Net zero in NSW: emissions reduction targets reach State Parliament

The NSW Government has introduced the Climate (Net Zero Future) Bill 2023 (Bill) to enshrine emissions reduction targets in law in New South Wales and establish a new Net Zero Commission to monitor the state’s progress.

Targets

The Bill, introduced on 12 October 2023 and now before Parliament for debate, commits NSW to reducing greenhouse gas emissions by at least 50 per cent by 2030 and net zero by 2050, slightly more ambitious than Australia’s national target. The Bill provides that the regulations (which are yet to be released) may make provisions about the implementation of the emissions targets, the calculation and assessment of greenhouse gas emissions and the objective of making NSW more resilient to climate change.

Australia’s Nationally Determined Contribution (NDC) under Article 4 of the Paris Agreement was updated on 16 June 2022 to reach net zero before 2050 and a reduction in greenhouse gas emissions of 43 per cent below 2005 levels by 2030. This NDC was enshrined in the Climate Change Act 2022 (Cth), which came into effect on 14 September 2022.

By comparison, the Victorian Government has an emissions reductions target by at least 28-33 per cent by 2025, 45-50 per cent by 2030, 75-80 per cent by 2035 and net zero by 2045 under the Climate Change Act 2017 (Vic). Victoria also has a renewable energy generation target of 95 per cent by 2035, renewable energy storage target of 6.3GW by 2035 and an offshore wind target of 4GW by 2035.

Net Zero Commission

The Bill establishes the Net Zero Commission as an independent expert body to monitor, review and provide advice on progress towards the above targets as well as climate change adaptation. The Commission will also:

• monitor and review action currently being taken in NSW to address climate change;
• identify and recommend action that should be taken by the NSW Government to address climate change, including strategies, policies and programs that should be implemented by the NSW Government; and
• educate and inform the NSW Government, businesses, organisations and individuals to promote action to address climate change.

The Net Zero Commission can provide advice and make recommendations to the Minister for Climate Change, Energy and the Environment about interim targets for the reduction of net greenhouse gas emissions, emissions budgets, energy use targets for government agencies and actions to address climate change relating to specific business or industry sectors. Importantly, while the Net Zero Commission can provide advice and recommendations in relation to further interim targets, only Parliament will have the power to impose any such targets.

The Commission, once established, will replace the current Net Zero Emissions and Clean Economy Board. The Commission will consist of at least five and no more than seven permanent commissioners, each appointed for up to five years, the Chief Scientist, and up to three temporary commissioners who may be appointed for up to 18 months.

The legislation of a state-based net zero government agency follows a similar announcement by the Federal Government in May to create a National Net Zero Authority (NNZA). The NNZA is intended to assist Australia to reach its NDC by supporting workers in emissions-intensive industries, creating inter-governmental programs and policies to support regions and communities, and assisting investors and companies to identify and invest in net zero opportunities. The NSW Government intends that the Net Zero Commission will also liaise with regions and communities on climate action.

It is not clear at this stage how the NNZA and NSW’s proposed Net Zero Commission will interact. As with the NNZA, the Net Zero Commission’s success will rely on coordination with other regimes and how it brings together regional and community stakeholders to drive decarbonisation.

Investment

This announcement will be welcomed by many businesses and investors, particularly those in the renewable energy sector looking to embrace the energy transition and support decarbonisation. The targets will also provide incentive for the NSW State Government to invest in infrastructure necessary to bring more renewable energy projects online.

Other than the emissions targets, the extent of progress and change generated by the Bill (if passed) will largely depend on the level of activity of the New Zero Commission and the way in which the Commission interacts with community, industry and other relevant State and Commonwealth Government agencies.

The NSW Government has flagged that it intends to set up a new stand-alone Department of Climate Change, Energy, Environment and Water in NSW. While currently unknown, the interaction between this new agency, the Net Zero Commission and the NSW Environment Protection Authority – which currently oversees the NSW Climate Change Framework – has the potential to create uncertainty, duplication and confusion for community and industry if it is not considered and constructed carefully.