1 September 2010 ALP and Greens agree on Multi-Party Committee.1
27 September 2010 Government announced:
- Multi-Party Committee members and terms.2 On 7 October, the Committee ‘affirmed the intention to advise agreement on an option for a carbon price’.3
- intent for Business Roundtable and Environment and Non-Government Organisation Roundtable.4 On 18 October, the government announced members.5
11 October 2010 Government confirmed intent for ‘Carbon Farming Initiative’ voluntary scheme for ‘credits’ from land-based carbon reduction or storage. On 27 October, the government announced Domestic Offsets Integrity Committee - to assess credit methodologies.6 A consultation paper will be released mid-November.
12 October 2010 New Climate Change Minister Greg Combet confirmed in 1st public speech that ‘introduction of a carbon price’ is key government policy.7
Following our September article, ‘New government for climate change, renewables and energy efficiency’8 we now look at how each of the states and territories are tackling climate change.
The states and territories have adopted a variety of legislative and policy initiatives:
- South Australia and Victoria have dedicated climate change legislation which sets greenhouse gas emission reduction and renewable energy targets. The Australian Capital Territory has recently introduced similar legislation into its Parliament
- Queensland, Western Australia and the Northern Territory are relying on policies and regulatory authority condition-making powers, and
- New South Wales has the widest range of legislative and policy initiatives to reduce GHG emissions and promote water, energy and emission savings.
In this article we cover the response of each jurisdiction’s climate change approach, and how this may affect your business. Click above on the state or territory of interest to you to be taken directly to that jurisdiction.
Australian Capital Territory
The ACT Government has recently introduced the Climate Change Greenhouse Gas Reduction Bill (ACT Bill) to its parliament (August 2010).
The key measures of the ACT Bill include the following:
GHG emission reduction target
The ACT Bill will set a target to cut greenhouse gas emissions by 40% by 2020 and by 80% by 2050, based on 1990 levels. The principal target under the ACT Bill is zero net emissions by 2060, making it one of the most ambitious targets in the country. Total emissions will be reduced through avoidance and mitigation activities, and may be offset outside of the ACT.
Renewable energy target
The ACT Bill also allows for renewable energy targets for the ACT to be prescribed in regulation. These regulations are yet to be prepared.
The ACT Bill allows the government to voluntarily enter into sector agreements with a particular person, entity, and industry or business group. The purpose of these agreements is to encourage private entities to take action and adopt strategies to reduce greenhouse gas emissions or to adapt to climate change.
New South Wales
The New South Wales Government has introduced a wide range of legislative and policy initiatives to reduce greenhouse gas emissions and promote water, energy and emission savings.
New South Wales Greenhouse Gas Reduction Scheme
New South Wales has enacted the Greenhouse Gas Reduction Scheme (GGAS),9 a measure that puts in place mandatory greenhouse gas reduction targets for electricity retailers. A benchmark target of 5% reduction in per capita greenhouse gas emissions from 1989–1990 levels has been set. The per capita amount continues at this level until 2021.
The GGAS allows electricity retailers considerable flexibility in achieving their benchmark obligations. Apart from direct reductions in greenhouse gas emissions, electricity retailers can:
a.purchase emissions reductions resulting from carbon sequestration by eligible forestry projects
b.invest in eligible renewable energy projects, or
c.reduce demand by promoting energy efficiency measures.
Renewable Energy Certificates (RECs) which may be created under the Federal Mandatory Renewable Energy Target scheme (MRET) can be brought to account under the New South Wales scheme. RECs have a higher value than New South Wales Greenhouse Gas Abatement Certificates (NGACs) issued under the New South Wales scheme. Accordingly the market in NGACs is in practice restricted to those areas where the two schemes do not overlap, that is, carbon sequestration by forestry projects, waste coal mine gas capture projects and certain energy efficiency projects.
Energy Savings Scheme
On 1 July 2009, the Energy Savings Scheme (ESS) commenced.10 The ESS requires liable entities (chiefly electricity retailers) to obtain and surrender Energy Savings Certificates (ESCs) to meet the newly legislated Energy Savings Target.
The Energy Savings Target will be allocated each year to electricity retailers in proportion to their liable electricity sales, which are total sales less sales to exempt emission-intensive trade-exposed activities.11
ESCs will be able to be created by Accredited Certificate Providers, who will in general be end users of electricity or persons nominated for the purpose by end users of electricity and who can demonstrate that they have modified, replaced, installed or removed end-user equipment with a resulting reduction in electricity consumption unaccompanied by any loss of production or service levels.
The ESS is designed to complement the ALP Government’s previously proposed Carbon Pollution Reduction Scheme (CPRS) and, in particular, to continue the effect of that part of the GGAS (namely, demand-side abatement) that will not be incorporated into the CPRS.
New South Wales Renewable Energy Target
The New South Wales Government’s most recent policy announcement in relation to renewable energy targets is a commitment to achieving 20% renewable energy consumption by 2020 in light of the Federal Government’s expanded Renewable Energy Target.12 This commitment is included in the New South Wales State Plan 2010, which is a policy document only and does not have any legislative or regulatory force.
We note that the status of the Renewable Energy (New South Wales) Bill 2007 (introduced in July 2007) is unknown. There has been no progress on the Bill since it was introduced into parliament. Given the time that has lapsed since it was introduced into parliament, and given that the Minister for Climate Change has changed since then, this Bill is not expected to further progress.
Other climate change initiatives in New South Wales include the following:
- Carbon sequestration: like many of the other states, New South Wales has put into place a basic legal framework that makes it possible to trade in forest-based carbon sequestration rights. The Conveyancing Act 1919 (NSW) provides for the creation and ownership of ‘forestry rights’ and ‘carbon sequestration rights’ (CSRs).
- New South Wales Biodiversity Banking and Offsets Scheme (BioBanking Scheme):13 the Biobanking Scheme is a voluntary scheme which establishes a market for ‘biodiversity credits’. For more information about the BioBanking Scheme and Freehills’ involvement in negotiating Australia’s first biodiversity banking agreement view our article ‘Biobanking: You can bank on it’.14
- Building Sustainability Index (BASIX):15 The BASIX scheme requires the achievement of substantial improvements in energy and water use efficiency in new and altered residential buildings.16 It requires these buildings to exhibit savings in greenhouse gas emissions of 40% (except for multi-unit developments of 6 storeys or more, where the target is 20%), and reduce potable water consumption by 40%.17
The Northern Territory has not implemented specific climate change legislation. However, it has a number of policies on the subject. The Northern Territory Climate Change Policy aims to:
a.reduce greenhouse gas emissions by 60% by 2050, compared to 2007 emissions, and
b.achieve carbon neutrality of territory government actions by 2018.
This policy also provides for other ad hoc measures, such as installing photovoltaic solar panels in schools and expanding the renewable energy industry in the territory.
In Queensland there is no legislated greenhouse gas emissions reduction target, however some legislation exists to promote the use of low emissions energy and energy efficiency measures, such as the Clean Energy Act 2008 (Qld). The Queensland Government has primarily addressed the issue of climate change and GHG emissions reductions through a wide variety of policy measures and funding initiatives.
The most recent general climate change policy document is ClimateQ: toward a greener Queensland (ClimateQ) (July 2009). ClimateQ states the Queensland Government’s climate change policy position with respect to energy, business, planning and building, community initiatives, transport, ecosystems and government.
ClimateQ gives little consideration to future climate change legislation, but it does indicate that the government is currently reviewing or proposes to amend:
- legislation to recognise carbon rights in relation to regrowth vegetation on leasehold land to transfer carbon and forestry rights to lessees for the purpose of participating in the carbon market
- state forestry legislation to encourage investment in forestry plantations that are eligible for permits under the CPRS and the voluntary carbon market, and
- body corporate legislation to better enable the uptake of energy efficiency in units, flats and townhouses and improve the standards of energy efficiency of new houses and multi-residential units.
There is no indication when these legislative initiatives will be implemented.
Clean Energy Act 2008 (Qld)
The Clean Energy Act 2008 (Qld) provides for the Smart Energy Savings Program (Program), which promotes energy saving improvements by Queensland businesses with medium to large energy consumption, through a cycle of energy use auditing, energy efficiency planning and reporting.
The Program applies to businesses that use an amount of energy within the energy use threshold or a completed financial year,18 but does not apply to a person registered under the Commonwealth Energy Efficiency Opportunities Act 2006.
Once registered, a participating business must:
- conduct an energy audit that complies with a level 2 energy audit under AS/NZS 3598:2000, and
- prepare an energy savings plan that sets out the various measures from the energy audit that will be implemented.
This process of auditing, planning and implementation is repeated every five years by each participating business.
Queensland Gas Scheme
The Queensland Gas Scheme (QGS) commenced operation in 2005 under the Electricity Act 1994 (Qld). It serves the dual purpose of encouraging growth of the Queensland gas industry and reducing greenhouse gas emissions by subsidising gas-fired electricity generation.
Under the QGS Queensland electricity retailers and other liable entities are required to source a prescribed percentage (currently 15%) of their electricity from gas-fired generation. Electricity retailers meet their liability under the QGS by purchasing Gas Electricity Certificates (GECs)19 from the GEC registry.
Accredited generators can create GECs when they generate electricity from eligible fuels, which include:
- natural gas (eg liquefied natural gas or compressed natural gas)
- coal seam gas (including waste coal mine gas)
- liquefied petroleum gas, or
- waste gases associated with conventional petroleum refining.
Climate Change and Greenhouse Emissions Reduction Act 2007
South Australia was the first state to introduce specific legislation to address climate change and reduce greenhouse gas emissions with the Climate Change and Greenhouse Emissions Reduction Act 2007 (SA Act).
The SA Act implements the following key measures:
GHG emissions and renewable energy targets
The SA Act sets out three targets to:
- reduce greenhouse gas emissions in the state by at least 60% of 1990 levels by the end of 2050, and
- increase the proportion of renewable electricity generated and consumed so it comprises at least 20% of electricity generated and consumed in the state by the end of 2014.
South Australia is on track with the renewable energy generation and consumption targets. By July 2009, the proportion of renewable energy was 14% for both.
The Rann Labor Government has since increased the renewable energy generation target to 33%.
Tasmania has enacted the Climate Change (State Action) Act 2008 (Tas Act) to deal with climate change by setting a target to reduce, by 31 December 2050, greenhouse gas emissions in Tasmania to at least 60% below 1990 levels.20
The Tasmanian Government has also addressed the issue of climate change and emissions reductions through policy measures, particularly the Tasmanian Framework for Action on Climate Change.
The Tasmanian Government is also reducing its own emissions through the Framework for Action on Reducing the Tasmanian Government’s Greenhouse Gas Emissions. The Tasmanian Climate Change Office reports regularly on whole-of-government progress towards achieving the objectives identified in the Framework for Action on Climate Change.
The Victorian Parliament passed the Climate Change Act 2010 (Vic Act) on 14 September 2010. The Vic Act implements a number of actions outlined in the government’s Climate Change White Paper (released 26 July 2010). Most of its provisions will come into force on 1 July 2011.
The Vic Act introduces the following key measures into Victoria to tackle climate change.
Legislated GHG target
The Vic Bill sets an emission reduction target of 20% of 2000 levels by 2020. These emissions reductions are to occur through energy and fuel efficiency, changes to Victoria’s energy mix (eg. by increasing sources of renewable energy), improved agricultural practices and land carbon sequestration.21
Expanded role of the EPA
The Vic Bill gives the Victorian Environment Protection Authority (Vic EPA) express powers under the Environment Protection Act 1970 (Vic) (Vic EP Act) to develop regulations and policies which regulate greenhouse gas emissions:
- to achieve the greenhouse gas emission reduction target, and
- to reduce the harm to the environment.
Importantly, in the Vic Act’s second reading speech, the Premier stated that the EPA would exercise these powers by setting an emissions intensity standard for new power stations, and it may also set emissions intensity standards for existing power stations.
Regulation of GHG emissions
The Vic Act amends the Vic EP Act to allow greenhouse gas emissions from licensed premises to be regulated as a ‘waste’ through licensing and approvals.
Greenhouse gas emissions-intensive industries are likely to be subject to more stringent permit conditions which aim to reduce greenhouse gas emissions. This may require improvements to current technologies.
The EPA Act will also be amended to allow the government to enter into voluntary Climate Covenants with communities, regions, industry and other stakeholders. The purpose of these climate covenants is to facilitate and implement activities and measures directed at addressing climate change.
Forest Carbon rights
The Vic Act establishes a regime relating to a new class of proprietary rights to be called ‘forest carbon rights’. This regime creates new arrangements for the ownership, registration and transfer of forestry and carbon sequestration rights which will facilitate the development of the emerging carbon sequestration industry.
There is also a new regime for carbon sequestration on crown land. Under a Carbon Sequestration Agreement the government may grant carbon sequestration rights or soil carbon rights in relation to crown land.
This regime is in addition to the existing regime under the Forestry Rights Act 1996 (Vic) (Forestry Act), which provides for the trade in forest-based carbon sequestration rights. The Forestry Act provides for the creation and ownership of ‘forestry rights’ and ‘carbon sequestration rights’. The Forestry Act does not apply to crown land.
In Western Australia there is no specific climate change legislation in place or proposed. However, a number of recently approved projects have been subject to climate change related conditions. Potential sea level rise risks have also received recent attention.
Project approval climate change conditions
A number of recently approved WA-based projects have been subject to climate change related conditions, including the coal fired Bluewaters Power Station Expansion and Coolimba Power Station Project.22
The WA Minister for Environment’s final approval conditions for these projects require the proponents to prepare greenhouse gas abatement programs to minimise and mitigate greenhouse gas emissions, including:
- demonstrating due consideration of maximising energy efficiency
- ensuring best practice greenhouse gas intensity, and
- achieving continuous technology and process improvement, including for carbon capture and storage (CCS).
These conditions have effect until the WA EPA CEO determines they are non-complementary to any national emissions trading scheme. It is expected that the need for state-based greenhouse gas regulation would, over time, be eliminated. The Minister for the Environment has acknowledged the current uncertainty around any national scheme for the regulation of greenhouse gas emissions,23 and it is likely similar types of conditions will continue to be imposed on new WA-based projects until that uncertainty is resolved.
This approach is broadly in line with the draft Climate Change Environmental Assessment Policy released by the EPA for stakeholder comment in 2009. We understand that the EPA is reviewing the policy.
Sea level rise
The WA Planning Commission (WAPC) and WA Local Government Association are developing policies that deal with climate change impacts via coastal planning. In September 2010, the WAPC adopted a Policy Position Statement based on a predicted sea level rise of 0.9m by 2110.24
This means a setback of approximately 150m for new developments on sandy coasts. It is expected that the sea level rise prediction will be updated in line with the Intergovernmental Panel on Climate Change’s Fifth Assessment Report, scheduled for 2013.