Chapter 3: A Comprehensive Approach to Climate Change
The Rudd Government is implementing a comprehensive response to climate change: reducing emissions, adapting to unavoidable climate change, and playing our part in a global response. These measures will safeguard our environment, sustain our society, and support our economy for the years ahead, keeping the Australia we know physically beautiful, prosperous and forward looking — for our children and our children's children.
On coming to office, the Government inherited a disparate and ad‑hoc collection of climate policy measures and programs that had evolved over the past 11 years. When those measures are viewed together, it is clear that greater coherence, consistency and effectiveness would have been achieved if they had been developed within a clear policy framework. Most of these measures relied on voluntary action by motivated individuals and organisations, which has been instrumental in slowing emissions growth but which, in isolation, could never prevent further rises in Australia's emissions (see Chart 3.1).
Chart 3.1: Australia's emissions projections
To begin the substantial reductions required to protect the environment and the economy, a broad‑based, integrated policy response is needed, one that combines significant reforms with comprehensive, integrated complementary measures to guarantee that, for the first time in Australia's history, emissions will be on a permanent downward trajectory.
Over the past 18 months, the Rudd Government has commissioned and carried out detailed analyses of existing and proposed policy responses to climate change. The Garnaut Climate Change Review (a joint Commonwealth, States and Territories initiative) and Australia's Low Pollution Future: The Economics of Climate Change Mitigation (modelling and economic analysis carried out by the Treasury) together form a deep and thorough analysis of the economic impacts of climate change and the costs of a response. Comprehensive economic modelling also underpins the expanded Renewable Energy Target, which will help deliver the Government's commitment to 20 per cent of Australia's electricity from renewable sources by 2020.
The Government's Green Paper on the Carbon Pollution Reduction Scheme (CPRS) garnered over 1000 submissions. More than 2400 people attended 18 public consultation sessions and workshops held in capital cities and regional areas, confirming the depth of the Australian public's concern about climate change. More than 260 companies attended technical workshops and meetings. Six industry and non‑government roundtables were held with representatives from 45 organisations. The White Paper on the CPRS, produced after this lengthy and widespread consultation process, set out a comprehensive framework for guaranteed substantial emissions reductions at the lowest possible cost to the economy. Since the release of the White Paper, the Government has consulted widely and listened to the feedback and concerns of environmental groups, scientists, business, industry, and the broader community. In response, on 4 May 2009 the Government announced a deferred start date for the CPRS of 1 July 2011, further refinements to the CPRS and a strengthened emissions reduction target.
The Strategic Review of Australian Government Climate Change Programs (the Wilkins Review, see box 4.3) was commissioned by the Government to ensure that its climate change programs would be appropriate once a carbon price signal was in place. The Wilkins Review complemented work being undertaken through the Council of Australian Governments to ensure that climate change programs across all jurisdictions work in support of the CPRS.
Together, these reviews and reports have brought together evidence from all facets of science, the economy and society, enabling the Government to produce an integrated policy response to climate change. The measures in this Budget do not represent end‑points in the Australian Government's climate change policy development. Rather, they form the foundation on which to build an ongoing response, protecting our natural environment and supporting a strong, low carbon economy as part of a global response.
Achievements: A Framework to Reduce Australia's Emissions
The Government has set credible and achievable medium and long term targets for emissions reductions, informed by detailed economic analysis and extensive public consultation. Australia will reduce its emissions by between five and fifteen per cent below 2000 levels by 2020; and by 25 per cent below 2000 levels if an ambitious global agreement to reduce emissions is reached. This stands in stark contrast to our historic record of continuing emissions growth.
In the near term, the Government will halt the growth in Australia's emissions and then, for the first time in history, set them on a permanent downwards trajectory. The Government remains committed to our long-term target of at least a 60 per cent reduction in emissions by 2050, but has indicated it will reconsider its current 2050 target if this was necessary to ensure that we play our full and fair part in an ambitious global agreement. If this is required, the Government would seek an explicit mandate at the next election in support of a 2050 target that goes beyond the current 60 per cent reduction.
To achieve these environmental objectives at the lowest possible cost, the Government remains committed to an integrated combination of market‑based solutions and complementary measures, to drive investment and economic growth, create jobs and develop new industries.
During the 2008‑09 financial year, the Government has provided incentives for households, business, industry and the community to reduce their contributions to Australia's emissions and help meet Australia's emissions reduction target.
Households and Communities
The Solar Homes and Communities Plan encourages the long‑term use of solar power technology to generate clean electricity from sunlight and increase the use of renewable energy in Australia. The Government's investment to December 2008 of over $2504 million in this program has increased the take‑up of renewable energy and provided crucial support for this important industry. It has been the major driver in demand for solar power systems in Australia, has resulted in development of standards for solar power systems and inverters, and has built an industry of installers for solar power systems supported by a range of training courses in Australian TAFEs. Since its inception, over 22 700 solar power systems have already been installed under the Solar Homes and Community Plan.
Water heating is the largest single source of greenhouse gas emissions from the average Australian home, accounting for around 28 per cent of home energy use. The Solar Hot Water Rebate Program, was enhanced as part of the Government's Energy Efficient Homes Program (EEHP), expanding the eligibility criteria to support jobs in the domestic manufacturing, distribution and installation of solar and heat pump hot water systems. This program assists householders to tackle climate change by switching to clean energy technologies.
The $480 million National Solar Schools Program is giving Australian schools a head start in tackling climate change and conserving our precious water supplies. National Solar Schools offers primary and secondary schools grants of up to $50,000 to install solar and other renewable power systems, solar hot water systems, rainwater tanks and a range of energy efficiency measures including insulation, energy efficient lighting and ceiling fans. The program involves the whole community in a process of social learning as we move towards a cleaner energy future. There has been an enormous level of interest from schools wishing to participate in the program. Since the program was launched in 2008, over 4000 schools (over 40 per cent of all eligible schools) have registered to participate and more than $10 million in grants has already been approved to 190 schools.
Business and Industry
A huge global market is developing in clean, green technology, and Australian industry has the creativity and drive to deliver to world markets in this area. Through Climate Ready, the Government is supporting the development and commercialisation of innovative products, processes and services that address the effects of climate change. The program is targeted at small to medium sized enterprises and offers grants from $50,000 up to $5 million on a matching funding basis, for research and development, proof‑of‑concept and early‑stage commercialisation activities. In 2008‑09, thirty‑two successful projects were awarded $27.78 million in Round 1 grant funding.
The Government is committed to working in partnership with Australian industry to meet the challenge of climate change through innovation. Re‑tooling for Climate Change ($75 million over 4 years) supports Australian manufacturers to improve their production processes, reduce their energy use and cut carbon emissions. In 2008‑09, eleven successful grants worth $900,000 were awarded in Round 1.
The Green Building Fund program ($90 million over four years) assists building owners in meeting the cost of retro‑fitting and retro‑commissioning commercial office buildings to achieve energy efficiency gains and greenhouse gas abatement. The program aims to have funded 45 commercial office building refurbishments by the end of the 2008‑09 financial year. First round applicants are currently being assessed.
Energy Efficiency
The Government in co‑operation with the States and Territories has worked through the Council of Australian Governments (COAG) to make significant progress on developing a National Strategy on Energy Efficiency to assist households and business prepare for the introduction of the Carbon Pollution Reduction Scheme. A suite of measures have been introduced in this Budget that will increase the energy efficiency requirements for new residential and commercial buildings, phase in mandatory disclosure of the energy efficiency of commercial and residential buildings at the time of sale or lease, and enhance the development of minimum energy performance standards and energy star labelling for appliances and equipment. These new measures are listed on page 32.
Renewable Energy
The stationary energy sector produces about 50 per cent of Australia's greenhouse gas emissions and renewable energy will have a key role in moving Australia to the clean economy of the future. The expanded national Renewable Energy Target will assist in increasing the use of renewable energy to 20 per cent of electricity supply by 2020 and bring forward investment in renewable energy across Australia.
The Renewable Energy Target is complemented by the $500 million Renewable Energy Fund (announced in the 2008‑09 Budget), which will support development and demonstration of renewable energy technologies including geothermal energy. Ten applications for projects have been received for the Fund's $50 million Geothermal Drilling Program, which will accelerate the development of the geothermal industry. The Renewable Energy Fund is being incorporated into the Government's $4.5 billion Clean Energy Initiative. All existing commitments under the Renewable Energy Fund will be honoured, and the program will be gradually migrated under Renewables Australia.
The Australian Government is committed to developing a suite of cost‑effective low‑emission energy technologies. The $150 million Energy Innovation Fund, announced in the 2008‑09 Budget, is supporting critical clean energy technology research, including $100 million for the Australian Solar Institute, which was launched in January 2009. The Institute will support research into solar thermal, solar photovoltaic, and other solar energy technology.
The Carbon Pollution Reduction Scheme
In 2008‑09, the Government also laid out a framework to achieve its environmental objective of capping and reducing emissions, through the Carbon Pollution Reduction Scheme (CPRS). It has been designed to provide lowest cost emissions reduction while guaranteeing an overall decline in emissions. For the first time, the Government is putting a price on carbon. The sale and allocation of carbon pollution permits will directly stimulate investment and growth in the low‑carbon economy of the future. The Government has committed that every cent raised from the Carbon Pollution Reduction Scheme will be used to assist Australian households and business to adjust to the low pollution economy of the future.
Consistent and comparable data on emissions is an important part of government decision making, in particular, in the development of the CPRS. The first reporting year under the National Greenhouse and Energy Reporting Act 2007 (NGER Act) began on 1 July 2008 and the inaugural Greenhouse and Energy Data Officer was also appointed on the same date. A number of tools were released in 2008 and 2009 to assist Australian businesses to comply with the NGER Act including:
- an Online Self Assessment Calculator;
- NGER Guidelines and NGER (Measurement) Technical Guidelines, to assist corporations understand their obligations under the NGER Act;
- a Registration Application Tool, to assist corporations to register for reporting; and
- a data input system to enable registered corporations to input information for their annual reports.
Extensive stakeholder engagement throughout 2008‑09 culminated in an NGER reporting system that achieved a very high level of support by Australian business, governments and the public. This engagement is continuing, to ensure that the legislation meets government, business and other data users' needs.
Carbon Capture and Storage
Coal is likely to continue to be a major energy source for the world over the coming decades. It is the most widely distributed fossil fuel in the world, and the technology to generate electricity from coal is relatively cheap and simple. For energy security reasons, coal will remain a key part of global energy supply. The International Energy Agency forecasts that world energy demand will increase by 45 per cent between 2006 and 2030 and that despite the growing importance of renewable energy, fossil fuel use will continue to grow through this period. For Australia, coal is likely to be the main source of our energy supply into the future and a major component of our export revenue.
Carbon capture and storage (CCS) involves capturing greenhouse gases from burning coal for electricity and transporting them to a suitable site for injection deep underground or below the seabed, trapping them for long term secure storage. CCS will be a key component of the global solution to climate change and the Government is driving the development of this technology globally through its support of the Global Carbon Capture and Storage Institute, launched in April 2009 (see page 23).
The Government has established the National Low Emissions Coal Initiative (NLECI)5 which aims to accelerate the development and deployment of technologies that will reduce emissions from coal use. The NLECI is supported by the $500 million National Low Emissions Coal Fund (NLECF). This Fund is designed to lever a further billion dollars in investment by other stakeholders in the research, development and demonstration of low emissions coal technologies. This Fund is being brought under the umbrella of the $4.5 billion Clean Energy Initiative.
The Government has also enacted legislation for the provision of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters. The legislation provides a management system for ensuring that storage is safe and secure, while balancing the rights of this new industry with the petroleum industry in a manner that encourages investment in both industries.
Achievements: Adapting to Climate Change
Science tells us that some damaging changes in the climate are unavoidable due to the greenhouse gases already in the atmosphere. Adapting to unavoidable climate change will involve the private sector, industry, communities, individuals and governments at all levels making decisions and taking action to minimise their risks from climate change impacts. The Australian Government is leading efforts to prepare Australia to deal with the social, economic and environmental risks of climate change impacts.
Through its $126 million Climate Change Adaptation Program, the Government has provided $20 million to establish a National Climate Change Adaptation Research Facility (NCCARF) and associated research networks, to lead the Australian research community in a major national effort to generate the information needed to manage climate change risks.
It has also invested $30 million to fund research plans which will identify critical information gaps in key vulnerable sectors and regions, set research priorities and identify the science capacity that can be harnessed to conduct this priority research. The plans are being developed around eight priority themes: terrestrial biodiversity; human health; marine biodiversity and resources; water resources and freshwater biodiversity; settlements and infrastructure; social, economic and institutional dimensions; emergency management; and primary industries. CSIRO and the National Health and Medical Research Council have joined with NCCARF to provide an additional $7 million towards research into the human health impacts of climate change.
Under its Adaptation Program, the Government is also undertaking major national vulnerability assessments, including for coastal areas and biodiversity, and climate change risk assessments for infrastructure and human settlements.
Our primary industries face unique challenges in a changing climate and could face a broad range of repercussions. There will be physical impacts (for example, changing rainfall patterns), social impacts (such as changes to farm business structures, community demographics, health and wellbeing) and economic impacts (such as changing productivity levels and markets). The Government's $26.5 million FarmReady program assists eligible primary producers and Indigenous land managers to attend approved training activities, and industry grants assist eligible industry organisations, primary producer and natural resource management groups to undertake projects to enable their members to adapt to the impacts of climate change.
The $46.2 million Climate Change Research Program is undertaking research and development in the priority areas of emissions reduction, better soil management and adaptation. The Government is working with industry groups, research bodies, universities and state departments on nationally coordinated research programs worth over $60 million to develop and demonstrate commercially viable on‑farm tools and management techniques for primary producers to manage emissions and adapt to climate change.
The Climate Change Adjustment Program will provide grants to eligible primary producers of up to $5,500 to access targeted professional advice and training to support them in managing for the challenges of climate change and provide support of up to $150,000 to eligible producers who may choose to leave farming.
In 2008‑09 the Australian Government made available $8 million to the forest industries to prepare for climate change, including the development of a Climate Change and Commercial Forestry Action Plan. Already, $1.5 million has been committed to develop regional level climate predictions and scenarios in forested areas to determine where intervention is critical and necessary.
Under its existing 'Water for the Future' initiative, the Australian Government is investing $12.9 billion over ten years on a range of initiatives to improve water planning and management practices and build adaptive capacity for managing climate change impacts communities (and ecosystems) dependent on water resources. Headline achievements over the past 18 months include:
- Completion of CSIRO's largest ever research project, which estimated climate impacts on future water availability in the Murray‑Darling Basin, with further projects rolling out in Northern Australia, Tasmania and Western Australia;
- Commencement of the Commonwealth Water Act on 3 March 2008, which, among other things, establishes new governance arrangements to implement a Basin water plan. The Basin Plan is a key climate adaptation initiative and will include new and sustainable limits on water extraction;
- Acceleration of the $3.1 billion 'Restoring the Balance in the Murray Darling Basin', for purchasing water to put back in the rivers in the Murray‑Darling Basin;
- Initial projects under the $5.8 billion 'Sustainable Rural Water Use and Infrastructure' program; and
- Ongoing investment of $450 million through the Bureau of Meteorology to collect and publish world class water information, including the production of a National Water Account.
Through the Reef Rescue initiative (part of the Government's flagship natural resources management program, Caring for our Country), the Government has committed $200 million over five years to address the impacts of declining water quality in the Great Barrier Reef lagoon. Reef Rescue will improve the water quality by increasing the adoption of land management practices that reduce the run‑off of nutrients, pesticides and sediments from agricultural land. Reducing these pollutants flowing from land‑based activities onto the reef will give the reef a chance to regain its inbuilt natural resilience and ability to cope with the impact of climate change.
Notable achievements to date include the commitment of $1.15 million to six multi‑farm projects in the Mackay Whitsunday region and in the Wet Tropics region. Terrain Natural Resource Management has negotiated 15 contracts across the Wet Tropics region with local councils, Landcare groups and River Improvement Trusts for riparian rehabilitation projects.
The tourism industry, like all industries, contributes to climate change. It is also highly susceptible to potential climate change impacts. The National Long‑term Tourism Strategy (to be finalised mid‑2009) will focus on building resilience and capacity in the tourism industry and maximising the industry's net economic benefit. The strategy will provide a framework for consistent policy engagement between tourism industry stakeholders and the Government. Like many other industries, tourism businesses will be subject to adjustment costs as Australia moves to a low carbon economy. The Government will assist businesses to prepare for this transition through the Climate Change Action Fund (see box 4.4).
Achievements: Shaping a Global Solution
Climate change is a global problem that requires a global solution. In 2008‑09, the Government continued working towards a global outcome on climate change that is comprehensive, fair and effective. The Government has three priorities in shaping a global response to climate change:
- a global goal: a clear constraint on global emissions which provides a strong incentive for countries to reduce emissions;
- specific national commitments: economy‑wide emissions reduction targets by all advanced economies and measurable, reportable and verifiable commitments to action by developing countries, taking into account the specific circumstances of each country; and
- helping the most vulnerable to adapt: effective mechanisms for funding and supporting adaptation for those countries least able to cope with climate change.
International cooperation on the development and deployment of low‑carbon technologies will also be an essential component of a strong global outcome.
Deforestation is a significant global source of emissions. The Government is working closely with neighbouring countries, in particular Indonesia, to find practical ways to reduce emissions for deforestation and forest degradation (REDD) in developing countries. Australian modelling shows that including REDD in a future global agreement has the potential to reduce the global costs of climate change mitigation by around 20‑25 per cent. It will also provide a significant economic development and environmental opportunity for developing countries.
In March 2009, the Australian Government submitted a proposal to the UN Framework Convention on Climate Change UNFCCC for an international forest carbon market mechanism in a post‑2012 climate change agreement (see box 3.1).
3.1 Reducing Emissions from Deforestation and Forest Degradation
Australia's proposal to the UNFCCC for an international forest carbon mechanism builds on the work under Australia's $200 million International Forest Carbon Initiative. The Initiative demonstrates that REDD can be part of an equitable and effective post‑2012 global climate change agreement.
Australia proposed a market based approach that puts an economic value on activities that reduce emissions from the forest sector in developing countries. National governments would be issued with forest carbon credits for emissions reductions below an internationally agreed national forest emission level. Reductions in emissions must be monitored, reported, and independently verified to generate credits, which can then be traded on an international carbon market.
Through Australia's collaborative Forest Carbon Partnership with Indonesia, the Government has established the Kalimantan Forests and Climate Partnership (KFCP). Indonesia and Australia are developing the first large‑scale demonstration activity, targeting emissions reductions by addressing the drivers of deforestation on the carbon rich peatland of Central Kalimantan.
Through the Bilateral Climate Change Partnerships Program the Australian Government has continued to deliver a series of practical projects. These projects will help achieve emission reductions and build capacity to adapt to the effects of climate change. They will also improve scientific understanding of climate change, support the development and deployment of low emission technologies and foster cooperation with industry and with partner countries. The program has also improved policy dialogue with partner countries, an example being the launch of the first Australia‑China Ministerial Dialogue on Climate Change in 2008 where Ministers shared perspectives on their respective domestic responses to climate change and agreed to share policy approaches and analysis in the future.
Carbon capture and storage (CCS) will be an important tool for reducing emissions. Developing and commercialising this technology is vital to moving towards a sustainable future. On 16 April 2009 the Prime Minister officially launched the Global Carbon Capture and Storage Institute at the first meeting of the 85 founding Institute members in Canberra. Australia will host the Institute, and the Australian Government has committed up to $100 million each year to the Institute, which will underpin a collaborative international effort to significantly reduce the amount of carbon dioxide released into the atmosphere from the combustion of fossil fuel.
The Institute will accelerate the global deployment of CCS technologies and processes, and creation of a portfolio of integrated CCS projects, to meet the G8's stated goal of more than 20 fully integrated large‑scale projects by 2020. Creating and hosting the Institute is an important step by the Australian Government to meet the global challenge of climate change and assist in adapting existing activities to improve their sustainability in a carbon‑constrained world. Successful deployment of CCS on a global scale will make a significant and crucial contribution to reducing carbon pollution.
Deploying low carbon technology in developing countries will help ensure that emissions reductions are compatible with development and economic growth. The Government is providing $100 million over three years from 2008‑09 to the World Bank's Clean Technology Fund, which finances innovative approaches to the demonstration and deployment of low carbon technologies in key developing countries. The Clean Technology Fund finances investments in large‑scale, high impact programs and fills a significant financing gap until post‑2012 climate change financing arrangements are negotiated in the United Nations context. Australia's seat on the Clean Technology Fund's Trust Fund Committee during its first year of operation has enabled us to participate in and influence fund design in one of the most important mechanisms for supporting developing country mitigation in the near term, as the UNFCCC deliberations progress.
The Government is providing $150 million through its International Climate Change Adaptation Initiative to meet high priority climate adaptation needs in vulnerable countries in our region. As part of this initiative, it has announced a $20 million Pacific Climate Change Science Program to help Australia's neighbours in the Pacific and East Timor better understand how climate change will impact on them.
4 Includes $26.4 million for 2009‑10 published in Department of the Environment, Water, Heritage and the Arts Portfolio Budget Statements 2008‑09 (Pg 16) that will be reflected in Budget Paper No.2 2009‑10
5 Originally announced as the Clean Coal Fund in the 2008‑09 Budget
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