Climate Change Bill 2022: translating Australia’s latest emissions reduction targets into domestic law

By Meg Lee and Luke Denham 

The Minister for Climate Change and Energy has introduced into the Commonwealth Parliament the Climate Change Bill 2022, designed to translate Australia's latest emissions reduction targets into domestic law.

Purpose

The primary objectives of the Bill are to:

• set out a floor for Australia’s greenhouse gas emissions reduction targets, emphasising the importance of Australia meeting its commitments under the Paris Agreement;
• provide for an ‘annual climate change statement’ (Annual Statement) by the Minister to Parliament, to inform Parliament and the Australian public about the country’s progress towards those commitments; and
• establish the ‘Climate Change Authority’ (Authority), which will advise the Minister in relation to the annual statements and on greenhouse gas emission reduction targets it considers should be included in any new Nationally Determined Contributions.

The Bill supports the objectives of the Paris Agreement, to which Australia is a party, to keep global temperature rise this century well under 2 degrees Celsius above pre-industrial levels, and to pursue efforts to keep warming to no more than 1.5 degrees Celsius.

The Bill comes months after the Intergovernmental Panel on Climate Change (IPCC) released the second part of its Sixth Assessment Report (AR6) (Impacts, Adaptation and Vulnerability, 27 February 2022) which concluded that the world is not on track to meet these targets, with increasingly devastating consequences, on the basis of countries' current climate policies.

The Bill entrenches in legislation Australia’s latest emissions reduction ambition – known under the Paris Agreement as its Nationally Determined Contribution (NDC) – to achieve net zero emissions by 2050, and a new, increased, 2030 target of 43% below 2005 levels by 2030.

In introducing the Bill to the House of Representatives for second time this Wednesday, the Minister – Chris Bowen MP – cited one of the key messages in the third part of the AR6 (Mitigation of Climate Change):

that climate laws enable mitigation action by signalling the direction of travel, setting targets, policies, enhancing regulatory certainty, creating focal points for social mobilisation and attracting international finance.  

Importantly, for shoring up support from the Greens and Teals, the 43% target is expressed not a limit but a minimum. As the Explanatory Memorandum to the Bill explains:

The targets set a floor on Australia’s emissions reduction ambition, not a ceiling. There is nothing in this bill that would prevent these targets being surpassed or achieved early.

Summary of the provisions

Part 1 sets out the Act’s objectives, definitions and other preliminary matters.

Part 2 reiterates Australia’s net greenhouse gas emission ambitions under the NDC, preserves the operation of any legislation by the States and Territories that can operate concurrently with the Bill; and requires any new NDC or adjustment of the existing NDC to represent an improvement.

Part 3 requires the Minister by the end of each year to prepare and present the Annual Statement, which explains the progress towards Australia’s NDC, relevant international developments, and the nature and effectiveness of the Commonwealth’s climate change policies.

Part 4 requires:

• at section 14, the Authority to give written advice to the Minister in writing regarding the preparation of the Annual Statement, permits the Authority to seek public consultation to inform that advice, and requires that advice to be made public. It also requires the Minister to consider that advice (in addition to any other advice) and to prepare and table a written statement of reasons if the Minister declines the advice; and
• at section 15, the Authority to give written advice to the Minister (if requested) in relation to a new NDC or an adjustment to the existing NDC, requires the Authority to seek public consultation to inform that advice, and requires that advice to be made public. It also requires the Minister to request such advice at least once every five years, to consider that advice (in addition to any other advice) and to prepare and table a written response to that advice.

Part 5 prescribes independent reviews of the operation of the Act and public consultation to inform those reviews. It requires the Minister to table each review in Parliament, and for the Minister to be given the first review within five years after the Act commences and, for each subsequent review, within 10 years after completion of the previous review.

The provisions of the Bill will be effective one day after the Act receives royal assent.

Consequential Amendments Bill

The Bill informs and is complemented by the Climate Change (Consequential Amendments) Bill 2022, introduced into Parliament on 26 July 2022, which seeks to include considerations regarding the emissions reduction targets and the Paris Agreement into the objectives and/or functions of key agencies and government departments administering programs and policies contributing to emissions reduction.

The objects of the Bill are also relevant to a number of national policies and initiatives, including the Labor Government’s ‘Rewiring the Nation’ policy, AEMO’s ‘Integrated System Plan’, CEFC’s Advancing Hydrogen Fund, the Emissions Reduction Fund, and national electric vehicle and battery strategies.

Some of the changes under the Consequential Amendments Bill which clients should be aware of include:

• under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), including reference to the Paris Agreement in the definition of ‘eligible carbon abatement’ from an offsets project to ensure that the credited abatement under the Act counts towards Australia’s greenhouse gas emissions reduction targets and Australia’s NDC.
• under the Clean Energy Regulator Act 2011 (Cth), allowing regulations to confer functions on the Clean Energy Regulator that contribute to the achievement of Australia’s greenhouse gas emissions reduction targets, which could include developing a Guarantee of Origin scheme for products such as hydrogen.
• under the Export Finance and Insurance Corporation Act 1991 (Cth), embedding consideration by Export Finance Australia (which facilitates Australian export trade and overseas infrastructure development) of Australia’s obligations under the Paris Agreement and emissions reductions targets in the performance of its functions.
• under the Infrastructure Australia Act 2008 (Cth), allowing for Australia’s greenhouse gas emissions reduction targets to be considered when Infrastructure Australia conducts audits of nationally significant infrastructure, develops plans, and exercises advisory functions.
• under the Northern Australia Infrastructure Facility Act 2016 (Cth) (NAIF Act), allowing for the consideration of Australia’s emissions reduction targets when determining the terms and conditions for the provision of financial assistance from the NAIF to the States and Territories, and other entities, for the development of Northern Australia economic infrastructure.
• under the Offshore Electricity Infrastructure Act 2021 (Cth) (OEI Act), enabling the Minister to specifically consider Australia’s greenhouse gas emission reduction targets when making decisions under the OEI Act about whether to make a declaration that an area is suitable for offshore renewable energy infrastructure.

Potential future challenges to decisions and actions

The UK High Court recently found that the Government’s Net-Zero Strategy (Strategy) published in October 2021 in the lead up to COP26 in Glasgow was inadequate and unlawful in response to a challenge brought by environment groups. The Court found for the claimant groups in part, concluding that the Secretary of State had breached sections 13(1) and 14(1) of the Climate Change Act 2008 (UK) by:

• failing to consider (i) the quantitative contributions that individual proposals and policies were expected to make to meeting the required carbon budgets; (ii) how the estimated shortfall of approximately 5% (compared to the Act’s requirement for 100% of emissions to be reduced) would be made up; and (iii) the implications of these matters for risk to delivery of policies in the Strategy and the carbon budget; and
• failing to include information on the quantitative contributions that individual proposals and policies were expected to make to meeting carbon budgets.

While the case turns on the interpretation of obligations in the UK Climate Change Act that are more specific than those proposed in the Bill, the case should highlight to the Government the importance of ensuring that:

• the Minister has regard to sufficient information, including progress and the effectiveness of the Commonwealth’s climate change policies, when preparing and tabling its annual climate change statement under section 12 of the Act;
• the Minister is given and has regard to sufficient information from the Climate Change Authority and other advisors when preparing annual climate change statements and new NDCs, and (as the case may be) when tabling its reasons for not accepting that advice, under sections 14 and 15 of the Act; and
• detailed analysis and briefings are provided to departments and agencies under the various Acts to be amended as a consequence of the Bill, to ensure that sufficient and appropriate information is available to them when being required to consider Australia’s climate change targets in their decision making.

Implications and looking ahead

With the Commonwealth Government’s performance in relation to Australia’s greenhouse gas reduction goals being subject to greater scrutiny and transparency, the legislated target of a 43% reduction below 2005 levels in national emissions by 2030 is likely to increase the Commonwealth’s investment in renewable energy, transmission and storage projects. As the Minister foreshadowed during the Second Reading Speech:

[W]e have the resources, the capability and the know-how to become a renewable energy superpower, not just in one part of Australia, but across multiple sectors of our economy. In clean energy, in battery manufacturing, in commodities, and in value-adding such commodities as aluminium, lithium, copper, cobalt and nickel.

There is a significant export market waiting for us—if we get the levers right to take advantage. That's what this bill does.

The simple and clear drafting of the legislation, tied to Australia’s commitments under the Paris Agreement and to the IPCC, as well as the requirements for the Authority’s advice and the Minister’s response to be made public, should also provide greater policy certainty to individuals and businesses (who will also benefit by being able to contribute during public consultation periods to the Authority’s advice regarding future developments of Australia’s NDC).

The updates made under the Consequential Amendments Bill will require agencies and government departments to consider Australia’s emissions reduction targets and its obligations under the Paris Agreement when exercising their powers and functions.

The Bill is currently before the House of Representatives for debate.