On 27 July 2022, the Government introduced the Climate Change Bill 2022.

The Bill proposes to set Australia’s greenhouse gas emissions reduction targets into law. It is similar to climate target laws enacted in other OECD nations and in four of Australia’s states and territories. It does not introduce carbon pricing, emissions trading, or carbon taxation.

Simultaneously introduced was the Climate Change (Consequential Amendments) Bill 2022, which would amend 14 Acts to enable consideration of the greenhouse gas emission reduction targets when specified agencies are exercising powers or performing functions.

Part 1 – Preliminary

The objects clause (clause 3) refers to the temperature-based goals of the Paris Agreement (Article 2.1(a)). The objects are to set out Australia’s emission reduction targets which contribute to global goals of ‘holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels’.

The Bill refers in 16 places to the Paris Agreement, particularly to Article 4. Consequently, it is at least a partial implementation of the Agreement into Australian law. However, the Bill does not express an intent to domestically implement the entire Paris Agreement.

The Bill does not bind the Crown in right of the states or self-governing territories (clause 6) and is explicit that its emission reduction targets are not intended to exclude or limit state or territory legislation (subclause 10(3)).

Part 2—Australia’s greenhouse gas emissions reduction targets

Subclause 10(1) provides for Australia’s greenhouse gas emission targets including:

• reducing Australia’s net greenhouse gas emissions to 43% below 2005 levels by 2030 (paragraph 10(1)(a)) and
  
  
• reducing Australia’s net greenhouse gas emissions to zero by 2050 (paragraph 10(1)(b)).

The Bill states that this targets clause is to be interpreted in a manner consistent with the Paris Agreement and Australia’s current nationally determined contribution  (NDC) (i.e., emissions reduction pledge) under that Agreement.

The Bill does not provide a mechanism by which the targets may be updated via legislative instrument. Instead, it anticipates the making and variation of NDCs directly under the Paris Agreement. Australia is obliged to adjust its NDC at least every five years (Article 4.9).

Subclauses 10(4), (5), and (6) concern the Executive’s power to make or vary NDCs. Subclause 10(4) provides that generally subclause 10(1) does not prevent or limit the exercise of executive power to prepare and communicate a new NDC, or adjust an existing NDC.

Subclauses 10(5) and (6) however provide for limitations to the statement of retained executive power in subclause 10(4). These subclauses implement the so-called ‘ratchet’ mechanism, or principle of progression, in Articles 4.3 and 4.11 of the Paris Agreement. These require that each new NDC represent a ‘progression’ beyond the current NDC, and each adjustment to an NDC ‘must represent an enhancement of Australia’s level of ambition’ (subclause 10(6)).

The Explanatory Memorandum states:

Mirroring the Paris Agreement principle against ‘backsliding’ – that is, the weakening rather than strengthening of ambition over time – subclause 10(5) makes clear that any new nationally determined contribution under the Paris Agreement must represent a progression beyond the nationally determined contribution in place at the time. Subclause 10(6) similarly confirms that any adjusted nationally determined contribution must also represent a more ambitious target than the nationally determined contribution immediately preceding it (page 10).

The implementation of these Paris Agreement protections into Australian law is significant. It potentially makes available judicial review in domestic courts of any new or adjusted NDC on the grounds of compliance with subclauses 10(5) and 10(6). It is relevant to note that the Paris Agreement does not prescriptively dictate or specify how progression is to be defined or determined.

NDCs are not legislative instruments and are therefore not exposed to parliamentary disallowance.

Future Parliaments will have the power to pass amendments to this Bill if passed, and to vary or introduce new emission targets. A future Parliament could also legislate to repeal the Act, or the ratchet provisions discussed above. Although signatories can choose their level of climate ambition, their participation remains subject to the Paris principle of progression (Article 4(3)).

Part 3—Annual climate change statement

Clause 12 requires the Minister to prepare and table in Parliament an annual climate change statement. The statement must relate to:

(a)   the progress made during the year towards achieving Australia’s greenhouse gas emissions reduction targets; and

(b)    international developments during the year that are relevant to addressing climate change; and

(c)    climate change policy; and

(d)    the effectiveness of the Commonwealth’s climate change policies in contributing to the achievement of Australia’s greenhouse gas emissions reduction targets (subclause 12(1)).

The ‘year’ referred to in this clause is a financial year. Each statement must be prepared within 6 months after the end of each financial year and must be tabled within 5 sitting days after preparation.

Climate targets legislation in other jurisdictions such as the UK provides for an alternative model where a climate change statement to Parliament is prepared by a statutory authority rather than by the Minister (Climate Change Act 2008 (UK), section 36). The UK law requires preparation of ‘carbon budgets’, and the statement to Parliament must refer to progress that has been made towards meeting the carbon budgets.

Part 4—Advisory functions of the Climate Change Authority

The Climate Change Authority was established in 2011 by the Climate Change Authority Act 2011 (CCA Act). It has functions including undertaking reviews of existing climate and energy laws (section 11) (principally the Carbon Credits (Carbon Farming Initiative) Act 2011 and the National Greenhouse and Energy Reporting Act 2007). The CCA Act enables it to be given additional functions by other Commonwealth laws (paragraph 11(f)).

The CCA must undertake reviews in accordance with the principles set out in section 12; including that measures to respond to climate change should be economically efficient, environmentally effective, equitable, and should ‘take account of the impact on households, business, workers and communities’. The CCA is already required to have regard to supporting an effective global response to climate change and consistency with Australia’s foreign policy and trade objectives.

Part 4 provides for two new advisory functions of the CCA.

Advice on Annual Climate Change Statements and NDC emission targets

The Bill requires the CCA to give the Minister advice that relates to the preparation of the annual climate change statement (clause 14) and advice on the emission reduction targets that the CCA considers should be included in any new or adjusted NDC (clause 15).

The two clauses are similar but non-identical:

• the CCA must provide advice that relates to the preparation of annual climate change statements (subclause 14(1)). The CCA must provide advice that relates to NDC emission targets on request of the Minister, and the Minister must request this at least once every five years (subclauses 15(1) and (2))
  
  
• in both cases, the CCA must publish the advice on its website (subclauses 14(6) & 15(6))
  
  
• the CCA may conduct public consultation in providing annual climate change statement advice, but is not required to (subclause 14(3)). However, it must conduct public consultation in providing NDC emission target advice (subclause 15(3))
  
  
• the Minister must have regard to advice provided when preparing an annual climate change statement and when considering the emission reduction targets to be included in a new or adjusted NDC (subclauses 14(4) and 15(4)). The Bill states the Minister may have regard to other advice (subclauses 14(5) and 15(5))
  
  
• the Minister must prepare a response to any advice on NDC emission reduction targets received within six months (subclause 15(7)). If the Minister decides not to accept the advice, the statement must set out the reasons for that decision. The Minister is not required to prepare a response to annual climate change statement advice received, but if they decide not to accept ‘one or more material aspects’ of that advice, they must prepare a written statement of reasons (subclause 14(7))
  
  
• the Minister must cause both the response to NDC emission reduction target advice, and any statement of reasons for non-acceptance of annual climate change statement advice to be tabled in both chambers of Parliament – within 15 sitting days and 5 sitting days respectively.

Part 5—Periodic reviews

Part 5 requires the Minister to cause independent reviews to be conducted into the operation of the Act. A review must include public consultation (subclause 17(2)). The first review must be completed within 5 years after commencement of the Act (subclause 17(5)), and each subsequent review must be completed within 10 years after completion of the previous review (subclause 17(6)).

The Minister must table a review report within 15 sitting days of receiving it (subclause 17(4)). 

Conclusion

The Bill is a proposal for climate targets legislation, similar to laws enacted in many OECD nations and in four Australian states and territories.

The Library will publish a Digest on these Bills as soon as possible to assist debate in Parliament; the Digest will further consider the context and issues raised by these Bills.