5 September, 2016
What you need to know
- The Victorian Government has accepted 32 of the 33 recommendations of the Independent Review of the Climate Change Act 2010 (Vic).
- The Victorian Government has committed to legislate a target of net zero emissions by 2050, but has declined to establish a Victorian emissions trading scheme.
- This target will be met by mandatory emissions reduction pledges from Victorian Government departments and agencies and voluntary pledges from companies through the TAKE2 pledge program.
- The Act currently requires a consideration of climate change and greenhouse gas emissions in the making of certain administrative decisions. The Victorian Government has undertaken to review and expand the decisions which are subject to this requirement, and given some support to broadening standing for judicial review of those decisions. Merits review of those decisions has not been supported.
- The achievement of this target will depend upon the other action taken by the Victorian Government to reduce emissions.
What you need to do
- Consider the impact of the net zero emissions by 2050 target on your business.
- Monitor the implementation of the Victorian Government's response.
- Consider making a voluntary pledge to reduce emissions, noting this may bring increased influence on interim targets and policy, as well as the opportunity of showing leadership in the transition to a lower carbon economy.
- Contribute to consultations for the first Victorian Climate Change Strategy to be completed and tabled in Parliament in 2020.
- Review the commitments in the Climate Change Framework, expected to be released in late 2016.
The review
A specially formed Independent Review Committee undertook a comprehensive review of the Climate Change Act 2010 (Vic) (Act) in 2015 (Review). The Review was required by the Act, and was tabled before Parliament on 11 February 2016.
In a post Paris Agreement context, international climate change law currently places great weight on the responses and leadership of sub-national jurisdictions. The Review provided the Victorian Government with an opportunity to take a leadership role in climate change response within Australia.
On 9 June 2016, the Victorian Government released its response and accepted, or accepted in principle, 32 of the 33 recommendations. However, some of the supported recommendations will be implemented in alternative ways to those proposed by the Review, and others will be the subject of further consideration and consultation.
Key recommendations
Target of net zero emissions by 2050
The Review called for an adjustable long-term emissions reduction target (ERT) "based on the best available science". The Victorian Government has previously committed to a long- term ERT under its Our Environment, Our Future policy. Premier Daniel Andrews announced on 9 June 2016 that Victoria would have a 2050 target of net zero emissions.
The Victorian Government supports the Review's recommendation that an interim ERT be introduced, setting a maximum level of greenhouse gas emissions (GHG) for Victoria as a whole.
To achieve this, the Review made a number of recommendations, including giving the Minister power under the Act to introduce measures such as emissions limits under EPA licences or a Victorian emissions trading scheme (ETS). However, the Victorian Government has ruled out an ETS, on the basis that it is "not appropriate for Victoria at this time".
Instead, the Victorian Government will seek to realise the targets through mandatory Government department and agency pledges to reduce emissions (detailed in Low Carbon Growth Plans), coupled with a scheme to incentivise companies who make voluntary pledges. This will be contained in the Climate Change Strategy (discussed below) which will set out the policies, regulations and programs designed to reduce emissions. There will not be penalties for businesses who do not make such a pledge. Details of the 2016 pledge process for emissions reduction action between 2017 and 2020 can be found at TAKE2 Victoria's climate pledge. The aggregate of pledges will inform the first interim target for 2017-2020.
Separately, in a Media Release on 15 June 2016, the Victorian Government has announced a target of 25% renewable electricity generation by 2020 and 40% by 2025. This will be accompanied by a reverse auction process for awarding projects long term contracts. The first auction of contracts will begin in 2017, and the details of the scheme will be released later this year in a Renewable Energy Action Plan.
Considering climate change in Government decisions
One of the key existing aspects of the Act is the requirement that decision makers take into account the potential impacts of climate change and the potential contributions to GHG emissions if making a decision of a kind listed in
Schedule 1. Currently this includes decisions such as the Ministerial endorsement of a Coastal Action Plan under s 26 of the Coastal Management Act 1995 (Vic) or the issue of a works approval by the Victorian EPA under s 19B of the Environment Protection Act 1970 (Vic).
Applying the consideration of climate change to a wider range of decisions
The Review recommended a further review of the list of decisions in Schedule 1 to include decisions under an additional 14 Acts (including the Electricity Industry Act 2000, Mineral Resources (Sustainable Development) Act 1990, Planning and Environment Act 1987, Major Transport Projects Facilitation Act 2009, Sustainable Forests (Timber) Act 2004 and the Water Industry Act 1994). The Victorian Government supports the recommendation and has committed to reassess the types of decisions listed in Schedule 1. This assessment will take place during 2016 and 2017 and it is not clear if this process will include public consultation.
Incorporating climate change into land use planning
The Review recommended investigating the most effective way to incorporate climate change considerations into statutory and strategic planning in Victoria. The Victorian Government considers that there are further opportunities to strengthen the ways that planning can support resilience to climate change and emissions reductions. For example through the Plan Melbourne Refresh or by a State led integrated planning and building approach designed to strengthen environmentally sustainable development. It notes that the inclusion of more decisions in Schedule 1 of the Act may allow planning authorities to "more fully consider" climate change and to update reference standards and referral advice between public authorities.
Climate change challenges to Government decisions
The Review recommended broadening standing for judicial review, and examining the feasibility of allowing merits review for decisions that do not adequately consider climate change. The Victorian Government has rejected introducing merits review.
The Victorian Government will consider broadening standing for judicial review, and has flagged that the Environment Protection and Biodiversity Conservation Act 1999 (Cth) as a useful model for extended standing. That Act includes an expanded statutory standing test which includes individuals who have engaged in activities for environmental conservation, protection, or research purposes. This test was the subject of renewed debate following the successful challenge to Adani's Carmichael Coal Mine Project.
The new Victorian Climate Change Strategy
The Victorian Government supports the recommended replacement of the existing Climate Change Adaption Plan with a five-yearly Victorian Climate Change Strategy that addresses emissions reduction and adaptation and disaster risk reduction. It also supports the inclusion of priorities and implementation plans for emission reduction pledges to meet the State's interim ERT. Department and agencies must also prepare Adaption and Disaster Risk Reduction Action Plans in response to the Strategy on a five-yearly cycle.
The Victorian Government has committed to:
- release a Climate Change Framework in late 2016;
- set an interim ERT up to 2020;
- legislate for the next review of the Act to take place in 2026 and 2036, in line with the interim target periods for the Act; and
- undertake a full analysis of the risks, costs and benefits of emissions and emissions reduction measures.
The EPA
The Review called for the reinstatement of the EPA's power to regulate GHG emissions for the purpose of achieving long term ERTs. The Victorian Government supports this in principle, but does not commit to any new regulation. This recommendation will be considered in conjunction with the recommendations of the recent Ministerial Advisory Committee (MAC) review of the Victorian EPA, which we reported on in our Environment Alert Recommendations of Public Inquiry into Victoria EPA.
No Climate Change Charter, but support for guiding principles and objectives
The Review recommended that a new Charter of Climate Change Objectives and Principles be introduced to inform strategic decision making. The Victorian Government supports the inclusion of climate change objectives in the Act, but will not create a "Charter".
The recommended objectives can be summarised as:
- reducing GHG emissions consistently with the best available science and the long-term ERT;
- building the resilience of Victorian infrastructure, built environment and communities through adaptation and disaster preparedness;
- managing natural resources, ecosystems and biodiversity to promote resilience;
- promoting and supporting Victoria's regions, industries and communities to maximise the opportunities that arise from a transition to a low carbon economy through coordinated whole of government action and partnerships; and
- supporting vulnerable communities.
The Victorian Government has confirmed that these objectives will inform and guide the overarching policy direction and inform the new Victorian Climate Change Strategy.
Next steps
The commitments of the Victorian Government represent a significant change to the policy settings for climate change in Victoria. In the short term the key impacts will be an increased consideration of climate change impacts in decision making and a potential increase in administrative challenges. If implemented, business and government bodies should ensure that the impacts of climate change are considered and accounted for in all major projects or decisions under Schedule 1 of the Act.
The emissions targets have more significant long term implications, such as the increased viability of renewable energy projects and serious impacts on high-carbon projects, particularly coal-fired power generation in the Latrobe Valley. The achievement of these targets will depend upon the other action taken by the Victorian Government to reduce emissions. Policy stability remains critical to the making of long term investment decisions and facilitating a smooth transition.
Many of the Victorian Government's commitments will lead to further consultation and consideration. Interested parties must ensure that they are aware of these opportunities and make their views known during the relevant periods.
For further information, please contact:
Jeff Lynn, Partner, Ashurst
jeff.lynn@ashurst.com
