Labor’s climate change legislation tabled

Introduction

On 27 July 2022, the Australian Federal Government introduced the Climate Change Bill 2022 (Climate Change Bill) and the Climate Change (Consequential Amendments) Bill 2022 (Consequential Amendments Bill) into Parliament.

The Climate Change Bill would introduce a new Commonwealth Climate Change Act 2022 (Climate Change Act), which would formally legislate Australia’s emissions reductions targets under the Paris Agreement.

The Consequential Amendments Bill would make changes to existing federal legislation to support the objects of the Climate Change Act, notably by amending the functions of federal government environmental agencies and schemes to make specific reference to Australia’s emissions reductions targets.

An overview of the key elements of the Climate Change Bill and the Consequential Amendments Bill is set out below.

Climate Change Bill

Objectives of the Climate Change Act

The objects of the Climate Change Act are:

• to set out Australia’s greenhouse gas emissions reduction targets which contribute to the global goals of:

1. holding the increase in the global average temperature to well below 2°C above pre industrial levels; and
2. pursuing efforts to limit the temperature increase to 1.5°C above pre industrial levels; and

• to promote accountability by requiring the Minister to:

1. prepare annual climate change statements; and
2. cause copies of those statements to be tabled in each House of the Parliament; and

• to ensure that independent advice from the Climate Change Authority informs:

1. the preparation of annual climate change statements; and
2. the greenhouse gas emissions reduction targets to be included in a new or adjusted nationally determined contribution.

The global temperature goals reflect those contained in the Paris Agreement.

Emissions reduction targets

On 16 June 2022, in accordance with obligations under the Paris Agreement, Australia submitted an updated Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat. The updated NDC comprises:

• 43% reduction from 2005 emissions levels by 2030 (compared to the previous target submitted by the Coalition government of 26-28%); and
• net zero by 2050.

In practice, the 43% reduction equates to a reduction of around 267 million tonnes of CO2-e.

Part 2 of the Climate Change Act would formally state Australia’s emissions reductions targets as specified in the NDC. The proposed wording of this Part makes clear that:

• the legislated targets are to be interpreted consistently with the Paris Agreement to ensure the targets are consistent with the relevant international rules.¹
• the Climate Change Act is not intended to interfere with State or Territory climate change legislation² (such as the Victorian Climate Change Act 2017).
• the Commonwealth may prepare and communicate a new NDC, which must represent a meaningful and ambitious progression from the current NDC.³

Annual climate change statement

Part 3 of the Climate Change Act would require an annual climate change statement to be provided to Parliament by the Minister for Climate Change and Energy within 6 months after the end of each financial year (Annual Statement).

The Annual Statement must relate to:

• Australia’s progress towards achieving its emissions reduction targets;
• international developments relevant to addressing climate change;
• climate change policy; and
• the effectiveness of federal climate change policies in contributing to the achievement of Australia’s NDC.

The Climate Change Authority (CCA) is required to provide advice to the Minister on the Annual Statement and the Minister must have regard to that advice when preparing the Annual Statement. The CCA may undertake public consultation to inform its advice.⁴

There are transparency measures built into the legislation, as any written advice from the CCA regarding the Annual Statement must be published online, and if the Minister does not accept ‘material aspects’ of the advice, the Minister must table a statement in Parliament, advising why the Minister chose not to accept those aspects.⁵

Climate Change Authority advice regarding targets

Part 4 of the Climate Change Act would require the CCA to provide advice to the Minister at least once every 5 years on the greenhouse gas emission reduction targets that the CCA considers should be included in Australia’s NDC.⁶ The CCA must make provision for public consultation on this advice, and the advice must be published online. Upon receipt of the advice, the Minister has 6 months to provide a written response which incorporates a determination of whether the Minister has accepted the CCA’s advice.⁷

Periodic reviews of the Climate Change Act

Part 5 of the Climate Change Act would require periodic, independent reviews of the operation of the Act. It is not clear from the Explanatory Memorandum what kind of body would be appointed to undertake the independent review.

The first review must be undertaken within 5 years of commencement of the Climate Change Act, with each subsequent review to take place within 10 years from the completion of the previous review.⁸

Consequential Amendments Bill

The Consequential Amendments Bill would amend 14 federal Acts, providing small modifications to the objects and responsibilities of existing climate change related government entities and schemes. However, as the Explanatory Memorandum notes, the “amendments are not intended to limit the exercise of powers or performance of functions of these entities or schemes.”⁹

Amending the objects of agencies

The Consequential Amendments Bill would amend the objects of a number of existing government agencies including:

• Amending the constitutional basis (functions) of the Australian Renewable Energy Agency (ARENA) to make specific reference to giving effect to the Paris Agreement by supporting activities and projects that could control or reduce emissions.¹⁰
• Amending the constitutional basis (functions) of the Clean Energy Finance Corporation (CEFC), to make specific reference to giving effect to the UNFCCC and the Paris Agreement, including by investing in clean energy technologies.¹¹
• Similar amendments would be made for Infrastructure Australia and Export Finance Australia.

New functions for the Clean Energy Regulator (CER)

The Consequential Amendments Bill would amend the Clean Energy Regulator Act 2011 (CER Act) so that the CER can in future be given new functions as conferred by regulations.¹² According to the Explanatory Statement this is intended to support the CER with the Guarantee of Origin scheme for hydrogen, which will measure the carbon intensity of hydrogen and enable the sale of verified low emissions hydrogen, and the Corporate Emissions Reduction Transparency project, which is a voluntary and standardised reporting system for companies to publicly disclose their climate-related commitments and carbon emissions.¹³

However, the Explanatory Memorandum makes clear that “the regulation making power does not extend to conferring additional enforcement powers or imposing requirements on third parties relating to such functions.”¹⁴

National Greenhouse and Energy Reporting Act

The Consequential Amendments Bill changes the object of the National Greenhouse and Energy Reporting Act 2007 to make clear that the Safeguard Mechanism will “contribute to the achievement” of Australia’s NDC.¹⁵

The Explanatory Memorandum notes this is intended to clarify ‘that the safeguard mechanism is intended to be a key policy connected with the achievement of the targets and not just a mechanism to cover exceptional increases in emissions.”¹⁶

Carbon Farming Initiative Act

The Consequential Amendments Bill would amend the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act) by replacing references to the Kyoto Protocol with references to the Paris Agreement.

Further, the Bill would make achievement of Australia’s Paris Agreement targets an object of the CFI Act.¹⁷

Next steps

The intention is for the Climate Change Act to commence this year, with the first Annual Statement to be tabled by 2023. Given that the Coalition is unlikely to support the Bills, it will be necessary for Labor to obtain the support of the Greens in order for the legislation to pass both Houses of Parliament.

However, there has been some support for the legislation from business, investor and environmental groups with a joint statement being released on 1 August 2022 by 8 signatories, welcoming the legislation as a “timely signal to the market… and further encouragement to Australian organisations to progress their own decarbonisation plans.”¹⁸

On 28 July 2022 the Senate referred both the Climate Change Bill and Consequential Amendments Bill to the Environment and Communications Legislation Committee for inquiry and report by 31 August 2022. This inquiry is currently accepting submissions, but no details have yet been released on the closing date for these submissions.¹⁹

How can we assist you?

For more information on the Climate Change Bill or Consequential Amendments Bill please contact a member of our climate change and sustainability team.