1. Policy framework

1.1 Multi-Party Climate Change Committee and the Clean Energy Agreement

On 27 September 2010, Prime Minister Julia Gillard created a Multi-Party Climate Change Committee to explore options for the implementation of a carbon price and help build consensus on how Australia will tackle the challenge of climate change.

On 10 July 2011 the Committee released a Clean Energy Agreement to reduce carbon pollution, provide opportunities for innovation and investment in clean technologies and reward improved land use management.

The key elements of the Agreement are;

• The introduction of a broad based carbon price in Australia, commencing from 1 July 2012 with a fixed price period and transitioning to a fully flexible cap-and-trade carbon pricing mechanism on 1 July 2015.
• The fixed price will commence at $23 per tonne of CO₂-e;
• Coverage of the scheme will include stationary energy, most business transport emissions, industrial processes, non-legacy waste, and fugitive emissions, with direct liability under the mechanism limited to large emitters;
• International linking will be allowed in the flexible price scheme;
• Kyoto compliant credits from the Carbon Farming Initiative will be able to be used for compliance.
• The establishment of a new more ambitious 2050 target for emissions reductions which will be set at 80 per cent below 2000 levels.
• The establishment of a new independent Authority - the Climate Change Authority - which will :
• provide advice to the Government on progress towards meeting announced targets;
• make recommendations on pollution caps, voluntary action, trajectories, long term emissions budgets and mechanism design issues;
• conduct regular reviews on the carbon price mechanism, NGER reporting, the Renewable Energy Target and other matters upon request.
• Household assistance measures to support low and middle income households and to support energy efficiency improvements in households to reduce energy costs;
• Business assistance measures to support jobs and competitiveness and support investment in the business sector to increase energy efficiency and reduce carbon pollution;
• Measures to support an orderly transition of our energy sector and underpin energy security;
• Enhanced support for innovation in low emissions and renewable technologies through:
• the establishment of a $10 billion fund, the Clean Energy Finance Corporation, to drive investment in the commercialisation and deployment of low emissions and renewable technologies; and
• the consolidation of existing renewable technology support measures into the Australian Renewable Energy Agency, to establish a more holistic approach to the Government's support for early stage investments in renewable technologies;
• Commitments to regional and rural communities through land measures which will:
• support participation in the Carbon Farming Initiative;
• provide incentives for land sector projects that deliver biodiversity and other additional environmental benefits; and
• support regional planning and skills development.

1.2 National Strategy on Energy Efficiency

On 2 July 2009, the Council of Australian Governments (COAG) signed the National Strategy on Energy Efficiency (NSEE), committing each Government to a comprehensive 10-year roadmap to accelerate energy efficiency improvements across all sectors of the economy. It was the first time that Commonwealth, State and Territory Governments agreed to a nationally consistent roadmap to reduce the carbon footprint of businesses and households across Australia.

In July 2010, COAG amended NSEE to reflect machinery of government changes, other administrative and governance changes and changes to program priorities during 2009-10.

All jurisdictions committed a total of $88 million to NSEE, for measures that combine incentives, consumer and business education and carefully targeted regulation. Under NSEE, the key measures to improve the energy efficiency of buildings include the following:

• Improving the efficiency of new buildings and major renovations by increasing the energy efficiency requirements in the 2010 update of the Building Code of Australia.
• Providing information to the housing market by requiring Australian homes to provide energy, water and greenhouse performance information to buyers and renters, starting with energy efficiency in 2011.
• Requiring owners of commercial office buildings and government buildings to provide energy efficiency information to buyers and tenants, starting in the second half of 2010.
• Collecting comprehensive information on how energy efficient Australian homes and commercial buildings are now to help inform future policy.
• Developing a national building framework to deliver consistency in how building energy efficiency is assessed and rated throughout Australia.
• Improving the energy efficiency of the appliances and equipment used to fit out buildings.
• Offering financial support and information resources to homes and commercial buildings.