Australia’s latest suite of climate legislation
Yesterday (March 27, 2024), Australia took a significant step towards a sustainable future, with a suite of new climate legislation coming to the floor, designed to fast-track the transition to a net zero economy.
- The Net Zero Economy Authority Bill 2024' (NZEA Bill)
- The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Mandatory Disclosures Bill)
- New Vehicle Efficiency Standard Bill 2024 (NVES Bill)
What you need to know
1. The NZEA Bill
The NZEA Bill establishes an independent authority “to foster a positive and orderly economic transition as the world moves towards decarbonisation”. This initiative fulfils a commitment made by the Prime Minister on May 5, 2023.
This move is designed to ensure Australian workers, regions, and industries can all transition and realise the benefits of a net zero economy. Australia has legislated targets to reduce emissions to 43% of 2005 levels by 2030, and reach net zero by 2050. That can’t happen without some serious changes and that means communities will be impacted. Almost 12 months ago now, our CEO Jessica shared this post on announcement.
The Albanese Government has pledged $189.3 million over four years, along with ongoing funding of $53.3 million per year, to resource the Authority. The NZEA Bill sets out the detailed functions, powers, and governance arrangements for the Authority. The Authority will:
- Coordinate net zero efforts across government and key stakeholders, and promote consistency in the design and implementation of Australian government policies and programs
- Facilitate public and private sector participation and investment in greenhouse gas emissions reduction and net zero transformation initiatives across Australia
- Support workers in emissions-intensive industries who are affected by the net zero transition to access new employment, or acquire skills to improve their employment prospects
- the Bill will also establish The Energy Industry Jobs Plan (Plan). Administered by the Authority, the Plan will support employees impacted by the closure of some coal-fired and gas-fired power stations.
- Support First Nations to participate in, and benefit from, the net zero transition
- Build community understanding, confidence and engagement with the net zero transformation.
2. The Mandatory Discloures Bill
The mandatory climate disclosures bill is the first step under a proposed framework that will impact thousands of companies and organisations in coming years. It’s setting up what accounting and reporting means for the future.
“These new laws will modernise our financial system, provide greater information and clarity to investors, and incentivise investment in the net zero transformation,” Dr Chalmers said.
These reporting requirements were meant to kick in on July 1, but they will now start on January 1 2025 for Australia’s largest listed and unlisted companies and financial institutions, others will be phased in over time.
Following two rounds of consultation (read our blogs on this here and here),the government has introduced a Bill into the House of Representatives - Schedule 4 to the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 – which would establish the framework for the new disclosure regime.
Consistent with the consultation draft, schedule 4 of the bill says that companies which have to submit financial reports under Chapter 2M of the Corporations Act, and either are of a certain size or need to report on their emissions because of the NGER scheme, must share information about their impact on the climate. They have to do this following the AASB sustainability standards.
3. The Vehicle Efficiency Standards Bill
The draft NVES bill aims to incentivise the automotive industry to supply more fuel-efficient, low and zero-emission vehicles into the Australian market, helping Australians save money on fuel as well as reduce emissions from cars.
Car manufacturers will be assigned specific CO2 emission targets for their vehicles, which must be met or exceeded. These targets will become stricter over time, encouraging the production of more fuel-efficient and low-emission vehicles. Nationwide, while all vehicle types can be sold, there's a push for selling more efficient models to balance less efficient ones. If a manufacturer meets or exceeds their target, they are rewarded with credits. Conversely, if they sell more polluting cars than their target allows, they have a grace period of two years to either trade credits with another supplier or generate additional credits to avoid penalties which are set at $100 per g/km of emission.
The NVES legislation is intended to come into effect on 1 January 2025, and penalties won’t come into effect until 1 July 2025.
Where to from here?
First, if you’re in Group 1 for mandatory reporting, take a deep breath. You have this year to get across this and Sumday is here to help. Start up-skilling the team now, it’s an easy step one.
The big picture…
An economy-wide net zero transformation will need public and private sectors to work together and ensure every organisation, regardless of size, is able to adapt and transition at the scale we need.
That’s why, at Sumday, we’re committed to empowering businesses of every size to access the accounting support they need to make this all affordable and accessible, of course existing accountants and finance teams have a huge role to play and we’re here for them!
