1 July 2012. More detail about the design was announced on 10 July 2011. On 27 July 2011, a package of 14 bills was announced and on 13 September 2011, these bills (and four others) were introduced into the House of Representatives.
The Clean Energy Bill 2011 establishes the legal foundations and parameters of the carbon pricing mechanism and an Australian carbon market, and provides for provides for assistance to emissios intensive and trade exposed industries. Australia’s long-term target is to reduce net greenhouse emissions to 80 per cent below 2000 levels by 2050. The Bill includes international linking, monitoring, enforcement, appeal and review provisions.
The Clean Energy Regulator Bill 2011 creates the Clean Energy Regulator to administer and enforce the carbon pricing mechanism, and the Climate Change Authority Bill 2011 sets up the advisory Climate Change Authority and the Land Sector Carbon and Biodiversity Board.
The Clean Energy (Consequential Amendments) Bill 2011 will integrate the carbon price with other laws and regulatory mechanisms.
Three Bills relate to the fuel taxation arrangements and the fuel tax credits system.
The Clean Energy Amendment (Household Assistance) Bill provides compensation mechanisms for vulnerable households facing some higher prices as the economy transitions towards lower emissions.
Other bills will establish a Clean Energy Finance Corporation (CEFC), an Australian Renewable Energy Agency (ARENA), and deal with the imposition of charges12.
Carbon farming initiative
The Carbon Credits (Carbon Farming Initiative) Bill 2011 was passed by the House of Representatives and Senate on 22-23 August 2011. The original bill was passed with 19 amendments including:
- A deeming provision that states that registered native title holders hold an eligible interest in the native title land; and
- Amendment to the matters for consideration by the Minister in recommending projects to be added to the negative list. The test is now whether there is a “material” risk, rather than a “significant” risk, of “material” adverse impacts.
On 1 July 2011, the Government released a consultation paper on the proposed approach to developing the positive and negative lists under the Carbon Farming Initiative. The paper contains illustrative examples of activities to be included on the positive and negative lists.
On 16 August 2011, the Government released draft regulations giving effect to the positive and negative lists in the Carbon Credits (Carbon Farming Initiative) Regulations 2011(Cth). Commentary on the exposure draft regulations was also released. Public consultation on the draft regulations closed on 16 September 2011.
National urban policy
On 18 May 2011, the Minister for Infrastructure and Transport released Our Cities, Our Future - A National Urban Policy for a productive,sustainable and liveable future.
The National Urban Policy sets out the Government’s objectives and directions for Australian cities over the next few decades, including delivering better infrastructure connections and public transport, reducing the carbon footprints of cities and improving urban planning and design.
NELR editors: Shol Blustein, Nicola Durrant and Hanna Jaireth