4. Renewable Energy:

The second major pillar of the Government's 'Clean Energy Future' plan is the use of renewable energy. The Government plans to invest over $13 billion in clean energy projects and has created two new government bodies to oversee this investment.

First there is the Clean Energy Finance Corporation, which will invest with private sector companies developing and deploying renewable and clean energy projects.{C}[2]{C} The second body is the Australian Renewable Energy Agency, which is responsible for improving the competiveness of renewable energy and related technologies, and aims to achieve this by investing in and supporting renewable energy technology development.

Currently in operation is the Renewable Energy (Electricity) Amendment Act 2010 (Cth), which requires electricity providers to generate an increasing amount of electricity from renewable sources.{C}[4]{C} The Act commenced in 2010 and by 2020 this figure of renewable energy must be 45,850 GW hours.{C}[5]{C} Where providers fall short of these targets a charge of $65 per megawatt (MW) hour is applied.

5. Land Use:

Another major part of achieving a clean energy future is improving land use policies and practice. The Carbon Farming Initiative is a major feature of this.

5.1 Carbon Farming Initiative:

The Carbon Farming Initiative is designed to support Australia’s agricultural sector. The carbon price does not apply to this sector so farmers and landowners do not face a carbon liability, however the Carbon Farming Initiative means that they can financially benefit from its operation.{C}[8]{C} Established under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth),{C}[9]{C} the initiative allows landowners to earn carbon credits through positive activities on their land and then sell these credits.

The initiative provides the opportunity for a new revenue stream for farmers and landowners, while also delivering positive environmental outcomes through the reduction of carbon emissions, as well as positive biodiversity management.

Eligible projects under the scheme include the planting of a forest to act as a carbon sink, or reducing emissions through the capture and destruction of "methane emissions from landfill or livestock manure", and the restoration of wetlands.{C}{C}[12]{C} The carbon credits generated can then be sold to other businesses that are burdened by the carbon price and want to reduce their emissions.

The ability to export these credits to other markets also exists. From July 1, 2015 to June 30, 2017 they can only be exported as part of a bilateral link to another ETS in order to maintain a stability of the mechanism in its early years.{C}[14]{C} From July 1, 2017 the export of carbon credits will be unrestricted, opening up an entire new revenue stream for landowners.

As well as the financial benefit to farmers and landowners through the sale of carbon credits, and the reduction in carbon entering the atmosphere, there are also ancillary environmental benefits, including the creation of shelter for livestock, the alleviation of dry land salinity, as well as biodiversity enhancement.

The downside to the initiative though is that the land being used as a carbon sink could be much more financially viable being sold on the timber market, which is where the Biodiversity Fund comes into play.{C}[17]{C} The fund, managed under the Climate Change Authority Act 2011 (Cth),{C}[18]{C} has been allocated $946 million to distribute in funding to landowners for the restoration and management of carbon stores.{C}[19]{C} The establishment of plantations is an expensive process both in time and money and the Biodiversity Fund is designed to provide compensation to landowners.

6. The National Carbon Offset Standard:

Another mechanism is the 'National Carbon Offset Standard.' It is similar in its operation to the carbon pricing mechanism, however it is a voluntary scheme that runs in addition to the regulatory scheme.{C}[21]{C} The standard’s goal is, “to ensure that consumers have confidence in the voluntary carbon offset market and the integrity of the carbon offset and carbon neutral products they purchase.”

The carbon offset standard is aimed at businesses and individuals not liable under the carbon tax who wish to voluntarily reduce their emissions, or businesses who are liable but wish to reduce their emissions even further, often with aim of using the notion of being environmentally friendly as part of their marketing strategy.{C}[23]{C} Marketing products as ‘green’ is a tool often used to entice customers in a world where global warming receives a lot of publicity.{C}[24]{C} The scheme is designed to reduce Australia's emissions below that national targets laid out.

This voluntary market has two participants, those being businesses that invest in offset projects to generate carbon credits for sale (providers), and businesses that purchase these credits as part of their offset strategy (purchasers).

The standard outlines the requirements for the voluntary carbon offset market, outlining specific criteria.

A carbon offset is defined as a; “reduction in greenhouse gases, or enhancement of greenhouse gas removal from the atmosphere by sinks, relative to a business as usual baseline.”[28] Organisations set a base year by which the reduction in their emissions is measured with both direct and indirect emissions being measured, with the calculation standards being outlined in section 4.3 of the standard.[29] They can also offset certain products or services by measuring the emissions footprint of the subject and purchasing the appropriate quantity of carbon credits.[30] For all offsets it is the responsibility of the business to ensure that the claimed emissions are ‘retired’ permanently.[31] Retirement of a credit occurs once it is sold, as the same offset cannot be sold again, so units are not reused, creating certainty that the offset is benefiting the environment.

The standard also outlines the criteria for becoming carbon neutral, which involves the completion of an emissions management plan as described in section 5.1.[33] If completed an organisation can then market itself as 'carbon neutral' meaning 100% of their emissions are offset.

The difficulty with the standard comes into play when business use it in this way, as a marketing tool.[35] There are stringent requirements contained within, and a business is at risk of breaching section 52 of the Trade Practices Act 1974 (Cth), which states; “a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” The ACCC recommends that the more susceptible consumers be considered when marketing any type of carbon offset.

With the carbon tax now in play if a business represents the fact that is has taken additional action to offset its carbon emissions, when the case is that is has only met its obligations under the regulatory framework then this would entail a breach of s 52 of the Trade Practices Act, as compulsory liability cannot be marketed as an offset.

In ACCC v GM Holden Ltd [2008] FCA 1428 the company claimed a certain car was carbon neutral, but was found to has misled buyers due to the fact that its marketing implied the car’s emissions had been offset for life, however the company had only offset the car’s first year of emissions.

The standard was released prior to the introduction of a the tax on carbon, and now faces an uncertain future as any offsets made under the scheme must be in addition to those a business is liable for under the carbon tax, and only time will tell if businesses who were previously making voluntary offsets will offset more than they are legally required to.

7. The Role of the Courts:

As the third branch of government; the legislative branch, the role of the courts is to give effect to the laws passed by parliament; enforcing public policy.[40] This means an important aspect of any mechanism designed to reduce emissions, is the role the courts will play in its enforcement.

The court has two roles to play in environmental law, first the basic act of enforcing the laws passed by parliament, and second adjudicating disputes that arise in relation to these laws.[41] The role of the courts is so important as they are tasked with “interpreting, applying and enforcing the law” based on the facts presented and due to the separation of powers no branch of government has any control over another branch, meaning that parliament cannot interfere with the court’s decisions, even if these decisions contradict their desired environmental policy.[42] This can lead to conflict between the executive and judicial branches of government.[43] It does not matter what the position of the government, the judges or the community is; the courts can only interpret the law based on the facts.[44] This does in effect limit the extent the courts can protect the environment.

No common law principles exist which “specifically relate to the protection of the environment” meaning that legislation has been implemented to fill this gap; like the above mentioned carbon pricing scheme.[46] The role of the courts is not to make a judgment on the value of the law and competing interests, or allocate priority to “competing aspects of public policy,” so even if a decision will have a negative impact on the environment the court must allow it.[47] The executive branch of government can, if it wishes, impose limits on environmental decision-making, by enacting environmental legislation that places such limits; narrowing the scope the courts have to interpret.

In Environmental Protection Authority; Ex Parte Chapple (1995) LGERA 310 the court was tasked with resolving a conflict that involved competing environmental and economic interests, and due to the legislation had to side with the economic interests, even though clear environmental damage would occur.

In enforcing legislation dealing with reducing emissions the court is limited to two powers; those being the power to punish those who breach the law, and the power to issue injunctions to restrain activity.[50] A limit the courts face though is that they have no power to “act on [their] own motion” and must rely upon a party to commence proceedings before it can take any action against an offending party.[51] The court can take a proactive role though by “fostering and enunciating community values in the area of environmental protection” and also by imposing a severe level of punishment upon any guilty party.[52] With breaches of environmental law normally motivated by economic gain, the court must impose a penalty that is more severe than the intended gain, to act as a deterrent against future pre-meditated breaches.

8. Key Findings:

There is no magic pill, or single mechanism that can singlehandedly reduce Australia’s emissions to a large enough extent, but a combination of several of the above mechanisms are most likely to help the process. 

There is however a standout piece of legislation that acts as the cornerstone of all of the other mechanisms I have detailed above; it acts as the glue that binds them together and is key to the success or failure of the various other mechanisms. This legislation is the Clean Energy Act 2011 (Cth) and the carbon pricing mechanism it establishes. [54] Putting a price on carbon is a major step forward and once the mechanism moves to a cap and trade system in 2015 real results will be measurable as a cap is placed on total emissions, which is reduced over time.

The other mechanisms such as the Carbon Farming Initiative and the National Carbon Offset Standard are key pieces of the puzzle, but are redundant if no price on carbon exists. 

The role of the courts is not to be underestimated either, as they are responsible for enforcing the legislation, and in order for its full effectiveness to be felt they must be prepared to impose severe penalties and work to foster values of environmental protection. [55]

Conclusion:

Reducing greenhouse gas emissions is a challenge, a challenge that only in very recent years has the government attempted to rise to. The various mechanisms outlined above are all pieces of the puzzle to combat climate change, but it seems the common glue that holds them all together is the Climate Change Act 2011, and the pricing of carbon it legislates. This mechanism stands the greatest chance at reducing emissions, and in a way that is the most cost effective. It is however a major shift in policy that is only now taking its first baby steps.

 


[1] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 4.

[2] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 3.

[3] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 3.

[4] Renewable Energy (Electricity) Amendment Act 2010 (Cth)

[5] Taberner, above n 23, 133.

[6] Ibid 133.

[7] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 3.

[8] Sharon Christensen, et al, ‘Regulating Greenhouse Gas Emissions from Coal Mining Activities in the Context of Climate Change’ (2011) 28 EPLJ 381, 411.

[9] Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth).

[10] Nick Thomas, Carbon Farming Initiative Takes Off (22 December 2011) Clayton Utz [5] < http://www.claytonutz.com/publications/edition/22_december_2011/20111222/carbon_farming_initiative_takes_off.page>.

[11] Nooshin Torabi, Making the Carbon Farming Initiative More Appealing to Farmers (14 June 2012) The Conversation [1] <http://www.theconversation.edu.au/making-the-carbon-farming-initiative-more-appealing-to-farmers-7318>.

[12] Lyster, above n 33, 464.

[13] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 10.

[14] Lyster, above n 33, 450.

[15] Ibid 450.

[16] Thomas, above n 104, 11.

[17] Torabi, above n 105, 7.

[18] Climate Change Authority Act 2011 (Cth).

[19] Tom Arup, Call to Shore Up Biodiversity Fund (23 August 2011) The Age < http://www.theage.com.au/national/call-to-shore-up-biodiversity-fund-20110822-1j6sh.html>.

[20] Emma Burns and David Lindenmayer, The Biodiversity Fund – Another Missed Opportunity? (1 February 2012) The Conversation [8] < http://theconversation.edu.au/the-biodiversity-fund-another-missed-opportunity-4889>.

[21] Sophie Chan, ‘Eligible Carbon Claims in the Voluntary Carbon Market’ (2011) 28 EPLJ 9, 9.

[22] Department of Climate Change and Energy Efficiency, National Carbon Offset Standard (2012) [5] < http://www.climatechange.gov.au/en/government/initiatives/~/media/government/initiatives/ncos/NationalCarbonOffsetStandard-V2-20120628-PDF.pdf>.

[23] Chan, above n 115, 9.

[24] Ibid 9.

[25] Department of Climate Change and Energy Efficiency, National Carbon Offset Standard (2012) [1] < http://www.climatechange.gov.au/en/government/initiatives/~/media/government/initiatives/ncos/NationalCarbonOffsetStandard-V2-20120628-PDF.pdf>.

[26] Chan, above n 115, 9.

[27] Department of Climate Change and Energy Efficiency, National Carbon Offset Standard (2012) [1] < http://www.climatechange.gov.au/en/government/initiatives/~/media/government/initiatives/ncos/NationalCarbonOffsetStandard-V2-20120628-PDF.pdf>.

[28] Department of Climate Change and Energy Efficiency, National Carbon Offset Standard (2012) [2] < http://www.climatechange.gov.au/en/government/initiatives/~/media/government/initiatives/ncos/NationalCarbonOffsetStandard-V2-20120628-PDF.pdf>.

[29] Chan, above n 115, 13.

[30] Ibid 13.

[31] Ibid 14.

[32] Ibid 14.

[33] Department of Climate Change and Energy Efficiency, National Carbon Offset Standard (2012) [18] < http://www.climatechange.gov.au/en/government/initiatives/~/media/government/initiatives/ncos/NationalCarbonOffsetStandard-V2-20120628-PDF.pdf>.

[34] Evan M Calford, Andrew Gurney, Edwina Heyhoe, and Helal Ahammad, The Effects of an Emissions Offsets Scheme on Australian Agriculture (Australian Bureau of Agricultural and Resource Economics, 1st ed, 2010), 14.

[35] Chan, above n 115, 13.

[36] ACCC, Carbon Claims and the Trade Practices Act (2008) 2.

[37] Trade Practices Act 1974 (Cth) s 52.

[38] ACCC v GM Holden Ltd [2008] FCA 1428.

[39] Chan, above n 115, 10.

[40] Wayne Martin, ‘The Role of the Courts in Protecting the Environment’ (Paper presented at the National Environment Law Association WA State Conference, Perth, 23 September 2011) 2.

[41] Ibid 3.

[42] Peter McClellan, ‘The Executive and the Judiciary – A Potential for Conflict’ (Paper presented at the Environmental Defender’s Office National Conference 2005, Sydney, 13 May 2005) 9.

[43] Ibid 6.

[44] Emma Bullen, ‘Legislative Limits on Environment Decision-Making: The Application of the Administrative Law Doctrines of Jurisdictional Fact and Ultra Vires’ (2006) 23 EPLJ 265, 265.

[45] Martin, above n 134, 4.

[46] Ibid 5.

[47] Ibid 6.

[48] Bullen, above n 138, 266.

[49] Environmental Protection Authority; Ex Parte Chapple (1995) LGERA 310.

[50] Martin, above n 134, 22.

[51] Ibid 22.

[52] Ibid 22.

[53] Ibid 22.

[54] Clean Energy Act 2011 (Cth) s 4.

[55] Martin, above n 134, 22.

Comment