Climate action

Budget Review 2013–14 Index

Anita Talberg

‘Offsetting’ a lower projected carbon price

Treasury has revised its projection of a 2015–16 carbon price from $29 to $12.10.[1] As a result, the expected revenue from the sale of carbon permits, after deducting industry and household assistance, is reduced by $1.9 billion until 2015–16.[2] However, the Government has stated that the Clean Energy Future package will remain broadly Budget neutral through ‘offsetting savings’.[3] Table 1 lists these, as highlighted in Budget Paper no. 2. The savings total $1.3 billion until 2015–16. In addition to those savings listed in Table 1, a further $300 million in cuts (Table 2) have been made over that time to climate change expenditure in general. The result is that net government expenditure on climate action until 2015–16 is just over $320 million more than at last year’s Budget. It would seem that reducing the Budget deficit has not been done at the detriment of climate action funding overall.

Additional savings

A second commitment period under the Kyoto Protocol: Australia has signed up for a second commitment period under the Kyoto Protocol. [4] As a requirement of this, Australia must adopt revised figures for the global warming potential (GWP) of certain greenhouse gases, such as methane. The net result of these new GWPs is an inflation of Australia’s emissions accounts, for example in the landfill sector. The government expects a $240 million increase in revenue from the sale of carbon permits.[5] Also, as part of re-joining the Kyoto Protocol, Australia has opted to account for emissions from certain land-based activities that had previously been exempt from our international obligations. Consequently, all carbon credits generated from land-based emissions abatement activities under the Carbon Farming Initiative (CFI) will be Kyoto-compliant, and will be accepted to meet liabilities under the Carbon Price Mechanism (CPM). The Non-Kyoto Carbon Fund, which had been established to purchase credits deemed not Kyoto-compliant, becomes redundant. Although this increases some costs to the government, it also saves almost $390 million over four years from the cancellation of the Non-Kyoto Carbon Fund.[6]

Abandoning the Global Carbon Capture and Storage Institute: the Institute has flagged that its ‘primary source of funding will be Membership fees’.[7] Termination of the government’s funding agreement saves $45 million over four years.[8]

The destruction of refrigerants: with the introduction of the CPM, the government began applying an equivalent carbon price to synthetic greenhouse gases, such as refrigerants. To help industry manage this new levy, the government had outlined an incentive program, ‘Destruction of Waste Ozone Depleting Substances and Synthetic Greenhouse Gases.’ In 2011–12 this program was costed at $97.9 million over five years.[9] However, the design of the scheme is now being altered to work in tandem with industry programs, such as that run by Refrigerant Reclaim Australia, a not-for-profit product stewardship organisation.[10] The government is also relaxing the levy requirements for certain applications, such as medical and veterinary devices.[11] Overall, these changes generate net savings of $81.5 million over four years.[12]

Early conclusion of the Solar Credits scheme: phase-out was completed in 2012, resulting in $1.8 million in savings.[13]

Additional expenses

As well as the savings noted above, the Government is increasing expenditure in some areas:

  • an additional $6.1 million in 2013–14 is being provided for the running of the Australian Renewable Energy Agency (ARENA)[14]
  • $17.4 million over the forward estimates is being provided for Antarctica, most of which is for climate change research[15] and
  • $23.3 million over four years is being provided so that the Australian Energy Regulator may fund various changes, of which one is the establishment of a Consumer Challenge Panel to improve consumer decision-making on electricity usage and costs.[16] Alongside this, $6.8 million over four years is earmarked (from existing resources) for the development of a consumer energy data system.[17]

Table 1: Explicit ‘offsetting savings’ highlighted as such in Budget Paper no. 2

 

Expense ($m)

Program (Department/Agency[18])

2012–13

2013–14

2014–15

2015–16

2016–17

Clean Technology Program — reprofile funding (DIICCSRTE)

-58

-

160.00

-60

-100

Education Investment Fund — return of unallocated funds (DIICCSRTE)

-46.1

-46.8

-66.20

-

-

Regional Structural Adjustment Assistance package — cessation (Regional)

-

-43.6

-5.40

-57.4

-28.6

Coal Mining Abatement Technology Support Package — reduction in funding (RET)

-

-

-

-14.5

-14.5

Carbon Capture and Storage Flagships — reduction in funding (RET)

-

-

-100.00

-200

-200

Coal Sector Jobs Package — reduction in funding (RET)

-

-

-

-160.7

-113.4

Low Carbon Communities — concluding rounds (RET)

-5.7

-17.6

-49

-25.9

-

National Low Emissions Coal Initiative — reduction in funding (RET)

-

-32.8

-55.4

-

-

Biodiversity Fund — rephasing of funding (SEWPaC)

-

-50.9

-70.6

-53.7

-50.2

Australian Renewable Energy Agency — deferral of funding (ARENA)

-

-

-70

-150

-150

Total

-109.8

-191.7

-256.6

-722.2

-656.7

Total savings over four and five years

1,280.3

1,937

Source: Budget measures 2013–2014: budget paper no. 2

Table 2: Additional expenses and savings related to climate action

 

Expense ($m)

Program (Department)

2012–13

2013–14

2014–15

2015–16

2016–17

Kyoto Protocol — adoption of second commitment period and new greenhouse gas GWPs (CER)

-

-

-

-100

-140

Issuing additional permits under the CPM (CER)

-

3.2

12.3

-

-

Termination of the Non-Kyoto Carbon Fund (DIICCSRTE)

-

-49.6

-46.7

-60.7

-77.7

Global Carbon Capture and Storage Institute — cessation of funding agreement (RET)

-

-20

-20

-2.5

-2.5

Synthetic greenhouse gases and ozone depleting substances — altered arrangements (SEWPaC)

-

-15.6

-19.4

-24.0

-24.2

Solar credits scheme — early conclusion (CER)

-1.4

-0.4

-

-

-

ARENA— additional departmental funding (RET)

-

6.1

-

-

-

Antarctica — additional support (SEWPaC)

2.6

13.5

-

1.3

-

Empowering consumers on electricity choices (ACCC and RET)

 

8.3

8.6

7.2

5.8

Total

1.2

-54.5

-65.2

-178.7

-238.6

Total savings over four and five years

297.2

535.8

Source: Budget measures 2013–2014: budget paper no. 2


[1].       G Combet (Minister for Climate Change, Industry and Innovation) and W Swan (Treasurer), Clean Energy Future package working in Australia's interest, media release, 14 May 2013, accessed 16 May 2013.

[2].       K Swoboda and A Talberg, Carbon scheme adjustments’, Budget Review 2013–2014, Parliamentary Library, Canberra, 2013, accessed 17 May 2013. From Table 1 of that document, the total reduction in revenue until 2015–16 is $10,584 million, plus $10,304 million, plus $9,274 million, plus $8,656 minus $4,580 million and $10,299 million and $ 8,929 million and $8,506 million (equals $6,504 million). From Table 2 of that same document, the total reduction in expenses from free permits until 2015–16 is $2,934 million plus $245 million plus $264 million plus $335 million (equals $3,778 million). Also from Table 2 of that same document, the total reduction in expenses from deferral of the tax free threshold changes is $820 million until 2015–16. As such, the total reduction in revenue from these changes is $6,504 million minus $3,778 million minus $820 million, which equals $1,906 million.

[3].       G Combet (Minister for Climate Change, Industry and Innovation), Transcript of media conference – Commonwealth Parliamentary Offices, Sydney, transcript, 8 May 2013, accessed 15 May 2013.

[4].       G Combet (Minister for Climate Change and Energy Efficiency) and M Dreyfus (Parliamentary Secretary for Climate Change and Energy Efficiency), Australia joins Kyoto Protocol second commitment as world on track to 2015 climate change agreement, media release, 9 December 2012, accessed 15 May 2013.

[5].       Australian Government, Budget measures 2013–2014:budget paper no. 2, Commonwealth of Australia, Canberra, 2013, p. 14, accessed 15 May 2013.

[6].       Ibid, p. 15.

[7].       Global CCS Institute, Accelerating CCS 2013–2017: Five-year strategic plan, 12 July 2012, p.12, accessed 15 May 2013.

[9].       Australian Government, Mid-Year Economic And Fiscal Outlook 2011–12, Commonwealth of Australia, Canberra, 2012, p. 155.

[10].     Department of Sustainability, Environment, Water, Population and Communities (SEWPaC), ‘Destruction Incentives Program for waste synthetic greenhouse gases and ozone depleting substances’, SEWPaC website, accessed 17 May 2013.

[11].     Australian Government, Budget portfolio statements 2013–2014: budget related paper no. 1.17, Sustainability, Environment, Water, Population and Communities Portfolio, Commonwealth of Australia, Canberra, 2013, p. 24, accessed 16 May 2013.

[14].     Budget measures 2013–2014: budget paper no. 2, op. cit., p. 249; there is an additional $25 million flagged for the Antarctic Climate and Ecosystems CRC over five years from 2014–15; however, there is no breakdown of this funding.

[15].     C Emerson (Minister for Tertiary Education, Skills, Science and Research) and T Burke (Minister for Sustainability, Environment, Water, Population and Communities), Australian Government commits to Antarctica, media release, 13 May 2013, accessed 16 May 2013.

[16].     Budget measures 2013–2014: budget paper no. 2, op. cit., p. 266; Australian Government, Budget portfolio statements 2013–2014: budget related paper no. 1.18, Treasury Portfolio, Commonwealth of Australia, Canberra, 2013, p. 95, accessed 16 May 2013.

[18].     The following department/agency abbreviations are used: DIICCSRTE—Department of Innovation, Industry, Climate Change, Science, Research and Tertiary Education; Regional—Department of Regional Australia, Local Government, Art and Sports; RET—Department of Resources, Energy and Tourism; SEWPaC—Department of Sustainability, Environment, Water, Population and Communities; ARENA—Australian Renewable Energy Agency; CER—Clean Energy Regulator; ACCC—Australian Competition and Consumer Commission.

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