Policy and Regulatory Responses to Climate Change

The next three years will be vital for policy development and implementation in order to stabilise greenhouse gas concentrations in the atmosphere. Put simply, action can involve reducing human-induced greenhouse gas (GHG) emissions, both globally and in Australia, and also enhancing sinks—such as growing trees—which absorb CO₂ from the air. The former has received the most attention.

One of the principal policy developments nationally and internationally has been the setting of emission targets. Debate has centred on whether these should apply to all countries, and whether they should be mandatory. The aim of targets is to reduce global GHG emissions so that the continuing rise in global temperature stabilises and damage to global ecosystems and to society is minimised.

The Kyoto Protocol, developed under the 1992 United Nations Framework Convention on Climate Change (UNFCCC), aims to limit the growth in GHG emissions as a first step towards stabilising the level of GHGs in the atmosphere, and thereby eventually reducing the rate of climate change. Australia’s target under the Kyoto Protocol is to limit its GHG emissions growth to 108 per cent of its 1990 baseline by 2012. Until December 2007, Australia had signed, but not ratified the protocol, so the target was not legally binding. The Howard Government did not ratify the protocol because it does not require developing nations such as China and India to meet binding targets. The Howard Government argued that this difference in treatment could lead to distortions in economic activity without any environmental benefit. However, it stated its commitment to meeting its Kyoto target, even though Australia’s GHG emissions are now predicted to rise to 109 per cent of the 1990 levels by 2012. The Australian Labor Party (ALP) stated that it would immediately ratify Kyoto on election to government and did so in early December 2007.

Australia attended the negotiations at the Kyoto–UNFCCC Conference of Parties (COP) in Bali in December 2007 to discuss post-Kyoto frameworks for dealing with climate change. The Sydney APEC Leaders declaration had outlined what must underpin an effective post-2012 climate change agreement. During the election campaign the ALP stated that, for the period after 2012, appropriate developing country commitments (not necessarily targets) under a binding international agreement would be ‘an essential prerequisite for Australian support’.

Long-term and medium-term GHG emission reduction targets are being proposed by several countries. The United Kingdom is legislating binding targets to reduce GHG emissions by 26–32 per cent by 2020 and by 60 per cent by 2050. The ALP has advocated a long-term target of reducing Australian GHG emissions by 60 per cent by 2050, a reduction that is considered to be the minimum required globally to avoid dangerous levels of climate change. The ALP position is that, in 2008, it will set interim emissions targets (for example, targets to be met by 2020) once it has received analyses from Treasury and from Professor Ross Garnaut. The Greens have proposed emissions reduction targets of
30 per cent by 2020 and 80 per cent by 2050.

There are various policies to reduce GHG emissions, including setting renewable energy targets. At present Australia has a 2 per cent Mandatory Renewable Energy Target (MRET) scheme, which aims to have 2 per cent of the country’s electricity requirements come from renewable sources by 2010. The ALP has set a renewable energy target of
20 per cent by 2020 that will increase the MRET to 45 000 GWh of electricity per year. The Greens have proposed a renewable energy target of 15 per cent by 2012 and 25 per cent by 2020. However, none of these renewable energy policies tackle Australia’s emissions from the transport sector, a major GHG contributor.

The ALP’s Clean Energy Plan, announced in November 2007, will establish four funds: a $500 million ‘renewable energy fund’, a $240 million ‘clean business’ fund, a $150 million ‘energy innovation’ fund, and a $500 million ‘clean coal’ fund. The ALP had also committed to $8000 rebates for solar power, $1000 rebates for solar hot water systems, $500 rebates for landlords to install insulation and $10 000 in low interest Green loans for solar systems and water and energy savings measures.

The Howard Government funded the development of low emission technologies locally and internationally through the Asia-Pacific Partnership on Clean Development and Climate, which facilitates technology transfer to member nations to reduce emissions. The ALP supports clean coal technology and carbon capture and storage. However, it has rejected the option of nuclear power generation—which is a potential low emission technology that could be available in 15–20 years.

Carbon emission trading schemes and taxes are two types of market mechanisms being implemented around the world and in Australia to provide incentives to reduce GHG emissions. The trading schemes often involve arrangements to allow for carbon sinks to be credited to major emitters. The details of the future Australian emissions trading system are still being developed by the Australian Government and the states and territories, but will presumably operate similarly to those in the United States and the European Union. The ALP is committed to introducing a ‘cap and trade’ emissions trading scheme by 2010, and it has outlined five tests for an effective scheme. To date, none of the major parties has favoured a carbon tax.

Any type of trading scheme will need a nationwide reporting framework for GHG emissions. To this end, the National Greenhouse and Energy Reporting Act was passed by the Parliament in September 2007¹. ALP members of the relevant Senate committee criticised the Act on the grounds that it potentially overrode existing state reporting frameworks².

1: Updated 9 January 2008
2: Update 4 February 2008