Energy and climate Change

POLICY AND STRATEGY 

Energy and climate change sits within the Department of Climate Change, Energy, the Environment and Water. The department is responsible for a broad-spectrum number of matters relating to the respective portfolios (Departmental responsibilities). 

Under the portfolio resides a number of agencies and statutory bodies, of particular note as they relate to industry are, Australian Energy Regulator (AER), Australian Renewable Energy Agency (ARENA), Clean Energy Finance Corporation (CEFC), Clean Energy Regulator and Climate Change Authority.  

The Energy policy and strategy element sitting within the energy portfolio, contains a series of energy and renewable fuel strategies. Of these Powering Australia is the headline framework: https://www.energy.gov.au/government-priorities/australias-energy-strategies-and-frameworks 

GOVERNMENT CONTEXT TO POWERING AUSTRALIA: 

  • Formal lodgement of the 43% emissions reduction target by 2030 as an enhanced Nationally Determined Contribution under the Paris Agreement. 
  • Enshrining this and the target of net zero by 2050 in law with the Climate Change Act 2022
  • Funding of $45.8 million over 6 years as part of the 2022-23 Budget to support an international climate step-up. This includes a bid to co-host a future Conference of the Parties in Australia with Pacific partner countries and constructive and ambitious participation in international forums. 
  • Funding of $42.6 million over 4 years in the 2022-23 Budget to enable the Climate Change Authority to provide independent climate change advice to government. 
  • Funding of $7.1 million over 2 years in the 2022-23 Budget to implement an interim policy and reporting framework as part of the government’s commitment that the Australian Public Service, excluding security agencies, commit to net zero emissions by 2030. 
  • Tabling in Parliament of Australia’s First Annual Climate Change Statement on 1 December 2022. The Statement accepted the advice of the Climate Change Authority in full, including to develop a plan showing Australia’s pathway to net zero by 2050 and Australia’s 2035 emissions target. 
  • Announcement of a National Net Zero Authority in the 2023-24 Budget to help guide Australia’s net zero transformation. 
  • Funding of $28 million in the 2023-24 Budget to identify and prioritise nationally significant climate risks to Australia and develop a National Adaptation Plan. 
  • Funding of $236 million over 10 years in the 2023-24 Budget for Flood Warning Infrastructure Network Remediation. 

POWERING AUSTRALIA 

The Powering the Nation Plan is a comprehensive strategy introduced by the Australian Federal Government to address the country’s energy needs while tackling climate change concerns. (https://www.energy.gov.au/government-priorities/australias-energy-strategies-and-frameworks/powering-australia)  

SUMMARY 

The plan focuses on several key areas: 

  1. Renewable Energy Investment: The government aims to promote the growth of renewable energy sources, such as solar, wind, hydro, and geothermal power, through various incentives and funding mechanisms. This includes the establishment of renewable energy zones and support for large-scale renewable projects. 
  1. Clean Energy Innovation: The plan emphasises investment in research and development of clean energy technologies. It encourages collaboration between industry, academia, and the government to drive innovation and improve the efficiency of renewable energy systems. 
  1. Energy Storage Solutions: Recognising the intermittent nature of renewable energy sources, the government plans to invest in energy storage technologies, such as battery storage systems and grid-scale storage, to enhance grid stability and reliability. 
  1. Energy Efficiency Measures: To reduce overall energy consumption and greenhouse gas emissions, the government will implement energy efficiency programs across various sectors, including manufacturing, transportation, and buildings. 
  1. Integration of Electric Vehicles: The Powering the Nation Plan seeks to support the adoption of electric vehicles by investing in charging infrastructure, providing incentives for electric vehicle purchases, and fostering the development of a domestic electric vehicle industry. 
  1. Transition from Coal: The government aims to manage the transition away from coal-based power generation by providing support to affected communities and facilitating the closure of high-emission coal plants over time. 

Backing industry, agriculture and carbon farming 

  • The Safeguard Mechanism has been reformed to put Australia’s largest industrial emitters on a pathway to net zero by 2050, commencing on 1 July 2023. Funding of $8.6 million in the 2023-24 Budget will support implementation and review of the Safeguard Mechanism reforms. 
  • Allocating funding from the Powering the Regions Fund (PRF) to continue the government’s support for Australia’s regions in a decarbonising economy, including supporting investments to reduce emissions in existing industries and fostering development of new, clean energy industries and workforces. 

Three funding streams have been designed in consultation with stakeholders: 

  1.  The $600 million Safeguard Transformation Stream (STS) to support decarbonisation investments at trade-exposed industrial facilities covered by the Safeguard Mechanism. The STS will be delivered by Business Grants Hub (BGH). Program opportunity guidelines have been released and applications will open in August 2023. Information sessions will be held online and in Brisbane, Sydney, Melbourne and Perth in August. To register your interest, please contact PRF@DCCEEW.gov.au
  1. The $400 million Industrial Transformation Stream (ITS) to support the reduction of direct and indirect emissions at existing industrial facilities, or clean energy developments, in regional Australia. The ITS will be delivered by the Australia Renewable Energy Agency (ARENA). Program opportunity guidelines are under development. Please visit ARENA’s website for further information. 
  1. The $400 million Critical Inputs to Clean Energy Industries (CECEI) program to support the domestic manufacturing capability of industries that produce inputs (primary steel production, cement and lime, alumina and aluminium) that are essential to the development of Australia’s clean energy industries. The CICEI Program will be delivered by the BGH. Program opportunity guidelines are under development.   
    • Funding of $3.9 million over 2 years in the 2023-24 Budget for a review of policy options to reduce carbon leakage, including consideration of an Australian carbon border adjustment mechanism for the steel and cement sectors (including clinker and lime production). 
    • The government accepted in principle all 16 recommendations of the independent expert review of the integrity of Australian Carbon Credit Units (ACCUs). Read more about the independent review of ACCUs. 
    • Commitment of $18.1 million in the 2023-24 Budget to strengthen the integrity of Australian Carbon Credits Units. 
    • $2 billion in the 2023-24 Budget for the new Hydrogen Headstart program, providing revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts. This investment will accelerate development of Australia’s hydrogen industry, which is critical to our vision of being a Renewable Energy Superpower. 
    • A further $2 million over 2 years in the 2023-24 Budget to help First Nations communities engage with hydrogen project developers. 
    • Funding of $5.6 million in the 2023-24 Budget to support further work on the best ways to leverage Australia’s competitive strengths to accelerate our clean industrial and manufacturing capabilities, with further actions to be identified by the end of 2023. 
    • Funding of $38.2 million in the 2023-24 Budget to establish a Guarantee of Origin scheme to certify renewable energy and track and verify emissions from clean energy products – in particular hydrogen. 
    • A Powering Australia Industry Growth Centre announced in the 2023-24 Budget as part of the Australian Made Battery Plan. It will work alongside the $392.4 million Industry Growth Program to bolster Australian manufacturing. 
    • Developing the Australian Made Battery Plan for globally competitive Australian battery industries. 
    • Commitment of $15 billion in the 2022-23 Budget to establish the National Reconstruction Fund, including up to $3 billion for the Powering Australia plan to support renewables and low emissions technologies. 
    • Funding of $8.1 million over 3 years in the 2022-23 Budget to progress research and support the commercialisation of seaweed as an emissions-reducing livestock feed supplement. 
    • Funding of $95.6 million over 9 years in the 2022-23 Budget to support 10,000 people under the New Energy Apprenticeship; and a $9.6 million New Energy Skills program. 
    • The government has commissioned Jobs and Skills Australia (JSA) to undertake a Clean Energy Capacity Study to evaluate workforce needs and enable Australia to strategically plan for the skills needed for the transformation to a clean energy economy. JSA is engaging with key stakeholders to inform a final report by mid-2023. 

Transport 

  • Australia’s first National Electric Vehicle Strategy was released on 19 April 2023. The strategy will increase the uptake of electric vehicles across Australia, reduce emissions, and improve the health and wellbeing of Australians. 
  • The strategy includes development of the first Fuel Efficiency Standard for light vehicles. Consultation closed 31 May 2023. 
  • Passing the $345 million Electric Car Discount Bill in November 2022, exempting eligible electric cars from fringe benefits tax (FBT) and the 5% import tariff. 
  • Funding of $275.4 million over 6 years in the 2022-23 Budget for the Driving the Nation Fund, taking total investment to over $500 million to help reduce transport emissions, including electric vehicle charging infrastructure and hydrogen highways. The NRMA agreed to partnership delivery arrangements for the National EV Charging Network and Hydrogen Highways on 1 March 2023. 
  • Funding of $14 million over 4 years in the 2022-23 Budget to the Australian Automobile Association to conduct on-road emissions and fuel consumption testing of light vehicles sold in Australia. 
  • Introduction of the Commonwealth fleet target to ensure its fleet purchases and leases will be 75% low emissions vehicles by 2025.

Electricity 

  • Funding of $1.6 billion in the 2023-24 Budget for an Energy Saving Plan to help households and businesses improve their energy efficiency and save on energy costs. The package includes the $1.3 billion Household Energy Upgrades Fund, providing:  
    • $1 billion to the Clean Energy Finance Corporation (CEFC) to turbocharge green financing options for household energy upgrades including battery- ready solar PV, better insulation and windows and modern appliances. This will help more than 110,000 households reach net zero future and lower their energy bills. 
    • $300 million, co-funded and co-designed with states and territories to target vulnerable Australians in social housing. It’s estimated that this will help around 60,000 social housing properties save up to one third of their energy consumption each year. 
    • $310 million for the Small Business Energy Incentive providing small businesses with an additional deduction on spending on electrification and energy efficiency. 
  • Implemented the Energy Price Relief Plan in the 2023-24 Budget with states and territories to reduce the impact of price increases. The plan places a temporary price cap on gas and electricity, introduces a mandatory code of conduct for east coast gas producers and provides targeted bill relief for eligible households and small businesses. 
  • Funding of $14.5 million in the 2023-24 Budget to accelerate the Offshore Renewable Growth Strategy and regulatory approvals to invest in our offshore energy industry to reach 82 per cent renewables by 2030 and make energy cheaper, cleaner and more reliable. 
  • Secured agreement to establish a new National Energy Transformation Partnership – a fundamental reset of relations across governments and the first fully integrated national energy and emissions agreement. 
  • Funding through the 2023-24 Budget for initial tenders under the Capacity Investment Scheme (CIS) will accelerate investment in clean energy through Commonwealth underwriting. In 2023 the program will deliver a joint CIS/NSW Electricity infrastructure Roadmap tender, and tenders in South Australia and Victoria for dispatchable renewable generation and storage. 
  • Established Rewiring the Nation in the 2022-23 Budget with $20 billion in low-cost finance over 4 years to unlock investment in our electricity grid. More than $12 billion has been allocated to priority transmission projects since September 2022, including Marinus Link between Tasmania and Victoria, Renewable Energy Zones in Victoria and NSW, and the Victoria-NSW Interconnector (VNI West). 
  • Funding of $224.3 million over 4 years in the 2022-23 Budget to deploy 400 Community Batteries across Australia to reduce bills, cut emissions and ease pressure on the grid. 
  •  Funding of $102.2 million over 4 years in the 2022-23 Budget for the Community Solar Banks initiative. 

EMISSIONS REDUCTION 

In alignment with international agreements and commitments, the Australian Federal Government has developed the following Emissions Reduction Strategies

  1. Paris Agreement Commitments: The government has pledged to meet its obligations under the Paris Agreement by reducing greenhouse gas emissions to a certain level by a specified target year. This includes submitting Nationally Determined Contributions (NDCs) and periodically updating them to enhance ambition. 
  1. Carbon Pricing Mechanisms: The government employs a carbon pricing mechanism to place a financial cost on greenhouse gas emissions. This can involve a carbon tax or an emissions trading scheme, encouraging businesses to reduce their emissions and invest in cleaner technologies. 
  1. Carbon Capture and Storage (CCS): To address emissions from industries that are difficult to decarbonize, the government supports the development and implementation of CCS technologies. These technologies capture carbon dioxide from power plants or industrial facilities and store it underground. 
  1. Land Use and Forestry: The government has implemented measures to promote sustainable land use and forestry practices that enhance carbon sequestration, helping offset greenhouse gas emissions. 
  1. Climate Adaptation and Resilience: Recognising the inevitability of climate change impacts, the government focuses on adaptation and resilience strategies to prepare for and minimize the adverse effects of changing climate conditions. 
  1. International Collaboration: The government engages in international partnerships and cooperation to share knowledge, technology, and best practices for emissions reduction and climate change mitigation. 

EV STRATEGY 

The Electric Vehicle (EV) Strategy of the Australian Federal Government is a comprehensive plan aimed at promoting the adoption of electric vehicles and reducing the environmental impact of transportation. The key elements of the strategy include: 

  1. Charging Infrastructure Development: The government plans to invest in the expansion of charging infrastructure across the country. This includes the installation of fast-charging stations along major highways, in urban areas, and at key public locations to enhance the convenience of EV ownership. 
  1. Financial Incentives: To encourage the purchase of electric vehicles, the government offers various financial incentives such as rebates, grants, and tax credits. These incentives aim to make EVs more affordable and attractive to consumers. 
  1. Fleet Electrification: The EV strategy includes initiatives to electrify government vehicle fleets. By leading by example, the government aims to demonstrate the feasibility and benefits of using electric vehicles in public sector operations. 
  1. Support for Domestic EV Manufacturing: The government provides support to domestic electric vehicle manufacturers, fostering the growth of a local EV industry and increasing the availability of Australian-made electric vehicles. 
  1. Public Awareness and Education: To raise awareness and promote the benefits of electric vehicles, the government runs public education campaigns. These campaigns aim to dispel misconceptions, address concerns, and highlight the environmental advantages of EVs. 
  1. Research and Development: The government allocates funding for research and development of EV technologies, including battery advancements, to improve the performance, range, and affordability of electric vehicles. 

TRANSPORT EMISSIONS REDUCTION 

The Australian Federal Government’s Transport Emissions Reduction Strategies are targeted at curbing greenhouse gas emissions from the transportation sector, which is a significant contributor to the nation’s carbon footprint. Key strategies include: 

  1. Fuel Efficiency Standards: The government sets fuel efficiency standards for vehicles sold in Australia. These standards aim to encourage the adoption of more fuel-efficient and low-emission vehicles, thereby reducing carbon emissions. 
  1. Support for Public Transportation: The government invests in public transportation infrastructure and services to promote the use of public transport, reducing the number of individual vehicles on the road and lowering emissions. 
  1. Active Transport Promotion: The strategy includes measures to encourage walking, cycling, and other forms of active transport. This initiative aims to reduce reliance on motor vehicles for short trips, leading to lower emissions. 
  1. Alternative Fuels: The government supports the development and use of alternative fuels, such as biofuels, hydrogen, and natural gas, as a transitional measure to reduce the carbon intensity of the transport sector. 
  1. Freight Efficiency Improvements: The government focuses on optimizing freight transport to enhance efficiency and reduce emissions in the movement of goods. 
  1. Intelligent Transport Systems: The strategy includes the implementation of intelligent transport systems and technologies to improve traffic management and reduce congestion, thereby decreasing emissions from idling vehicles. 
  1. Behavioural Change Programs: The government runs behavioural change programs to promote eco-friendly driving habits and encourage the adoption of sustainable transportation choices. 

DISASTER MANAGEMENT 

the Australian Federal Government aims to enhance the nation’s preparedness, resilience, and capacity to effectively manage and respond to various natural and human-made disasters. Disaster management largely resides with state and local authorities for implementation and management. A national framework has been designed in order to coordinate and attribute funding expenditure. The National Emergency Management Agency is the primary overseer of the policy action: https://nema.gov.au/#/map  

Setting out the primary areas of focus is the National Disaster Management Framework: The government has established a national framework that outlines the roles, responsibilities, and coordination mechanisms for all levels of government (federal, state, and local) and non-governmental organisations in disaster management and response efforts. Crisis Management Framework 

The intent of the framework is to provide guidance on: 

  1. Preparedness and Risk Reduction: The policy emphasises proactive measures to reduce disaster risks and increase community preparedness. This includes risk assessments, hazard mapping, public awareness campaigns, and community engagement initiatives. 
  1. Early Warning Systems: The government invests in early warning systems to promptly alert communities about potential disasters, such as bushfires, floods, cyclones, and extreme weather events. This allows for timely evacuation and emergency response planning. 
  1. Capacity Building and Training: The policy supports capacity building and training programs for emergency responders, volunteers, and relevant personnel. It focuses on enhancing their skills and knowledge to effectively manage disaster situations. 
  1. Coordination and Communication: The government emphasises seamless coordination and communication among all stakeholders during disaster events. This involves the use of emergency management centres, information-sharing platforms, and inter-agency collaboration. 
  1. Response and Recovery Efforts: The policy outlines strategies for rapid and effective response to disasters, including deploying emergency services, conducting search and rescue operations, and providing humanitarian assistance. Additionally, it addresses post-disaster recovery and rebuilding efforts. 
  1. International Cooperation: Recognising the global nature of some disasters, the government actively participates in international cooperation and assistance efforts to support other countries facing significant disaster events. 

Cyclone and Terrorism Reinsurance Pool (Reinsurance Pool) 

The Government has implemented a reinsurance pool for insurance companies to transfer their risk for cyclones and cyclone-related flood damage, called the Cyclone Reinsurance Pool (cyclone pool), which is backed by a $10 billion Government guarantee. The cyclone pool is a reinsurance arrangement between insurers and ARPC. The cyclone pool covers household, strata, and small business property insurance policies. ARPC commenced operations of the cyclone pool from 1 July 2022. The cyclone pool operates Australia wide, but targets support to cyclone-prone areas, and provides reinsurance for insurers operating in those areas. 

The cyclone pool is supported by an annually reinstated $10 billion Government guarantee. Any shortfall in reserves built up over time will be paid for through the Government guarantee. 

If the $10 billion guarantee is likely to be exceeded by a single cyclone event or series of cyclone events within a single year, the Government will increase the guarantee to support the cyclone pool to meet all its obligations. 

The reinsurance pool covers commercial property policies with less than $5 million total sum insured across risks covered by the pool (property, contents, and business interruption).