Governance crucial to determining success of carbon package

Key Points

• Governance is crucial in fostering assurance and certainty in the scheme
• External assurance over emissions data will be important in the broader governance of the scheme
• Innovation and the support to encourage and foster innovation are vital.

In its initial response to the government’s carbon package announcement, the Institute stated that the success of the carbon package depends on a robust governance framework.

With the announcement of the price, came the birth of two new government agencies.

Climate Change Authority

While the government and the parliament will be responsible for major policy decisions, an independent statutory body called the Climate Change Authority has been launched to provide independent advice to the government on the performance of the carbon price and other initiatives.

Geraldine Magarey, the Institute's Head of Sustainability and Regional, says the appointment of a regulatory body will be important in fostering assurance and certainty in the market-based mechanism.

‘Having appropriate levels of governance over this emerging market will give the business sector and the general public confidence in the scheme. External assurance over emissions data will also play an important role in the broader governance of the scheme. We do urge government to exercise caution over creating added regulatory burden, though. Additional paper work is exhaustive and poses challenges for the allocation of resources,’ Ms Magarey said.

As part of its role, the new authority will make recommendations to the government on the year-by-year steps, and on the longer-term path, that Australia should take towards the 2050 emissions reduction target. The authority will report regularly on progress, which will then inform the public by way of regular, public reviews as to whether the nation is on track to meet targets.

The authority’s first review – which will provide recommendations on the carbon pricing mechanism’s first five years of pollution caps – is expected by February 2014.

The Clean Energy Regulator

Liability for the carbon price mechanism will be assessed by the Clean Energy Regulator (CER), which will also be in charge of monitoring and enforcing compliance with the tax mechanism.
The tax on the country’s top 500 carbon emitters is due to come into effect on 1 July 2012. The carbon price mechanism will transform into an emissions trading scheme in 2015.

What’s to come?

In 2013-14, the government will also establish the Clean Energy Finance Corporation (CEFC), which will primarily consist of a board with expertise across investment management and clean energy, and will distribute loans, loan guarantees and equity investments to drive innovation in renewable technology in Australia.

’We need to develop ways of doing things differently if we are to reduce emissions in the longer term. Innovation and the support to encourage and foster innovation are vital,’ added Ms Magarey.

Article last updated 25 August 2011