Towards a climate policy toolkit: Special Review of Australia’s climate goals and policies
Report Three is the final report in the Authority’s Special Review and recommends what action Australia should take to deliver on the commitments that flow from the United Nation’s Framework Convention on Climate Change (UNFCCC) Paris conference held in late 2015.
In making its recommendations, the Authority considered the recent history of climate policy in Australia, the characteristics of different sectors of the economy, and the importance of a stable, effective set of policies to encourage investment in low emissions technologies and practices.
The Authority recommends that the Government puts in place a policy toolkit that builds carefully on current policies like the Emissions Reduction Fund and the safeguard mechanism, and adopts some key new measures to form a long term and durable solution to Australia’s climate change challenge. The overarching architecture for the toolkit would remain stable to help provide investment certainty while the measures themselves evolve and strengthen over time.
The emissions reduction policy toolkit needs to be able to be scaled up in the future to meet the emission reduction challenges in the Paris Agreement. That agreement makes it clear that countries’ emissions reductions will need to go beyond their 2025 or 2030 pledges to achieve deeper reductions in the decades ahead, and Australia’s emissions will need to decline much more rapidly in the near future than they have in the past.
For the electricity generation sector, the Authority found that a market mechanism in the form of an emissions intensity scheme is the best policy fit. The Authority is also recommending that an enhanced safeguard mechanism be put in place as a pragmatic and durable way of reducing emissions across a range of industrial, manufacturing and resource sectors.
For households, vehicles and buildings, the Authority recommends that energy efficiency standards be put in place or strengthened. For the land sector, the Authority found that voluntary offsets are the best tool for the task, given the large number of landholders and the differences between farming operations.