The Government announced a target of 26‑28 per cent below 2005 levels by 2030 for Australia on 11 August 2015. This statement sets out the Authority’s observations on the target.
View the Statement on Australia’s 2030 target.
Date: Friday, 14 August 20152 July 2015: The Climate Change Authority has released its Final Report on Australia’s Future Emissions Reduction Targets.
The report confirms the Authority’s preliminary recommendations for:
The Authority considers these recommendations constitute a credible package for the Australian government to take to the Paris Climate Conference in December.
The report presents the Authority’s reasons for confirming its preliminary recommendations, drawing on stakeholder consultation and new information since it released its draft report in April.
The report completes the first of three phases of the Special Review of Australia’s climate action requested by the Minister for the Environment.
Date: Wednesday, 01 July 2015The Authority is seeking feedback on its proposed approach to electricity sector modelling. This work forms part of its Special Review of Australia’s emissions reduction targets and policies.
The Authority’s Special Review will pay particular attention to options for reducing Australia’s electricity sector emissions. The Authority’s analysis will include modelling to help compare a range of illustrative policy scenarios using a common set of input assumptions, including a common emissions constraint. The Authority has commissioned Jacobs to undertake this modelling.
The modelling work will have two broad phases.
Phase one will compare seven policies, broadly representative of those proposed and discussed in Australia in recent years. The Authority will evaluate the policies by comparing their performance across a range of quantitative and qualitative indicators of effectiveness, efficiency and equity.
In phase two, the Authority will select a sub-set of better-performing policy scenarios for further investigation, including sensitivity analysis and robustness tests.
The scenarios in the modelling exercise should not be interpreted as the Authority’s preferred policy positions or designs. In particular, the sectoral (rather than economy‑wide) focus of this modelling does not indicate a preference for sector-specific emissions reduction policies in the electricity or any other sector. The Authority will consider questions of policy scope and coverage as part of its broader Review.
The Authority welcomes comments on the proposed approach to the modelling, outlined in this consultation document. Feedback should be emailed to submissions@climatechangeauthority.gov.au by 12 June 2015.
The Climate Change Authority released the first draft report of the Special Review of Australia’s climate change policies and goals in April 2015. The draft report recommends future emissions reduction targets for Australia, and is intended as an input to the Government’s deliberations ahead of the international negotiations for a new climate agreement in Paris at the end of this year.
The Authority recommends a 2025 target for Australia of 30 per cent below 2000 levels. The Authority considers this target is comparable to the efforts of other countries.
In recommending targets, the Authority attaches most weight to the science of climate change, the efforts of comparable countries to reduce their emissions, and Australia's own long term interests. In considering targets for the post-2020 period, the Authority has taken account of the uncertainty regarding Australia's action to 2020, and how quickly Australia might ‘catch up’ with global efforts.
The recommended 2025 target of a 30 per cent reduction by 2025 remains reasonable and achievable even if Australia does not strengthen its 2020 target beyond the minimum 5 per cent reduction. If Australia is able to do more than 5 per cent by 2020, this would allow a more gradual acceleration of effort beyond 2020.
The draft report builds on the Authority's 2014 report, Reducing Australia’s Greenhouse Gas Emissions - Targets and Progress Review, released in February 2014. The Authority considers the recommendations in that report remain appropriate. These include a 2020 target of 19 per cent below 2000 levels, a 2030 range of 40 to 60 per cent below 2000 levels, and a long-term emissions budget to 2050. These goals would help Australia make a fair contribution to global climate action to limit global warming to less than 2 degrees.
The Authority welcomes stakeholder comments on its draft report.
Date: Wednesday, 22 April 20157 July 2014
The Climate Change Authority is today releasing a paper on how recourse to international ‘units’ can assist countries, including Australia, to meet their emissions reduction targets, and contribute to the goal of limiting the increase in global average temperatures to 2 degrees Celsius, compared with pre-industrial levels.
Meeting that goal requires concerted global action. Genuine reductions in emissions, wherever they occur, contribute to that endeavour, even when these reductions (units) are purchased by another country and count towards that country's target.
International units can be generated by a variety of activities, including renewables and energy efficiency programs, similar to those pursued in Australia. Trade in the units creates the opportunity for emissions abatement to be sourced at lower costs than might be possible domestically.
The Authority has argued that Australia should employ a wide range of policies in responding to the challenges of climate change. This ‘tool kit’ should include market and non-market policies (including light vehicle emissions standards).
In its Targets and Progress Review, the Authority recommended that Australia should aim to reduce its emissions in 2020 by more than the current minimum target of 5 per cent (compared with 2000), and that international units be used to complement domestic measures to achieve whatever 2020 target Australia settles on.
This paper focusses on the practicalities of Australia accessing international emissions reductions for this purpose. It notes the different types of units currently and prospectively available and identifies those categories which the Authority considers the most appropriate for Australia to buy. It also discusses the likely supply and costs of international units, and draws on the experiences of other countries to canvass options on how Australia might go about buying selected units.
Three points stand out:
Mr Fraser concluded that the thrust of this paper was quite clear: Australia should be gearing up now to actively participate in these international markets to help ensure that its emissions reductions targets for 2020 (and beyond) were pursued in cost effective ways.
He also noted that there was strong support among both industry and environment groups for Australia to follow this course.
The Climate Change Authority is an independent statutory body established in 2012 to provide expert and balanced advice on climate change policy issues (including Australia’s emission reductions goals). It comprises members with considerable expertise in relevant disciplines, including climate science and economic policy, and is backed by an experienced and independent secretariat. The Government has introduced a Bill to abolish the Authority; that Bill is still before the Parliament.
This paper is the third leg of the trifecta of recent papers from the Authority; it follows the release of papers on vehicle emissions standards (Light vehicle emissions standards for Australia), and on issues relevant to the forthcoming Paris meetings on international climate action (International climate action: priorities for the next agreement).
Date: Monday, 23 February 201522 December 2014: Statement by the Chair, Mr Bernie Fraser
The Climate Change Authority has today released two reports covering its reviews of the Carbon Farming Initiative (CFI) and the Renewable Energy Target (RET). These reviews are required in the relevant Acts of Parliament establishing the two schemes.
The Authority is a statutory body established under a separate Act to provide independent and transparent advice to the government on a range of climate change policy issues, including appropriate emissions reductions targets for Australia, and the various policy instruments available for pursuing those targets. The two schemes under review were created as parts of a broad set of measures to combat the risks of climate change and the Authority has reviewed them in terms of their roles in this broader policy framework, as well as in terms of their individual goals and performances.
Carbon Farming Initiative and Emissions Reduction Fund (ERF)
The CFI was introduced in 2011 to complement the carbon pricing mechanism - in effect, to seek out opportunities to reduce greenhouse gas emissions in sectors such as agriculture, waste management, land use and forestry, which for various reasons, were not covered by the carbon pricing mechanism. Participants in the scheme received credits for approved reductions in emissions which could be sold to eligible entities under the carbon pricing mechanism.
Like other schemes of its type, the CFI was administratively intense, resulting in relatively high transaction costs. These, together with gaps in coverage and uncertainty about future prices of credits, worked to constrain participation in the scheme.
Overall, the Authority judged that the scheme had performed reasonably well, achieving real reductions in greenhouse gas emissions equivalent to around 10 million tonnes of carbon dioxide (10 Mt CO2) over the past four years—with about 60 per cent coming from landfill and waste treatment projects, and a further 30 per cent from projects that avoided deforestation.
The CFI legislation was amended in November 2014 and the scheme was expanded to become the ERF. Participants in the CFI were rolled into the ERF which now covers all sectors of the economy. Under the ERF the government will purchase emissions reductions through auctions, and $2.55 billion has been allocated for this purpose to date. The Government has stated that it may consider additional funding in the future.
The ERF incorporates significant design improvements compared with the CFI, including greater certainty around future prices for credits (as projects receive a fixed price for the life of the purchase contract). Other changes to streamline procedures and lower transaction costs are also improvements.
It retains, however, much of the administrative intensity and complexity inherent in schemes where credits are assessed on outcomes against pre-determined baselines. In such schemes there can be no certainty that the credits awarded to participants always relate to emissions reductions which are genuinely additional to those that would have occurred in the absence of the scheme.
On this point, the big difference between the CFI and the ERF which replaced it is the much greater scale of the latter – and the much greater consequences of the risks that the scheme might not only miss some real opportunities to reduce emissions but also (and perhaps more worryingly) result in large payments for reductions that would have occurred anyway.
This will be a constant challenge for the scheme's administrators. The Authority's two recommendations on the ERF relate to this point:
• the first is that enhanced ‘additionality’ tests be considered in respect of individual projects that would generate a large volume of credits (and therefore receive a large payment) under the scheme; and
• the second is that the ongoing appropriateness of the ERF for achieving emissions reductions in particular situations be subjected to independent and periodic review.
With its recent creation, and the earlier repeal of the carbon pricing mechanism, the ERF has become the spearhead of the Government’s climate change policy.
The relevant legislation was passed only last month: no auctions have been conducted to this time, and the details of the potentially significant ‘safeguard mechanism’ have still to be disclosed. For these reasons it is too early to be reaching firm conclusions on the capacity of the ERF to deliver emissions reductions on the scale required to meet Australia's current and prospective targets. On the basis of its current configuration and funding, however, the Authority considers it unlikely the ERF would deliver even the minimum 5 per cent target without significant complementary action, such as purchases of appropriate international permits and the maintenance of a robust RET.
Renewable Energy Target
Electricity generation in Australia is responsible for one-third of the nation's total greenhouse gas emissions. Large, on-going reductions in emissions in this sector are therefore unavoidable as Australia strives to reach its targets.
The main burden of this task currently rests with the RET which, by creating a market for additional renewable electricity, encourages investment in new renewable generation capacity.
The present RET arrangements comprise the Large-scale Renewable Energy Target (LRET), which covers wind and other large-scale generators, and the Small-scale Renewable Energy Scheme (SRES) , which helps households, small businesses and community groups with the upfront cost of installing small-scale systems, such as rooftop solar PV systems and solar hot water systems.
When the current arrangements were put in place in 2010, these two schemes, together with existing hydro-electric generation, were broadly targeted to meet at least 20 per cent of then-projected total demand for electricity in 2020. The largest and most prominent part of this calculation was the 41,000 GWh set in legislation as the target for LRET in 2020.
It is this particular target which has been the focus in recent calls to, if not abandon the target altogether, then at least cut into it. One proposal is to reduce the LRET so that the overall target for renewables would represent a ‘real’ 20 per cent target—that is, 20 per cent of currently projected demand for electricity in 2020 (which is significantly lower than it was at the time the 20 per cent figure was first mooted). On this basis the LRET for 2020 would drop from 41,000 GWh to about 25,500 GWh.
The Authority does not see any magic in a ‘real’ 20 per cent figure, or in other figures of this kind. What really matters is that sustained emissions reductions be made in the electricity sector and, in the absence of better alternatives, this means the RET—and LRET in particular—will have to continue to lead this transformation. The Authority is not, therefore, recommending any reduction in the level of the LRET. The Authority acknowledges in its review that—largely because of the general erosion of bipartisan support for the RET and heightened speculation around the LRET which has flattened investment in the sector— there is now some doubt that the 41,000 GWh target can be achieved in 2020. Rather than reduce the level of the target, the Authority recommends that the 2020 target year for LRET be pushed out by, say, up to three years.
The Authority also acknowledges that forecasts of electricity demand have declined a lot from the levels anticipated a few years ago and that this is adding to the adjustment problems of some incumbent (fossil fuel based) generators. Extending the LRET target date in the manner recommended will not do a lot to ease those problems. But nor will slashing the target: the underlying difficulties in the sector will remain, the lost emissions reductions will have to be made good elsewhere, and negative signals will have been sent on the long term future for renewables.
In a separate recommendation on the RET the Authority has proposed that consideration be given to the nature and time-frame of possible RET arrangements in the post-2020 period, with particular regard to increasing and extending targets, and expanding coverage to a wider set of technologies. This reflects the Authority's view that, particularly in the absence of credible alternative policies, RET-type arrangements might be required to support increased penetration of renewables in electricity for some time.
The review includes some discussion of the question of exemptions from electricity costs under the RET for emissions-intensive, trade-exposed (EITE) industries. It notes that existing exemptions provided to some businesses are based on their overall emissions intensity, whether or not those emissions are related to electricity use. The Authority has not recommended any broadening of these exemptions but has suggested that if further exemptions were granted, this should be on the basis of electricity intensity, rather than emissions intensity.
The Authority made no recommendations in relation to SRES in this review. It noted that subsidizing household solar PV is a relatively expensive way to reduce emissions in the electricity sector but did not recommend any changes, largely because the assistance will soon begin to phase out, and the overall costs are relatively modest.
The Big Picture
The CFI and RET schemes essentially targeted opportunities to reduce emissions in particular sectors not always accessible through broader measures (such as the previous carbon pricing mechanism, for example). Although not perfect, these schemes have generated significant reductions in greenhouse gas emissions— reductions that otherwise would have to be made good elsewhere, if they were made up at all.
The Authority has argued consistently throughout its short life that an effective policy response to the risks of climate change requires favourable winds on at least two fronts:
• first , a broad community consensus that climate change poses real risks to the community; and
• secondly, a well-stocked toolbox to be able to tap into opportunities to reduce emissions wherever they occur.
Neither exists today. The earlier broad political consensus has ruptured in recent years, and no early repair is in prospect. And the tool box is feeling less weighty, with the removal of the carbon pricing mechanism, an unproven ERF, and an uncertain outlook for the RET. The Authority's recommendations and conclusions in the two reports released today have been framed against this background, and in the knowledge that in matters to do with climate change, policy makers have to plan for the long term, which is way past 2020.
In formulating its advice, the Authority is obliged to think about the long term, and as countries negotiate a framework for stronger climate action beyond 2020, the Authority will be considering Australia’s contribution—including emissions reduction goals, and the policies needed to meet them—in its special review next year.
Media contact: 0417 540 537 media@climatechangeauthority.gov.au
Date: Monday, 22 December 2014The Climate Change Authority is proceeding with its statutory review of the Renewable Energy Target (RET), which must be completed by 31 December 2014.
The Authority conducted its first review of the RET in 2012. That report emphasised the role of the RET in reducing greenhouse gas emissions, and the need for a stable and predictable policy environment for investors. It concluded that no major changes were warranted to the overall scheme design, but suggested some minor operational changes.
The Authority conducted its 2012 Review against the policy backdrop that existed at that time. Since then, significant changes have occurred. In particular, the carbon pricing mechanism has been repealed and the outlook for electricity demand remains subdued, even more so than it was in 2012.
The Authority’s 2014 RET Review will have regard to the role of the electricity sector in cost‑effectively meeting the national emissions reductions goals that are in Australia’s interest, in the period to 2020 and beyond.
Australia, together with the broader international community, has agreed to a goal of limiting global warming to no more than 2 degrees Celsius above pre-industrial levels. In its Targets and Progress Review released in February 2014, the Authority recommended an emissions budget consistent with that agreed goal.
In the Authority’s view, key considerations for reviewing the RET are the need to reduce greenhouse gas emissions (both now and in the longer term), and the critical role that a decarbonised electricity sector will play as Australia and the world move to a low-emissions economy. In the absence of alternative policies to decarbonise Australia’s electricity supply, severely curtailing the RET would risk stalling Australia’s progress, at a time when climate change science makes it clear that rapid reductions in emissions are required.
The Authority will conduct a necessarily limited RET review, with the aim of making a constructive contribution while not exacerbating policy uncertainty for the electricity sector.
The Authority will draw on its previous work as well as the public submissions, analysis (including modelling) and report of the recent Warburton Review. Given the limited time available, the Authority will not release an Issues Paper or draft report. Stakeholders are, however, invited to provide additional thoughts to the Authority via submissions@climatechangeauthority.gov.au. All submissions except those made in confidence will be published on the Authority's website.
Date: Tuesday, 21 October 2014The Climate Change Authority today released an Issues Paper and invited submissions to the Authority’s Review of the Carbon Farming Initiative (CFI)
The Carbon Farming Initiative (CFI) is part of the Commonwealth Government’s response to climate change. It is a national, voluntary baseline and credit scheme. It provides incentives to encourage projects that reduce or avoid greenhouse gas emissions.
The CFI, introduced in 2011, was originally intended to provide offsets for businesses with liabilities under the carbon pricing mechanism, which was subsequently repealed in July 2014. The government now proposes to streamline and expand the CFI to form its Emissions Reduction Fund (ERF), the central element of its Direct Action Plan to reduce Australia's greenhouse gas emissions.
The Authority will consider how the CFI has performed during its first two years of operation and options for improvement, taking account of the government's proposed changes to streamline and expand the scheme. The Review will draw on other review and policy processes, including a study published by the Authority earlier this year, Coverage, Additionality and baselines—Lessons from the Carbon Farming Initiative and other schemes, and, where relevant to the CFI, the government’s Emissions Reduction Fund White Paper(Opens in a new tab/window).
The Authority welcomes submissions from interested parties on the issues canvassed in the Issues Paper. Submissions are due by Friday, 31 October 2014.
The Authority is required by legislation to submit its report to the Australian Government by the end of December 2014.
Media contact: 0427 805 900, media@climatechangeauthority.gov.au.
Date: Friday, 17 October 2014Australia could almost double the fuel efficiency of its new vehicle fleet by 2025, save motorists thousands of dollars over the life of their vehicles, and significantly reduce greenhouse gas emissions – all by introducing mandatory emissions standards for light vehicles.
A new report released by the Climate Change Authority today says that improving the efficiency of light vehicles is one of the least costly emissions reduction options available to Australia. Passenger and light commercial vehicles (light vehicles)
contribute 10 per cent of Australia’s emissions. In its report, Light vehicle emissions standards for Australia, the Authority argues that a mandatory standard is the best policy for improving the efficiency of the light vehicle fleet.
Australia is unusual in the developed world in not having mandatory emissions or fuel economy standards. The United States, Canada, the EU, Japan and Korea all have mandatory standards. China and India also have mandatory standards, and both have more efficient passenger vehicle fleets than Australia.
The Authority proposes that the first phase of mandatory standards be introduced with effect from 2018, by which time local manufacture of automobiles is expected to have ceased. The standards would progressively reduce carbon dioxide emissions from new light vehicles to 105g/km in 2025, almost half the current level of 192g/km. This 2025 standard would broadly bring Australia into line with the United States, and still trail the tighter European Union targets by several years.
It is proposed that the targets would be set as an average across the fleet as a whole, rather than be applied to individual vehicles. This fleet-average approach would preserve customer choice in the purchase of light vehicles.
Implementation of a standard to reduce carbon dioxide emissions to 105g/km is estimated to increase the average cost of a new car in 2025 by about $1500. This, however, would be offset several times by fuel savings of about $8500 over the life of the vehicle, leaving motorists better off. The proposed standard is projected to avoid 59 million tonnes of greenhouse gas emissions over the period to 2030, equivalent to the current annual emissions of all light vehicles.
The details of the standard would be a matter for the Government of the day to finalise but the Authority has identified some possible best-practice design features, including:
coverage of new passenger and light commercial vehicles under a single standard flexible compliance mechanisms to reduce regulatory costs, including ‘banking’ and limited ‘borrowing’ of compliance credits using existing testing processes, to minimise regulatory burdens financial penalties for non-compliance.
The Authority has also suggested that a review be held in 2021 to consider the operation of the scheme, and to recommend new national average standards for a second phase, which would begin after 2025.
Mr Fraser said that the proposed standard was a win-win for the environment and for motorists. He expressed the hope that the proposal would be embraced by the major political parties and even mark the beginning of a necessary broad political consensus on effective climate change policy.
The Climate Change Authority is an independent statutory body established in 2012 to provide expert and balanced advice on climate change policy issues (including Australia’s emission reductions goals). It comprises members with considerable expertise in relevant disciplines, including climate science and economic policy, and is backed by an experienced and independent secretariat. The Government has introduced a Bill to abolish the Authority; that Bill is still before the Parliament.
Read the report on Light vehicle emissions standards for Australia
Date: Friday, 20 June 2014Next year Australia will be called upon to present its climate change credentials and policy to the world at the global climate conference in Paris.
The conference will seek to reach agreement on concerted and collective action beyond 2020 consistent with keeping global average warming below 2°C, compared with pre-industrial levels. Preparations are now underway for this conference and some countries are expected to indicate their goals for climate action beyond 2020 by April 2015.
As an intended contribution to Australia’s preparations for the Paris conference and the meetings leading up to it, the Climate Change Authority has today released the paper entitled International climate change: priorities for the next agreement.
The Paris conference follows the last comparable conference held in Copenhagen in 2009. Mr Fraser noted the forthcoming conference was likely to be held in rather more favourable circumstances than the last, which coincided with the early onset of the global financial crisis.
He also believed that since Copenhagen mainstream climate scientists had continued to strengthen their earlier findings on the links between human-induced increases in greenhouse gas emissions and the rise in average global temperatures.
The paper discusses several of the core priority issues which are expected to be considered in the meetings. These issues include:
Effective collective action to contain global warming is as much in Australia’s interests as it is for other countries. Australia has played an active role at past international negotiations and, as a wealthy developed country and a high per capita emitter of greenhouse gases, it will be expected to carry a fair share of the post 2020 emissions reductions.
Background note
The Climate Change Authority is an independent statutory body established in 2012 to provide expert and balanced advice on climate change policy issues (including Australia’s emission reductions goals). It comprises members with considerable expertise in relevant disciplines, including climate science and economic policy, and is backed by an experienced and independent secretariat. The Government has introduced a Bill to abolish the Authority; that Bill is still before the Parliament.
Read the report on International climate action: priorities for the next agreement
Date: Friday, 20 June 2014
