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AUSTRALIA STATE OF PLAY 

TARGETS

 

Australia resubmitted its unchanged NDC on 31st December 2020. This highly insufficient NDC sets out a target of 26% to 28% reduction in GHG emissions below 2005 levels by 2030 . Unlike many other key nations who attended US President Biden’s Leaders Summit on Climate Change [1], Australia stuck to the same insufficient target for 2030, refusing to increase ambition. Australia stood as an outlier again at the G7 leaders meeting in June, where Prime Minister Scott Morrison refused to increase the country’s ambition [2], despite the pressure and example set by other countries in the Group of Seven[3].

 

The 26% to 28% target is inadequate by any metric[4] and in 2015 the Australian Government’s own independent Climate Council Authority recommended a target range of 46-65% by 2030 from 2005 levels[5]. More recent analysis published in 2020 indicates that to achieve net zero by 2050, Australia’s domestic emissions reductions would now need to be around 66% below 2005 levels by 2030, with full decarbonisation of the power sector by the mid 2030’s[6].

 

Based on the latest Australian Government projections[7], 2030 emissions including LULUCF are projected to be 22.3% below 2005 levels, hence Australia is not on track to reach its 26-28% reduction target by 2030. A high technology sensitivity scenario projecting 29% below 2005 levels by 2030 is the basis for Government claims of ‘beating’ its unambitious NDC[8]. No quantitative justification is provided for this pathway.

All states and territories in Australia and many of the nation’s largest companies and financial institutions[9] have announced net zero by 2050 commitments. Economic analysis indicates that Australia would create AU$63 billion in fresh investment opportunities over the next five years by strengthening climate targets and policies in line with reaching net zero emissions by mid-century[10].

 

Earlier this year, Prime Minister Scott Morrison indicated a preference for a net zero 2050 target. However, no ‘commitment’ has been made[11]. Further, The National Party, which is in coalition with the Prime Minister’s Liberal Party, has stated an interest in excluding the agriculture sector (which makes up 13% of national emissions and a quarter of Australia’s exports to the US). Other Nationals are pushing for exclusion of mining and related activities, which could push the exclusions to over 30% of national emissions.

 

The main opposition party, the Australian Labor Party (ALP) have retained their net zero by 2050 policy.

Based on Australia’s domestic efforts to tackle climate change, the latest UN Sustainable Development Report ranked Australia last of all 193 member countries for climate action [12]. The report cited that “major challenges remain” in Australia taking action to combat climate change and its impacts. This comes despite Australia being ranked 35th in overall performance across all 17 Sustainable Development Goals [13].

POLICIES

Electricity: The electricity sector makes up the largest share of Australia’s emissions (33%) and has benefited from a Renewable Energy Target to 2020 that has now been fully subscribed. Renewables are projected to supply around 53% of electricity generation in 2030[14].

Emission Reduction Fund (ERF): The ERF is the Government’s only climate change strategy designed to directly reduce emissions. It is a reverse auction that purchases carbon credits from businesses that undertake emissions reduction projects. Australia has committed $2.4 billion to the scheme and contracted 199.8 millions tonnes of carbon abatement, of which it has only delivered on 58.9 million tonnes in the five years of operation.[15] Unfortunately the government is attempting to make the ERF available for Carbon Capture and Storage (CCS) projects connected to enhanced oil and gas extraction.

The Safeguard Mechanism is a component of the ERF that requires Australia’s largest emitting facilities to purchase carbon offsets for any emissions over their designated baseline. Baselines were set to maintain business as usual rather than to drive down emissions. They are often generously high and have been revised upwards. As a result, the Safeguard Mechanism has had little to no impact on reducing Australia’s emissions.[16]

Technology Investment Roadmap: In line with the Government’s “technology not taxes” strategy, the 2020 roadmap outlines the continued growth of fossil fuels in Australia’s future technology mix: CCS, hydrogen produced with fossil fuels, and natural gas. It does not include increasing renewable energy, any policy to drive private sector investment,[17] actual analysis of abatement opportunities, nor set out a pathway to reduce emissions in the next ten years.[18]

Transport electrification is sorely overlooked in Australia. The Government’s Future Fuels Strategy (FFS) discussion paper, which replaced a commitment to an EV Strategy, showed no new funds or regulations for transport.[19] There are no fuel efficiency standards and some state governments are now pursuing their own road user taxes just on electric vehicles.[20]

Exports of fossil fuels represent a far larger contribution to global GHG emissions than Australia’s domestic emissions. Australia is the largest exporter of coal, arguably the largest exporter of liquified natural gas (LNG), and globally the third largest exporter of fossil fuels in terms of embedded emissions.[21] Emissions from coal and gas extraction continue to climb.

Gas-fired recovery: To lead the national COVID Recovery Commission, the Government appointed a gas industry executive and set Australia on a course for a ‘gas-fired recovery’. The 2021-22 federal budget, revealed in May of this year, includes $58.6 million in new measures to drive this initiative.[22] This will fund the development of a gas supply hub, the expansion of numerous pipelines, as well as an import terminal.[23] Alarmingly, proposed fossil gas projects represent an annual climate impact of more than half of Australia’s annual emissions.[24]

Clean stimulus: While the Australian Federal Government’s COVID-19 related fiscal stimulus has been relatively robust (15.75% as a proportion of GDP[25]), its green recovery spending has been small. As a proportion of total recovery spending, France has spent 25 times more on green initiatives than Australia, South Korea 9 times more, and the UK 7 times more. Although the May 2021 budget offered a viable opportunity to allocate new spending to green recovery initiatives, the federal government's decision to reduce climate spending to 0.16% of the federal budget dashed hopes of greater job creation and lessened emissions.[26] Regrettably, for every $100 that the federal government currently spends, only 16 cents goes towards addressing climate change.[27]

Green Climate Fund: Despite its leading role in the Green Climate Fund (GCF), with Ewen McDonald acting as the longest serving Co-Chair and Howard Bamsey the Executive Director of the fund’s secretariat, in 2018, Australia followed President Trump’s lead to exit the GCF. This decision goes against the interests of Australia’s Pacific neighbours, and their need for climate security.

Adaptation and resilience: This year, the Government joined the Coalition for Climate Resilient Investment (CCRI),[28] and committed to refresh its 2015 National Climate Resilience and Adaptation Strategy. In response to recent major bushfires, the Government has also proposed a number of useful reforms to the national disaster framework.[29] The severity of the bushfires was reflected in the 2020-2021 federal budget,  which established the new National Recovery and Resilience Agency, enhanced Emergency Management Australia, and allocated $209.7 million to establish the Australian Climate Service.[30] All of this serves to build on the $2 billion National Bushfire Recovery Fund. Nevertheless, Australia remains “woefully unprepared” for the emerging impacts of climate change.[31]

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KEY MESSAGES

 

  • Highlight the climate risks to national security and the global economy. Everyone needs to step up 2030 and 2050 ambition together.

  • Whilst it is important that Australia adopt a zero emissions goal for 2050 without exclusions and exemptions, what is fundamental is that by COP26 it substantially increases its 2030 domestic NDC consistent with the Paris Agreement - noting the US has recently adopted a 50-52% reduction target by 2030, based on 2005 levels.32

  • There is a once-in-a-generation opportunity for Australia to pivot its major export markets in Asia away from fossil fuel intensive commodities to renewable energy, like green hydrogen, and to work with the US and others to do so.

  • Discuss the opportunities for collaboration with the US and other regional partners to drive investment in green hydrogen, green steel and aluminium, and emissions reductions in agriculture and ensuring the accountability and credibility of other national targets.

  • Discuss the prospects of a Carbon Border Adjustment to ensure trading partners apply similar climate ambition to the United States and what this could mean for agriculture, aluminium and other major Australian exports to the US.

  • Outline plans to “name and shame global climate outlaws” outlined by President Biden.

Recommendations

  1. Encourage A stronger 2030 NDC

    a. At a minimum, this should be in the range proposed by the Australian Government’s own independent Climate Change Authority (45% to 65%).
    b. To be legitimately effective in getting Australia to reach net zero emissions, the 2030 NDC should be around 65%, reflecting the more recent analysis done in 2020.
    c. Noting the US has recently adopted a more ambitious 50-52% NDC.
     

  2. Encourage a legislated whole-of-economy commitment to zero emissions by 2050 before COP26.
     

  3. Launch a Green Hydrogen Coalition of countries and companies to commit to only producing and consuming green hydrogen
    a. This will help direct all government support to commercialising and scaling up green hydrogen production and avoid subsidising fossil fuel based alternatives.
    b. Target members could include Australia, Republic of Korea, Japan, China, Canada, EU, UK, India, Chile, and Morocco.

     

  4. Recommend Australia rejoin the Green Climate Fund like the US has a. Noting it is the only developed country not engaged with the main multilateral financing vehicle for climate action.
     

  5. Encourage Australia to develop battery manufacturing capabilities a. Australia is the world’s largest lithium producer33 and should position itself as a manufacturing leader for electricity storage and transport.
     

  6. Encourage Australia to follow the Biden Administration’s move to halt new oil and gas leases and further extend this to coal.

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Authors

These recommendations were prepared by the following people and organisations:

Bill Hare, Climate Analytics

Gavan McFadzean & Suzanne Harter, Australian Conservation Foundation

Richie Merzian, The Australia Institute

Julie-Anne Richards, Climate Action Network Australia

Edited by Eden Cooper-Squires, Climate Action Network Australia

Released 22 July 2021

  1. Leaders Summit on Climate: Day 1 (2021) https://www.state.gov/leaders-summit-on-climate/day-1/

  2. Climate Analytics (2021) https://climateanalytics.org/latest/global-update-projected-warming-from-paris-pledges-drops-to-24-degrees-after-us-summit-analysis/

  3. PM stands by climate policy as G7 nations pledge to step up action https://www.smh.com.au/politics/federal/australia-lags-g7-nations-ambitious-climate-commitments-20210614-p580w8.html

  4. Merzian & Campbell (2018) Advance Australia’s fair share: assessing the fairness of emissions targets, https://australiainstitute.org.au/report/advance-australias-fair-share-assessing-the-fairness-of-emissions-targets/

  5. Climate Change Authority (2015) Final Report Australia’s Future Emissions Reduction Target https://www.climatechangeauthority.gov.au/sites/default/files/2020-07/Final-report-Australias-future-emissionsreduction-targets.pdf

  6. Climate Action Tracker (2020) Scaling up climate action in Australia https://climateactiontracker.org/publications/scalingupaustralia/ and Climate Works Australia (2020) Decarbonisation Futures: Solutions, actions and benchmarks for a net zero emissions Australia https://www.climateworksaustralia.org/resource/decarbonisation-futures-solutions-actions-and-benchmarks-for-a-netzero-emissions-australia/

  7. Ibid.

  8. Ibid.

  9. For examples see: https://climateleague.org.au/about/

  10. Investor Group on Climate Change (2020) https://igcc.org.au/wp-content/uploads/2020/10/121020_MediaRelease_Mapping-Australia-net-zero-investment-potential.pdf

  11. ABC (2021) https://www.abc.net.au/news/2021-02-07/michael-mccormack-flags-excluding-agriculture-climatetarget/13130160

  12. Australia ranked dead last in world for climate action in latest UN report (2021) https://reneweconomy.com.au/australia-ranked-dead-last-in-world-for-climate-action-in-latest-un-report/

  13. Sustainable Development Report Australia Profile (2021) https://dashboards.sdgindex.org/profiles/australia

  14. Department of Industry, Science, Energy and Resources (2020) Australia’s emissions projections 2020 https://view.officeapps.live.com/op/view.aspx?src=https://www.industry.gov.au/sites/default/files/2020-12/australiasemissions-projections-20 20.docx

  15. Clean Energy Regulator (2020) Auction September 2020, http://www.cleanenergyregulator.gov.au/ERF/Pages/Auctions%20results/September%202020/Auction-September2020.aspx

  16. MacKenzie (2019) Australia’s Emissions Reduction Fund is almost empty. It shouldn’t be refilled, http://theconversation.com/australias-emissions-reduction-fund-is-almost-empty-it-shouldnt-be-refilled-92283

  17. Investor Group on Climate Change (2020) https://igcc.org.au/wp-content/uploads/2020/06/IGCC-submissiontechnology-roadmap-FINAL.pdf

  18. Mazengarb (2020) https://reneweconomy.com.au/federal-government-energy-roadmap-based-on-guesswork-andthought-bubbles-24028

  19. Department of Industry, Science, Energy and Resources (2021). Future Fuels Strategy: Discussion Paper, https://consult.industry.gov.au/climate-change/future-fuels-strategy/

  20. Filatoff (2020) Australia state governments introduce tax on electric vehicles, https://www.pvmagazine.com/2020/11/23/australian-state-governments-introduce-tax-on-electric-vehicles/

  21. Swann (2019) High Carbon from a Land Down Under https://australiainstitute.org.au/report/high-carbon-from-a-landdown-under-quantifying-co2-from-australias-fossil-fuel-mining-and-exports/

  22. Advancing Australia's gas-fired recovery (2021) https://www.energy.gov.au/news-media/news/advancing-australias-gas-fired-recovery

  23. Ibid.

  24. Swann (2020) Weapons of gas destruction https://australiainstitute.org.au/wp-content/uploads/2020/12/Weapons-ofGas-Destruction-WEB.pdf

  25. Policy Responses to COVID-19; Australia https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19

  26. The CCRI is a finance sector-led initiative bringing together over 75 institutional investors, banks, insurers, rating agencies and governments, representing over US$10 trillion in assets, to address climate resilience challenges. The CCRI aims to develop consistent frameworks to accurately price physical climate risks in investment decisions, which will help reduce exposure and channel more private capital towards building greater resilience across economies and communities.

  27. Investor Group on Climate Change (2020) https://igcc.org.au/bushfire-royal-commission-government-must-help-unlockprivate-capital-to-build-national-resilience-to-climate-change/

  28. Securing Australia’s Recovery Budget 2021-2022 https://budget.gov.au/2021-22/content/download/glossy_overview.pdf

  29. 29 Investor Group on Climate Change (2020) https://igcc.org.au/bushfire-royal-commission-government-must-help-unlockprivate-capital-to-build-national-resilience-to-climate-ch

  30. Australian Climate Roundtable (2020) https://www.australianclimateroundtable.org.au/wpcontent/uploads/2020/08/ACR_statement_on_climate_impacts-August_2020.pdf