This new development will impact a number of areas of legal work — including within the energy, environment and corporate advisory spaces.

In conversation with Lawyers Weekly, Law Council of Australia president, Tass Liveris, said that as the bill also requires an annual climate change statement to be tabled in Parliament that sets out the progress towards achieving the reduction targets, other laws and policies are likely to be brought out moving forward.

“Lawyers will need to stay abreast of these laws and policies (and the annual reports provided to the Commonwealth Parliament under the Act) to ensure they provide appropriate advice to their clients,” he said.

“The Act itself does not impose direct abatement obligations on businesses, corporations, or sectors. However, the Act does anticipate that actions taken by the Commonwealth in seeking to achieve emissions reductions targets may affect certain sectors of the economy. 

“The Act requires the Minister to report to Parliament annually on progress made towards achieving the emissions reductions targets, and on the effectiveness of Commonwealth policies in contributing to the achievement of the targets and reducing emissions in the sectors covered by those policies.”

There are also likely to be implications for the energy sector, arising from Commonwealth policies directed towards reducing greenhouse gas emissions – with legal frameworks also set to evolve.

“As an example of altering policies and laws, which may be linked to achieving the Australian Government’s objectives set out in the Act, the Australian Government is currently undertaking a public consultation process on the Safeguard Mechanism. An Independent Review of the Australian Carbon Credits Units is also underway,” Mr Liveris added.

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“Both review processes are likely to result in material changes to the way these schemes operate. For example, facilities that are subject to the Safeguard Mechanism could be required to further reduce or offset their emissions to comply with new, lower baselines. Lawyers will need to stay up to date with developments relating to these schemes so they can advise clients on the legal implications of any changes.”

Samantha Daly, environment and planning partner at Johnson Winter & Slattery, said that in passing the Climate Change Bill, Australia has signalled it is “open for business” for energy and resources projects to work towards climate targets.

“It also marks an important milestone in Australia’s energy transition, as annual reporting against Australia’s net zero targets can be expected to inform regulator decision-making processes and will also provide certainty of investment to the private sector who are part of the transition — this will include not only energy companies, but also companies who produce the technologies and the minerals that are essential to support the energy transition,” she explained.

“We expect to see increased interest and investment in renewables projects, decarbonisation including methods such as hydrogen and carbon capture and storage, innovations and critical minerals, as project proponents have greater certainty of political will to see these projects come to fruition. It is going to be a busy time ahead for energy lawyers!”

Whilst the passing of the bill will affect energy and environment lawyers’ work significantly, Kelly Dickson, managing principal of the Macpherson Kelley, Dandenong office, said that there will be numerous flow-on impacts for other sectors, too.

“Macpherson Kelley’s M&A transactions, general commercial, governance, compliance and property lawyers will all be seeing changes in the type of advice clients are seeking from us following the focus on reductions in (or complete elimination of) greenhouse gas and other emissions. Lawyers will have more work to do in educating and supporting their clients — whether that be in drafting or reviewing policy documentation; setting up new distribution arrangements; or connecting their affected clients with service providers or other experts in the lawyers’ networks,” she said.

“It’s difficult to predict what the legislation will mean for clients who operate in different industries. For example, Macpherson Kelley has a significant manufacturing and agriculture client base. These types of businesses tend to have a larger environmental footprint, so for them, the impact of this legislation will be much greater than in sectors with typically minimal emissions.

“I think there’s no doubt that regulation and compliance will play a big role in achieving the goals set by the Federal Government. Compliance programs often do sit where the law and legal requirements intersect with ‘real life’ business practice. So, I think this legislation will be an opportunity for wider regulatory obligations to be brought front of mind (sic) — and this is exactly the space in which I like to practice.”

Macpherson Kelley chief operating officer, David Ward, added that the impact of the bill of different clients and businesses will depend on a number of things, including their sector, industry, level of commitment and level of work already undertaken within the environmental space.

“For reporting obligations, it is likely that businesses need to consider their own activities, outputs and footprint, and ensure they are reporting on those areas with accuracy. To do so, businesses will need to be able to track, measure and report on their own outputs and progression towards lower emissions. It will require investment of time, staff (and potentially external consultant) resources, and some expenditure. This will be true for those businesses where tracking emission output is a new concept, or for those who are already making strides in this space,” he explained.

“What will also be interesting though, is the impact technology will have in meeting emission targets. There will be opportunities for new entrants into the Australian marketplace, whether it be businesses investing in, creating and selling more emissions-friendly products and services or building new technologies, products, manufacturing plants or facilities that are more environmentally friendly.

“For some businesses and industries, meeting emission targets will mean they need to actively seek an alternative pathway for doing things. Some businesses and industries will need to get rid of their existing plant, facilities, or processes entirely. Or, they will need to undergo a process of converting them to ‘friendlier’ technologies. Either way, this means that big capital expenditure is on the horizon and though the detail of these changes is not yet set in stone — businesses will need guidance during what can be a challenging transitional period.”

In addition, the new legislation means that Australia’s greenhouse gas emission reduction targets, set under the Paris Agreement, have now been “enshrined” into domestic law, Mr Liveris explained.

“The Intergovernmental Panel on Climate Change’s 2022 Mitigation of Climate Change report found that climate laws enable mitigation action including, amongst other things, by setting targets. The passage of the Act provides a degree of certainty for businesses and particularly impacted industry sectors to move forward with their own emissions reduction pathways,” he said.

“The Act frames the 2030 target as a floor rather than a ceiling by requiring any subsequent adjusted or new nationally determined contribution made by the Australian Government under the Paris Agreement to represent a higher percentage reduction in greenhouse gas emissions than the previous one. In this context, the nature of the demands for legal services and on lawyers will continue to evolve over time, as broader legal frameworks (and associated policies) alter to ensure that the Act’s targets can be met.”

Moving forward, energy and resource clients will start exploring new ways to innovate existing projects towards a clean energy future in line with the Climate Change Bill. Regulators, Ms Daly explained, will also likely release updated guidance to indicate how projects will be assessed in line with the legislation.

“We can also expect additional government-funded opportunities for companies to be part of the energy transition through various mechanisms including wind and solar projects, storage such as pumped hydro and battery energy storage systems and hydrogen. 

“We are also likely to see greater focus on the measures to achieve our emissions targets and the statutory instruments that may need to be created or adjusted to support those measures, as we are currently seeing with the consultation on the proposed changes to the safeguard mechanism as well as the current inquiry into the integrity of ACCUs. Given the complexity of this space, it will be critical for government to collaborate with industry so that Australia can achieve its targets in a balanced, sustainable, stable and prosperous way,” she said.

“The Australian government’s commitment provides certainty to businesses by embedding Australia’s emissions targets in legislation. It indicates that government will follow through on its climate action promises, and any commitment to greater transparency and accountability in reaching its climate goals is a positive step for Australia.”

Mr Ward agreed — and said that whilst a deeper dive into climate change is still needed, the passing of the new bill is an overall positive step.

“I think there has been general public consensus for a while now that this needs to be done and addressed. I think many businesses have been waiting for clear guidance from the Federal Government that this is indeed their intended path so, in many ways, it’s a relief that the time has finally come,” he said.

“What I imagine this legislation will do is reignite the conversation about social and environmental responsibility, challenging businesses to rethink the way they do things. Although much of the detail is still yet to come, this legislation provides businesses a bit more certainty on the way forward.”