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Report of the Senate Environment, Communications, Information Technology and the Arts References Committee
The Heat Is On: Australia's Greenhouse Future
Table of Contents

Chapter 4

Australia's Greenhouse performance and strategy         (Part a)

The primary objective of all greenhouse policy has to be to deliver substantial, real and timely reductions in greenhouse gas emissions. This has to be the primary criterion for judging the performance of [Australia's greenhouse] programs. [1]

Australia's Abatement Challenge

4.1 Australia's agreed target under the Kyoto Protocol, to reduce greenhouse gas emissions to 108 per cent of 1990 levels, was granted in recognition of Australia's particular national circumstances. [2] Australia's target of 108 per cent is 13 per cent higher than most OECD countries. Australia successfully argued that, among developed nations, it faces a distinctive set of challenges which will make effective climate change abatement difficult and costly. This claim, of `a special case' in relation to Kyoto emissions targets, has been discussed at length in chapter 3 of this Report.

4.2 As a percentage of total emissions by Annex 1 countries, only nine of a total of 34 countries recorded a higher level of CO2 emissions in 1990 than Australia. Excluding the United States (responsible for 36.1 per cent of CO2 emissions by Annex 1 countries), the average Annex 1 country emissions in 1990 were 1.9 per cent of the total emissions. [3] At 2.1 per cent Australia is an above average emitter.

4.3 On a global basis, Australia's output of greenhouse gas emissions in 1990 was 1.4 per cent of total global emissions. [4] However, Australia is the largest emitter of greenhouse gases per person in the industrialised world. [5] The National Greenhouse Strategy (NGS) attributes Australia's national emissions profile to a number of key factors which distinguish it from other OECD countries. In summary, these include Australia's:

• above OECD average population growth;
• remoteness from overseas markets;
• widely dispersed natural resources and reliance on long-haul transport;
• lack of economically viable energy alternatives; and
• dominance of world coal markets and fossil fuel reserves which form the basis of export-oriented and energy-intensive industries such as steel and aluminium. [6]

4.4 Despite having achieved an emissions target which allows for an increase in emissions above 1990 levels, Australia's emissions National Greenhouse Gas Inventory (NGGI) for 1998 indicates that growth in domestic emissions remains largely unchecked. The NGGI shows that, in 1998, Australia was 16.9 per cent over 1990 levels (excluding emissions from land clearing). [7] Without a reversal in current trends, Australia is likely to be well beyond its Kyoto target at the beginning of the first commitment period in 2008. Australia could also be faced with an equivalent or greater cut to emissions in the second and subsequent commitment periods.

4.5 In 1998 Australia's total emissions (excluding land clearing) were 455.9 million tonnes (Mt) CO2, nearly 17 per cent above the 1990 level of 389.8 million tonnes. An increase of 63.3 Mt CO2 in energy emissions alone was almost as great as the overall increase of 66.1 Mt CO2. This increase was reduced in part by falls in the industrial emissions and land clearing. [8] A summary of the 1990 and 1998 greenhouse gas emissions by sector is provided in the figure opposite. [9]

4.6 The Australian Greenhouse Office (AGO) estimates that the growth in Australia's total emissions, including all sources and sinks (except land clearing), and allowing for the effect of current greenhouse gas abatement measures, will be 71 Mt CO2 -e (or 18 per cent) between 1990 and 2010, 10 per cent higher than our Kyoto commitment for 2008 to 2012. [10] In the absence of any abatement measures, emissions could reach 552 Mt CO2 -e by 2010, a 43 per cent increase over 1990 levels. [11]

Figure 4.1

1990 & 1998 Emissions by sector

Figures not available in Htm Version

The National Greenhouse Gas Inventory

4.7 Under Article 4(1) and Article 12 of the UN Framework Convention on Climate Change (UNFCCC), Australia has committed to providing an annual greenhouse gas inventory which records Australia's annual contribution to global emissions in accordance with internationally accepted guidelines. The Australian NGGI captures all human induced greenhouse gases emitted from sources and removed by sinks. It also details the relative contribution of key industry sectors.

4.8 The NGGI is updated each year and Australia has produced an inventory for each year from 1990, the most recent inventory being 1998. The 1998 Inventory will allow Australia to establish a baseline from which it will be able to monitor and review response action and develop projections of greenhouse gas emissions. [12] As the analysis underpinning the inventory becomes more robust, it could prove potentially useful in identifying low-cost abatement options for each sector. [13]

4.9 At an international level, the NGGI contributes to a global picture of greenhouse gas emissions levels and allows Australia to compare its performance in achieving its international targets with that of other countries.

4.10 The NGGI categorises emissions and sinks into six standard sectors set out by the Intergovernmental Panel on Climate Change (IPCC): Energy, Industrial Processes, Solvent and Other Product Use, Agriculture, Land Use Change and Forestry, and Waste. [14] It also presents emissions on a gas by gas and sector by sector basis.

4.11 The NGGI expresses the emissions of methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs) and sulphur hexafluoride (SF6) in terms of their `carbon-dioxide equivalent' (CO2-e). The concept of global warming potentials (GWPs) has been introduced to express equivalent units of emissions. [15]

4.12 The GWP is based on the potential for each type of emission to influence climate change processes. GWP figures are refined as new knowledge emerges on the relative impact of different types of emissions. GWPs also vary with the time horizon being considered and, by convention, a 100-year horizon is used in policy analysis. [16] Carbon dioxide has a GWP of one. All other emissions have a GWP value set at a multiple of one. Aggregate emissions are derived by summing the emissions of various greenhouse gases. The NGGI attributes a value of 21.1 for methane per unit of carbon dioxide, 310 for nitrous oxide, 6,500 for the PFC perfluoromethane (CF4), 9,200 for the PFC perfluoroethane (C2F6) and 23,900 for sulphur hexafluoride (SF6). [17]

4.13 The 1998 NGGI, released in July 2000, provides the most recent report on Australia's greenhouse gas emissions. The Committee notes the AGO's explanation that the total emissions reported in the NGGI do not represent Australia's true performance to date against the Kyoto Protocol, as the 1990 baseline is yet to be determined due to the uncertainties associated with emissions from the land use change and forestry sector; and the final guidelines for the compilation of inventories under the Kyoto Protocol are still under negotiation. [18]

4.14 The 1998 Inventory has incorporated improvements and changes to methodology and data and now includes: improved emissions estimates for the manufacturing and construction sector; the CO2 content of distributed natural gas; improved estimates of animal numbers in the calculations of CH4 and N2O from livestock; and estimated resident population for all years. [19]

4.15 In addition to the NGGI, a five-year program to develop a National Carbon Accounting System (NCAS) was announced by the Prime Minister in November 1997. This initiative is being led by the AGO and will provide substantially improved estimates of national emissions for the land use change and forestry sector. Estimates for land use change and forestry are still considered highly uncertain. According to Dr Gary Richards, Manager of the NCAS, estimates used in earlier years of the NGGI carried a 70 per cent uncertainty. The NCAS aims to reduce this uncertainty to a `within 10 per cent' range. [20] The AGO regards the development of the NCAS as critical to addressing the need for greater transparency of reporting and verification of data. [21]

The Performance of the National Greenhouse Strategy

4.16 The remainder of this chapter presents the Government's response to global warming. Consideration is given to emission abatement programs - their objectives, their outcomes and budgetary expenditure. It provides an overview of the current national greenhouse policy framework, and in particular:

• examines the role of the Commonwealth, state and territory governments, local governments and the broader community within that framework;
• examines current progress in the implementation of the NGS, and the barriers and issues hindering its effectiveness; and
• provides recommendations for future directions.

4.17 In November 1998 the Government released the National Greenhouse Strategy (NGS) to provide the strategic framework for advancing Australia's greenhouse response and to be the `primary mechanism through which our international commitments will be met'. [22] The NGS also claims that `implementation of the Strategy will forge major reductions in Australia's projected emissions growth, consistent with meeting our international competitiveness'. [23]

4.18 Two years after its release, implementation planning is yet to be finalised, the expected emissions reductions from the implementation of NGS measures remain unquantified, and the principles to guide its further development and implementation appear to have been compromised by recent Government statements aimed at pacifying industry concerns.

4.19 There is a considerable lack of information available regarding the measures under the NGS, which has made an assessment of its progress and success extremely difficult. While some information was made available to the Committee, in a number of areas information simply did not appear to exist. This was particularly true of measures that were the primary responsibility of the states and territories. An initial report to Parliament on the progress of the NGS is to be tabled in 2001, and a major review is scheduled for 2002.

4.20 The Committee acknowledges that, in many cases, the states and territories have begun worthwhile greenhouse initiatives. The states and territories are crucial to Australia's greenhouse abatement efforts, given their responsibility for policy decisions of great environmental significance across the whole-of-government. The Committee received submissions from New South Wales, South Australia, Western Australia and Tasmania, but representatives from Queensland, Tasmania, Victoria and South Australia declined to give evidence.

4.21 It is a matter of some regret to the Committee that they were not able to hear the views of all states and territories. While supporting the Commonwealth's role in setting greenhouse policy, the Committee has also recommended further efforts to assist, involve and consult with the states and territories.

Overview of the National Greenhouse Policy Framework

4.22 National action to address climate change began in 1992 with the National Greenhouse Response Strategy (NGRS). The NGRS represented a commitment made by the Commonwealth, state and territory governments, and was formally endorsed by the Council of Australian Governments (COAG). An interim planning target was agreed that Australian greenhouse gas emissions would be reduced by 20 per cent by 2005, based on 1988 levels. This target was subsequently overtaken by the later negotiations associated with the UNFCCC and the 1997 Kyoto Protocol which represents a less onerous target than that agreed to in 1992.

4.23 Priority measures in the NGRS included:

• preparation of a National Greenhouse Gas Inventory (NGGI);
• micro-economic reform in the electricity and gas sectors to promote competition between suppliers and the promotion of greenhouse-friendly energy sources;
• increased energy efficiency within the residential and commercial sectors through energy labelling and minimum energy performance standards; and
• more efficient transport systems through travel demand strategies and improved fuel consumption in the national vehicle fleet.

4.24 In 1995 the Commonwealth Government announced additional greenhouse measures in a statement called `Greenhouse 21C'. The most significant of the new measures was the Greenhouse Challenge Program. [24]

The 1997 Prime Minister's Package

4.25 In 1997, immediately prior to the Kyoto conference, the Prime Minister announced a $180 million, 5 year package of measures Safeguarding the Future: Australia's response to climate change. The Government argued that this package of measures represented a `balanced and far sighted approach' [25] to answer the challenge of climate change and that the package would deliver a `reduction of a third in our expected net emissions growth from 1990-2010… from 28 to 18 per cent in that period'. [26]

4.26 The package was developed on the principles of protecting Australia's national interests and reflected Australia's national circumstances:

Those interests lie in both protecting Australian jobs and Australian industry whilst ensuring that Australia plays her part in the world wide effort needed to reduce greenhouse gas emissions. [27]

The measures have been developed against the background of our national circumstances and our national interest. They also have been developed against achievements by Australia to date such as reform of our electricity and gas markets, halving the amount of waste going to landfill by the year 2000 compared to 1990 levels and the efforts of particular industries such as the aluminium industry which will reduce emissions by more than 20 per cent over the same period.

The Government is seeking realistic, cost effective reductions in key sectors where emissions are high or growing strongly while also fairly spreading the burden of action across our economy. [28]

4.27 While the package's major focus is on cost effective `no regrets' action, scope was included to go `beyond no regrets' if required:

We are prepared to ask industry to do more than they may otherwise be prepared to do, that is, to go beyond a `no regrets', minimal cost approach where this is sensible in order to achieve effective and meaningful outcomes. [29]

4.28 The package directed funding at both new or, substantially expanded, existing programs which included the following elements: [30]

Table 4.1

Australia's response to climate change

The National Greenhouse Strategy

4.29 The Commonwealth, state and territory governments commenced work on the NGS in 1996, finalising the Strategy in late 1998. The final Strategy was based on the outcomes of a review of the NGRS, the Prime Minister's 1997 package, the outcomes of the Kyoto negotiations, and a range of other `factors that have emerged and evolved since 1992'. [31]

4.30 The NGS has three key goals:

1. To limit net greenhouse gas emissions, in particular to meet our international commitments.
2. To foster knowledge and understanding of greenhouse issues.
3. To lay the foundations for adaptation to climate change.

4.31 The NGS includes eight modules of targeted measures designed to achieve the goals of the Strategy, and a framework for its further development and implementation. Measures contained in the Strategy are to be delivered through a variety of mechanisms including Ministerial Councils, or independently by state or Commonwealth governments. Implementation plans take the form of state and territory greenhouse strategies or nationally coordinated measure-specific plans.

4.32 Reports on the progress of the NGS are to be prepared every two years, with a first report by the end of 2000. The reports will discuss Australia's progress towards its target under the Kyoto Protocol, the progress of NGS measures, and the effectiveness of these measures to limit emissions and enhance carbon sinks. Performance indicators are being developed to assess this progress, although these were not available for scrutiny by the Committee. [32]

4.33 The NGS will be subject to periodic review, with the first review scheduled for 2002. Key factors in the reviews will include national emissions trends, international developments, progress in implementing the NGS, developments in greenhouse science, advice from stakeholders and the community, and findings from research about the opportunities, constraints, costs and benefits of given policy options. [33]

4.34 The NGS is a negotiated document and as such is limited by the outcome and success of negotiations, primarily between the Commonwealth and the states and territories, but also between government and industry. It is noted in the Strategy that a key consideration in its development was `the need to integrate greenhouse and other policy objectives' [34] and that:

In addition to the range of new and additional greenhouse measures outlined in the Strategy, greenhouse policy must also be integrated with that addressing other community concerns, particularly economic and trade policies, micro-economic reform agendas, competition policy reforms and the review of Commonwealth/State environmental roles and responsibilities. [35]

4.35 To date it would appear that the integration has primarily occurred in one direction, with existing policy agendas limiting greenhouse responses rather than greenhouse considerations influencing other relevant policy frameworks. Greenhouse policy has been subject to a great deal of scrutiny as to the potential cost to the economy and impacts on competitiveness. Yet, other policy agendas, such as energy market reform, have not taken greenhouse sufficiently into account, which has resulted in a significant increase in emissions from the electricity sector. These issues are discussed in more detail in chapters 5 and 9 of this Report.

4.36 It is also of some concern to the Committee that the NGS principles have been compromised by recent state and Commonwealth government statements. A key principle of the NGS is the `pursuit of greenhouse action, consistent with equity and cost effectiveness, and with multiple benefits' [36] with the recognition that `Australia should achieve compliance with the Kyoto Protocol in the least cost way to the national economy and with the least effect on competitiveness'. [37]

4.37 However, the Minister for Industry Science and Resources Senator the Hon Nick Minchin, recently announced that:

The Government is committed to the pursuit of cost effective greenhouse gas abatement policies and measures in order to minimise the burden for business and the community so that Australian industry can remain competitive. [38]

While the Government remains fully committed to honouring Australia's international greenhouse obligations, it also recognises the imperative of maintaining the competitiveness of Australian industry. Sacrificing economic growth and jobs is not in Australia's interests. [39]

4.38 The Committee also notes that the Western Australian Government's endorsement of the NGS was predicated on the following:

• maintenance of international competitiveness of Australian industry;
• differentiation fully reflecting variations in state circumstances within Australia so that there is a fair sharing of the compliance burden nationally;
• changes in assumptions made about the 1990 level of emissions to determine the basis for changes to states and territories' positions; and
• cost of achievement of greenhouse targets to be recognised in the implementation of the NGS. [40]

4.39 The Committee understands that a number of other states imposed similar qualifications on their endorsement. The Committee endorses the position of the NGS that `Australia should achieve compliance with the Kyoto Protocol in the least cost way to the national economy and with the least effect on competitiveness'. [41]

More Recent Greenhouse Measures

Measures for a Better Environment

4.40 The Measures for a Better Environment package announced in May 1999 as part of the GST tax reforms in Australia taking effect from 1 July 2000, introduced a number of additional greenhouse initiatives: [42]

Table 4.2

Measures for a Better Environment

Greenhouse Gas Abatement Program

4.41 The Greenhouse Gas Abatement Program (GGAP) was announced as part of the Measures for a Better Environment package (May 1999) and arose from negotiations with the Australian Democrats on the new tax system (ANTS) reform package.

4.42 The AGO reported that:

The GGAP builds on the Prime Minister's $180 million package of greenhouse measures, which was announced in November 1997 and is currently being implemented. These funds, together with new allocations for renewable energy generation, alternative fuels use and household energy reduction initiatives, amount to nearly $1 billion over five years – the largest commitment of funding to address the challenge of climate change in Australia's history. [43]

4.43 The GGAP Program aims to:

• attain long lasting results that translate into sustained reduction in emissions during the period 2008 to 2012 and/or beyond;
• be cost effective with a least cost impact on economic activity;
• have consistency with ecologically sustainable development; and
• where appropriate, generate employment, the use of new technologies and innovative processes, support export opportunities, act as a catalyst for further non-government investment, and provide opportunities in rural and regional Australia. [44]

4.44 The GGAP commenced on 1 July 2000, with first round submissions closing in September 2000. $400 million has been allocated to the GGAP between 2000-01 and 2003-04. [45]

4.45 GGAP is targeting opportunities for large-scale, cost-effective and sustained abatement across the economy. GGAP will only support projects that will result in quantifiable and additional abatement not expected to occur in the absence of GGAP funding. Priority will be given to projects that will deliver abatement exceeding 250,000 tonnes of CO2-e per annum.

Areas of Commonwealth Action

4.46 The Commonwealth is responsible for implementing the measures contained in the 1997 Prime Minister's package, the new greenhouse measures announced as part of the Measures for a Better Environment package, and has a lead/coordinating role in a number of nationally focused measures under the NGS. Key programs/areas of expenditure and activity are listed below, and discussed in detail in later chapters.

Greenhouse science

4.47 Expenditure on research into climate change issues and greenhouse gas abatement has been undertaken through the Greenhouse Science Program, guided by the measures contained in the NGS and international commitments:

• The Government has committed, in the 1999 to 2000 budget, an additional $14 million over four years for the continuation of the Greenhouse Science Program. The Program contributes to improving global, national and regional understanding of climate change, its potential impacts on Australia and the region and options for adaptation and mitigation through basic and applied research and communication of findings.
• The Greenhouse Science Advisory Committee, which provides strategic advice on research directions and priorities, has prepared an interim Advancing Greenhouse Science Strategy and Business Plan 2000-2005 which argues for an additional $10 million a year to be devoted to scientific work. The Government has made no response to this recommendation.

4.48 In August 2000, the Government announced grants totalling $600,000 for 57 Antarctic research projects to contribute to a better understanding of climate change. [46]

Greenhouse Challenge Program

4.49 An initiative of the Prime Minister's package is `extending the voluntary Greenhouse Challenge Program to allow a greater uptake by industry'. [47] The Greenhouse Challenge Program is a joint initiative between industry and the Commonwealth Government. Through the mechanism of cooperative agreements, the Program provides a framework for participants to undertake and report on actions to abate greenhouse gas emissions. Participation in the Greenhouse Challenge Program is voluntary. [48] Full details of the Greenhouse Challenge Program can be found in chapter 8 of this report.

Energy market reform

4.50 Another key initiative of the Prime Minister's package is `accelerating energy market reform leading to further economic, environmental and greenhouse benefits, and implementing efficiency standards for fossil fuel electricity generation by the year 2000'. [49] The production and use of energy is the largest single source of Australia's greenhouse gas emissions. Chapter 5 examines the operation of Australian energy markets and supply in detail.

Renewable energy

4.51 Renewable energy is examined in detail in chapter 5. A Government initiative in 1997 aimed to establish `targets for increased renewable energy and assistance for renewable energy technologies'. [50] To achieve this aim the Commonwealth Government has established a number of programs to:

• support the development and commercialisation of renewable energy technologies;
• accelerate the uptake of renewable energy;
• showcase leading edge renewable energy projects; and
• stimulate the development of an internationally competitive Australian renewable energy industry.

4.52 According to the Department of Industry, Science and Resources, approximately $387 million is being made available to support the renewable energy industry over the period 1998 to 2003. [51]

4.53 The suite of programs being funded includes: the Renewable Energy Action Agenda (REEA); the 2 per cent Renewables Program; the Renewable Energy Showcase Program (RESP); the Renewable Energy Commercialisation Program (RECP); the Renewable Energy Equity Fund (REEF); the Renewable Remote Power Generation Program (RRPGP); the Photovoltaic Rebate Program (PVRP); and the National Green Power Accreditation Program (NGAP).

Automotive industry fuel efficiency

4.54 An initiative of the Government is the introduction of `new fuel efficiency standards through negotiation with the automotive industry to secure a 15 per cent fuel efficiency improvement target by 2010 over business as usual - to include mandatory, model specific, fuel efficiency labelling'. [52] A number of specific measures are outlined in chapter 6.

Building codes and appliance standards

4.55 The Commonwealth Government has committed to regulations covering strengthened national energy efficiency building codes and standards for housing and commercial buildings, appliances and equipment. [53] A more detailed discussion of energy efficiency and greenhouse gas abatement can be found in chapter 5 of this report.

4.56 Energy consumed by equipment and appliances is a major source of greenhouse gas emissions. According to the AGO, these emissions are responsible for more than a quarter of net greenhouse gas emissions in Australia (excluding land use change and forestry). [54]

4.57 The Commonwealth Government has introduced a National Appliance and Equipment Energy Efficiency Program. Through this Program, the Commonwealth, state and territory governments throughout Australia, and the New Zealand Government, are working cooperatively to develop and introduce measures that improve the energy efficiency of appliances and equipment used by households and business by extending and enhancing the effectiveness of existing labelling and minimum energy performance standards (MEPS).

International projects supported by the Australian Government, including the Clean Development Mechanism (CDM) and Joint Implementation (JI)

4.58 The Commonwealth Government's final initiative in the Prime Minister's 1997 statement is the provision of `$6 million for facilitating Australian involvement in the Kyoto project-based mechanisms such as the Clean Development Mechanism and Joint Implementation'. [55] This funding is largely focused on facilitating commercial involvement in projects in developing countries and meeting the additional costs incurred by business in undertaking such a project. [56]

4.59 The main discussion of the Clean Development Mechanism (CDM) and Joint Implementation (JI) mechanisms of the Kyoto Protocol is provided in chapter 3.

The Performance of Commonwealth Measures Under the National Greenhouse Strategy

4.60 In evidence, Ms Lynette Thorstensen, of the Australian Consumers' Association, captured the inevitable gap between policies, programs and action. She argued that the voluntary NGS programs were not delivering adequate results, and that the credibility of some programs, such as the Greenhouse Challenge and the 2 per cent renewables energy target, was questionable:

… we are urging a wide range of incentives for energy efficient products on both the supply and the demand sides. We would like to see more rebate schemes, we would like to see a vastly improved approach to minimum energy performance standards and we would like to see new building energy efficiency standards. We notice that there is a lack of credible national minimum standards in Australia … I suppose, if we have a general criticism of the National Greenhouse Strategy it is that the number of voluntary programs within the National Greenhouse Strategy just do not seem to be delivering the kinds of greenhouse gas savings we would like to see. Certainly we are highly critical of the Greenhouse Challenge Program and, in a general sense, we would like to see - particularly with respect to the two per cent renewable energy target, which we think is so small as to be almost meaningless - mandated credible national targets. [57]

4.61 The Electricity Supply Association of Australia (ESAA) also expressed reservations about the success of the NGS and criticism of the low level of spending on research into development of new greenhouse-benign capacity:

The National Greenhouse Strategy response measures are generally pragmatic and sensible. However, lack of effective implementation, particularly on issues related to the end-use efficiency, should be of concern.

… there needs to be a process for effective NGS implementation, particularly focusing on end-use efficiency where the most effective gains can be made. [58]

Direct and indirect incentives offered to improve existing fossil fuel supply efficiency and new fossil fuel and renewable energy projects are inadequate, piecemeal and distortionary. A more coordinated national response is needed to ensure that greenhouse gas reduction benefits are maximised and costs minimised. [59]

ESAA believes Australia should increase its support for industry-related greenhouse gas abatement research and development activities. Energy-related research spending is conspicuously low. Government is not contributing to even modest spending on the International Energy Agency's program on energy efficiency, wind technology, photovoltaic power systems, solar photovoltaic and chemical energy systems, and greenhouse energy research and development. [60]

4.62 Stanwell Corporation commented on greenhouse gas management in Australia and argued for reform of the regulatory framework when it stated that the following factors were crucial to the success of renewable energy projects. There must be:

• appropriate price signals to reflect the full cost of fossil fuelled energy;
• an end to the distorted investment signals in favour of generation using fossil fuels; and
• an end to the inappropriate network pricing framework. [61]

4.63 Great Southern Energy noted that initiatives taking industry beyond `no regrets' were necessary and that there is a need for legal enforcement if industry is to go beyond `no regrets' measures. The organisation indicated that mandatory requirements are likely to be accepted because of the certainty they provide to companies with long term time horizons as a basis for their operations and decision making:

Great Southern Energy has considerable experience participating in Government greenhouse programs and developing emissions reduction measures. This experience provides a useful insight to the design of future programs. One of the key conclusions from this experience is that companies will not implement measures that go beyond a `no regrets' approach, without legally binding requirements in place. In addition to enable sound commercial decision to be made companies require a framework that provides certainty, flexibility and time frames of at least ten years. Without such a framework major emission reduction measures are unlikely to be approved. [62]

4.64 In its submission, the Tasmanian Government pointed to the need for the AGO to place greater emphasis on informing stakeholders about its programs and claimed that a significant proportion of the Tasmanian community was unaware of the various loan support schemes available to assist greenhouse gas emissions reduction initiatives. [63]

4.65 In the Committee's view, the Commonwealth Government must send a clear message to business as to how it intends to address the issue of significant emissions reductions and provide a structural framework or industry plan which spells out its medium and long term objectives. It is clear that there are a range of perceived problems associated with the NGS: the methods for implementing the programs, especially the efficacy of voluntary programs; the need to encourage or enforce action beyond `no regrets' outcomes; the importance of educational support; and the need for equitable distribution of burdens. These issues are discussed in greater detail in the remainder of this report.

4.66 During the inquiry the Committee sought to gather specific information about the progress of specific initiatives under the NGS. In many cases it was difficult to do so, and a full accounting may be delayed until the completion of the major review of the NGS, currently planned for 2002. In the Committee's view, there are strong grounds for this review to be brought forward, and it emphasises that the review be comprehensive and transparent.

4.67 The Committee notes that the NGS contains a Measure (3.1) for Commonwealth, state and territorial governments to reduce emissions from their operations, including mandatory targets for government agencies, inventories of government emissions, independent verification, and minimum energy performance standards. [64] The Committee was unable to establish what progress has been made on this Measure.

4.68 In all these areas it became clear that a stronger commitment to a whole-of-government approach is required. The Committee notes that one of the declared principles underpinning the NGS is the `integration' of greenhouse `with other government commitments', specifically to ensure that government policymaking be `consistent with the principles of ecologically sustainable development' and `to promote the need for greenhouse goals and policies to be recognised in the development of other government policies'. [65]

4.69 However, while the NGS contains a Measure (3.2) to incorporate greenhouse issues into planning and decision making, the measure is limited in scope and worded vaguely. It is hard to see exactly what either the Commonwealth or the states and territories have committed to in this area, and there is no clear timetable applied to the measure. [66] The NGS contains no clear commitment to fully integrate greenhouse with other policy areas. A variety of evidence to the Committee shows that Commonwealth and state policies in regards to taxation, transport, energy and resources remain poorly integrated (and often simply not integrated) with greenhouse policy, even though they often have crucial effects on emissions outcomes.

Recommendation 11

The Committee recommends that the first report on the progress of the National Greenhouse Strategy, which is to be tabled in Parliament in early 2001, should:

• include an assessment of the progress, implementation and effectiveness of each measure;
• include an estimate of emissions reductions for each measure;
• clearly identify where information is lacking and progress remains unsatisfactory, and
• assess performance against prior pledges, including performance against expected emissions reductions.

Recommendation 12

The Committee recommends that the major review of the National Greenhouse Strategy currently planned to be conducted during 2002 be brought forward to 2001 to immediately follow the release of the first report.

Recommendation 13

The Committee recommends that the Commonwealth Government incorporate the reduction of greenhouse emissions as a central objective across the whole-of-government and in all policy formulation. All relevant areas of Government, including transport and treasury, should be required to include greenhouse abatement in policy development and report on progress in their annual reports.

Recommendation 14

The Committee recommends that all agencies of the Commonwealth Government be required to develop quantified emissions reduction targets for all emissions from their operations.

Recommendation 15

The Committee recommends that performance against emissions targets should be monitored, independently and transparently assessed, and reported in annual reports.

Recommendation 16

The Committee recommends that government develop greenhouse accounting tools for the private sector and provide tangible recognition and encouragement to those organisations which apply in-house mechanisms such as emissions trading or de-facto carbon taxes.

Australian Democrats Recommendation 3

The Australian Democrats recommend that the Commonwealth Government apply a tax on all energy used within its departments at the rate of $10/tonne of CO2. These funds should be allocated to investments in emissions reduction for Government operations. Agencies could be allowed to determine how they spend those funds, or unallocated funds be allocated to the Australian Greenhouse Office to invest in the most cost- and greenhouse-effective manner. The Australian Democrats recommend that state and local governments be encouraged to match this measure.

(Chapter 4 - Part b)

Footnotes

[1] Greenpeace Australia, Proof Committee Hansard, Canberra, 23 June 2000, p 752.

[2] United Nations General Assembly, Executive Summary of the National Communication of Australia, 26 October 1995, A/AC.237/NC/4, p 3. See also Department of Foreign Affairs and Trade, Australia and Climate Change Negotiations, An Issues Paper, September 1997, pp 4-6, at dfat.gov.au/environment/climate/accn/overview.html (02/02/00); Australian Greenhouse Office, Submission 169, p 1682; and The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 100.

[3] `Report of the Conference of the Parties on its Third Session', The Kyoto Protocol to the Convention on Climate Change, p 33.

[4] According to the Australian Greenhouse Office, this percentage will fall as emissions from developing countries grow in association with economic growth (AGO, Submission 169, p 1682).

[5] Using official totals for 1995, supplied to the UN by the 35 Annex B (industrialised) Parties to the Kyoto Protocol, the Australia Institute calculated that Australia had the highest emissions per capita at 26.7 tonnes: `this is twice the level for all other wealthy countries (13.4 tonnes) and 25 per cent higher than emissions per person in the US (21.2 tonnes). While the US has higher emissions per capita from energy (20.6 tonnes compared to Australia's 17.6 tonnes), Australia has much higher levels of emissions from agriculture and land-use change' (The Australia Institute, Submission 79, p 2).

[6] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 100.

[7] Australian Greenhouse Office, National Greenhouse Gas Inventory, Fact Sheet 1, July 2000, p 1.

[8] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, July 2000.

[9] Australian Greenhouse Office, National Greenhouse Gas Inventory, Fact Sheet 1, July 2000, p 1.

[10] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 99.

[11] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 99.

[12] Australian Greenhouse Office, Submission 169, p 1701.

[13] Pacific Power, Submission 98, p 805.

[14] The Australian methodology for estimating greenhouse gas emissions and sinks are consistent with the Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Intergovernmental Panel on Climate Change, 1997.

[15] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, July 2000, p ix.

[16] Australian Greenhouse Office, National Greenhouse Gas Inventories, IPPC, 1997.

[17] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, July 2000, p ix.

[18] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, 2000, p xii. See chapters 3 and 8 of this report for a further discussion of the Kyoto Protocol framework for accounting emissions and carbon sinks.

[19] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, Fact Sheet 7, July 2000.

[20] Dr Gary Richards, Proof Committee Hansard, Canberra, 6 September 2000, p 926.

[21] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998.

[22] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, piii.

[23] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, piii.

[24] The Australian Institute, Submission 79d, p 2299.

[25] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, p 2.

[26] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, p 3.

[27] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, p 1.

[28] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, p 4.

[29] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, p 4.

[30] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997.

[31] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 1.

[32] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, pp viii-ix.

[33] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p viii.

[34] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 2.

[35] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 2.

[36] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 3.

[37] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 3.

[38] Media release: Senator, the Hon Nick Minchin, Minister for Industry Science and Resources, 23 August 2000.

[39] Media release: Senator, the Hon Nick Minchin, Minister for Industry Science and Resources, 23 August 2000.

[40] Western Australian Government, tabled documents.

[41] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 3.

[42] Changes to the Goods and Services Tax, Measures for a Better Environment, Media Release 31 May 1999, Prime Minister of Australia, pm.gov.au/media/pressrel/1999/changes3105.htm (02/08/00).

[43] greenhouse.gov.au/ggap/internet/guidelines.htm (03/09/00).

[44] Australian Greenhouse Office, Submission 169, p 1683.

[45] Gwen Andrews, Climate Change: The current status of Australia's response, Outlook 2000, Proceedings of the National Outlook Conference, Natural Resources, Volume 1, 29 February - 2 March 2000, ABARE, Canberra, 2000, p 69.

[46] Senator, the Hon Robert Hill, Opening Address to the Insurance Council of Australia's Canberra Conference, 10 August 2000, Department of the Environment and Heritage Media Release and Speeches, environment.gov.au/minister/env/2000/sp0aug00.html (13/08/00), p 1.

[47] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ago/safeguarding.html (17/07/00).

[48] Australian Greenhouse Office, Submission 169, p 1683.

[49] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ago/safeguarding.html (17/07/00).

[50] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ago/safeguarding.html (17/07/00).

[51] Department of Industry, Science and Resources, Action Agendas, isr.gov.au/agendas/Sectors/energy.html (19/07/00), p 2.

[52] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ago/safeguarding.html (17/07/00).

[53] greenhouse.gov.au/ago/safeguarding.html (17/07/00), p 6.

[54] greenhouse.gov.au/energyefficiency/appliances/index.html (07/08/00).

[55] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ ago/safeguarding.html (17/07/00).

[56] Statement by the Prime Minister of Australia, the Hon John Howard, Safeguarding the Future: Australia's response to climate change, 20 November 1997, http://www.greenhouse.gov.au/ ago/safeguarding.html (17/07/00).

[57] Official Committee Hansard, Sydney, 22 March 2000, p 368.

[58] Electricity Supply Association of Australia Limited, Submission 83, p 635.

[59] Electricity Supply Association of Australia Limited, Submission 83, p 635.

[60] Electricity Supply Association of Australia Limited, Submission 83, p 636.

[61] Stanwell Corporation Limited, Submission 91, pp 694-97.

[62] Great Southern Energy, Submission 150, p 1550.

[63] Tasmanian Government, Submission 185, p 1983.

[64] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 32.

[65] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 3.

[66] Australian Greenhouse Office, The National Greenhouse Strategy: Strategic Framework for Advancing Australia's Greenhouse Response, 1998, p 32.

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