Towards a climate policy toolkit: special review on Australia's climate goals and policies

31 Aug 2016

The Climate Change Authority is pleased to release the third and final report of its Special Review into the actions or policies that Australia should take to implement outcomes flowing from the historic Paris climate change agreement.

This report is the culmination of nearly two years of research, analysis and policy consideration. It builds on previous reports, released in July and November 2015, that examined the targets Australia should take to the Paris conference and options for the policies that could be adopted to achieve the Paris Agreement emissions reduction goals.

The Authority is recommending that the Government puts in place a policy tool kit that builds carefully on current policies like the Emissions Reduction Fund and the safeguard mechanism, and adopts some key new measures to form a long term and durable solution to Australia’s climate change challenge. The overarching architecture for the toolkit would remain stable to help provide investment certainty while the measures themselves evolve and strengthen over time. The emissions reduction policy toolkit needs to take account of Australia’s climate policy history, be suited to the emissions opportunities and challenges in individual sectors and be able to be scaled up in the future to meet the emission reduction challenges in the Paris Agreement.

That agreement makes it clear that countries’ emissions reductions will need to go beyond their 2025 or 2030 pledges to achieve deeper reductions in the decades ahead, and Australia’s emissions will need to decline much more rapidly in the near future than they have in the past. For the electricity generation sector, the Authority found that a market mechanism in the form of an emissions intensity scheme is the best policy fit.

The Authority is also recommending that an enhanced safeguard mechanism be put in place as an effective, pragmatic and durable way of reducing emissions across a range of industrial, manufacturing and resource sectors. For households, vehicles and buildings, the Authority recommends that energy efficiency standards be put in place or strengthened.

For 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. In this report, as flagged in the Authority’s Special Review final report on targets, the Authority has not sought to provide further advice on emissions reduction targets. Emissions reduction targets are very important parts of the emissions reduction armoury but without effective policy action they will remain aspirational rather than determinative for the way ahead.

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