Parliament Updates

Climate Change Bill 2020 Business Overview

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The Bill will be seconded by Rebekah Sharkie MP, Centre Alliance for MAYO

Climate Change (National Framework for and Mitigation) Bill 2020  

Climate change is a significant challenge for the business and investor community. Rising consumer demand for action and responding to risks associated with climate change are front of mind for many investors and business leaders.

Many are already planning to transition to a net-zero economy but to help guide necessary transitions, align objectives, efficiently allocate capital, and to optimise outcomes for stakeholders, business leaders need policy certainty.

To date in Australia, the lack of a bipartisan approach on climate has not provided certainty or the conditions required for medium and long-term planning and decision-making.  

This bill answers this need by providing an opportunity for a bipartisan approach and a clear and internationally proven framework that will ensure that certainty as well as open new areas of opportunity.  In establishing this framework, Australia is following a proven model enacted in the United Kingdom, Germany, France, and New Zealand, that has benefited their private sectors.

This national framework will provide:

  1. An Independent Climate Change Commission to oversee the transition
  2. An economy-wide net-zero target by 2050
  3. Economy-wide emissions budgets and national plans for reducing greenhouse gas emissions
  4. A National Climate Risk Assessment and plans for adapting to changing climate.
  5. Transparent monitoring, reporting on progress, and plans.

1. An independent Climate Change Commission to oversee the transition

To be effective on climate action, Australia needs an independent arbiter to guide policy and provide crucial accountability. The Act will establish a Climate Change Commission (CCC) to advise the government on policy-setting and reporting based on the advice of experts, including on business and economics.

The CCC will have stronger powers than the current Climate Change Authority. Firstly, by mandating that the Government consider the advice and recommendations of the CCC on setting climate policy. If the Government rejects the advice of the CCC it will have to provide a statement of reasons clearly outlining why. Secondly, it empowers the CCC to report on and review Government policy with no referral by the Minister.

The CCC will also be less prone to political influence by having a Joint Parliamentary Committee on Climate Change, made up of all sides of politics which will vet appointments to the Commission, and regularly report to Parliament on the functioning of the CCC.

2. An economy-wide net-zero target by 2050

In line with the Paris Agreement and the Intergovernmental Panel on Climate Change’s best available science, this Act will establish a net-zero target by 2050 in statute. By having the goal in statute, business and investors can be confident the Government is heading in the right direction, moving in line with states, territories, our international peers and can plan decisions accordingly and manage this critical financial risk.

Consistent with the guidance from the Australian Prudential Regulatory Authority (APRA), the Australian Securities and Investment Commission (ASIC) and the Reserve Bank of Australia (RBA), investors and businesses are increasingly considering climate-aligned targets for their portfolios, including net-zero by 2050. This target would bring the government into further alignment to maximise the business opportunities and limit financial risks.

3. National Economy-wide emissions budgets and national plans for reducing greenhouse gas emissions

The Act establishes a process to meet net-zero by 2050 by requiring the setting of 5-yearly emissions budgets, based on advice from the CCC which considers factors like technology readiness and the best available science. This creates the conditions necessary for business to plan and invest over the medium and long term. 

To meet these budgets, the Government will provide 5 yearly emissions reduction plans, one year in advance to parliament, to allow for added scrutiny. These plans will be multi-sectoral, dealing with energy, agriculture, waste etc. Emissions reduction ambitions will be balanced by cost-efficiency and affordability. For energy, specifically, the Australian Energy Market Operator and Energy Security Board will continue to advise Government and Commission, ensuring we manage the trilemma of security, reliability and affordability.

By having comprehensive plans set in advance, investors and businesses can also align core objectives with government support in emissions reduction areas. Importantly, in the creation of these plans, the Government must consult the community and business sector

4. National Climate Risk Assessment and plans for adapting to our changing climate

As evidenced by the recent fires, Australia is uniquely susceptible to climate change impacts. It is important that the community and business understand the full extent of those risks. The Act will provide regular risk assessments conducted by the CCC, which will identify risks across Australia’s economy, society, and environment, to which Australia will need to respond. The risk assessments will be underpinned by the advice of experts including financial and economic advice from the financial regulators.

The Government will be required to develop adaptation plans which will set out the Government’s priorities in addressing those risks. These assessments and plans will help guide businesses and investors' decision making

5. Transparent monitoring, reporting, and accountability

Transparent monitoring and reporting will give businesses and investors adequate information on how the Government is preparing for a net-zero economy and allow for efficient allocation of capital. Overall, increasing transparency will make Australia’s markets more efficient, manage the financial risks, and transition our economy for more stability and resilience.

To assist in this, the Government and the CCC will work together on the adaptation plans, long-term target, interim budgets and mitigation plans (the elements) in a transparent and accountable way. The CCC will also report annually on Australia’s national and sector emissions progress against targets, the extent to which the Australian adaptation and mitigation plans are being delivered, and the extent to which their objectives are being met.