Climate changePurpose: Develop and implement a national response to climate change

Reduce Australia’s greenhouse emissions and support adaptation to climate changeThe Department helps to develop and implement a national response to climate change through policies and programs that reduce emissions by boosting energy productivity, reducing waste, increasing renewable energy and driving innovation. The Government’s policies are addressing climate change while helping to reduce costs for households and businesses.

Emissions Reduction Fund

The Emissions Reduction Fund provides incentives for emissions reduction activities across the Australian economy through crediting, purchasing and safeguarding reductions. As at 30 June 2016, the Emissions Reduction Fund had contracted 143 million tonnes of emissions reductions over three auctions at an average price of $12.10 a tonne. The safeguard mechanism, introduced on 1 July 2016, will ensure that emissions reductions that the Government has purchased are not displaced by significant increases in emissions above business-as-usual levels elsewhere in the economy. This mechanism requires Australia’s largest emitters to keep emissions within baseline levels. It will cover around 140 large businesses that have facilities with direct emissions of more than 100,000 tCO2-e a year. This represents about half of Australia’s emissions.

During 2015, the Department established the legislative framework so that the safeguard mechanism could begin operating from 1 July 2016. The National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 became law in October 2015. Its timely passage was made possible by broad and effective consultations with other government agencies, interested businesses and members of the community.

Emissions reduction targets

Australia is on track to meet its 2020 target reducing its emissions to five per cent below 2000 levels by 2020. At the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2015, Australia committed to reduce its emissions to 26–28 per cent below 2005 levels by 2030.

Renewable Energy Target

The Renewable Energy Target is designed to reduce emissions of greenhouse gases in the electricity sector and encourage additional generation of electricity from sustainable and renewable sources. It works by creating a market that provides financial incentives to both large-scale renewable energy power stations and the owners of small-scale systems. Every megawatt hour of energy they generate from a sustainable or renewable source creates a certificate that they can sell to electricity retailers, which then sell the electricity to householders and businesses. The electricity retailers have legal obligations under the target to surrender certificates to the Clean Energy Regulator, in percentages set by regulation each year.

International engagement

The Department leads Australian negotiations on land sector issues through the UNFCCC and builds support for rainforest recovery efforts as well as other activities. Australia has internationally

recognised expertise in estimating greenhouse gas emissions from the land and forest sector. The ability of countries to accurately measure, report and verify land sector greenhouse gas emissions will support efforts to slow, halt and then reverse vegetation loss across the Asia-Pacific region. We shared our emissions accounting expertise through a range of successful capacity development projects in 2015–16.

Through the Department, Australia is contributing to the Global Forest Observations Initiative by developing methods and guidance documentation for measurement, reporting and verification capacity building to reduce emissions from deforestation and forest degradation and to foster conservation, sustainable management of forests and enhancement of forest carbon stocks (see the case study ‘Global Forest Observations Initiative’ on page 64).

International capacity development projects supported by the Australian Government

System for Land-based Emissions Estimation in Kenya (SLEEK): The SLEEK Program is allowing the Government of Kenya to implement a measurement, reporting and verification system for the land sector, enabling emissions reporting to the UNFCCC. The system has broader application for natural resource management and can inform improvements to agricultural productivity. Australia has been involved in the program’s design and delivery since March 2012. The system has been functional and under full ownership of the Kenyan government since May 2016. In July 2015, the SLEEK Program Management Unit was established in the Kenyan Ministry of Environment and Resources. The unit will have ultimate responsibility for the administration of all aspects of SLEEK. During 2015–16, day-to-day responsibilities were transferred from the implementing partner to the unit.

www.sleek.environment.go.ke

Indonesian National Carbon Accounting System (INCAS): Australia has helped the Indonesian government to successfully develop a national land sector accounting system consistent with international best practice for emissions measurement, reporting and verification. Indonesia now has a world-leading forest monitoring system that informs the development of forest conservation policies and facilitates international reporting, including the submission of land sector emissions reports to the UNFCCC. INCAS was officially launched at the Global Landscapes Forum side event at the Conference of Parties to the UNFCCC in Paris in December 2015 and was endorsed by Indonesia’s Minister of Environment and Forestry.

www.incas-indonesia.org

South African measurement, reporting and verification capacity development: Australia has helped South Africa to develop a strategic plan to measure, report and verify its land sector emissions. This is allowing South Africa to fulfil its UNFCCC reporting requirements, undertake domestic mitigation actions and participate in future carbon market mechanisms. The strategic plan was finalised in February 2016, and the Department is supporting its initial implementation until March 2017.

The Department has begun bilateral cooperation with China and Thailand to help with their capacity for greenhouse gas emission measurement, reporting and verification systems. Robust systems will be essential for the successful implementation of the Paris climate change agreement.

Climate change adaptation

The Department supports research and produces practical information and tools for businesses, governments and communities to help them identify climate change impacts and appropriate actions they can take. Our climate adaptation work links closely with our environmental science

and research enabling activity (see pages 82–86). This work improves our understanding of climate change and promotes informed decision-making.

For example, we are working with the National Climate Change Adaptation Research Facility to develop a coastal climate risk management tool that will provide local governments and communities in the coastal zone with the skills, information and tools to support effective decision-making. We publish methodologies that help Australian businesses and households to take practical, direct action to improve energy efficiency and save money on their electricity bills.

In December 2015, the Australian Government released its National Climate Resilience and Adaptation Strategy. This strategy sets out how Australia is managing climate risks for the benefit of the community, economy and environment. It identifies a set of principles to guide effective adaptation practices and resilience building, and outlines the Government’s vision for the future. As part of the strategy, the Department has:

established a Commonwealth interagency working group to consider cross-cutting risks and opportunities arising from climate change and natural disasters and to lead future consultation with business and communities about building resilience and adapting to climate change

engaged the Environment Institute of Australia and New Zealand to implement the Learning to Adapt: National Climate Change Adaptation Professional Development Program. The course was delivered in three modules over three days during April, May and June 2016 and attracted strong interest from Commonwealth, state, territory and local government representatives. An action-learning approach whereby participants volunteer projects and conduct them in the workplace context has encouraged peer-to-peer learning and the development of new communities of practice.

The Climate Change in Australia website, developed in collaboration with Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology, provides comprehensive technical and regional reports, a wealth of data, decision-making tools and other resources. Between January 2015 and February 2016, the website received over 120,000 unique site visits and attracted over 800 registered users. Feedback on the value of the reports and the projections of future climate on the website indicated broad use by a variety of research users and decision-makers.

www.climatechangeinaustralia.gov.au

Results against key performance indicatorsObjective: Meet Australia’s greenhouse gas emissions reduction targets

Criterion

Australia’s annual emissions are consistent with meeting the Government’s 2020 target to reduce emissions by 5 per cent based on 2000 levels

Result AchievedThe Department published Australia’s emissions projections, Tracking to 2020, in December 2015 and updated them in a fact sheet released in April 2016.www.environment.gov.au/climate-change/publications/factsheet-tracking-to-2020-april-2016-updateThe latest release indicates that Australia is expected to surpass its 2020 cumulative abatement task by 78 million tCO2-e and is better placed to achieve its 2030 target of reducing emissions to 26–28 per cent below 2005 levels. The December 2015 projections were included in Australia’s second biennial report to the UNFCCC.www.environment.gov.au/climate-change/publications/australias-second-biennial-reportIn May 2016, in accordance with Australia’s obligations under the UNFCCC and the Kyoto Protocol, the Department submitted the annual national inventory report on Australia’s

greenhouse gas emissions for 1990 to 2014. A United Nations in-country audit of the report in September 2015 confirmed that our emissions estimates are generally of a high standard while making a series of recommendations we need to implement to improve the inventory and ensure compliance.The Department is responsible for producing the National Greenhouse Accounts—a suite of publications and databases that estimate and account for Australia’s greenhouse gas emissions. The latest quarterly update of the National Greenhouse Accounts, released in May 2016, report that Australia’s emissions were 2.5 per cent below 2000 levels in the year to December 2015.www.environment.gov.au/climate-change/greenhouse-gas-measurement/tracking-emissions

Criterion

Percentage of national emissions covered by Emissions Reduction Fund methods

Result AchievedMethods for estimating emissions reductions from different activities are now available across the economy, covering a diverse range of emission sources. Methods are formalised through legislative instruments that define eligible emissions reduction activities as well as how the reductions are to be measured, verified, reported and monitored.Thirty-three methods are in operation for a range of activities across the economy. Figure 2.2 shows that the methods cover most sources of Australia’s greenhouse gas emissions. The safeguard mechanism limits emissions from the electricity and industrial sectors.Ten of the 33 available methods were added in 2015–16. As a result of these new methods, businesses and landholders can undertake a range of activities to reduce emissions in the transport, industrial and agriculture sectors and earn carbon credits. For example, beef producers could reduce emissions from their herds by changing management practices and companies may install high-efficiency fans in buildings to reduce their energy use. More information on the methods available is on our website.www.environment.gov.au/climate-change/emissions-reduction-fund/methods

Figure 2.2: Sources of Australia’s greenhouse gas emissions by inventory sector and available Emissions Reduction Fund methods to reduce greenhouse gas emissions in those sectors

Source: Quarterly update of Australia’s National Greenhouse Gas Inventory, December 2015.

Criterion

Increase in the number of Australian carbon credit units issued

Result AchievedEvery tonne of emissions reduced or stored through an Emissions Reduction Fund project earns one Australian carbon credit unit.In 2015–16, there was an increase in the number of units issued. As of 30 June 2016 a total of 26,162,256 units had been issued—an increase of 25,447,053 since August 2015. The Clean Energy Regulator is responsible for administering the Emissions Reduction Fund including issuing Australian carbon credit units. More information is on the Clean Energy Regulator website.www.cleanenergyregulator.gov.au/ERF/project-and-contracts-registers/project-registerIn partnership with the Regulator and AusIndustry, the Department engages with businesses and landowners to raise awareness of the opportunities available under the Emissions Reduction Fund. During 2015–16, we engaged with more than 450 stakeholders, representing more than 300 organisations. With participation from the Clean Energy Regulator and AusIndustry we ran a series of briefings and workshops around the country about the fund. These stakeholder engagement activities increased participation in the Emissions Reduction Fund and, ultimately, the amount of abatement achieved through projects and therefore the number of Australian carbon credit units issued.

Criterion

Compliance with Emissions Reduction Fund safeguard mechanism—covered facilities do not exceed safeguard mechanism baselines

Result Data/information not available or incompleteIn 2015–16, the Department established the legislative framework for the safeguard mechanism to begin operating from 1 July 2016. The National Greenhouse and Energy

Reporting (Safeguard Mechanism) Rule 2015 became law in October 2015.The safeguard mechanism applies to facilities that emit more than 100,000 tCO2-e a year. These facilities must maintain their emissions at or below a baseline level set by the Clean Energy Regulator. As the safeguard mechanism began on 1 July 2016, facilities were not required to comply with baselines during 2015–16.The safeguard mechanism is complemented by the Emissions Reduction Fund’s crediting and purchasing elements.

Criterion The uptake of additional renewable energy is encouraged and the Renewable Energy Target is achieved

Result Partially achievedThe Renewable Energy Target is made up of two schemes: the large-scale Renewable Energy Target and the small-scale Renewable Energy Scheme.Large-scale Renewable Energy TargetThe annual large-scale target for 2015 of 18,850 GWh was met through a combination of large-scale generation certifications generated in 2015 (approximately 15,200 GWh) and surplus certificates generated in previous years.In the Renewable Energy Target 2015 Administrative Report and Annual Statement released on 4 May 2016, the Clean Energy Regulator advised that progress towards the 2020 large-scale target was adequate under the circumstances and that the 2020 target was achievable. The Clean Energy Regulator estimates that around 3000 MW of additional projects need to be committed in 2016 to avoid shortfalls in certifications in 2018. Between 1 January and 30 June 2016, there were 10 new projects committed, with 344 MW of capacity.Small-scale Renewable Energy SchemeAs at 30 June 2016, over 2.54 million small-scale systems had been installed under the Small-scale Renewable Energy Scheme. It is estimated that small-scale renewable energy systems, such as household photovoltaics, will generate around 6600 GWh a year, while solar hot water systems and air source heat pumps will displace around 3200 GWh a year.

Objective: Contribute to the negotiation of an effective global solution to climate change

Criterion Key countries and civil society organisations from across the region commit to a collective plan to slow, halt and then reverse the loss of tropical rainforests across the Asia-Pacific region

Result AchievedThrough the Asia-Pacific Rainforest Partnership, the Australian Government has been supporting efforts to build capacity in the region to reduce greenhouse gas emissions from the land sector and avoid further deforestation. The Asia-Pacific Rainforest Partnership is a network of regional governments, private sector organisations and civil society that provides a platform for the practical implementation of the Paris Agreement under the UNFCCC and of the convention’s Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD+) program.Under the Asia-Pacific Rainforest Partnership, a private sector roundtable that includes executives from the timber, palm oil, finance and agribusiness sectors has been established. It aims to encourage private sector finance to flow to forest conservation and best-practice landscape management activities.The Department helped the Government of Brunei Darussalam to host the second Asia-Pacific Rainforest Summit in August 2016. Attendees included major international climate change donors, regional governments, the private sector and civil society.More information on our forest conservation activities in the Asia-Pacific region is on our website.www.environment.gov.au/climate-change/rainforest-recovery

Objective: Improve understanding of climate change impacts and inform decision-making

Criterion Independent evaluation of the effectiveness of the National Climate Change Adaptation Research Facility program undertaken by 30 June 2017 demonstrates:

number of end-users engaged in the design of a coastal risk management tool number of coastal communities using the information and tools from the project to

inform local policy and plans the degree of awareness among relevant government agencies, coastal councils and

business and industry groups of National Climate Change Adaptation Research Facility Phase 2 outputs, and

the extent to which the risk management tool is aligned with state and territory government initiatives in climate change adaptation in the coastal zone

Result Partially achievedIn October 2014, the National Climate Change Adaptation Research Facility (NCCARF) appointed an independent organisation, Coutts J&R, to design and conduct a monitoring and evaluation framework for this program. The work is due for completion in 2017. Coutts J&R is reporting to the Department and NCCARF quarterly. It delivered a mid-term review in February 2016, which will be published shortly on the NCCARF website. The final evaluation report is due in October 2017.www.nccarf.edu.au/biblioThe mid-term review reported that NCCARF had ‘met its milestones to date and is on track to deliver its contracted outputs in the time allocated’. Specifically:

In the development of the online coastal climate risk management tool, NCCARF had ‘meaningful engagement with a range of stakeholders—including potential end-users’. More than 600 people have attended workshops or participated in surveys, across all states and territories, in capital cities and regional locations. User testing of a draft version of the coastal tool commenced in July 2016.

Stakeholders and potential end users have strongly endorsed the synthesis information and tools. Those involved with the NCCARF engagement process said they were ‘very satisfied with the direction, approach and development of the synthesis products’.

All four NCCARF adaptation research networks, hosted by universities across Australia, have been established. The mid-term review states that they are ‘fantastic as a resource, information hub and networking platform; a useful tool to bridge research and practice; and [are] progressing well’.

www.nccarf.edu.au

Criterion Information on climate change projections and adaptation approaches is well targeted to the needs of regional natural resource management organisations and other decision-makers

Result AchievedThe Regional Natural Resource Management Planning for Climate Change Fund (2013–16) supported regional NRM organisations to adapt to and plan for climate change impacts and maximise the environmental benefits of carbon-farming projects and biodiversity activities. An independent evaluation of stream two of the fund, finalised in July 2016, found that the climate change information outputs and engagement activities, along with the Climate Change in Australia website, have made high-quality, regionally specific climate change information more accessible and increased the capacity of NRM planners across the country to use it. This evaluation will be published on our website.

Analysis against purposeAustralia is on track to meet its 2020 emissions reduction targets, has improved understanding of climate change impacts and supported an effective international response.

2015–16 was an important year for international climate change action, with the successful negotiation and signing of a new global agreement. In December 2015, Australia played a key role in negotiating the global agreement for climate action post 2020 at the Conference of the Parties to the UNFCCC. Key outcomes of the agreement include:

a global goal to hold average temperature increase to well below 2°C and pursue efforts to keep warming below 1.5°C above pre-industrial levels

mitigation targets to be set by all countries from 2020 and reviewed every five years to build ambition over time, informed by a global stocktake

new targets set for the majority of countries, including Australia, which collectively represent over 96 per cent of global emissions.

Australia committed to a 2030 target of reducing our emissions to 26–28 per cent below 2005 levels. This builds on the 2020 target to reduce our emissions to 5 per cent below 2000 levels. In setting the 2030 target, the Australian Government indicated that it will undertake a review in 2017 to ensure its policies are appropriately calibrated to achieve the target.

In April 2016, the Australian Government’s emissions projections showed that Australia is expected to surpass its 2020 cumulative abatement task by 78 million tCO2-e and is better placed to achieve its 2030 target. The Australian economy has become less emissions intensive. This is partly due to the implementation of policy measures including the Emissions Reduction Fund and the Renewable Energy Target (RET).

The uptake of renewable energy is an important part of meeting Australia’s emissions reduction targets. The RET is designed to reduce emissions in the electricity sector and encourage additional generation of electricity from sustainable and renewable sources. The Clean Energy Regulator, which administers the RET scheme, stated in a report released in May 2016 that the Large-scale Renewable Energy Target in 2020 is achievable. Uncertainty was alleviated by the passage of Commonwealth legislation in June 2015 that revised the target downwards from 41,000 GWh to 33,000 GWh in 2020. Under the revised target, the RET is designed to double the amount of large-scale renewable energy delivered by the scheme compared with current levels. This means that about 23.5 per cent of Australia’s electricity generation in 2020 will come from renewable sources.

In September 2015, the Government created the Office of Climate Change and Renewables Innovation within the Department to better integrate the suite of policies aimed at meeting our emissions reduction targets. The office enabled us to better support the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation—which were incorporated into the Environment portfolio following machinery-of-government changes in 2015—by building a robust framework for agency collaboration on policy development. We help ARENA by providing corporate support and guidance on governance issues. This includes ensuring compliance with each of the agency’s responsibilities to the Minister under the Clean Energy Finance Act 2012 and the Australian Renewable Energy Agency Act 2011, as well as the appointment of additional board members to ARENA’s board of expert fund administrators.

Case Study – Global Forest Observations Initiative Countries implement land-based measurement, reporting and verification systems to measure stored carbon on the land and thereby assess greenhouse gas emissions and removals.

These systems enable countries to submit national greenhouse gas inventory reports for the forestry sector and to report to the UNFCCC in a transparent, accountable and verifiable manner. Australia is a recognised world leader in measuring land-based emissions that contribute to climate change and is using this expertise to help developing countries. What happens on the land is vital for progressing global efforts to tackle climate change, as activities from agriculture, forestry and other land use represent 20–24 per cent of greenhouse gas emissions.

Developing countries in particular can benefit from better carbon accounting, as robust measurement, reporting and verification systems provide other broad national benefits such as enabling sustainable land management and food security to improve rural people’s livelihoods and allowing countries to gain accreditation for climate finance.

The Global Forest Observations Initiative is at the forefront of international efforts to improve developing countries’ ability to measure and account for greenhouse gases. The Australian Government is a founding member of this international partnership, together with the governments of Norway and the United States, the Food and Agriculture Organisation of the United Nations and the Committee on Earth Observation Satellites. The Department plays a guiding role in the ongoing work of the initiative.

We have led the development of Global Forest Observations Initiative guidance material specifically tailored to operational methods complying with international reporting requirements under the UNFCCC. This guidance focuses on emissions and removals associated with the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD+) program and on the role of conservation and sustainable management of forests, and on increases in forest carbon stocks in developing countries. With our help, the guidance material has recently been transformed into a user-friendly online system, called REDDcompass.

www.gfoi.org/reddcompass

REDDcompass provides simple guidance through the otherwise complex process of developing forest monitoring and measurement, reporting and verification systems. It allows countries to tailor their approaches to their needs, without prescribing a particular method or approach. It provides and interprets direct links between UNFCCC decisions and reporting requirements. To date, 550 users from 79 countries have created accounts on REDDcompass. The uptake of REDDcompass by developing countries is expected to grow as the tool continues to be showcased at regional workshops in 2016–17.

Beef cattle herd managementAustralia’s land sector is playing a big part in the success of the Emissions Reduction Fund. The fund, which is at the core of the Australian Government’s approach to climate change, gives Australian businesses, including farmers and landholders, the opportunity to reduce greenhouse gas emissions while improving productivity, profitability and sustainability.

The Government has contracted land sector projects to deliver approximately 115.3 million tonnes of carbon abatement—a significant portion of the 143 million tonne total contracted under the Emissions Reduction Fund to date. The majority of these projects are reducing emissions by storing carbon in trees or the soil, and a range of opportunities are available for farmers to participate in the Emissions Reduction Fund. For example, cattle producers can now reduce emissions from their livestock through a range of herd management activities.

Paraway Pastoral, a major grazing operation owned by the Macquarie Pastoral Fund, is one of the cattle producers taking up this opportunity and receiving funding from the Emissions Reduction Fund. The Clean Energy Regulator contracted the company’s project at the April 2016 auction to deliver carbon abatement over the next seven years. Paraway Pastoral is using the beef cattle herd management method to reduce the emissions it produces. The

project is being conducted across 10 properties in Queensland and New South Wales that run 110,000 cattle.

Adrian Sykes, Paraway Pastoral’s Land and Environment Officer, says the project has been a catalyst for a review of operations and land development opportunities. As a result of this, the company is fast-tracking land development projects such as subdividing paddocks and installing new water troughs to improve grazing efficiency. This will increase the overall production efficiency of the herd, resulting in improved growth and reproduction rates. These efficiency gains will increase the number of kilograms of beef produced per grazing day and reduce the number of days to slaughter.

‘Our company is committed to sustainable land management and responsibly managing our herd to reduce its environmental impact and maximise profit over the long term. The Emissions Reduction Fund gave us a way to bring forward production improvements by allowing us to earn Australian carbon credit units which we can sell. The project is aligned with our business’ land management and production objectives. In addition to the revenue the project will generate, it demonstrates our operating philosophy has mutual environmental and profitability benefits’, said Mr Sykes.

‘The Emissions Reduction Fund gave us a way to bring forward production improvements by allowing us to earn Australian carbon credit units which we can sell.’—Adrian Sykes, Land and Environment Officer, Paraway Pastoral

The Government worked closely with Meat and Livestock Australia to develop the beef cattle herd management method—one of a suite of methods under the Emissions Reduction Fund that create financial incentives for businesses to reduce greenhouse gases. The methods set out the rules for determining and verifying the quantity of emissions reductions.

Meat and Livestock Australia’s analysis of the herd management method found that better management activities for a herd of 10,000 animals on pastoral lands could generate annual productivity gains of $40,000 to $80,000. These returns are in addition to revenue from the sale of carbon credits.

Steve Wiedemann, an agricultural scientist with rural consultancy Integrity Ag Services, highlights the advantages: ‘Returns from participating in the ERF offer livestock producers an incentive to fast-track management changes or capital expenditure and realise productivity benefits earlier.’

‘Returns from participating in the ERF offer livestock producers an incentive to fast-track management changes or capital expenditure and realise productivity benefits earlier.’—Steve Wiedemann, Integrity Ag Services

The Department is continuing to work on new emissions reductions opportunities across the economy.