Chapter 2Key issues
2.1This chapter provides contextual information relevant to the Environment Protection and Biodiversity Conservation Amendment (Climate Trigger) Bill 2022 [No.2] (the bill). This includes outlining the relevant findings of the 2020 Independent Review of the Environment Protection and Biodiversity Conservation Act 1999 (EPBCAct) (the ‘Samuel Review’) and recent developments including the enactment of the Safeguard Mechanism (Crediting) Amendment Act 2023.
2.2This is followed by outlining the key issues raised by inquiry participants about the bill and concludes with the committee’s view and recommendation.
The EPBC Act and relevant findings of the Samuel Review
The EPBC Act and ‘matters of national environmental significance’
2.3The EPBC Act passed the Australian Parliament in 1999 and commenced on 16July2000. It aims to protect and conserve Australia’s environment, biodiversity and heritage, and promote ecologically sustainable development through the conservation and sustainable use of natural resources.
2.4Part 3 of the EPBC Act sets out nine ‘matters of national environmental significance’ (MNES). These include:
world heritage areas;
national heritage places;
wetlands of international importance (listed under the Ramsar Convention);
listed threatened species and ecological communities;
listed migratory species (protected under international agreements);
Commonwealth marine areas;
the Great Barrier Marine Park;
nuclear actions (including uranium mines); and
water resources from unconventional gas development and large coal mining development.
2.5As a general principle, the EPBC Act prohibits the taking of actions that are likely to have a significant impact on MNES without approval from the Minister for the Environment.
2.6Actions that have, will have, or are likely to have a significant impact on a MNES or other protected matter, must be referred to the Minister for a decision on whether the action is a controlled action. A controlled action cannot be taken unless it has been assessed and approved under the EPBC Act.
2.7In deciding whether to approve a controlled action, and what conditions to attach to an approval, the Minister must consider the impacts of the proposed action on relevant protected matters, together with economic and social matters.
2.8Greenhouse gas emissions are not currently an MNES under the EPBC Act. Therefore, proposed actions that have high associated emissions do not necessarily trigger the EPBC approvals process. However, the EPBC Act provides a framework for the assessment and approval of projects, including greenhouse gas emitting projects, that are likely to have a significant impact on MNES and other protected matters, such as a significant impact on a listed threatened species.
Review of the EPBC Act and findings on a climate trigger
2.9The EPBC Act requires an independent review at least every ten years. The second independent review of the EPBC Act, led by ProfessorGraemeSamuel, commenced in October 2019. A final report providing 38 recommendations for reform, was provided to the Minister for the Environment in November 2020, and publicly released in January 2021.
2.10The Samuel Review’s overall assessment of Australia’s primary environmental legislation found:
Australia’s natural environment and iconic places are in an overall state of decline and are under increasing threat. They are not sufficiently resilient to withstand current, emerging or future threats, including climate change.
The EPBC Act is out dated and requires fundamental reform. It does not enable the Commonwealth to effectively fulfil its environmental management responsibilities to protect nationally important matters. The Act, and the way it is implemented, results in piecemeal decisions, which rarely work in concert with the environmental management responsibilities of the States and Territories. The Act is a barrier to holistic environmental management which, given the nature of Australia’s federation, is essential for success.
2.11In relation to MNES, the final report outlined that the review had received a wide range of views on the matters that should trigger an assessment under the EPBC Act. These include climate change, including significant greenhouse gas emissions, and protection of the environment from climate change impacts.
2.12Various contributors to the Samuel Review suggested expanding the EPBC Act to include a ‘climate trigger’. A climate trigger was proposed for various reasons, including a view that Australia’s current emissions reduction policy settings are insufficient to meet our international commitments, and that the EPBC Act does not effectively support adaptive management that uses the best available climate modelling and scenario forecasting to ensure actions taken will be effective in a changing climate.
2.13The Samuel Review concluded that specific policy mechanisms to implement commitments to reduce emissions, and not the EPBC Act, is the appropriate way to place limits on greenhouse gas emissions. It also recommended that proposals assessed under the EPBC Act be required to ‘transparently disclose the full emissions of the development’ as well as ‘explicitly consider the likely effectiveness of avoidance or mitigation measures on nationally protected matters under specified climate change scenarios’.
The Government’s response to the Samuel Review
2.14The Government’s response to the Samuel Review was released in December2022. The Nature Positive Plan: better for the environment, better for business sets out the Government’s commitment to reforming Australia’s environmental laws in response to the recommendations of the Samuel Review and the findings of the 2021 State of the Environment report.
2.15With respect to climate considerations, the Government’s response notes:
The government recognises the risks global warming poses to Australia’s unique ecosystems and the link between climate and biodiversity. We will address this by embedding climate considerations in all roles and functions of government.
In addition to our commitments to reduce national emissions to 43% below 2005 levels by 2030, and to achieve net zero emissions by 2050…the government will integrate climate change considerations, where relevant, throughout national environmental law without duplicating existing mechanisms for reducing greenhouse gas emissions.
2.16Consistent with the recommendations of the Samuel Review, the Government’s Nature Positive Plan does not propose the adoption of a climate trigger. Project proponents will however be required to publish their expected Scope 1 (direct) and Scope2 (indirect) emissions and disclose ‘how their project aligns with Australia’s national and international obligations to reduce emissions’. The changing climate will also be a mandatory consideration in environmental planning approaches, supported by improvements in information and guidance.
2.17The Nature Positive Plan outlines that a package of new national environmental legislation will be released as an exposure draft before introduction into Parliament.
2.18The Department of Climate Change, Energy, the Environment and Water (DCCEEW) conducted consultation on the development of the new laws, with targeted stakeholder workshops in October 2023, and two public webinars held in November 2023.
2.19Public consultation on the proposed changes is open until 30 March 2024, with legislation expected to be introduced later in 2024.
Safeguard Mechanism reforms
2.20The Safeguard Mechanism provides a framework for Australia’s approximately 215 largest industrial emitters to measure, report and manage their emissions.
2.21The Safeguard Mechanism places legislated emissions limits (baselines) on facilities that emit more than 100,000 tonnes of carbon dioxide equivalent each year, which encourages facilities to manage their emissions.
It applies to industrial facilities including in mining, oil and gas production, manufacturing, transport and waste facilities.
2.22The Safeguard Mechanism was first legislated in 2014 and has been in place since 2016. In 2023, the Safeguard Mechanism was reformed through the Safeguard Mechanism (Crediting) Amendment Bill 2023 to require facilities to reduce their emissions in line with Australia’s climate targets. These reforms apply a 4.9 per cent annual decline rate to facilities’ baselines so that they are reduced predictably and gradually over time on a trajectory consistent with achieving Australia’s emission reduction targets of 43 per cent below 2005 levels by 2030 and net zero by 2050.
2.23As part of these reforms, all new facilities will be given baselines set at international best practice levels, adapted for an Australian context. The baselines for new facilities will then decline over time at the same rate as other facilities. This recognises that new facilities have the opportunity to use the latest technology and build world’s best practice emissions performance into their design.
2.24The Safeguard Mechanism Bill passed both houses on 30 March 2023 and came into effect on 1 July 2023.
2.25Notably, different emissions thresholds would apply for the climate trigger bill compared to the Safeguard Mechanism. The climate trigger bill would apply to any new projects that emit over 25,000 tonnes of carbon dioxide equivalent scope 1 emissions in any one year, while the Safeguard Mechanism applies to facilities, both existing and new, that emit more than 100,000 tonnes of carbon dioxide equivalent in a year.
Support for the bill
2.26Submissions received from environmental organisations, community groups, various scientists or scientific bodies expressed broad support for the bill’s objectives, including the need to directly consider climate change in the EPBC Act.
2.27For example, the Humane Society International (HSI) highlighted that in the context of the significant and growing threat of climate change to Australia’s natural environment, ‘the lack of a direct consideration of climate change in the EPBCAct is untenable’ and that a ‘climate trigger will be an important first step in addressing this gap’. The HSI also supported the proposed introduction of a carbon budget for Australia as contemplated in the bill:
Understanding our available carbon budget will help to ensure that Australia’s emissions remain consistent with limiting warming to 1.5°C above pre-industrial levels, and particularly that any new high emissions projects are consistent with that budget.
2.28The Australian Conservation Foundation (ACF) noted that while the Samuel Review did not support a climate trigger on the basis that reducing emissions is best left to other specific Commonwealth policy mechanisms, the ACF’s view remains:
…there is a significant gap in the EPBC Act itself because it does not clearly or explicitly address climate change. There is currently no other Commonwealth policy mechanism which ensures that the climate impacts of new or expanded projects are clearly considered and addressed prior to their construction and operation. ACF considers that ensuring climate change is clearly addressed in the EPBC Act via a climate trigger is a sensible complement to existing Commonwealth policy.
2.29Some submitters emphasised the moral imperative in introducing a climate trigger mechanism and that a failure to include strict emissions allowances represented a failure of duty of care. The Australian Parents for Climate Action (APCA) argued that it is both ‘inconceivable and immoral’ that the EPBC Act does not prohibit development of high emitting projects and that climate change is not designated as a matter of national environmental significance. It further outlined that:
The approval of projects under what is referred to as the drug dealer defence – if Australia doesn’t supply coal and gas to the world market then others will – is not a moral or just reason to avoid applying the Climate Trigger to all projects, whether they are intended for export or not.
2.30Similarly Doctors for the Environment Australia considered the absence of climate change as a designated MNES as indicative that the EPBC Act ‘is no longer fit for purpose’. It further contended that the failure ‘to include strict emissions allowances in an Act which is designed to protect the environment is a fundamental failure of duty of environmental care’.
2.31The Trust for Nature, a dedicated private land conservation agency, argued that the EPBC Act should go further to ensure that impacts of climate change on biodiversity are capable of being a triggering process under the Act, in accordance with international climate goals and national committees.
2.32Professor Penny Sackett, a former Chief Scientist for Australia, outlined that a climate trigger would:
provide a direct means of implementing legislation to achieve the objects of the EPBC Act for ‘what is likely the greatest single threat to the Australian environment, namely climate change caused by greenhouse gas emissions’;
complement other Commonwealth legislation, including the Climate Change Act 2022 and the reformed Safeguard Mechanism;
provide a means to limit or disallow large, new additional sources of greenhouse gas emissions; and
use the existing Climate Change Authority to provide advice on a national carbon budget, aligning with its role under the Climate Change Act 2022.
2.33Similarly, Science & Technology Australia, a peak body for Australia’s science and technology sectors, expressed support for the bill to help achieve Australia’s emissions targets and biodiversity.
2.34The Australia Institute highlighted that the bill could complement other climate measures and would ‘serve as an important backstop to protect the emission reductions of existing facilities under the Safeguard Mechanism by preventing new entrants to the scheme’ noting:
The Climate Trigger Bill would prevent new entrants to the Safeguard Mechanism, protecting both existing facilities from greater emissions reduction requirements, and preventing other sectors of the economy from having to reduce emissions more than they would otherwise, to compensate for less reductions under the Safeguard Mechanism.
2.35A similar view was expressed by Engineers Australia, contending that the bill covers a gap ‘by specifying a liable emissions threshold that is not only harmonised with NGERs [National Greenhouse and Energy Reporting scheme]…but would capture an expected significant number of projects that the SGM [Safeguard Mechanism] currently does not’.
2.36The ACT Government welcomed the bill as a ‘practical measure to address one of Australia’s gaps between commitment and effective emissions reduction on our pathway to net zero’, highlighting that it would ‘allow Australia to measure and demonstrate our progress to net zero emissions and international commitments under the Climate Change Conventions.’ It outlined improvements that could be made to the bill, including expanding the bill to include Scope 3 emissions and increasing the range of thresholds in the bill to include activities with less than 25,000 tonnes of carbon dioxide equivalent Scope 1 emissions per annum.
2.37The Citizens’ Climate Lobby (CCL) Australia, a grassroots advocacy group focused on climate policies, while supportive of the proposed amendments to the EPBC Act, argued that it would be preferable to address fossil fuel emissions at source, noting that ‘[i]t is less efficient to try and prevent them downstream as proposed in the EPBC amendments’:
It requires expensive and time-consuming administrative and regulatory activity by government and industry that would be unnecessary if emissions were addressed at source. It also exposes the decisions of the department and the minister to increased political pressure and interference. Therefore, CCL recommends that in addition to these amendments, an upstream fee be applied to fossil fuel emissions to enable much more efficient and effective emission reductions than would be achieved by the EPBC.
Calls for broader reform of the EPBC Act
2.38A number of submitters advocated for broader reforms to the EPBC Act. For example, Doctors for the Environment Australia considered the concept of a climate trigger in the EPBC Act ‘as a second-best option to a thorough reworking of Australia’s environmental laws’.
2.39The ACF called for fundamental reform of the EPBC Act, including amendments to ensure that ‘climate change is systematically considered and strongly integrated in all decision-making and adequately addressed in the planning functions of the Act’. Trust for Nature supported the inclusion of new triggers for MNES within the EPBC Act including triggers to assess significant land-clearing proposals, guarding of the National Reserve System of protected areas, and protecting ecosystems of national importance that are not covered by the Ramsar Convention.
Opposition to the bill
2.40Submissions from groups such as the Business Council of Australia (BCA), the National Farmers’ Federation (NFF) and the Minerals Council of Australia (MCA) cautioned against a piecemeal approach in addressing these issues, outlining other processes underway including proposed reforms to the EPBC Act following the Samuel Review.
2.41The BCA noted:
Adding a Climate Trigger into the EPBC Act will only serve to further complicate and frustrate much needed EPBC Act reforms. Doing so also risks diverting resources and attention from the protection and restoration of the physical environment and matters of national environmental significance, to focus on an issue that is being separately addressed through other more considered means.
2.42The NFF questioned whether the regulatory burden of introducing a climate trigger would outweigh its benefits, arguing that it is unclear what additional benefit this would have considering existing frameworks and other emissions reduction programs:
A climate trigger would not materially influence the emissions associated with the decisions taken on projects. Therefore, the benefits (or lack thereof) that would be created with the introduction of this proposal would not outweigh the additional regulatory burden that would be imposed. If a proposed project, which would resolve other supply chain issues in Australia, for example a fertiliser plant, is unable to be established, this would be a significant disincentive and a perverse outcome, especially where it may also reduce GHG [greenhouse gas] emissions.
If the intent is to reduce emissions, there is no explanation for what additional benefits a climate trigger would create that would not otherwise be captured under existing frameworks, or other emissions reduction programmes. The NFF suggests that emissions reduction should continue to be considered separate to the EPBC Act and therefore rejects any climate trigger proposal.
2.43The Queensland Resources Council contended that the EPBC Act is not the appropriate mechanism to deliver emissions reduction, outlining the need for a long-term national plan ‘rather than a simplistic new stop-go assessment gate in the EPBC Act’s existing assessment process’.
2.44The MCA, while supporting the industry’s ambition to achieve net zero emissions by 2050, outlined its concerns that ‘[t]his bill would potentially jeopardise the achievement of Australia’s climate targets by introducing mechanisms that successive reviews have found to be counterproductive to emissions reductions’.
2.45Instead the MCA recommended the regulation of carbon emissions under a fit‑for-purpose national policy on climate change, noting that the Government at the time was consulting on the now legislated reforms to the safeguard mechanism to help industry reduce emissions in line with Australia’s climate targets:
The MCA does not support the use of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act) to address Australia’s contribution to climate change as there are more efficient and effective mechanisms than the EPBC Act for regulating carbon emissions. Addressing emissions on a project-by-project basis as part of the approvals process is inefficient and focuses efforts on a narrow set of point sources, and, an isolated approvals-based approach that is disconnected from broader government climate change and energy policy is not an efficient approach to managing carbon emissions.
Furthermore, a climate trigger under the EPBC Act would be unwieldy, likely capturing a large number of activities which would simply require more government, community and industry resources without addressing broader global concerns.
Given the multi-factor nature of climate change and carbon emissions, climate change matters should be addressed through a fit-for-purpose national policy framework – such as the current proposals by the Australian Government on safeguard mechanism reform.
2.46The MCA also argued that the bill could potentially impact on Australia’s ability to achieve and transition to net zero, contending that the bill would ‘constrain Australia’s ability to develop the vital minerals and metals that enable the clean technologies of the net zero future to be deployed’.
2.47The Department of Industry, Science and Resources (DISR) outlined the impacts the proposed bill would likely have on:
the resources industry and the downstream manufacturing sector;
the increase in regulatory burden and compliance costs placed on industry; and
uncertainty about how the bill would operate with existing climate measures.
2.48For example, DISR noted that while the bill would principally affect emissions‑intensive fuel production, it would also impact industry and resources projects, many of which are important for achieving the goals of the Paris Agreement:
The proposed Climate Trigger could disrupt supply chains and discourage further investment in these commodities [critical minerals] – at a time when more investment is needed to guarantee the raw materials needed to achieve the goals of the Paris Agreement.
2.49DISR also highlighted that the proposed regulations appear to remove the Minister for Environment’s flexibility when making decisions under the EPBC Act to consider broader factors such as current demand for products, domestic energy security and the needs of export partners. It also noted that a proposed legislated requirement for information on the emissions associated with a project, and annual assessments for facilities with certain emission ranges, could increase the regulatory burden and compliance costs placed on industry with the potential for duplication of regulatory reporting.
2.50Finally, DISR outlined the interaction with existing climate measures, including the Safeguard Mechanism, and that the proposed bill could risk increasing business uncertainty and duplicating the regulatory burden:
The cornerstone of the Government’s policies for reducing emissions from industrial facilities, which are subject to EPBC Act approval, is the Safeguard Mechanism… Facilities covered by the Safeguard Mechanism will be required to reduce their emissions in line with Australia’s carbon budget, which is calculated as Australia’s share of global emissions consistent with the temperature goals of the Paris Climate Agreement. The Climate Change Authority will report annually on Australia’s progress in keeping within its carbon budget, and emissions reduction will accelerate as needed to accommodate the emissions of any new, large industrial facilities.
Given the Safeguard Mechanism will deliver emissions reduction within Australia’s carbon budget, the proposed regulations risk increasing business uncertainty and duplicating the regulatory burden.
2.51DCCEEW’s submission highlighted the range of mitigation and adaptation measures the Australian Government is implementing to respond to climate change and to support emitters to reduce emissions. DCCEEW’s submission also noted that while greenhouse gas emissions are not currently an MNES under Part 3 of the EPBC Act:
…where a project’s greenhouse gas emissions are likely to result in a significant impact to an MNES or other matter protected under Part 3 of the [EPBC] Act, either directly or indirectly, the project would require assessment and approval under the EPBC Act. This is determined on a case‑by-case basis...
Committee view
2.52The committee recognises the significant and profound impact of climate change on the environment, including past and future emissions of greenhouse gases.
2.53There is general consensus among inquiry participants about the need to reduce Australia’s greenhouse gas emissions, in line with Australia’s Nationally Determined Contribution under the Paris Agreement. The committee supports the need for significant reductions of Australia’s greenhouse gas emissions, and acknowledges the various initiatives of Federal, state and local governments, the private sector, community groups and individuals.
2.54While the committee commends the objectives and intention of the bill, the committee notes a number of significant recent developments since this bill was introduced.
2.55Recent reforms to the Safeguard Mechanism will ensure Australia’s largest emitters gradually reduce their greenhouse gas emissions to help Australia meet its Paris targets, while supporting them to remain competitive in a decarbonising global economy. The Safeguard Mechanism will result in emissions reduction from both existing and new industrial facilities, in line with Australia’s Paris targets. By contrast, the climate trigger proposal outlined in this bill would only deal with emissions from new facilities. If the climate trigger bill is passed, it would duplicate some of the outcomes already underway via the reformed Safeguard Mechanism.
2.56Additionally, the Government’s commitment to fundamental and wholesale reform of the EPBC Act in response to the Samuel Review, will ensure that new proposals’ prospective greenhouse gas emissions are transparent prior to their environmental assessment, including estimates of emissions across the life of a project.
2.57The Safeguard Mechanism reforms, which are now the primary legislative mechanism to reduce greenhouse gas emissions in Australia’s industrial sector, including new entrants, in combination with the greater transparency that will be delivered through the EPBC Act reforms, make the climate trigger bill largely unnecessary.
Recommendation 1
2.58The committee recommends that the bill not be passed.
Senator Karen Grogan
Chair