26 October, 2019
Federal climate change bodies, government-supported initiatives and international cooperation
What you need to know
- Climate change can have significant implications for the obligations of companies and their directors, even when it does not pose any direct physical risk to business activities.
- There are a range of government bodies which have functions relating to climate change mitigation and adaptation strategies at a federal level.
- The Australian Government supports a number of initiatives that promote action on climate change and participates in various international climate change efforts.
What you need to do
- Familiarise yourself with the climate change regulatory landscape in Australia and monitor changes in this area, including by ensuring that your business has an understanding of the federal government bodies which have functions relating to climate change.
- Consider ways in which your business can take advantage of government initiatives that support action on climate change in order to demonstrate to regulators and shareholders a commitment to proactive mitigation and adaptation efforts. This may include investing in technologies or adopting practices to off-set company greenhouse gas emissions and exhibit reduction strategies in line with Australia’s emissions targets and international commitments.
Key Australian Government climate change bodies
| UNIT | DEPARTMENT / AGENCY | LEGISLATION | OBJECTIVES AND FUNCTIONS |
|---|---|---|---|
| Australian Renewable Energy Agency (ARENA) | The Department of the Environment and Energy | Australian Renewable Energy Agency Act 2011 |
Seeks to accelerate Australia's shift to renewable energy by:
|
| Clean Energy Regulator | The Department of the Environment and EnergyClean | Energy Regulator Act 2011 |
Responsible for administering legislative schemes focused on managing, reducing and offsetting Australia's carbon emissions, including the:
Functions include:
|
| Climate Change Authority | The Department of the Environment and Energy | Climate Change Authority Act 2011 | Provides independent, expert advice on climate change mitigation policies. From July 2018 to June 2022, this includes a review of the National Greenhouse Reporting and Carbon Credits Legislation, as well as other matters as requested by the Minister or Parliament. |
| Greenhouse and Energy Minimum Standards (GEMS) Regulator | The Department of the Environment and Energy | Greenhouse and Energy Minimum Standards Act 2012 |
Responsible for:
|
| The National Greenhouse and Energy Reporting (NGER) scheme | The Department of the Environment and Energy | National Greenhouse and Energy Reporting Act 2007 |
Provides a single national framework for reporting and disseminating company information about greenhouse gas emissions, energy production, energy consumption and other information specified under legislation. Seeks to:
|
| The Ozone Protection and Synthetic Greenhouse Gas Program (OPSGG) | The Department of the Environment and Energy | Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 |
Responsible for:
|
Australian Government supported initiatives action on climate change
Clean Energy Innovation Fund
The Clean Energy Innovation Fund (CEIF) invests commercially to increase renewable energy uptake, energy efficiency and low emissions technologies. CEIF receives funding from ARENA and the Clean Energy Finance Corporation, which is a AUD$10 billion fund dedicated to investing on behalf of the Australian Government to accelerate Australia's transformation towards a more competitive economy in a carbon-constrained world.
Emissions Reduction Fund
The Emissions Reduction Fund (ERF) is a AUD$4.55 billion Australian Government initiative that provides incentives for organisations and individuals to reduce greenhouse emissions and store carbon by adopting new practices and technologies. The ERF is administered by the Department of Environment and Energy and the Clean Energy Regulator and seeks to assist the achievement of Australia’s emissions targets. Activities of the ERF include project development and issuing Australian carbon credit units.
Renewable Energy Target
The Renewable Energy Target (RET) scheme is the Australian Government mechanism designed to reduce greenhouse gas emissions in the electricity sector and to encourage an increase in electricity generated from renewable and sustainable sources. The RET provides financial incentives to large-scale generators and small-scale renewable energy systems through the creation of green certificates, which can be sold to retailers to then be submitted to the Clean Energy Regulator in fulfilment of the retailers’ RET obligations. The Department of the Environment and Energy provides implementation support and policy advice for the scheme.
Carbon Neutral Program
The Carbon Neutral Program certifies organisations, products, services, events and buildings as carbon neutral against the National Carbon Offset Standard. To achieve carbon neutral certification organisations must measure emissions, reduce these where possible, offset remaining emissions and report on their carbon neutrality. The Carbon Neutral Program is administered by the Department of Environment and Energy.
Solar Communities Program
The Solar Communities Program is a AUD$5 million Australian Government initiative to provide grants in support of local responses to climate change. It seeks to facilitate the installation of small-scale renewable energy systems, including rooftop solar panels, solar hot water and solar-connected battery systems.
Carbon Capture Storage Flagships
The Carbon Capture and Storage (CCS) Flagships program supports demonstration projects that will capture carbon dioxide emissions from industrial processes, provide transport infrastructure and safely store carbon dioxide underground. The program aims to promote the use of CCS technologies and demonstrate Australia’s storage resources. The CCS Flagships program is administered by the Department of Industry, Innovation and Science.
National Low Emissions Coal Initiative
The National Low Emissions Coal Initiative (NLECI) assists the development and deployment of low emission technologies and carbon dioxide transport and storage infrastructure to reduce greenhouse gas emissions from coal usage. The NLECI supports a number of projects including the Australian National Low Emission Coal Research and Development program and Bilateral Cooperation with China on Clean Coal Technology. Previous programs have included the Hydrogen Energy Supply Chain Front End Engineering Design Project and the Mineral Carbonisation Project.
Australia's international cooperation on climate change
United Nations Framework Convention on Climate Change
The 1992 United Nations Framework Convention on Climate Change (UNFCCC) is the primary framework for international climate change cooperation. Its overarching objective is to stabilise greenhouse gas concentrations at a level that would prevent dangerous human induced interference with the climate system. The UNFCCC is a framework document supported and updated by subsequent agreements, including the 1997 Kyoto Protocol and the 2015 Paris Agreement.
The Paris Agreement
Under the Paris Agreement, signatory countries have agreed:
- a global goal to limit average temperature increase to well below 2°C above pre-industrial levels and pursue efforts to keep warming below 1.5°C;
- all countries will make nationally determined contributions to reduce emissions, and review their efforts every five years, to build ambition over time;
- robust transparency and accountability rules that will provide confidence in countries’ actions and track progress towards targets;
- the importance of adaptation and resilience to climate impacts; and
- developing countries will receive financial, technological and capacity building support.
Australia ratified the Paris Agreement in 2016 and has committed to reduce emissions by 26-28 per cent below 2005 levels by 2030.
The Kyoto Protocol
Australia ratified the UNFCCC Kyoto Protocol in 2007. The Kyoto Protocol binds developed state parties to targets to limit and reduce greenhouse gas emissions. Under its first commitment period, from 2008 to 2012, Australia adopted a Quantified Emission Limitation and Reduction Objective (QELRO) limiting emissions growth over the first commitment period to 108 per cent of 1990 levels, which it successfully met. Australia’s QELRO under the second commitment period, from 2013 to 2020, is 99.5 per cent of 1990 levels.
Cancun Agreements
The Cancun Agreements were adopted in 2010 and run in conjunction with the Kyoto Protocol’s second commitment period. Under these Agreements, countries established nationally determined 2020 emissions reduction targets, in the form of national mitigation actions. Australia’s Cancun target is to reduce emissions by five per cent below 2000 levels by 2020, which is consistent with Australia’s second Kyoto Protocol commitment.
Montreal Protocol
The Montreal Protocol was established in 1987 to address the depletion of the ozone layer by harmful substances such as hydrofluorocarbon (HFC) emissions. Australia was among the early countries to sign up to the Montreal Protocol and has often exceeded its requirements. In 2016, Australia played a significant role in negotiating the States Parties’ agreement to reduce HFC emissions by 85 per cent.
International Civil Aviation Organization
In 2013, the International Civil Aviation Organization (ICAO) agreed to achieve carbon neutral growth from 2020 through a collection of strategies, including improved fuel efficiency and the use of sustainable alternative fuels. Australia has supported ICAO to adopt a Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) requiring airlines to purchase offsets if industry emissions increase above 2020 levels. Australia has pledged to participate in the CORSIA from its commencement in 2021.
International Maritime Organization
In 2018, the International Maritime Organization, of which Australia is a member, adopted an initial strategy on the reduction of greenhouse gas emissions from ships. Parties agreed to reduce total annual emissions by at least 50 per cent compared to 2008 levels by 2050 and to pursue efforts towards phasing them out entirely. The IMO identified potential short-, mid- and long-term emissions reduction measures, as well as possible timeframes for implementation.
Mission Innovation
At the 2015 Paris Climate Conference, Australia joined Mission Innovation, a collective of countries committed to doubling governmental investment in clean energy innovation over a five year period. Members are collaborating around a set of innovation challenges to accelerate technology breakthroughs in priority areas such as off-grid access to electricity, carbon capture and storage, smart grids, sustainable biofuels and hydrogen. Mission Innovation has announced USD$4.6billion in new investment since its launch.
International Solar Alliance
The International Solar Alliance (ISA) was launched at the 2015 Paris Climate Conference to coordinate joint efforts to scale-up solar technology, particularly in countries that have under-developed electricity access but high solar resources. Australia has committed to sharing its knowledge and expertise for capacity building in other ISA members countries. Australia's involvement includes offering free tailored expert advice and training, as well as resources sharing for policy development through the Clean Energy Solutions Centre.
Intergovernmental Panel on Climate Change
The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for the assessment of climate change and providing scientific information to all levels of government for the development climate policies. Australia's involvement in the IPCC supports the preparation of Assessment Reports and Special Reports, which are inputted into the Paris Agreement’s Global Stocktake.
Climate and Clean Air Coalition
Australia is a partner in the Climate and Clean Air Coalition (the CCAC), which consists of more than 120 state and non-state partners to reduce and avoid emissions of fast acting pollutants, such as methane, hydrofluorocarbons and black carbon. The CCAC seeks to leverage high-level engagement and catalyse action across the public and private sectors to achieve benefits for the climate and human wellbeing.
Asia-Pacific Rainforest Partnership
The Asia-Pacific Rainforest Partnership facilitates policy dialogue and action to support Paris Agreement implementation. It provides a platform to progress activities to reduce emissions from deforestation and forest degradation in the Asia-Pacific Region. Key focus areas include, amongst other things, restoring degraded landscapes, increasing biodiversity conservation and building monitoring mechanisms. Australia played a central role in the establishment of the Asia-Pacific Rainforest Partnership and hosted the inaugural Asia-Pacific Rainforest Summit in Sydney in 2014.
International Partnership for Blue Carbon
Australia established the International Partnership for Blue Carbon at the 2015 Paris Climate Conference. The Partnership seeks to raise awareness about the importance of coastal blue carbon ecosystems in climate action and to strengthen cooperation between governments, intergovernmental organisations and research groups to restore and protect them. Australia has committed AUD$6 million to the Pacific Blue Carbon initiative to protect coastal blue carbon ecosystems in the Pacific region. The aim is to enhance blue carbon expertise and data, supporting its integration into national greenhouse gas accounting and climate policy, and promoting investment across the public and private sectors.
International Coral Reef Initiative
The International Coral Reef Initiative (ICRI) is an informal partnership between countries and organisations aimed at making the world’s coral reefs more resilient. Australia, a founding member of ICRI and co-chair until July 2020, and has committed AUD$2 million to build the capacity of developing country members to better manage and protect their coral reefs. The Australian Government's commitment is complimented by its Reef 2050 Plan for the protection of the Great Barrier Reef.
Risk
- As we have previously outlined, Australian regulators, such as ASIC and the ASX, increasingly recommend or require that businesses disclose to shareholders all material climate change-related risks. More arduous climate change risk reporting requirements are likely to be instated in the near future.
- We have seen significant climate change litigation in Australia focused on fossil-fuel project approvals and increasingly on climate change risk-reporting. There is also potential for proceedings to be initiated by investors seeking to recover their financial losses from directors who have not appropriately considered or responded to climate change risks. Parties to climate change proceedings often cite Australia’s international commitments, such as those made through the UNFCCC and the Paris Agreement.
- For further information on climate change risk, see here:
1. It's getting hot in here: Company and director liability for climate change in Australia (21 May 2019)
2. Ship sourced emissions make landfall in Australia (18 June 2019)
For further information, please contact:
John Briggs, Partner, Ashurst
john.briggs@ashurst.com
