News

The Australian Energy Market Commission (AEMC) and the Climate Change Authority today released a new report on solutions for affordable, secure and lower emissions energy.

The joint advice released today was requested by the Commonwealth Minister for the Environment and Energy to provide advice on policies to enhance power system security and to reduce electricity prices consistent with achieving Australia’s emissions reduction targets in the Paris agreement.

Dr Wendy Craik AM, the Authority Chair, said: “Energy and emissions reduction policies have been largely pursued as separate agendas.

“The advice in this report is geared towards the better integration of energy and emissions reduction policies, to provide greater investment certainty and in doing so, help keep electricity prices as low as possible while enhancing power system security.

“Uncertainty has a price. New analysis done for this report by the Centre for International Economics found that current wholesale electricity prices are above long-run costs by around $27 to $40 per megawatt hour. Electricity prices could be lower than they would be otherwise if credible and durable policy is put in place to reduce emissions in the electricity sector,” Dr Craik said

The AEMC and the Authority are of the view that an Emissions Intensity Scheme (EIS) is the preferred policy mechanism for the electricity generation sector, consistent with the options they analysed in previous reports.

AEMC Chairman, John Pierce, said today the joint advice drew on existing analysis and independent modelling. It is consistent with previous advice from both the Commission and the Authority.

“Government policy certainty is needed to generate the investment required to transform the sector. Well integrated emissions and energy policy that can adapt to change and support the means of exchange and risk allocation is likely to be more stable into the future,” Mr Pierce said.

The Authority considers many different policies or policy sets can help to reduce emissions although their impacts on electricity prices and power security will vary depending on their nature and design features.

The Authority also thinks that good design and implementation are as important as policy choice if measures are to meet the three objectives of affordability, security and emissions reductions.

The Authority has recommended a Low Emissions Target (LET) be considered as an alternative policy given that the EIS has been ruled out by the Commonwealth Government. The Authority believes that a LET could support a wide range of generation technologies including gas and carbon capture and storage (CCS).

The AEMC has not conducted any quantitative analysis of a LET-type emissions reduction policy mechanism and how it compares to an EIS. Without such analysis it is not possible for the Commission to assess the impact of such a policy mechanism on the electricity market, and specifically its impact on prices and system security.

In addition to the recommendation on the EIS, the Authority and the AEMC also support the ongoing reforms of the east coast gas markets, agreed by the COAG Energy Council, and the continued development of a competitive energy services market as important elements of delivering affordable, secure and lower emissions energy.

The Government has said that this report will serve as an input into the Independent Review into the Future Security of the National Electricity Market being led by Professor Alan Finkel. The Finkel review will inform the Government’s 2017 review into climate policies.

About the AEMC and the CCA

The AEMC is an inter-jurisdictional body with many functions and responsibilities in the Australian electricity and gas markets. The Authority is a Commonwealth agency established to provide advice on emissions reduction policy.

Media contact

The Climate Change Authority today released an issues paper for consultation on its new research project which is looking at ways to reduce carbon emissions on the land while enhancing our natural environment and helping farmers improve their bottom line.

In the third and final report of its 2016 Special Review into Australia’s climate goals and policies, the Climate Change Authority recommended further research into the multiple benefits for farm profitability and the broader environment that could result from well-designed emissions reduction policies on the land.

The Authority’s Chair, Wendy Craik, said “if you go out and talk to farmers, you quickly find that many of them are doing great things on their farms to deliver ‘win-win’ outcomes.”

“Improving agricultural soils by changing farming practices can mean that farms are more resistant to drought, crops or pasture grows better and now there is also the possibility of soil carbon credits.”

Planting trees along a creek or riverbed can also store carbon, help prevent erosion and reduce agricultural run-off improving water quality.

“It would be good to see more of this kind of action happening across the country,” Dr Craik said.

In this research, the Authority is keen to understand the barriers to achieving the multiple benefits of reducing emissions, enhanced natural resource management and on-farm profitability.

Could such barriers be overcome with smart policy design? Is there scope for better integration between policies?

What should the roles be for government, the private sector and non-government actors? Is it possible to create new markets to support and enhance environmental or social benefits like biodiversity, Indigenous employment or diversified farming operations?

The Authority encourages individuals and organisations with an interest in these issues to make a submission by 20 April 2017. These submissions will help inform development of a research paper that the Authority plans to release in mid-2017.

Media contact

AUSTRALIA’S CLIMATE POLICY TOOLKIT

The Climate Change Authority today released the third and final report in its Special Review on the actions that Australia should take to meet its obligations in the historic Paris climate agreement.

Dr Wendy Craik, the Chair of the Climate Change Authority said: “The Authority found that one size cannot fit all of the many opportunities that exist to reduce emissions across our economy. Australia needs a set of measures - in other words, a policy toolkit - that is well calibrated to capture reductions in different sectors.

The Authority is recommending that the Government puts in place a policy toolkit that uses current measures like the Emissions Reduction Fund and the safeguard mechanism, as well as new measures, in a durable solution that would allow Australia to decarbonise its economy and plays its part in efforts to keep global warming well below 2 degrees.

The Authority emphasised the importance of a stable, effective set of policies to encourage investment in low-emissions technologies and practices. The overarching architecture for the toolkit would remain in place to help provide investment certainty while the measures themselves evolve and strengthen over time.

For the electricity generation sector, the Authority found that a market mechanism, in the form of an emissions intensity scheme that would start in 2018, would be the best fit.

“We also think that an enhanced safeguard mechanism offers a pragmatic and durable way of reducing emissions across a range of industrial, manufacturing and resource sectors.”

For households, vehicles and buildings, establishing or strengthening existing energy efficiency standards is the way to go. On the land sector, the Authority found that voluntary offsets are the best tool for the task, given the large number of landholders and the differences between farming operations.

Dr Craik said that this final report of the Special Review marks the culmination of 18 months of research, analysis and talking to stakeholders about how Australia should rise to the now pressing challenge of reducing its emissions.

Dr Craik also said that the final report did not seek to re-assess Australia’s 2030 Intended Nationally Determined Contribution (as the Paris targets are known). As the Authority indicated in the first report of this review, the third and final report of the Special Review is focused on the policy actions that Australia should take to meet its Paris obligations.

The Authority today also released its research report into policies that could be used to reduce emissions in the electricity generation sector. The report is based on economic modelling and analysis commissioned by the Authority, and is an important input into the Special Review.

Media contact

The Climate Change Authority today welcomed the historic climate accord reached in Paris at the weekend. As anticipated the agreement commits the signatories to be bound to their individual targets with 5 yearly reviews aimed at strengthening the agreement over time.

Above all, the almost 200 nations have committed to a temperature increase "well below" 2 degrees, putting the science at the heart of the policy framework.

The Authority will consider the outcomes from COP21 in Paris in its 3rd and final report on Australia’s climate policy actions due to be released in June 2016. 

Submissions on the Special Review second draft report options paper must be lodged by 19th February 2016.

The Climate Change Authority has today released its draft report on Australia’s climate policy options. This is the second report in its Special Review of Australia’s climate change policies and goals.

Australia and the world are negotiating a framework for climate action beyond 2020. The Government has set targets for 2020 and 2030, and may agree to progressively strengthen targets as part of an agreement in Paris. Australia will need new, stable policies to meet its current and future targets.

The Authority’s draft report invites a fresh conversation about Australia’s climate policy options. It poses questions and invites feedback on the merits of different approaches. The Authority is considering a range of policy options to reduce Australia’s emissions, including different types of emissions trading.

The draft report lays out how the Authority will evaluate the policy options, based on three key principles: cost effectiveness, environmental effectiveness and equity. The report also looks at how climate policy can affect international competitiveness.

The Authority wants to hear from interested Australians. Their views will inform the final report of the Special Review due by 30 June 2016. In the final report, the Authority will recommend the actions Australia should take following the international climate negotiations in Paris.

• Chair’s statement

Media contact

The Climate Change Authority secretariat today welcomed the appointment of a new Chair and members to lead its work advising the Australian Government on climate change policy.

A/g Climate Change Authority CEO, Shayleen Thompson said the new Authority members would bring a wealth of experience and expertise in energy, economics, transport, business and industry.

‘The Authority secretariat  welcomes their appointment and looks forward to working with the new Chair and members, drawing on their extensive skill set and in-depth experience, from both the private sector and from their work with government.’

The new Climate Change Authority Chair is Wendy Craik AM.  The new Authority members are Stuart Allinson, CEO of Bid Energy, Kate Carnell AM of the Australian Chamber of Commerce and Industry, Danny Price from Frontier Economics and the Hon John Sharp a former Minister of Transport, and a corporate adviser with specialist expertise in the aviation sector.  The new members will join the existing members, Professors Clive Hamilton, John Quiggin and David Karoly and the Chief Scientist, Professor Ian Chubb. 

The appointments have immediate effect.

View the statement

Date: Thursday, 08 October 2015

The Government announced a target of 26‑28 per cent below 2005 levels by 2030 for Australia on 11 August 2015. This statement sets out the Authority’s observations on the target.

View the Statement on Australia’s 2030 target.

2 July 2015: The Climate Change Authority has released its Final Report on Australia’s Future Emissions Reduction Targets.

The report confirms the Authority’s preliminary recommendations for:

• a 2025 target of 30 per cent below 2000 levels
• further deductions by 2030 of 40 to 60 per cent below 2000 levels

The Authority considers these recommendations constitute a credible package for the Australian government to take to the Paris Climate Conference in December.

The report presents the Authority’s reasons for confirming its preliminary recommendations, drawing on stakeholder consultation and new information since it released its draft report in April.

The report completes the first of three phases of the Special Review of Australia’s climate action requested by the Minister for the Environment.

The Authority is seeking feedback on its proposed approach to electricity sector modelling. This work forms part of its Special Review of Australia’s emissions reduction targets and policies.

The Authority’s Special Review will pay particular attention to options for reducing Australia’s electricity sector emissions. The Authority’s analysis will include modelling to help compare a range of illustrative policy scenarios using a common set of input assumptions, including a common emissions constraint. The Authority has commissioned Jacobs to undertake this modelling.

The modelling work will have two broad phases.

Phase one will compare seven policies, broadly representative of those proposed and discussed in Australia in recent years. The Authority will evaluate the policies by comparing their performance across a range of quantitative and qualitative indicators of effectiveness, efficiency and equity.

In phase two, the Authority will select a sub-set of better-performing policy scenarios for further investigation, including sensitivity analysis and robustness tests.

The scenarios in the modelling exercise should not be interpreted as the Authority’s preferred policy positions or designs. In particular, the sectoral (rather than economy‑wide) focus of this modelling does not indicate a preference for sector-specific emissions reduction policies in the electricity or any other sector. The Authority will consider questions of policy scope and coverage as part of its broader Review.

The Authority welcomes comments on the proposed approach to the modelling, outlined in this consultation document. Feedback should be emailed to submissions@climatechangeauthority.gov.au by 12 June 2015.

• Consultation Paper: Modelling illustrative electricity sector emissions reduction policies (PDF 1.8MB) | (DOCX 1.2MB)

The Climate Change Authority released the first draft report of the Special Review of Australia’s climate change policies and goals in April 2015. The draft report recommends future emissions reduction targets for Australia, and is intended as an input to the Government’s deliberations ahead of the international negotiations for a new climate agreement in Paris at the end of this year.

The Authority recommends a 2025 target for Australia of 30 per cent below 2000 levels. The Authority considers this target is comparable to the efforts of other countries.

In recommending targets, the Authority attaches most weight to the science of climate change, the efforts of comparable countries to reduce their emissions, and Australia's own long term interests. In considering targets for the post-2020 period, the Authority has taken account of the uncertainty regarding Australia's action to 2020, and how quickly Australia might ‘catch up’ with global efforts.

The recommended 2025 target of a 30 per cent reduction by 2025 remains reasonable and achievable even if Australia does not strengthen its 2020 target beyond the minimum 5 per cent reduction. If Australia is able to do more than 5 per cent by 2020, this would allow a more gradual acceleration of effort beyond 2020.

The draft report builds on the Authority's 2014 report, Reducing Australia’s Greenhouse Gas Emissions - Targets and Progress Review, released in February 2014. The Authority considers the recommendations in that report remain appropriate. These include a 2020 target of 19 per cent below 2000 levels, a 2030 range of 40 to 60 per cent below 2000 levels, and a long-term emissions budget to 2050. These goals would help Australia make a fair contribution to global climate action to limit global warming to less than 2 degrees.

The Authority welcomes stakeholder comments on its draft report.