11 Aug 2010

Victoria moves ahead with release of Climate Change White Paper and the Climate Change Bill 2010

by Sallyanne Everett, Jessica Kaczmarek

The Climate Change Action Plan and the Bill represent a bold move by the Victorian Government to address the impacts of climate change at the State level.

Victoria has taken a major step in advancing the climate change agenda in Australia with the release of the Victorian Climate Change White Paper - The Action Plan on 26 July and the introduction into Parliament of the Climate Change Bill 2010 on 27 July 2010.

As a package, the Action Plan and the Bill represent a bold move by the Victorian Government to address the impacts of climate change at the State level, and will affect almost all sectors of the Victorian economy, including energy generation, construction, development, and transport.

Action Plan includes 10 actions aimed at reducing emissions, providing for a more diverse energy mix, encouraging more water and energy efficient Victorian homes and businesses and facilitating community adaptation to climate change.

The key changes include:

  • the ambitious target of a 20 percent reduction in Victoria's greenhouse gas emissions by 2020 (compared to 2000 levels), equivalent to a 40 percent per capita reduction;
  • significant increases in the power of the Environment Protection Authority (EPA) to regulate carbon emissions; and
  • a new target emission level of 0.8 tonnes of CO2 equivalent (per MWh) to be set for all new power stations in Victoria.

What does the Action Plan propose to reduce climate change?

The Action Plan is intended to place Victoria at the forefront of the climate change debate and emissions reduction schemes nationwide. Importantly, the Action Plan reflects the Government's position that the failure to reach an agreement at Copenhagen and the subsequent defeat and deferral of a Carbon Pollution Reduction Scheme at the Commonwealth level do not justify doing nothing to reduce Victoria's greenhouse gas emission levels.

The 10 actions set out in the Action Plan are:

1. Legislating a target reduction - introduce a Climate Change Bill to set and facilitate an emissions reduction target, as well as establish a framework for measuring and reporting on climate change actions;

2. Clean energy - reduce brown coal-fired generators' greenhouse gas emissions by up to 4 million tonnes over the next four years through a competitive "open book" process and regulating to ensure that no approvals are granted for new coal fired power stations based on current brown coal technologies;

3. Solar - increase Victoria's large scale solar power electricity supply to approximately 5 percent by 2020 and provide incentives to install and develop solar technology as well as a streamlined planning approvals process called the "Green Door" for renewable energy projects;

4. Homes - require all new homes and major renovations to meet a 6‑star minimum energy rating from 2011 and aim for all existing homes to achieve a 5-star equivalent rating by 2020;

5. Business - position Victoria to be a global leader in clean technology and drive improvements in energy efficiency in business including by expanding the Victorian Energy Saver Incentive to allow participation by small and medium enterprises and aiming to expand the Environment and Resource Efficiency Plan programme;

6. Farms and forestry - support Victoria's agriculture, food and forestry sectors in adjusting to changing economic, industry and environmental conditions and establish the Victorian Carbon Exchange to enable the voluntary purchase of carbon offsets;

7. Transport - build on the Victorian Transport Plan by encouraging local design and manufacture of electric vehicles, improved fuel efficiency and promoting low-emission travel options;

8. Government - continue to reform the Victorian Government's operations to set a national benchmark for greener government and ensure that climate change becomes part of the mainstream business of government and public sector decision-making;

9. Adaptation - implement programs which assist individuals, businesses and local communities in understanding and adapting to their specific climate change-related risks;

10. Climate communities - expand Victoria's Climate Communities Program to assist communities and businesses to implement their ideas in addressing climate change.

How the Climate Change Bill 2010 will implement the Action Plan

As stated in the preamble to the Bill, the Victorian Government recognises the overwhelming scientific consensus that human activity is causing climate change.

In an effort to "respond to the challenges of climate change", the Bill seeks to implement a broad-ranging framework for action including:

  • introducing a target to reduce greenhouse gas emissions
  • providing for forestry rights, carbon sequestration rights and soil carbon rights on land and
  • amending the Environment Protection Act 1970 to empower the EPA to regulate the emission or discharge of greenhouse gas.

Greenhouse gas emissions target of 20 percent by 2020

Under the Bill, the Minister must ensure that, by the year 2020, the amount of Victoria's greenhouse gas emissions is 20 percent below the amount of Victoria's greenhouse gas emissions for the year 2000. The Minister may determine a figure that represents the 2000 greenhouse levels in accordance with the method prescribed by the Regulations. The Action Plan explains that this target would act as a benchmark for action on climate change in Australia.

The Minister must report to each House of Parliament on Victoria's greenhouse gas emissions and the extent to which emissions have been reduced against 2000 levels, on or before 31 December 2011, and then biennially.

Obligations of decision-makers to have regard to climate change

Specified decision-makers will be required to take into account the potential impacts of climate change and the potential contribution to Victoria's greenhouse gas emissions relevant to a specified decision or action. The specified decisions or actions are listed in Schedule 1 of the Bill and include:

  • approval or refusal of a management plan under the Catchment and Land Protection Act 1994;
  • consideration by the Minister of a draft Coastal Strategy under the Coastal Management Act 1995;
  • the issue of, or refusal to issue, a works approval by the EPA under section 19B and a decision relating to the licensing of scheduled premises by the EPA under section 20 of the Environment Protection Act 1970, affecting general industrial and commercial sites that are large emitters and energy users;
  • decisions relating to action statements, management plans and interim conservation orders by the Secretary under the Flora and Fauna Guarantee Act 1988; and
  • consideration of a draft Sustainable Water Strategy by the Minister under section 22G of the Water Act 1989.

What are the relevant consideration for decision-makers?

In having regard to the potential impacts of climate change, the relevant considerations for a person making a decision or taking an action are the potential:

  • biophysical impacts;
  • long- and short-term economic, environmental, health and other social impacts;
  • beneficial and detrimental impacts;
  • direct and indirect impacts;
  • cumulative impacts.

In having regard to the potential contribution to Victoria's greenhouse gas emissions, the relevant considerations are the potential:

  • short- and long-term greenhouse gas emissions;
  • direct and indirect greenhouse gas emissions;
  • increases and decreases in greenhouse gas emissions; and
  • cumulative impacts of greenhouse gas emissions.

The Minister may issue guidelines for a person making a decision or taking an action about the scope and application of these requirements.

Climate Change Adaptation Plan

A Climate Change Adaptation Plan must be prepared every four years by the Minister, with the first plan to be prepared on or before 31 December 2012. The Plan will provide for an outline and a risk assessment of climate change impacts on Victoria and the Government's priorities in response to those impacts and risks.

Reviews of the Climate Change Act

An independent review of the Climate Change Act must be completed on or before 31 December 2015.

The Bill also provides that if the Federal Government proposes legislation for a national emissions trading scheme in Australia, the Victorian Minister must undertake a review of the Climate Change Act.

Forestry and Carbon Sequestration Rights

The Bill establishes forest carbon rights (which include carbon sequestration rights, forestry rights and soil carbon rights) as an interest in land which may be created and transferred.

The Bill also provides for the creation of Forestry and Carbon Management Agreements between owners of a freehold or leasehold estate in land and the owner of a forest carbon right to provide for the imposition of management obligations in relation to carbon sequestration.

Under the Bill, a person who is bound by a Forestry and Carbon Management Agreement may apply to the Victorian Civil and Administrative Tribunal for enforcement of the agreement or for resolution of a dispute in relation to the agreement.

The Secretary of the Department of Sustainability and Environment is responsible for the management of Crown land for the purposes of carbon sequestration and can enable carbon sequestration and soil carbon rights to be granted to third parties through Carbon Sequestration Agreements.

Amendments to the Environment Protection Act 1970

The Bill inserts a new definition into the Environment Protection Act of greenhouse gas substances, corresponding with the definition of greenhouse gases in the Commonwealth National Greenhouse and Energy Reporting Act 2007. The Bill also amends the definition of waste to include greenhouse gas substances emitted in gaseous form or discharged in a liquid form into the environment.

The Bill includes specific powers for the making of statutory policies (such as state environment protection policies) and regulations to control the emission of greenhouse gas to contribute to the greenhouse gas emissions target and reduce environmental harm.

Regulations can also be made to prohibit or control greenhouse gas emissions, prescribing standards for the discharge of such emissions including emission intensity standards and maximum emissions and prescribing conditions under which greenhouse gases may be emitted.

According to the second reading speech, it is proposed that "as a first step" following the passage of the Bill the EPA will use these new powers to set up an emission intensity standard for new power stations, with the Government proposing a standard of 0.8 tonnes of CO2 equivalent (per MWh) subject to public consultation and an assessment of economic and social impacts.

The powers may also be used to establish emission standards for existing power stations, however the second reading speech states that this would be a matter for consideration in the future and only after full public consultation and regulatory impact statements. Accordingly, it is unlikely that the amendments will be used immediately to regulate existing power stations greenhouse gas emissions through their discharge licences. The Bill also:

  • introduces climate covenants, which are voluntary agreements entered into between the Premier, the Minister and any person or body to facilitate activities or implement measures directed to climate change; and
  • creates a Climate Communities Fund Account to help fund community activities which are geared towards mitigating the impacts of climate change in Victoria.

What happens now?

Further detail on the specific initiatives underpinning the Action Plan will be set out in a White Paper Implementation Plan which is scheduled for release later this year, assuming that the Bill is passed in its current form.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.