Setting Australia’s Post-2020 Target for Reducing Greenhouse Gas Emissions

Acknowledgements

This report was prepared by the UNFCCC Taskforce at the Department of the Prime Minister and Cabinet. The Taskforce worked in close collaboration with the Departments of Foreign Affairs and Trade, the Environment, Industry and Science, and the Treasury. We would also like to acknowledge the input from other agencies, including the Departments of Infrastructure and Regional Development, and Agriculture, and CSIRO.

We would also like to thank the organisations that provided valuable input to the report: McKibbin Software Group, ClimateWorks Australia, and the Crawford School of Public Policy at The Australian National University.

The Taskforce would also like to acknowledge all organisations and individuals who engaged in the consultation process through meetings, roundtables and the submission process.

Table of Contents

Acknowledgements
List of figures
List of boxes
Executive summary: a strong and responsible 2030 target
Chapter 1: Introduction and context
Chapter 2: Australia’s role in global action on climate change
2.1 Australia’s response to climate change
2.2 Paris and post-2020 climate action
Chapter 3: Public consultation and summary of stakeholder views
3.1 Approach to consultation
3.2 Summary of stakeholder views
Chapter 4: Australia’s national circumstances
4.1 Australia’s greenhouse gas emissions
4.2 Our emissions are driven by our national circumstances
Chapter 5: Australia’s 2030 target
5.1 Target scenarios
5.2 Metric comparison
5.3 Economic impact relative to others
Chapter 6: Policy options to achieve Australia’s 2030 target
6.1 The cost is manageable under the right conditions
6.2 Existing action to reduce emissions
6.3 Achieving Australia’s 2030 commitments
6.4 Policies to support climate change adaptation
Appendix 1: Target parameters
Appendix 2: International analysis
Appendix 3: Assumptions and limitations of economic modelling
Appendix 4: Sector by sector examination of the Australian economy
List of abbreviations
Glossary
References

Executive summary: a strong and responsible 2030 target

Acting on climate change

Australia has a strong track record on climate change. Australia more than achieved its Kyoto Protocol first commitment period target (2008-2012). We are on track to meet and beat our 2020 target of a five per cent reduction on 2000 emissions levels, equivalent to a 13 per cent reduction on 2005 levels.

As part of an enduring framework to deliver significant emissions reductions the Government is implementing a suite of Direct Action policies, including the $2.55 billion Emissions Reduction Fund which has already purchased 47 million tonnes of emissions reductions. The gains made will be protected by the Fund’s safeguard mechanism which takes effect from 1 July 2016.

The Australian Government has agreed a target to reduce greenhouse gas emissions so they are 26-28 per cent below 2005 levels by 2030. This target will build on Australia’s strong performance and commitments to date. The target has been set following wide public consultation and consideration of the analysis of Australia’s national circumstances resented in this report. It is a progression beyond Australia’s current undertaking.

Climate change is a global issue

Climate change is a global issue. All countries must work together to address it.

The Australian Government is announcing its 2030 emissions reduction target in the context of concluding a global climate change agreement at the December 2015 United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties in Paris. All countries have agreed to formally submit their targets well in advance of Paris.

UNFCCC Parties agreed to a collective goal of limiting global average temperature rise to less than 2°C above pre-industrial levels. The scale of this challenge is over 25 times greater than Australia’s annual emissions. That is why it is vital that the Paris negotiation deliver participation and commitments from the entire international community.

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To have a meaningful global impact, all countries need to act to limit and reduce their greenhouse gas emissions. This means the Paris Agreement must deliver full participation and commitments to take coordinated action by all countries. Australia, together with all UNFCCC members, has agreed the commitments should be appropriate to countries’ national circumstances so they can work alongside plans for strong economic growth, jobs and development.

Australia’s 2030 target is a strong and fair contribution

Australia’s 2030 target is a significant increase on our 2020 target.

Our 2030 target compares well to other developed countries across a range of metrics. Our target delivers one of the largest reductions in emissions per capita and emissions per unit of gross domestic product of all developed countries. In absolute terms our target is in the range of efforts of other key developed countries.

As a prosperous nation we have the capacity to do our fair share. Acting in concert with others means we can contribute while remaining competitive to protect our economy and jobs.

Our target is even stronger once our national circumstances are taken into account. It will require substantial and sustained effort to reach it. Our population is growing faster than most other developed countries (around 1.5 per cent a year, compared to the OECD average of 0.4 per cent). This will push up our emissions.

Electricity generation contributes one third of our emissions. With an abundant endowment of cheap, accessible coal, we rely more heavily than other developed countries on emissions intensive electricity generated using coal. This creates real challenges to reduce emissions without impacts on the economy.

We also export more resources (half of our exports in 2013) and agricultural products

(12 per cent of exports) than many other developed countries. Limiting emissions in these

sectors is difficult using current technology. Just looking at our domestic emissions data

does not capture the fact that our exports, such as liquefied natural gas and high quality

coal, are helping emerging economies grow and lower global emissions by displacing lower

quality energy sources.

A responsible target to deliver on our 2030 commitments

Australia’s 2030 target is responsible. It builds on our previous action and is consistent with

strong economic growth and jobs.

We have shown we can do it. Between 2000 and 2013 the economy grew by nearly

50 per cent and our population grew strongly, while greenhouse gas emissions fell by

two per cent. Australia’s emissions per capita have declined by 19 per cent since 2000 and

by 22 per cent since 2005. Emissions per unit of gross domestic product have fallen by

33 per cent since 2000 and by 28 per cent since 2005.

Our 2030 target is achievable, taking sensible actions that deliver overall benefits or

are low cost. There are accessible and cost-effective abatement opportunities across all

sectors of the Australian economy beyond 2020. Direct action measures by the Australian

Government, State and Local governments and actions by business and the community can

all work together to reduce Australia’s post-2020 emissions.

Under Australia’s target, the Australian economy and wages will continue to grow strongly.

Analysis suggests the economy will grow slightly more slowly than it would without action

by Australia and other countries. The impacts will differ across sectors of our economy.

 

For example, coal exports will be impacted – largely as a consequence of the climate actions

of other countries rather than those of Australia. There are also upsides such as increased

demand for agricultural and services exports.

Ultimately, the costs and benefits of our target will depend on the policies and other

choices we make to keep our economy strong – not just to reduce emissions but to adapt to

changes in global demand. The Government’s reform agenda: lower taxes; less regulation;

investing in small business, productive infrastructure and childcare; and returning the

Budget to surplus will keep our economy strong and jobs growing.

Technology will be critical in achieving low cost emissions reductions. The Government’s

Industry, Innovation and Competitiveness Agenda is implementing a wide range of actions

to build business capability and better facilitate commercialisation by business.

The Government has chosen a 2030 target, rather than a 2025 target, to provide longer

term certainty to business. It will allow a smoother transition given investment timeframes

and the current oversupply of electricity generation in the Australian market. Employment

impacts will be reduced for policy changes introduced gradually, with advance notice so

business and individuals can adjust.

Domestic policy steps to achieve Australia’s 2030 target

The overall design of Australia’s 2030 target policy framework will be considered in detail in

2017-2018, before the end of the current commitment period in 2020. At that time, lessons

from implementation of the Emissions Reduction Fund will be available.

In the interim, the Government will consult on and where appropriate implement initiatives

that have a high prospect of achieving low cost emissions reductions and delivering other

benefits. These include: working with Council of Australian Governments’ Energy Ministers

to develop a National Energy Productivity Plan; improving the efficiency of vehicles; phasing

down hydrofluorocarbons; developing a strategy to improve the utilisation of solar power

and other renewables; and developing a low emissions technology roadmap.

These measures align with other policies delivering significant emissions reductions,

including the Renewable Energy Target which will deliver more than 23 per cent of

Australia’s electricity from renewables by 2020, Minimum Energy Performance Standards

for appliances and the 20 Million Trees programme. These measures are complemented by

other actions including the Green Army programme and the Asia Pacific Rainforest Recovery

Plan.

The Australian Renewable Energy Agency is already supporting around $1 billion of new and

innovative renewable energy, energy storage and energy efficiency technologies.

The Government’s current policy suite is designed to reduce emissions, while improving

energy and agriculture productivity, reducing costs and delivering positive environmental

outcomes. This will be a key consideration in setting policies to achieve the target.

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The Government is further supporting work to improve capabilities and scientific

understanding of climate change impacts and adaptation. This includes the National

Environmental Science programme, National Climate Change Adaptation Research Facility

and through work to improve the environmental health of the Great Barrier Reef.

While the Government will continue to lead Australia’s action on climate change, everyone

has a role to play. Achieving our 2030 target will involve coordinated action at all levels of

government with contributions from business and the community.

The target appropriately accounts for stakeholder views

Australia’s target strikes the right balance for Australia in reflecting the views of the

community, business and other stakeholders expressed during consultation.

Of individuals who made a submission, 73 per cent want the Government to take action

on climate change, whereas 27 per cent do not. Many non-government organisations and

individuals supported targets with far deeper emissions cuts than Australia’s partners and

competitors. It is important that Australia act in unison with other countries. Reducing

emissions ahead of the rest of world could lead to transfer of emission intensive industries

offshore, with minimal difference to global climate outcomes.

Many businesses want a target that balances Australia’s fair contribution with the need

to act in step with trading partners to preserve competitiveness. They want our national

circumstances considered. They also want the investment security of a long-term and

stable target and policy framework to achieve it. For this group, policies are as important

as the target itself and they want to play a part in their development. Non-government

organisations and academic bodies also support clear and predictable targets and policy

frameworks.