In search of consistency: state schemes and policies

How to navigate novel policies emerging from State Governments

State and territory governments are increasingly willing to take action separate to the Federal Government to address climate change through state schemes, policies and, in some cases, legislation. This represents a change in approach at the state and territory level over the past decade, as climate change issues, particularly controls on greenhouse gas emissions, were traditionally seen as a national issue best addressed by the Federal Government.

All states and territories are now working towards a target of net zero emissions by 2050 (or earlier) and a majority have adopted a target of renewable energy consumption of 50% or greater by 2030. However, only four jurisdictions¹ have enacted specific climate change legislation which captures these targets and other commitments. In other jurisdictions, the commitments remain aspirational and subject to policy change.

State and territory climate policies continue to evolve. In 2019, there were a number of significant developments, for example, the WA Government released its Greenhouse Gas Emissions Policy for Major Projects. There are also a number of reviews and public consultations concerning various climate change strategies and policies underway, which means there will be further change in this space in 2020.

The relationship between the federal and state / territory governments will also be important to monitor closely. In January 2020, the Federal Government announced a $2 billion partnership with the NSW Government that includes (amongst other things) funding for NSW-based emissions reduction initiatives and new generation projects. The Prime Minister has raised the prospect of further 'energy deals' with other state and territory governments.

'If the states act decisively and act together on setting emissions targets, they can reduce pollution through an alternative route. Let’s call it the Princes Highway to climate action.'²

The states and territories have proposed a number of measures to achieve their climate change commitments. Key areas of focus include:

• increasing investment in renewable energy generation and battery storage projects;
• improving energy efficiency in the areas of transport and infrastructure (eg by transitioning government fleet vehicles to electric alternatives);
• establishing funds or grants to support projects that contribute to reducing carbon emissions. For example, Queensland has invested $500M to establish the Land Restoration Fund, which will support the land sector in Queensland to undertake carbon farming projects and South Australia has developed a Blue Carbon Strategy to encourage protection and restoration of coastal ecosystems; and
• climate change adaption.

Key risks and opportunities

There is a risk that if state and territory governments 'go it alone' on climate change, this will create inconsistent policy between the federal and state/ territory governments and between individual states and territories. This could result in increased or duplicative regulatory burden for companies in some states or territories compared with others and stifle investment and innovation in jurisdictions with less favourable policy settings.

However, the evolving landscape at the state and territory level offers companies the opportunity to engage with government to ensure that policies and schemes meet relevant industry needs. There is also an opportunity to access state schemes relevant to particular industries or businesses, eg energy efficiency schemes (referred to here) and Queensland's Land Restoration Fund.

Key questions

• Is your organisation's strategy aligned with the general policy adopted by the states and territories of achieving carbon neutrality by 2050 (and, where relevant, any interim targets)? If not, is there a plan in place to align strategy with these targets?
• Should your organisation consider adopting measures to enable it to operate effectively in an environment where policy measures were implemented to achieve carbon neutrality by 2050? Ie measures which would mimic the effect of the domestic implementation of the Paris Agreement's 1.5°c – 2°c warming target?
• What is the impact of current and proposed state policies and targets on your organisation's assets, project proposals and operations?
• Is your organisation comfortable that it is engaging with regulators and policymakers appropriately on the practical implications of proposed policies and schemes?
• Do the state and territory schemes create opportunities for your organisation, eg to generate offsets?