The Commonwealth Department of the Environment and Energy has released its ‘Review of Climate Change Policies’ Discussion Paper dated March 2017.

The purpose of the review is to consider whether current climate policy settings will deliver Australia’s 2030 target of reducing emissions by 26 to 78% below 2005 levels by 2030, and Paris Agreement commitments.

The review is also driven by a broader recognition at the Commonwealth level that there are economic impacts to be balanced in reducing emissions and meeting Australia’s international commitments. In  this regard the Discussion Paper expressly provides that the review will include a focus on electricity prices for end users.

While the review presents business with a key opportunity to inform the national policy debate on this issue, the Discussion Paper does not articulate any policy options to address the opportunities and challenges involved in reducing Australia’s emissions from the electricity, resources, manufacturing, waste, transport, land and agriculture sectors. The last date for submissions is 5 May 2017.

Climate Change Policies

Australia’s key climate change policies are as follows:  

• Emissions Reductions Fund – a voluntary scheme that provides economic incentives for approved emissions reductions activities. The Government utilises the fund to purchase carbon credits generated by emissions reductions activities through a reverse auction system;
• Safeguard Mechanism – which forms part of the Emissions Reduction Fund, and is designed to ensure emissions reductions purchased by the Government are not offset by significant increases in emissions above business-as-usual levels;
• Renewable Energy Target – which provides a financial incentive for investment in renewable energy with the statutory objective of achieving 23% of electricity supply from renewable sources by 2020.

Other emissions reduction policies which will be subject to the review (and which are summarised in the Discussion Paper) include:

•  National Energy Productivity Plan;
• Clean Energy Innovation Programs;
• National Carbon Offset Standard;
• Solar Communities Program; and
• Australia’s International Climate Policies.

In our view there is a material risk that current climate policy settings will not enable Australia to meet its  2030 target of reducing emissions by 26 to 78% below 2005 levels by 2030, or Paris Agreement commitments.

Terms of Reference

To achieve that objective the specific terms of reference for the review is broad, and will look at :

• the opportunities and challenges of reducing emissions on a sector-by-sector basis;
• the impact of policies on jobs, investment, trade competitiveness, households and regional Australia;
• the integration of climate change and energy policy, including the impact of state-based policies on achieving an effective national approach;
• the role and operation of the Emissions Reduction Fund and its Safeguard Mechanism;
• complementary policies, including the National Energy Productivity Plan;
• the role of research and development and innovation;
• the potential role of credible international units in meeting Australia's emissions targets; and
• a potential long-term emissions reduction goal post-2030.

While the Discussion Paper poses a number of questions in respect of the above issues, it does not articulate any policy options to capture opportunities or resolve the many challenges facing Australia if it is to achieve its 2030 target without adversely impacting the economy.

Next steps

The last date for submissions on the Discussion Paper is 5 May 2017 with the review process to conclude by the end of 2017.

If you would like any assistance preparing a submission to the Department, or have any questions in respect of the implications of the Discussion Paper for your business, please contact Ben Fuller.