Legislating ambition: Climate Change Bill 2022

The Federal Government has tabled its Climate Change Bill 2022 (the Bill) which – if passed – will enshrine into law the Government’s emissions reduction targets. A second bill, the Climate Change (Consequential Amendments) Bill 2022 (the Amendments Bill) would define these targets as objectives of a range of government agencies and programs.

The Bills reflect Australia’s updated nationally determined contribution under Article 4 of the Paris Agreement communicated on 22 June 2022 of:

• GHG emissions reduction target of 43% below 2005 levels by 2030; and
• net zero emissions by 2050.

The Bills are the precursor to a range of proposed climate-related measures, including implementing the “rewiring the nation” policy, changes to the Safeguard Mechanism and an electric vehicle strategy.

Industry should be alert to these developments. The Government has stated that these bills, if implemented, are designed to provide policy certainty and promote stability of investment in decarbonisation technologies. The bills also reinforce the role of state and territory governments in emissions reduction, increasing the complexity of policies that business must navigate.

Snapshot

If passed in its current form…

• The emissions reduction targets of 43 per cent below 2005 levels (as a floor) by 2030 and net zero by 2050 would become law. The Government has underlined that policies may seek to achieve more ambitious targets than the legislated level.
• The government of the day will be required to publish an annual climate change statement on progress towards the targets.
• The Climate Change Authority will be required to give advice on the annual climate change statement and future emissions reduction targets.
• Other agencies and bodies including the Clean Energy Finance Corporation, Australian Renewable Energy Agency, and Infrastructure Australia will have new statutory objectives to pursue the targets.

At just 16 pages, the Bill is of considerably smaller scope than framework climate legislation in other jurisdictions including the United Kingdom’s Climate Change Act 2008 and Victoria’s Climate Change Act 2017 (the Victorian Act). The Bill focuses on targets, an annual climate change statement, and the provision of independent advice. Interestingly, the Explanatory Memorandum references the IPCC AR6 Working Group III report Climate Change 2022: Mitigation of Climate Change in relation to the ability of legislative change to support and promote action by the private sector.

Emissions reduction targets

Section 10(1) of the Bill defines ‘Australia’s greenhouse emissions reduction targets’ as 43 per cent (against a 2005 baseline) by 2030 and net zero by 2050. The Bill does not define what is meant by ‘net greenhouse emissions’ but says the targets should be interpreted consistently with the Paris Agreement and Australia’s nationally determined contribution. This opens the door to the use of offsetting to achieve the targets.

The Bill includes a ratchet mechanism which requires that any fresh or updated nationally determined contribution – submitted in accordance with the Paris Agreement – is an enhancement of Australia’s ambition.

Importantly, the operation of state and territory laws is expressly preserved under the Bill. This serves as a reminder to industry that it must remain alert to the laws, regulations, and higher emissions reduction ambitions in the jurisdictions it operates.

For example, under the Victorian Act, the Victorian Government sets five-yearly interim emissions reduction targets. For the period 2025 to 2030, this is a 45-50 per cent reduction on 2030 levels and is more ambitious than the 2030 Commonwealth target set out in the Bill. Business should also be aware of the sector based emissions reduction pledges set by the Victorian Government which will likely drive decision making and investment.

Annual statement

Section 12 of the Bill requires that the Minister prepare and table an annual climate change statement in Parliament. This statement should detail progress towards achieving the targets, international developments, the Government’s climate policy, and an assessment of the effectiveness of those policies.

Independent advice

Under the Bill, the Climate Change Authority will be tasked with providing independent advice to the Government on the annual statements, future targets, and any changes to existing targets. This advice must be published and, where the Minister disagrees with the advice, they must table in Parliament an explanation of why it has been rejected.

Experience in the United Kingdom demonstrates that this advice will be treated with deference by courts when considering challenges to approvals and decisions based on climate change. In R (on the application of Friends of the Earth Ltd) v Secretary of State for Transport [2021] 2 All ER 967 the Committee on Climate Change’s advice helped the UK Supreme Court dismiss a challenge to the approval of a third runway at Heathrow Airport (see [132]).

Indeed, the potential for the Bill to ground judicial review applications may be limited. This is because of its limited scope which focuses only on targets, a ministerial statement and independent advice. The Bill does not itself, for example, replicate the requirement in section 17 of the Victorian Act that climate change is a mandatory consideration for certain decision makers.

Other agencies and bodies

The Government has also tabled the Amendments Bill. This will amend the functions and objectives of various Commonwealth bodies and programs to include achievement of the emissions reduction targets. These include the Australian Renewable Energy Agency, the Clean Energy Finance Corporation, Infrastructure Australia and others.

These amendments will encourage, although arguably not require, decisions consistent with the emissions reduction targets. The new legislative objectives are expected to influence investment decisions and regulator behaviour.

For example, through proposed amendments to the Offshore Electricity Infrastructure Act 2021, when the Minister is making a decision whether to declare an offshore area as a ‘declared area’ suitable for offshore renewable energy infrastructure, the Minister is required to ‘have regard to’ various matters which would include Australia’s greenhouse gas emissions reduction targets. While not requiring that decisions actively support achievement of those targets, this nevertheless provides a much clearer policy basis.

Next steps

The two Bills are expected to be the subject of detailed parliamentary negotiation as the Greens and expanded cross bench seek to increase ambition. We will keep across any significant amendments.

By Heidi Asten, Kathryn Pacey, Melanie Debenham, Peter Briggs, Mark Smyth, Tim Stutt & Harrison Jones