Budget marks key decarbonisation progress, next 12 months critical
The 2023 Federal Budget assembles the key components that can drive the transition to a negative emissions and nature positive economy, according to the Carbon Market Institute, which also welcomed significant investments in clean energy and energy productivity. However, to bring together and coordinate outstanding pieces, it also called for the development of a National Carbon Market Strategy, as recommended by the Climate Change Authority.
“We’re at a point where we must urgently manage the risks and realise the opportunities of our climate and biodiversity challenges. This budget assembles most of the institutions, policies and resources needed to do this, which requires harnessing the private and public investments that can transform Australia’s economy towards net zero and net negative emissions,” said John Connor, CMI CEO.
“The next 12 months will be critical in continuing to build the governance architecture that ensures sufficient momentum and investment in industrial decarbonisation, reversing deforestation and removing carbon from the atmosphere.”
“There is welcome funding for new or reformed institutions including the Net Zero Transition Authority, Carbon Abatement Integrity Commission, Environment Protection Authority and Environment Information Australia. Focused management and careful regulatory design can ensure delivery of legislative reforms to the Safeguard Mechanism, the carbon crediting framework and the Environment Protection and Biodiversity Conservation Act.”
“The system wide changes necessary to manage this crucial economic transition shouldn’t be underestimated and these important changes will be supported by government accountability through annual climate change statements, proposed corporate climate disclosure requirements, and the development a new Sustainable Finance Strategy.”
“The significant budget investments in renewable energy, hydrogen and energy efficiency are also important and will need to be well directed to ensure Australia can scale investment, drive innovation and create new employment opportunities, as the US, Europe and others compete for advantage in this economic transition.”
“There are still some important incomplete tasks however.”
“CMI recognises the importance of $1.4 billion of investment in clean energy and transformation from the $1.9 billion Powering the Region Fund, but the scale and management of the election commitment of strategic investment in Australian carbon credits and their potential additional co-benefits remains to be resolved. So too does the management of the Safeguard Mechanism strategic reserve and the future of the carbon abatement contract exit program.”
“Final details of the Chubb Review implementation plan, which is budgeted for, remains to be clarified. Market certainty will be crucial to address stalling growth in carbon reduction projects and the supply of carbon credits. There is also no addition to the landholder extension program announced in last year’s budget, which will be important in properly engaging farmers, Indigenous and conservation land managers.”
“The next 12 months will also see work begin on Australia’s Net Zero Plan for 2050 and the preparation of our next Nationally Determined Contribution plan with emission reduction targets for 2035. These will be vital for our credibility in climate action and in potentially hosting COP31 in 2026, in partnership with Pacific neighbours. While ongoing funding for the Indo Pacific Carbon Offsetting Scheme is welcome to boost capacity in our region, there is no indication of the substantial investment required to prepare for and host COP31 in in 2026 and the ensuing Presidency through 2027.”
“CMI looks forward to further details on these tasks and the focused management required to ensure institutions, policies and resources assembled in this budget deliver the investments needed to transform the economic pathway required for Australia’s ongoing prosperity.”
“A National Carbon Market Strategy, recommended by the Climate Change Authority and others, would be an important complement to the overall systemic changes so that the contributions of Australia’s carbon crediting framework can be clarified for investors and the broader community,” concluded Connor.
About the Carbon Market Institute
The Carbon Market Institute (CMI) is a member-based institute accelerating the transition towards a negative emissions, nature positive world. It champions best practice in carbon markets and climate policy, and its over 150 members include primary producers, carbon project developers, Indigenous organisations, legal, technology and advisory services, insurers, banks, investors, corporate entities and emission intensive industries. The positions put forward constitute CMI’s independent view and do not purport to represent any CMI individual, member company, or industry sector.
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