Climate Change Authority Final Report

by Energy Action | Oct 10, 2016
The Climate Change Authority recently released the third and final report in its Special Review recommending what action Australia should take to deliver on the commitments that flow from the United Nation’s Framework Convention on Climate Change Paris conference held in late 2015.

The Final Report by the Climate Change Authority is recommending that the Government put in place a policy toolkit that uses current measures like the Emissions Reduction Fund and the safeguard mechanism, as well as new measures that would allow Australia to decarbonise its economy as part of its efforts to keep global warming well below 2 degrees.

For the electricity generation sector, the Authority found that a market mechanism, in the form of an emissions intensity scheme be adopted to start in 2018. Under such a scheme, the Government would set a target emissions intensity baseline (e.g. tonnes of carbon dioxide per megawatt hour of electricity produced) for the sector and electricity producers would receive a free allocation of permits per unit of production.

In relation to the Safeguard Mechanism, the Authority notes that whilst its current form may prevent emissions from rising in facilities, it is unlikely to actually reduce emissions and so recommends an 'enhanced' Safeguard Mechanism for the direct combustion, industrial processes, and fugitive emissions sectors. These changes include reducing the threshold for facilities from 100,000 to 25,000 tonnes carbon dioxide per annum and removing flexibility mechanisms which allow facilities to reset their baselines.

The Authority also recommends that existing schemes under the Renewable Energy Target should proceed as planned.

The Final Report notes that energy efficiency is a very cost-effective way to achieve emissions reductions and recommends establishing, or strengthening existing energy efficiency standards and harmonising existing state and territory white certificate schemes. The resulting credits can then be used by liable facilities to meet their obligations under the recommended emissions intensity scheme for the electricity sector.

Following release of the report however two dissenting board members of the Authority (who participated in the Special Review process) have published a “Minority Report” which criticises a number of aspects of the reports.

The key point of disagreement is the failure to develop policy recommendations linked to a national carbon budget consistent with the long term commitments set out in the Paris Agreement.

Other recommendations of the Minority Report include adopting a cap and trade scheme in the electricity sector and supporting a regulated closure of coal-fired power stations.

 

A summary fact sheet for the Authority's recommended changes can be found here.

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