Science, Technology, Environment and Resources
Climate policy continues to be controversial. Following the repeal of the carbon price in the last parliament, the Emissions Reduction Fund (ERF) is now Australia’s main mechanism to reduce greenhouse gas emissions. However, two-thirds of the ERF’s allocated $2.5 billion funding has now been spent. The ERF, and other policies, will need further funding to achieve our climate targets.
Under international climate agreements, Australia
has two targets to reduce our greenhouse gas emissions:
While Australia appears to be on
track to meet its 2020 target, achieving the 2030 target may prove
challenging. To achieve this target we need to know where our emissions are
coming from and have effective policies to reduce those emissions.
Where do our emissions come from?
The Australian Government tracks our emissions of greenhouse
gases (such as carbon dioxide and methane) through National
Greenhouse Gas Accounts. The Department of the Environment and Energy
publishes regular Quarterly
Updates on Australia’s greenhouse gas emissions.
According to the most
recent Quarterly Update, issued in May this year, Australia produced 535.7 million
tonnes of carbon
dioxide equivalent (Mt CO2-e) emissions. These emissions came
from various sectors:
- Energy (Electricity)—187.5 Mt CO2-e (or 35% of the total emissions) were
produced by fuel combustion to make electricity (on- and off-grid).
- Energy (Direct combustion)—94.5 Mt CO2-e (18%) were produced by fuel combustion
directly used in energy, mining, manufacturing, buildings and primary
industries. Direct combustion excludes electricity use and transport.
- Transport—93 Mt CO2-e (17%) came from fuel combustion used in road,
rail, domestic shipping and aviation, off-road recreational vehicles and
- Agriculture—68.5 Mt CO2-e (13%) were produced from livestock (approximately
70% of agricultural emissions), application of fertilisers and soil additives,
soil emissions and burning of agricultural residues.
- Fugitive emissions—39.6 Mt CO2-e (7%) were produced from fugitive gas
emissions from coal, natural gas and oil extraction, processing and supply.
Fugitive emissions can be unintentional (for example, a leak) or intentional
(such as the burning of waste gases). The main source is coal mines (66%), with
underground coal mines producing more than surface mines.
- Industrial processes—33.7 Mt CO2-e (6%) were produced from industrial and
production processes that do not create energy. This includes metal production,
chemical industry processes and synthetic gas production and use (for example, hydrofluorocarbons).
Mt CO2-e (2%) were produced from waste decomposition, treatment and
combustion. This includes solid waste in landfill (the major source in this
category), waste in wastewater and compost.
- Land use, land use change and forestry —6.5 Mt CO2-e (1%) were
produced from deforestation (such as land clearing), reforestation,
revegetation and forest, crop and grazing lands management. There is a greater
level of uncertainty in calculating emissions for this sector.
Australia’s climate policies
To meet our international climate targets we will
need to reduce emissions across all the sectors outlined above. However, finding
bipartisan agreement on the most appropriate policies to achieve these
reductions has been challenging. Climate policy has been a polarising
and highly political issue in Australia. Several proposals to establish an
emissions trading scheme have come unstuck, with the former ALP Government
finally establishing a carbon
pricing mechanism in 2012. However, the ‘carbon tax’ was repealed
by the Abbott Government in 2014. Instead, the Emissions Reduction Fund (ERF) is now the
centrepiece of the Australian Government’s current policies to limit greenhouse
The Government is relying on the ERF, as well as a
number of other policies, to reduce our greenhouse gas emissions, and meet our
2030 climate target (see Figure 1). These policies are designed to reduce
emissions, increase energy productivity, and boost the uptake of renewable
have been raised as to whether these policies, particularly the ERF, are
sufficient to achieve our 2030 target, particular given that many do not
currently appear to have sufficient
The Climate Change Authority
(discussed below) is currently reviewing whether
Australia should have an emissions trading scheme, as well considering the
policies that Australia should implement to meet the Paris climate agreement.
The Authority’s report on these issues will be released by the end of
Figure 1: Australia’s climate policies
of the Environment
Emissions Reduction Fund
The ERF is a voluntary scheme designed to provide
financial incentives for businesses, landholders and communities to reduce emissions.
Under the ERF, the Government purchases greenhouse gas abatement, quantified by
Australian Carbon Credit Units through an auction process administered by the Clean Energy
Regulator. Before a project can participate (or bid)
in an ERF auction, it must be eligible and registered with the Clean Energy
So far, three auctions have been held under the
ERF, resulting in the purchase of 143 million tonnes CO2-e in emissions reductions at an average price of $12.10 per tonne.
Of the $2.55 billion allocated to the ERF, over
$1.7 million, or around two-thirds, has now been spent, leaving $816 million remaining. Further funding for the
ERF will apparently ‘be considered in future budgets’.
A range of projects to reduce emissions have been funded under the
ERF so far. These include, for example, projects to replace Melbourne street lights with more energy
efficient light bulbs, native forest and vegetation regrowth projects and
the use of gas from waste to create energy.
However, the ERF has been criticised as an inefficient way of reducing our
emissions, amid suggestions that the Government is paying
polluters for emissions reductions that would have happened anyway even without
the scheme. The Climate Change Authority concluded in a 2014 report that ‘by itself, and as currently
funded, the [ERF] scheme is unlikely to deliver sufficient emissions reductions
to reach even Australia’s minimum 2020 target’.
The ERF also includes a ‘safeguard mechanism’, which aims to ensure
that emissions reductions achieved by the ERF are not offset by rises in
emissions elsewhere. The safeguard mechanism came into effect on 1 July 2016, and
encourages large businesses not to increase their emissions above historical
levels. The mechanism applies to emitters with annual emissions
of over 100,000 tonnes CO2-e. While the
mechanism has been criticised as weak, some commentators have suggested it could
provide the basis for an emissions trading scheme. The mechanism will be reviewed
To meet our 2030 emissions reduction target, the Government is also
relying on the National Energy Productivity Plan (NEPP), which
aims to enhance energy productivity by 40% between 2015 and 2030. Energy
productivity combines traditional energy efficiency measures (such as more
efficient appliances) with new technology and services (such as smart
appliances and solar power). The main aims of NEPP are to encourage more
productive consumer choices and promote more productive energy services.
Measures listed in the NEPP include, for example,
improved vehicle efficiency; and improved residential building energy ratings
and disclosure. The NEPP could result in reduced greenhouse gas
emissions in numerous sectors including transport,
agriculture, industry, and electricity.
Government expects the NEPP to contribute over one quarter of the emissions
reductions required to meet our 2030 target. However, as of July 2016, there does
not appear to be any additional funding specifically allocated to implement
Other policies and measures
Renewable energy is an important method of reducing emissions in the
energy sectors, which produce over half of Australia’s emissions (see above).
Policies to increase uptake of renewable energy are discussed separately in the
brief on renewable energy policy.
The Government has also announced measures to further reduce emissions of hydrofluorocarbons (HFCs) by 85% by
2036, with measures planned to start by 2018. These potent greenhouse gases are
commonly used in refrigeration and air conditioning. The Government has said it
will implement measures to reduce HFC emissions by up to 80 Mt CO2-e by 2030.
These measures include banning imports of HFC containing equipment and working
with business to encourage proper installation and maintenance of
HFC-containing equipment to reduce gas leakage and energy use.
The Government is also exploring options for
improving the fuel efficiency of Australia’s vehicle fleet, through the Vehicle Emissions
Ministerial Forum, established in October 2015. The Forum released a Discussion
Paper in February 2016 to seek views on measures to reduce emissions from
the road transport sector. This includes consideration of Euro
6 vehicle emissions standards, improved fuel quality standards and measures
to increase the fuel efficiency of light vehicles.
Climate advisory bodies
As part of a package of measures along with the
‘carbon tax’, the former ALP Government created government agencies to review
climate change policies and clearly communicate climate science to the public.
Change Authority is an independent statutory authority
which came into effect in 2012. It provides the government and
parliament with ‘rigorous, independent advice on climate change
policies to improve the quality of life for all Australians’. It does this by
carrying out reviews
on climate change policies and initiatives such as the Renewable Energy Target.
The Abbott Government introduced legislation in the last parliament in an attempt to abolish the Climate Change Authority as
part of its effort to dismantle the former ALP Government’s climate policy
structure. However, the first abolition Bill was rejected by the Senate,
while the second Bill eventually lapsed. Although the
attempted abolition was not successful, one half (four) of the Authority’s Board member positions were left vacant for over a year
from 2014. This occurred after the members quit because, according to some commentators, the then-Government:
... made it clear that it would not listen to
its [the Climate Change Authority’s] advice (although it does seem to have been
influenced by its recommendations on vehicle emissions standards and
These actions resulted in the Climate Change Authority’s future being questioned by commentators. Although
new Board members were appointed in late 2015, the Authority’s future is still
unclear, given that it is currently not funded beyond 2017.
In contrast, the Abbott Government successfully
abolished the Climate Commission in 2013. The Climate Commission had been
set up by the Gillard Government to communicate climate science to the
Australian public in an understandable manner. Such was the public outcry after
the Climate Commission’s dismantling, that a social media campaign to crowd-fund
a replacement body raised nearly
$1 million in under one week. The resultant independent Climate Council aims
... provide independent, authoritative climate
change information to the Australian public. Why? Because our response to
climate change should be based on the best science available.
As well as providing information on climate-related
science and climate change impacts (for example, health), the
Climate Council provides reports on
policies related to climate change such as renewable energy. The
not-for-profit Climate Commission continues to rely on public donations to
support its work.
A Talberg, S Hui and K Loynes, Australian climate change policy to 2015: a chronology, Research paper series, 2015-16, Parliamentary Library, Canberra, 5 May 2016.
Climate Change Authority, Australia’s climate policy options
, Climate Change Authority, 2015.
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