Download National Climate Change Policy Review 2017

National Climate Change Policy Review 2017
Submission from the South Australian Government
May 2017
A Call to Action from South Australia to the Commonwealth
Government
There is no doubt that climate change is fundamentally altering our environment and provides
our nation with one of the biggest economic opportunities of the 21st century.
The Paris Agreement, signed by over 190 countries and already ratified by over 130, signified
the start of an unstoppable global shift to low carbon economic development.
The South Australian Government has positively positioned South Australia to be at the
forefront of new technologies and investment, to capture the jobs and investment growth as the
nation and the world shifts to a low carbon future.
This global shift provides an opportunity for our nation more broadly to capture those economic
and environmental benefits by taking action, unlocking investment and creating new
employment opportunities.
South Australia’s Low Carbon Economy Experts Panel (Dr. John Hewson, Prof. Frank Jotzo,
Ms. Anna Skarbek) provided advice in 2015 that set out these opportunities in clear terms and
South Australia acted.
The South Australian Government became the first jurisdiction to introduce climate change
specific legislation with the Climate Change and Greenhouse Emission Reduction Act 2007, the
first jurisdiction to introduce a solar feed-in tariff, and we set the ambitious objective of achieving
net zero emissions by 2050.
The South Australian Government has already seen more than $7.1 billion invested in
renewable energy projects in SA from taking decisive action and we’ve recorded carbon
emission reduction of over 8% since 1990 while seeing our economy grow by 60%.
South Australia is calling on the Federal Government to provide clear and committed climate
change policy to ensure Australia meets its obligations under the Paris Agreement and
responds effectively to the challenge of climate change.
The SA Government has demonstrated that economic growth and emission reductions are not
mutually exclusive with the appropriate policy settings.
Our goal to achieve zero net emissions has been taken up by a number of other jurisdictions
within Australia, and world-wide, including through endorsement of the “Under 2 MoU” that was
released at the time of signing of the Paris Agreement.
Businesses around the world, and in Australia, have recognised the implications of climate
change and are acting accordingly, as are the financial institutions whose investments and
insurance products provide the framework in which our businesses operate.
Most recently, Westpac Banking Corporation launched its new Climate Change Action Plan.
One of the nation’s biggest electricity generators and providers, AGL recently announced as
part of its Greenhouse Gas Policy that it would close, by 2050, all of its coal-fired power
stations.
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A recent report by the CSIRO and the Energy Networks Australia identified not only would there
be environmental benefits from an emissions intensity scheme, but consumers could save in the
order of $216 a year on an average household power bill.
The CSIRO, Energy Networks Australia, energy retailers like Energy Australia, Origin, AGL, the
Climate Change Authority, BHP Billiton, Australian Industry Group, National Farmers Federation
and the South Australian Government have repeatedly called upon the Commonwealth
Government to introduce an emissions intensity scheme.
The South Australian Government’s recent energy policy announcement advocated for an EIS
as a way to incentivise more secure, cleaner power into the market.
On the global stage, the G20 Financial Stability Board’s Task Force on Climate Related
Financial Disclosures has been set up in recognition of the risk to global financial stability of the
risks and opportunities of climate change not being incorporated properly in investment decision
making processes.
The Australian Prudential Regulation Authority has recently confirmed that it expects financial
institutions in Australia to take all forms of climate risk into consideration when making their
investment decisions.
The Australian Government must recognise that the implications of climate change go far
beyond the environment and energy portfolios, and reach into every sector of our economy,
requiring action at all levels of government. It is inadequate that these issues are currently
considered only by Environment Ministers at a meeting that does not even have Council Status.
The South Australian Government calls on the Australian Government to introduce climate
change policy as a standing item on the COAG agenda for regular consideration by First
Ministers, together with Energy, Transport and Agriculture Ministers.
Climate change affects all elements of our society and our economy, and requires action at all
levels of Government that is coordinated and coherent.
The Australian Government must act to remove barriers to that transition and create policy that
attracts investment and catalyses innovation.
The Australian Government should:
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make the national response to climate change a standing item on COAG
introduce an Emissions Intensity Scheme across the National Electricity Market
provide strong leadership on behalf of all Australians in tackling climate change
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Just Transition
The South Australian Government’s headline target to achieve net zero greenhouse gas
emissions in the State by 2050, South Australia’s Climate Change Strategy: 2015-2050 included
the aim to ensure a fair and equitable transition to a low carbon economy and the ambition to be
the just transition capital of the world.
More recently, through participation in the Climate Action Roundtable, the South Australian
Government has committed to work collectively with several other Australian jurisdictions on
climate change action and just transition to low carbon societies. This transition is inevitable –
the risk is that failing to plan and manage the transition will have negative impacts on
communities and society, particularly in those areas that are most dependent on the
technologies and industries that will be phased out.
The Australian Government should adopt approaches that ensure the transition to a net zero
emissions economy is well-managed, opportunities are captured, and the impacts on
communities and industries that are most at risk are fully addressed. Investment by the
Australian Government in planning, education and re-training is essential if new industry and
employment opportunities are to be realised – increasing workforce skills provides the best
opportunities for employment and productivity. A well-planned transition also requires a stable
policy framework that enables business to plan for the future with confidence.
Australia’s transition to a clean energy economy provides opportunities for new sustainable and
decent employment not only in the energy sector, but in transport, construction, agriculture and
the services industry. With forward planning and investment in our regions, low carbon
industries and workforce, we can create a more prosperous and diversified economy.
The Australian Government should:

work with states and territories to develop a national framework to transition
Australia to a low carbon economy in a fair and just way.
Adaptation
Australia is already on the front line of climate change impacts, from the Great Barrier Reef
bleaching to South Australia’s increased extreme weather events. Effective policy to adapt to
climatic impacts is a fundamental responsibility of government, and is essential to underpin
Australia’s stainable economic growth in the years to come.
National Governments have a crucial responsibility in this area to support the strategic
development and implementation of adaptation initiatives, and the responsible use and
operation of insurance markets. The South Australian Government is dismayed that adaptation
is completely absent from this Review.
National policy should recognise that adaptation and mitigation are intrinsically linked and
facilitate the setting of short to medium term targets we need to meet to ensure we achieve the
commitments made under the Paris Agreement.
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Further, looking internationally, there are opportunities for Australia to work closely with its
neighbours to invest in their climate adaptation capacity, such as improving the resilience of
communities particularly vulnerable to climate change. Australia can improve its own position by
making the region more able to adapt to impending climate security threats.
The Australian Government should:
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
adopt and fund a strong national policy in respect of adaptation working with States
and Territories to develop a coherent framework for action at all levels of Government
reflect adaptation priorities in infrastructure funding across the country.
RESPONSES BY SECTION IN THE DISCUSSION PAPER
Australia’s Paris Target
The South Australian Government commends the Australian Government for ratifying the Paris
Agreement under the United Nations Framework Convention on Climate Change (UNFCCC).
Strong actions by national governments are crucial if we are to limit global warming to well
below 2°C above pre-industrial levels and thereby avoid most of the predicted climatic changes
that would adversely impact upon Australia.
Australia will need long-term policy certainty to transition to a low carbon economy and meet the
decarbonisation objective agreed in Paris. Australia must have clear emissions abatement
targets, beyond the current 2030 target, that are consistent with international commitments and
expectations.
After an expert review, the South Australia Government has set a state based emissions target
of zero net emissions by 2050. Such a target is consistent with Australia’s commitment in Paris
to stabilise temperature rises to below 2˚C and ambition to contain rises to 1.5˚. South Australia
accepts the expert advice of the Climate Change Authority1 with respect to interim emissions
abatement targets for the national economy and continues to urge the Australian Government to
adopt these as bi-partisan commitments with a longer 2050 goal of zero net emissions.
Considering policy to meet Australia’s current 2030 emissions reduction target must be done in
the context of needing to reach net zero emissions by 2050, and of the commitment made in the
Paris agreement to reviewing targets every 5 years. The Review should therefore inform
preparation of Australia’s long-term low greenhouse gas emissions development strategy which
Parties to the Paris Agreement have been invited to submit to the UNFCCC Secretariat by 2020
and update every 5 years. A national approach is required to ensure the coherence of the
strategy and that progress is being monitored and evaluated effectively.
The South Australian government believes the current approach and policy settings with respect
to the Emissions Reduction Fund and Safeguard Mechanism are not adequate to achieve
Australia’s 2030 targets and beyond in their current form. In accordance with the advice of many
leading economists, implementation of market / pricing mechanisms will likely present the most
1
http://climatechangeauthority.gov.au/reviews
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effective and least cost response required, as well as provide certainty associated with
investments required within the private sector to lead the transition to a low carbon economy.
The South Australian Government calls on the Australian Government to support a national
approach to improving climate science. Improved high resolution atmospheric models, such as
the BOM re-analysis, high resolution Digital Elevation Models for Australia’s coastline should be
considered for this analysis. In addition, the South Australian Government calls for the
Australian Government to share the existing climate science evidence base with the wider
community and to provide national leadership for a community of practice for continuous shared
learnings.
The Australian Government should:
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prepare Australia’s long-term low greenhouse gas emissions development strategy in line with
the Paris Agreement
plan the orderly transition of Australia's essential services to a low carbon future
support a national approach to improving climate science
undertake a full evaluation of the impacts of its existing suite of climate change policies, and
share the evidence base and models with the wider community.
Electricity generation
Successful integration of carbon and energy policy will be crucial to meeting Australia’s climate
change goals while ensuring Australians have access to low cost, sustainable and reliable
energy.
To achieve our emission reductions, our nation will require a high level of renewable energy
generation in the system. A stable policy framework is required to incentivise the investment in
technologies and projects that ensures the stability of the grid and the lowest cost for
consumers.
South Australia’s Climate Change Strategy 2015-2020, is committed to continued advocacy for
a national emissions trading scheme (ETS) across the economy to provide a market-based
mechanism for reducing emissions.
In the absence of an economy wide ETS, the electricity sector is impacted by the lack of clarity
around national climate policy, which is has already caused uncertainty and led to a lack of
investment in new electricity generation. At the same time, unviable coal-fired power stations
are closing across the country and as a result, upward pressure on wholesale electricity costs in
all jurisdictions is being experienced.
The South Australian Government is strongly in favour of an Emissions Intensity Scheme (EIS)
for the electricity sector to drive investment in lower emissions energy sources, and allow an
orderly transition of existing coal-fired power stations.
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An EIS has the broad support of business, industry groups and energy experts. The Finkel
Review’s preliminary report states that “an EIS best integrated with the electricity markets’
pricing and risk management framework, had the lowest economic costs and the lowest impact
on electricity prices”.
An EIS has also been backed in an assessment by the Australian Energy Market Commission
and the Australian Energy Market Operator2 that looked at a range of potential emissionreduction policies, including extension of the existing Large-scale Renewable Energy Target
(LRET) and regulated closure of fossil-fueled generators required to meet Australia’s emissions
reduction target.
Importantly, the report, requested by the COAG Energy Council, found that an Emissions
Intensity Target has the lowest cost and lowest impact on prices relative to the business-asusual scenario and relative to the Extended LRET and Regulated Closure.
The South Australian Government supports clear national policy settings that are needed to
modernise the electricity grid. Continued lack of national leadership will require State
Governments to take policy leadership to meet emission reduction obligations. In addition to an
emissions intensity scheme, complementary measures will be required to meet affordability,
reliability and security objectives.
In the absence of the necessary reforms required at the national level, the South Australian
Government is implementing its own Energy Plan. The State is taking charge of its energy
future to ensure a reliable power supply, putting downward pressure on prices, supporting job
creation and in the long term, becoming more self-reliant and in control of its power supply.
Implementation of this plan is already underway.
South Australia’s electricity system is transitioning to a low carbon future already. Investment in
renewable energy has seen more than $7.1 billion invested in the State. This investment has
been driven by the national Renewable Energy Target (RET), as well as a regulatory
environment established in South Australia attracting this investment. Renewable energy is cost
competitive with other forms of new electricity generation, driven by significantly falling costs of
solar PV and wind generation, and more recently, declines in energy storage such as battery
technologies.
Regulatory frameworks of the National Electricity Market have been slow to adapt to the needs
of a power system transitioning from mostly large centralised fossil-fuel powered generators to a
more diverse mix of generation and customer requirements.
Domestically, the bulk of renewable energy capacity to date is wind generation and rooftop solar
photovoltaics. More recently, a significant interest is being shown in large-scale solar PV
systems and energy storage such as pumped hydro and battery storage to support the
integration of variable sources of renewable energy, improving energy reliability and security.
2
Refer http://www.aemc.gov.au/Markets-Reviews-Advice/Integration-of-energy-and-emissions-reduction-poli,
released on 9 December 2016.
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Australia’s climate change and energy frameworks should not include barriers to new
technologies participating in the transition of our energy supplies
Currently technical standards and markets have been designed based on conventional power
systems and they need to urgently adapt to respond to the energy sector transition. Clear
technical standards are important for having a secure and reliable power system. Standards
should be set to accommodate a full range of potential technological solutions at all levels of the
power system. It is also important to recognise that markets are required to deliver the most
economically efficient solutions to meet technical standards.
In addition, the South Australian Government firmly believes that better interconnection between
the National Electricity Market (NEM) regions will be required to support the transition of our
energy supplies. As renewable energy generation across the NEM increases and power system
security services become scarcer, there will be a greater need for jurisdictions to share the
services which are available. Greater interconnection will provide for geographic diversity in
these facilities which will help address variability issues.
The Australian Government should:
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adopt a national Emissions Intensity Scheme (EIS) for the electricity sector to drive investment
in lower emissions energy sources, and allow an orderly transition of existing coal-fired power
stations out of the market.
support the development of the necessary regulatory and market frameworks to enable
inertia and fast frequency response service markets to exist in the NEM.
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Households, small to medium-sized and enterprises and the built environment
Whilst there has been significant action with regard to driving energy efficiency upgrades in
larger commercial buildings, energy efficiency opportunities associated with smaller scale
commercial and residential buildings need to be further explored. The South Australian
government is committed to working with other jurisdictions further to develop improvements to
energy efficiency measures in the National Construction Code, and to improving national
appliance standards that will have energy efficiency benefits for buildings, and welcomes any
efforts to accelerate these discussions.
The Commercial Building Disclosure (CBD) Program currently requires energy efficiency
information to be provided in most cases when commercial office space of 1000 m² (from 1 July
2017) or more is offered for sale or lease. Consideration could be given to decreasing the
minimum office space below 1000m² to further improve energy efficiency information.
In terms of energy efficiency requirements for new buildings, it is understood that revisions to
the National Construction Code in 2019 will focus on increasing the performance requirements
for commercial buildings. The South Australian Government considers there is an opportunity to
also review residential buildings requirements, particularly for Class 2 buildings (Apartments).
The Greenhouse Energy Minimal Standards (GEMS) programme under current settings will
reduce emissions by up to 29 Mt CO2-e to 2030. The South Australian Government considers
that additional emissions reductions could be realised by expanding and accelerating the range
of products under GEMS. For example, South Australia requires low greenhouse gas emission
water heaters to be installed when replacing old water heaters in most situations, such as highefficiency gas, solar or electric heat pump water heaters. These requirements have been in
place in South Australia since 2009 and are an important part of the Government of South
Australia’s efforts to lower greenhouse gas emissions from the residential sector. Requirements
such as these could be applied more broadly across Australia. South Australia also believes
that regulatory processes under the GEMS scheme could be considerably streamlined to
improve the efficacy of the scheme. It is also important that greenhouse abatement is assigned
a value in cost benefit analyses under the GEMS scheme.
The Australian Government should:
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through the CBD Program, consider decreasing the minimum office space below 1000 m² to
further improve energy efficiency information.
enable residential buildings requirements, particularly for Class 2 buildings (Apartments), to
be reviewed through revisions to the National Construction Code
expand and accelerate the range of products under GEMS
streamline the regulatory processes under the GEMS scheme to improve efficacy
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Resources, manufacturing and waste
The waste industry is a significant sector of the economy and contributor to greenhouse gas
emissions. In South Australia it has an annual turnover of approximately $1 billion, contributing
$500 million to Gross State Product (directly and indirectly) and employing approximately 4,800
people.
National Waste Policy suggests that the waste sector will contribute greenhouse emissions of
around 15 million tonnes of carbon dioxide equivalent per year, of which approximately 11
million tonnes is from landfill. As well as reducing methane emissions from landfill, collecting
and recycling materials can save greenhouse gas, energy and water. Recycling also generates
significantly more jobs than landfill disposal. The recently increased waste levy in South
Australia provides a strong price signal to the market, assists in diverting waste from landfill and
into recycling and productive use.
The South Australian Government considers that the ERF has a strong role to play in the
achievement of emissions reductions in the waste sector. To facilitate this, the regulatory
additionality requirement under the ERF should not disadvantage States that are forerunners of
adopting stricter environment standards and emission reduction measures. For example, in
relation to landfill gas extraction, in South Australia all modern large landfills are required to
manage landfill gas as part of the Environment Protection Authority license conditions.
It is important that the development of ERF methods should take into account and complement
State’s relevant policy objectives. For example, the South Australian Government supports
efficient energy recovery from residual waste and niche waste streams only and believes that
energy from waste should support and not disregard any viable options for higher value uses of
waste feedstock materials.
Food waste is a significant contributor to waste streams in Australia and there is continued effort
in South Australia in increasing waste diversion from landfill, in particular food/organic waste
diversion. Food waste contributes significant amounts of greenhouse gas emissions, both at the
end of its lifecycle when it produces methane if disposed to landfill, and also as a result of the
lost embodied resources. There are a number of initiatives currently underway in South
Australia which contribute to food waste reduction and diversion from landfill. Despite South
Australia’s efforts, a 2009/10 food waste pilot study identified that 40-50% of residual waste in
household waste bins was food and other organics, while segregation of commercial food waste
collection is not the industry norm.
Consequently, the South Australian Government supports the development of a National Food
Waste Strategy which is currently led by the Australian Government, which is aligned with
climate change and emissions reductions objectives. Clearly articulated food waste reduction
targets, measurement and reporting methodology and funded programs assisting with the
implementation of the Strategy can help to achieve further food waste diversion from landfill and
the associated emissions reductions.
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The Green Industries SA Act 2004 has legislated the waste management hierarchy as one of
the guiding principles for the management of Waste in South Australia.
South Australia’s Waste Strategy 2015-2020 outlines the South Australian Government’s high
level policy position on waste to energy and believes that efficient recovery of energy from
residual waste (i.e. wastes that are not able to be reused and recycled) has a valuable role to
play in both diverting waste from landfill and resource recovery. Any policy framework around
energy from waste should support and not disregard any viable options for higher order
beneficial uses and have regard to impacts to businesses and supply chains that compete for
the same feedstock materials, such as the composting industry.
The concept of ‘circular economy’ is where economic growth is decoupled from consumption of
finite resources and is a self-sustaining and closed loop system driven by renewable flows and
an imperative to keep material resources in use, or ‘circulating’ for as long as possible.
Economic growth is a fundamental objective of the concept of circular economy while producing
no or minimal waste and pollution, by design or intention. National climate policy should
consider embracing a circular economy business model given its benefits, including job creation
and significant contribution to reduce greenhouse gas emission and energy use.
The Australian Government should:
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take into account and complement State’s policy objectives, e.g. hierarchies for waste
management, to avoid perverse outcomes from policy development regarding energy from
waste.
consider adopting a circular economy business model
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Transport
The South Australian Government recognises the importance of acting to reduce transportrelated emissions, initially to stabilise levels towards achieving Australia’s 2030 emissions
reduction target. While recent political discussion has focused on the energy sector, transport
emissions make up a significant percentage of Australia’s emissions which will require changes
over time to transport systems, vehicle fleets and commuter behaviour.
South Australia’s Integrated Transport and Land Use Plan (2015) describes many of the future
investments needed to improve transport system efficiency and to reduce emissions. The
Government has committed to an electric bus trial and is investigating other low carbon bus
technologies for future use in the fleet.
Collectively these transport measures can also achieve a substantial mode shift from high
emitting private vehicle transport to clean, quiet low emission public transport and zero emission
active transport forms. The application of 100% renewable energy to electrified public transport
services, will enable South Australians to undertake much of their daily travel needs free of
emissions.
Public procurement provides a strong policy lever for intervention at all levels of Government.
As such the South Australian Government is revising its current policy for fleet procurement to
increase the share of low emission vehicles, and urges the Australian Government to consider
its own fleet operations in this light.
The South Australian Government commends the current work of the Australian Government’s
Ministerial Forum on Vehicle Emissions and strongly supports the introduction of a bold new
Fleet Fuel Efficiency Standard as a means to rectify the current very poor emissions
performance of the Australian light vehicle fleet. This is critical to ensuring that the Australian
market is supplied with the most fuel efficient vehicles, thereby ensuring that our energy
productivity and emissions performance eventually aligns to leading OECD countries. This will
also be important to avoid Australia being dumped with models that have been regulated out of
other markets. The fact that this can be achieved at a substantial net saving to Australian
consumers through reduced fuel costs should be appreciated.
Under the Carbon Neutral Adelaide initiative with the Adelaide City Council, South Australia has
set a goal for hybrid and electric vehicles to be the preferred form of vehicle travel in the
Adelaide CBD within a decade. Achieving this goal will require the ready supply of affordable
electric vehicles across all vehicle classes. While this now seems a real possibility for European,
American, Japanese and particularly Chinese auto markets from as early as 2020 with major
auto manufacturers such as VW and Daimler-Benz announcing their forward electric vehicle
plans, Australia risks trailing badly in adoption without a significant change in national policy.
Given that motor vehicles have an average life of about 20 years on Australian roads, the early
adoption of electric vehicles will provide for ever increasing emission savings during their life as
the electricity grid is de-carbonised.
South Australia has demonstrated its own commitment to reducing vehicle emissions through
procurement. In 2016 an Expression of Interest was conducted for the supply of low emission
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vehicles (LEVs) for Fleet SA. Although limited by the scarcity of models in the Australian
marketplace, a target of 30% LEVs has been set for 2019. We are also considering ways to
increase the number of plug-in electric in the fleet as well as trials of hydrogen fuel cell vehicles
in the fleet.
The Australian Government’s Green Vehicle Guide is commended as a means of providing
factual information to both consumers and corporate fleets on low emission vehicles. The Clean
Energy Finance Corporation (CEFC) Fleet Programs are acknowledged, but their level of
promotion, incentive and awareness in South Australia is questioned. We suggest that these
programs, together with the Luxury Car Taxation (LCT) measure be given stronger effect for
zero emission vehicles as they mostly support the uptake of marginally more efficient diesel
vehicles which do not contribute to the step change in technologies required by the long term
emissions reduction objectives.
The South Australian Government also believes that bioenergy and biofuels have a role to play
in the future of Australia’s transport sector, particularly for heavy vehicles, and urges the
Australian Government to maintain policy measures supporting the development of next
generation biofuels and bioenergy technologies.
Rather than a threat, we see significant economic development opportunities in the transition to
a low carbon economy including the transport sector. We believe the greatest gains will be
achieved by acting boldly and early to identify and exploit competitive advantages. For example,
our low carbon, high renewables-based electricity supply makes South Australia a desirable
location for auto manufacturers to trial their low emission technologies and for studying the
integration of their vehicles into a low carbon grid. We see opportunities for research and
innovation, attracting investment and creating jobs.
The Australian Government should:
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utilise the new Fleet Fuel Efficiency Standard and other policy means to incentivise the early
introduction of zero emission vehicles (plug-in electric and hydrogen fuel cell vehicles) into
Australia. This could be achieved by a system of ‘Super Credits’ under the Standard, purchase
incentives and/or relief in taxation regimes (FBT, LCT and GST) that are unfavourable to high
purchase cost, but low running cost zero emission vehicles.
explore the costs and benefits of a biofuels mandate (as per NSW/QLD) at a national level.
consider collaboration with States and Territories in the procurement of low emission
vehicles.
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Land and Agriculture
The 2016 modelling and analysis of Australia’s abatement opportunities report to the Australian
Government Department of the Environment found improved land management and improved
low emissions farming practices to be by far the largest single carbon abatement potential group
in Australia achieving its 2030 targets. If this opportunity is to be realised under the ERF, the
Australian Government should consider considerable investment in the timely development of
further specific abatement methods.
In addition to the carbon benefits of land sector abatement, there are also significant
opportunities to positively contribute to the environment, primary industries, regional and
indigenous community development. South Australia has been researching new science in Soil
Modification techniques and demonstrated through the New Horizons program that we can
significantly increase crop production (between 70 to 200%) and sequester large amounts of
carbon.
South Australian and Australian Government officers have been collaborating on new
methodologies, in particular soil carbon. This requires significant research and policy input and
can take years to develop a single approved method. These ERF development activities need to
be resourced and expedited if the land sector is to contribute this potential.
The high cost of participation in the ERF for farmers and other land managers has been at least
partially addressed by aggregators, but this has resulted in around half of the cost of a project
often going to the aggregators. Any modifications that can make project development and
administration more cost effective would contribute to better take-up.
Making it as easy as possible for landholders and their partners to deliver high volumes of
emissions abatement, while maintaining the credibility of the abatement in accordance with
international standards is a major challenge, however South Australia sees opportunities for the
Australian Government to enhance supply of abatement via such activities as:
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targeted extension investment;
long-term policy stability that fosters gradual familiarisation and expanded take-up by
project proponents;
provision of key data and knowledge tools to compliment project proponents and
extension efforts; and
refinement of ERF methodologies and the development of new methodologies which
facilitate participation by the land and agriculture sector.
There is considerable scope to explore cross-program funding leveraging and enhanced
outcomes that could arise from the better integration of National NRM, water, agricultural and
climate change policies, which are set out in South Australian Natural Resources Management
Investment Strategy 2016. The South Australian Government would welcome a further
discussion of this approach of bringing together stakeholders from agriculture, mining,
environment and community sectors to deliver on cross-sectoral NRM objectives such as
climate change with the Australian Government.
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Further benefits from emissions reduction activities beyond carbon abatement can be realised
through greater recognition of co-benefits such as improved soil, indigenous employment,
improved water management. This could be done by enhanced investment in extension
activities that favour ERF participation by proponents that typically deliver benefits in addition to
emission reductions. Furthermore, potential negative impacts, for example on ground water, can
be minimised by ensuring the appropriately valued, full consequences of carbon abatement
strategies are included in the assessment of opportunities.
South Australia intends to explore this further through a 12-month research project about to
commence with the Goyder Institute for Water Research. We would welcome the opportunity to
collaborate with the Climate Change Authority and/or Australian Government departments to
leverage our collective resources/investments.
All policies in all sectors have consequences beyond those they are aiming to impact; some of
these can be positive, others are negative. In the case of climate change, these impacts can be
wide ranging, unpredictable, and can vary in both magnitude and direction. Any anecdotal
evidence of relationships between climate change policy and other economy wide indicators
needs to be considered within a rigorous framework before the contribution of climate change
policy, amongst other influences, can be isolated and quantified. It would also be necessary for
reviews of the impacts beyond emissions of climate change policies to be considered in
conjunction with the evidence of the impact of these policies on emissions.
The Australian Government should:
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modify existing and develop new methodologies which better match South Australia’s
management practices, so as to increase South Australia’s involvement in the ERF.
develop and invest in a targeted extension program aimed at increasing awareness and
participation in the ERF.
consider co-investing in the Goyder Institute for Water Research sequestration projects.
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Research, development, innovation and technology
The principles of innovation and development which should underpin Australia's climate change
policy mean it should align broadly with the Australian Government's current Industry Innovation
and Competitiveness Agenda and National Innovation and Science Agenda.
The South Australian Government recognises that innovation drives growth, sustainability and
diversification for South Australia’s businesses and the broader economy. South Australia is
undergoing an economic transformation – moving away from traditional manufacturing towards
high value-added, sophisticated activities that will transform our economy, generate new
investment and create the jobs and industries of the future. This equally applies to the
Australian economy.
To support this transition, the South Australian government has released its Innovation for Jobs
Statement, including supporting initiatives such as the $60 million South Australian
Commercialisation Fund and Future Industries Institute. The government is also supporting
innovation in the South Australian energy market through the $150 million dollar Renewable
Energy Technology Fund, supporting next generation technologies, announced as part of the
SA Energy Plan.
The Australian Government has an important role to support innovation, which will be crucial if
Australia is to capitalise on the opportunities associated with the development of new industries
and jobs as part of the inevitable transition toward a low carbon economy. The South Australian
Government is a strong supporter of the role of the Australian Renewable Energy Agency
(ARENA), Clean Energy Finance Corporation (CEFC) and the Commonwealth Scientific and
Industrial Research Organisation (CSIRO) in this area. It is recommended that support for
existing policy and funding commitments as identified in the discussion paper remain stable and
provide certainty into the future. It is also essential that Australia’s innovation, R&D and
commercialisation agenda strategically align, with the aim of achieving Australia’s emission
reduction targets and future economy direction.
For instance, South Australia identifies the global growth of the hydrogen economy, particularly
in Asia, as an opportunity to support the development of new decarbonised energy supplies and
transport fuels, including the generation of hydrogen from clean sources of renewable energy
(through electrolysis) and export of this fuel as an alternative to coal and natural gas. The South
Australian Government is supporting the development of a Hydrogen Road Map to identify the
economic feasibility of green hydrogen as a future opportunity, and recommends that the
Australian Government supports the further development of such hydrogen technologies.
Through support from ARENA and the South Australian Government, Muradel in South
Australia’s mid north is demonstrating the potential for the development of advanced biocrudeoil production from renewable and organic based feedstocks. If successful, the
commercialisation of green crude could see substantial emissions reduction through the use of
alternate fuels in the transport and aviation sector. The ability to export this technology has
global relevance.
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The South Australian Government also acknowledges the positive work being undertaken by
CSIRO including the establishment of CSIRO’s Centre for Hybrid Energy Systems (CHES) in
Victoria and its Energy Centre in New South Wales – incorporating its Renewable Energy
Integration Facility (REIF) and Stored Energy Integration Facility (SEIF). The government is
progressing discussions with CSIRO on a longer term strategic partnership associated with this
type of research. Noting the relatively high share of renewable energy technologies in place in
South Australia, combined with the range of measures in the recently announced South
Australian Energy Plan and the potential for significant next generation technology adoption to
support improved electricity grid security and reliability, South Australia is ideally placed to
provide a cutting edge innovation environment and lead Australia’s transition to a low carbon
economy.
In addition, Australia’s agriculture is highly exposed to climate change due to being weather
dependent. Research into farming systems and adaptation is essential. The Research and
Development corporations (e.g. GRDC) are taking up the challenge of climate change
adaptation. Continued research and development in the agriculture sector is essential for
sustainability of this industry.
The Australian Government should:


ensure that support for existing policy and funding commitments as identified in the
discussion paper remain stable and provide certainty into the future.
ensure that Australia’s climate, innovation, R&D and commercialisation agendas strategically
align, with the aim of achieving Australia’s emission reduction targets and future economy
direction.
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International units
The South Australian Government recognises the role that offsets have to play in achieving
carbon neutral objectives. It is important that Australian jurisdictions work to achieve their
offsetting objectives where feasible within Australia. The South Australian government aims to
foster the further development of an offsetting industry within South Australia to enable
Australian businesses and jurisdictions to meet their offsetting goals with local projects where
possible. The opportunities to realise co-benefits for the wider economy from offsetting and
sequestration projects represent a wider public value than the pure carbon value. The role of
international units is well recognised in the Paris Agreement. The European Union has adopted
a policy under which its baseline target for 2030 of a 40% reduction in greenhouse gas
emissions from 1990 levels should be met exclusively through ‘domestic’ mitigation measures,
but achieving a target beyond 40% could see the use of international units. This model should
be considered by the Australian Government, which could adopt a policy of achieving 26%
reductions domestically, but being open to the use of international credits in going to 28% or
beyond that.
The Australian Government should:

only use international credits to achieve reductions beyond the basic 26% target.
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