On Tuesday night, the Australian Government handed down the 2022/23 Federal budget.
In our full Federal Budget Report, we reflected on the fact that Australia remains a ‘lucky’ country in having a stable political environment, vast natural resources and low unemployment. The challenge for the Government will be capitalising on those advantages and being able to smooth short term issues while still ensuring long term prosperity.
Although Climate did not headline this year’s Budget, the Budget does contain some measures which are likely to impact clients who are active in the Climate and ESG space, and we believe are critical to the long term prosperity of our nation. Furthermore, the Budget reflects the Government’s emphasis on technology as a means of achieving its net-zero carbon emissions commitment by 2050.
Budget measures on climate and environment
Practical measures included in the Budget in relation to climate and environmental risks can be viewed in two broad groupings:
- mitigation measures (i.e. measures which are designed to mitigate the effects of climate and environmental change); and
- adaptation measures (i.e. measures which are targeted towards adapting to the effects of climate change).
Key measures in relation to each category, many of which are referenced elsewhere in this report are highlighted below.
Mitigation
- $2.5 billion for projects through the Emissions Reduction Fund – Australia’s carbon offset scheme;
- $2 billion for further abatement through the Climate Solutions Fund;
- $1.5 billion to develop a clean hydrogen industry in Australia;
- Increases to the concessional tax treatment for carbon abatement and biodiversity stewardship income for primary producers (see here);
- $300 million will be allocated to support low emissions LNG and clean hydrogen production at Darwin;
- $100 million will be provided over 3 years for the Environment Restoration Fund;
- $83.1 million has been allocated over 5 years to support Australia’s waste and recycling sector and to develop Australia’s circular waste economy; and
- $20.3 million over 3 years from 2021–22 for the Planting Trees for The Queen’s Jubilee Program to provide grants across Australia for community led tree planting projects (see here).
Adaptation
- $6 billion over the next four years on flood recovery;
- $1 billion over 9 years has been allocated for the protection of the Great Barrier Reef, including funding for water quality improvement, management of reef ecosystems and research and development into resilience and adaptation strategies. (see here);
- $114.6 million over 5 years to support various sustainability measures in the forestry and fishing industries (see here);
- $85.4 million in funding over 4 years will support activities to improve drought readiness and resilience. Funding will be provided from the Future Drought Fund; and
- $20 million over 4 years from 2021–22 to work with States and Territories to reduce the impact of pests and weeds on agricultural production, native wildlife, the environment, and the community.
Whilst select climate spending, including Clean Energy Finance Corporation (CEFC), the Clean Energy Regulator and the Australian Renewable Energy Agency (ARENA) is included in the Budget, it is expected to fall from $2 billion next financial year to $1.3 billion by the 2025/2026 financial year.
As some of the measures in this Budget suggest, renewable energy production and delivery is going to be an area requiring significant technological and investment growth in the near future. This represents an immediate and sizeable opportunity for clients in this space.
With $6 billion of funds directed to flood recovery, there are likely to be opportunities to be involved in various capacities to assist in the recovery from the recent devastating floods around the country and to strengthen community and infrastructure resilience to future flood events.
