Vic climate law: A tough Act to follow?

Pundits are scratching their heads about what may come out of the review currently underway into Victoria's Climate Change Act. The Act was passed with the support of the Coalition when it was in Opposition, but they have been moving backwards on their climate commitments ever since unexpectedly taking government 12 months ago.

The Victorian Act contains many groundbreaking provisions, including a legislated target for a 20 per cent reduction in greenhouse gas emissions by 2020; powers for the EPA to control emissions levels and enter into voluntary agreement with businesses; a requirement for climate consequences to be considered by public service decision makers; reports on adaptations strategies every four years; and a review of climate science every two.

The first review of climate science is due on December 13, but there is little sign that substantive work is underway to comply with the Act.

The Baillieu government established the Climate Change Act Review in late October and submissions were due by Monday 28 November. The review is being conducted by a respected former Treasury official, Dr Lynne Williams, but the staff all come from government departments and there is little to suggest it will be independent. The terms of reference and a description of the review are available here.

The need for such a Review was foreseen by the former Brumby Labor government, which included in the original Act a requirement for such a review when the Commonwealth legislation was finalised. The question is whether this will now be used as an excuse to gut the Act, or whether it will simply be fine tuned to reflect the federal carbon price scheme.

The biggest issues will be the 20 per cent emissions reduction target (which the Baillieu government now describes as “aspirational”) and the overlaps between state and federal renewable energy programs, which have sparked a war of words between federal climate minister Greg Combet and state minister Ryan Smith.

The difficulty for the Baillieu government is that they were strongly on the record, prior to the election, as supporting the 20 per cent target and the general objectives of the Act. For example on September 4, 2010, The Age reported:

“Responding to a series of questions from The Age, Mr Baillieu committed a future Coalition government to ambitious cuts to Victoria's carbon emissions should he win at November's state election. The Opposition has backed the government's target of reducing emissions by 20 per cent of 2000 levels over the next decade, in stark contrast to the 5 per cent target of his federal counterpart Tony Abbott.”

This statement was never withdrawn or amended prior to the election and was the policy on which the government was elected. The then Victorian shadow minister for environment and climate change, Mary Wooldridge, in her contribution to the debate on the Climate Change Bill (Hansard August 12, 2010) said:

"The Coalition believes we need action on climate change. It needs to be accepted on a global level, it needs to be driven on a national level, it needs to be acted on at state and local level, and we all need to be part of this. We support efforts to move to a low-carbon environment and we support actions which help Victorian families and businesses to achieve positive outcomes on this front. For these reasons, we are not opposing the bill."

The major debate will be over the 20 per cent Victorian target which appears out of alignment with the federal target for a 5 per cent reduction – seemingly the sole point of agreement between the federal Labor and Coalition parties.

However, the case for keeping the higher target is strong, given Victoria makes a disproportionate impact on Australia's total carbon emissions due to its heavy reliance on brown coal-fired electricity generation; and its significant level of interstate export of electricity. Brown coal-fired power plants are also the most readily reducible source of greenhouse emissions – simply because they are so inefficient.

The replacement of the 1600MW Hazelwood plant, alone, with renewable energy would cut 16 million tonnes a year, or 13 per cent of Victoria's emissions, of 121 million tonnes a year.

A 20 per cent reduction is therefore eminently achievable, given the federal government's commitment to fund the retirement of 2000MW of brown coal-fired power – mostly in Victoria. Other Victorian sources would only have to be reduced by around 8 million tonnes to achieve this target.

The most criticism from industry was directed at the special powers given to the EPA. The concerns were mostly based around the objections of one group, who incorrectly interpreted the power given the EPA as something broad and unusual.

The value of the EPA being able to determine maximum emission levels is demonstrated by the vexed question of how to approve future uses of brown coal. Those committed to banning any future use of brown coal are effectively seeking a blanket ban on future development in the Latrobe Valley. Only by establishing acceptable emission standards through the EPA can new power station proposals, using clean coal technology or carbon capture and storage, be effectively regulated and approved.

The Victorian Act contains a lengthy section dealing with carbon sequestration rights in forestry on public land. This is complementary to the federal government's carbon farming provisions, which provide an incentive for carbon sequestration through agriculture and forestry on private land.

This is also potentially fertile ground for the Coalition's direct action plan, which has staked its policy heavily around soil carbon.

The timing for completion of the review is unclear, but it must be tabled in Parliament within 10 sitting days – so the probability is that it will not surface until the second quarter of next year and any legislative amendments would follow from there. The government has the numbers to put any amendments through both Houses – but the public reaction to direct contradiction of its pre-election stance may stay its hand.