Victorian Climate ChangeGreen Paper

Message from the Premier

Climate change is the defi ning challenge

of our times. There is no doubt that we must take action now to avoid the worst effects of climate change and the damage and disruption it could cause to our economy, communities and environment.

Governments around the world need to act to stop the problem getting any worse. We have to reduce our greenhouse gas emissions and shift towards becoming a low carbon economy – one that relies on low emissions forms of energy and that is much more effi cient in using energy resources.

The Victorian Government is already taking strong action on climate change. We were the fi rst State to set a renewable energy target and we are making a major investment in renewable energy and low emissions technologies. We have introduced an innovative new scheme that will support households to become more energy effi cient. We are also acting to secure Victoria’s future water supply.

We have been a national leader on climate change, but much more needs to be done. The Victorian Climate Change White Paper will set out a comprehensive new climate change strategy for the State, including immediate action in a number of areas. This Green Paper is an important step in that direction.

Irrespective of how successful we are in reducing emissions, some climate change will still occur: the damage has already been done. We will still face warmer temperatures, rising sea levels, lower rainfall and more extreme events such as storms and bushfi res. We have to act now to make sure that Victoria is fully prepared to deal with these changes.

The task is not an easy one. It will require public and private investment in sustainable infrastructure and industries, and in research and innovation. We will need to change the way we do things in almost every aspect of our daily lives – in our households and workplaces, in our communities and neighbourhoods, in business and industry, and in government. Some people and communities will be harder hit than others and will need help to cope with the impacts of climate change and with the rising energy prices that will occur as Australia moves to reduce greenhouse gas emissions.

But climate change is not all bad news. The shift to a low carbon, ‘green’ economy brings with it some of the biggest opportunities we have encountered since the Industrial Revolution of the 19th century.

By being smarter in the way we tackle climate change, we will not only improve our quality of life, we will also develop new ideas, services and products that will boost our economy and create new jobs. Victoria has genuine opportunities to lead the world in a number of areas, such as carbon capture

and storage, water technologies and solar power. The very substantial benefi ts generated from these opportunities mean that we cannot afford to let them slip by.

The current global economic downturn is not a reason for delay. While Victoria can expect lower growth in the short-term as a result of the fi nancial crisis, global warming remains the biggest long-term threat to Victoria’s prosperity and will remain long after the downturn has passed. Decisive action on climate change will stimulate new economic activity and underpin a strong Victorian economy into the future – irrespective of the fallout from the fi nancial crisis.

Now is not the time to be cautious. As a community, we need to fi nd the courage to make bold decisions if we are to sustain our standard of living and create new economic opportunities.

But more importantly, we have an obligation to our children and grandchildren to ensure that they inherit a planet that is not damaged beyond repair. In developing Victoria’s new climate change strategy, the Government is determined to ensure that the legacy our generation leaves to future generations of Victorians is a sustainable, productive economy, strong and robust communities, and a healthy, resilient environment.

John Brumby Premier

Message from the Minister for Environment and Climate Change

Victoria has entered a new climate

of opportunity, in which our reforms to address climate change will open new prospects for our innovators and entrepreneurs. For over a decade Victoria has been a national leader in tackling climate change. Now is the time to renew our efforts to ensure our industries, communities and families are ready to take advantage of the opportunities created by the transition to a carbon constrained economy.

Victoria’s innovation, skills and economic credentials mean we are well placed to take these opportunities. Victoria has led Australia in science, technology and innovation support. We have made critical investments in renewable and low emissions technologies and in the skills needed for a low carbon, more sustainable future.

The range of potential areas of opportunity for Victoria is extensive, from energy, agriculture and the built environment to design, manufacturing and carbon

market operation. Now is the time to further focus this culture of innovation on the defi ning challenge of our century.

This Green Paper outlines our strategic vision for climate change action: driving innovation and opportunity; ensuring Victoria does its part in the national effort to reduce emissions; preparing for and adapting to the unavoidable impacts of climate change; and smoothing the transition for communities and families.

The Climate Change White Paper, to follow engagement with the community, will set out a comprehensive new climate change strategy and actions for the State. It is important that this renewed climate change agenda is fi nalised in the context of progress toward the Commonwealth Government’s Carbon Pollution Reduction Scheme.

Our objective is a truly sustainable policy response: creating economic opportunity; adopting new approaches to supporting vibrant and resilient communities and households; and managing and adapting to the impacts of climate change on our shared natural assets.

Our legacy to the next generation must be an innovative and resilient Victoria, able to adapt to a low carbon future and take advantage of the new jobs, technologies and markets

that will fl ow from it. This will require innovation and creativity, and is not a legacy that governments alone can create.

Through the Green Paper we will engage with individuals, communities and businesses to ensure our policy directions will provide a foundation for a prosperous and sustainable, low carbon future. Together we can rise to this challenge.

I encourage all Victorians to take the opportunity participate in the discussion, and share your ideas, expertise and vision for Victoria’s future.

Gavin Jennings Minister for Environment and Climate Change Minister for Innovation

Contents

HIGHLIGHTS OF THE VICTORIAN CLIMATE CHANGE GREEN PAPER 1

PART ONE: VICTORIA’S CLIMATE CHANGE FRAMEWORK

1.1 Reviewing our approach to climate change 5

1.2 The Commonwealth Carbon Pollution Reduction Scheme – a new policy landscape 7

1.3 Governments working together – a new role for Victoria 8

1.4 Our long-term goals 11

1.5 Our priorities 12

1.6 Choosing between different policy ‘levers’ 13

PART TWO: THE CHALLENGE OF OUR GENERATION 17

2.1 Our changing climate 18

2.2 Our current emissions 24

PART THREE: COMPLEMENTING THE CPRS:

A NEW WORLD OF OPPORTUNITIES 27

3.1 The stationary energy sector 33

3.2 Energy effi ciency 35

3.3 Transport 37

3.4 The built environment 39

3.5 Solid waste management 42

3.6 Land use and forestry 43

3.7 Agriculture 45

PART FOUR: ADJUSTMENT: THE LOW CARBON ECONOMY -

A CLIMATE OF OPPORTUNITY 47

4.1 Creating opportunities 51

4.2 Driving innovation 53

4.3 Developing skills 55

4.4 Supporting adjustment to change 57

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PART FIVE: ADAPTATION: A NEW REALITY 63

5.1 Managing our water resources 69

5.2 Victoria’s natural ecosystems 71

5.3 Adapting to change in the built environment 73

5.4 Building responsive emergency services 75

5.5 Health and wellbeing in a changing climate 77

PART SIX: A SHARED RESPONSIBILITY 79

6.1 Communities and climate change 81

6.2 Government leading the way 84

6.3 Making decisions in a time of climate change 85

HAVING YOUR SAY 87

Published by the Victorian Government Departmentof Premier and Cabinet, Melbourne, June 2009. © The State of Victoria, Department of Premier and Cabinet 2009.

This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

Authorised by the Victorian Government1 Treasury Place, East MelbournePrinted by Stream SolutionsPrinted on 100% Recycled paperISBN 978-1-921337-51-2

DISCLAIMER

This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without fl aw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication.

ACCESSIBILITY

If you would like to receive this publication in an accessible format, such as large print or audio, please telephone 03 9651 2624, or 03 9651 5094 (TTY), or email climatechange@dpc.vic.gov.au.

An electronic copy of this document is available online at www.climatechange.vic.gov.au.

Highlights of the Victorian Climate Change Green Paper

Why are we releasing a Climate Change Green Paper?

The Victorian Government has led the way on climate change action. In a new era of national effort to reduce emissions, through the Commonwealth Government’s Carbon Pollution Reduction Scheme, now is the time to ensure that Victoria is well placed to take advantage of the opportunities created by the transition to a carbon constrained economy. In this climate of opportunity the Victorian Government will drive the development of new technologies, industries and jobs to maximise the benefi ts to Victorian families, businesses and communities.

Victoria is recognised as a leader in tackling the challenges of climate change In 2008, as the fi rst step in updating Victoria’s climate change strategy, the Premier hosted the Victorian Climate Change Summit and released a discussion paper – A Climate of Opportunity. Over the past year, the Government has consulted widely on climate change, meeting with individuals, businesses, peak industry bodies and community groups across the State. The Government has also received submissions from Victorians in response to the summit discussion paper.

The Victorian Government will continue to take strong action to give Victoria a competitive edge as we move towards a low carbon economy. We have the strengths and capabilities to be a leading economy in a carbon-constrained world, taking up opportunities for securing new markets and generating many new high quality jobs.

A new role for the State We are entering a new phase of climate change policy in Australia, and Victoria must act now to ensure the State has a robust framework in place to complement national action and to meet the complex needs of our diverse economy and society. The Commonwealth is committed to introducing a national Carbon Pollution Reduction Scheme (CPRS) to put a price on carbon. This national framework will now drive emissions reductions in Australia. The opportunity now exists to more clearly focus State action on policies that complement the national scheme, and which drive our adaptation to the impacts of climate change we cannot avoid.

Victoria’s efforts to support national leadership are vital Collaboration and leadership at the national level is critical to a successful response by Australia and Victoria to the climate change challenge. Victoria’s policies and actions must contribute to national and international efforts to reduce emissions. Victoria also has a role to play in shaping our national and international contribution to the global mitigation effort based on the latest scientifi c advice.

If a satisfactory global agreement to combat climate change post­2012 is reached, the Victorian Government will strongly urge the Commonwealth Government to place Australia on a trajectory to achieve a reduction in Australia’s emissions of at least 80 per cent by 2050.

The framework for State action The Green Paper sets out the challenge of focussing Victorian action across three distinct fronts:

1. Complementing the CPRS to drive emissions abatement in areas of market failure or those sectors not covered by the CPRS State Government action to reduce emissions will need to complement (rather than duplicate) national developments such as the implementation of the CPRS. Initiatives developed by the Victorian Government, to encourage greater energy effi ciency in our households and businesses, drive innovation in low emission energy technologies in Victoria’s interests and to drive emissions reductions in the agriculture sector will become the focus of action. This paper will address specifi c opportunities in the areas of energy, transport, the built environment, waste, water, agriculture and in our ecosystems.

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2. Positioning Victoria to take advantage of the opportunities created by the transition to a carbon constrained economy The Government’s objective in this area will be to maximise the potential of the “Green Economy” for Victoria – attracting green investments and creating green jobs. The Victorian Government will achieve this primarily by driving innovation and facilitating the development of low carbon industries in the State. The Victorian Government’s upcoming Green Jobs Action Plan will be a key initiative in this area. The Government’s work in this area will also focus on giving households the tools and the support to effi ciently adjust their own behaviour in response to the introduction of a carbon price. The Victorian Government has a range of policies, tools and actions available to it, including providing information as well as fi nancial and institutional support to households. This could include actions to facilitate community led initiatives to encourage homes and businesses to utilize cost effective energy effi ciency measures.

3. Adapting to the impacts of climate change we can no longer avoid Scientists tell us that some effects of climate change are already unavoidable in the short term. As a result Victorians will need to adapt to these inevitable changes to the natural environment including more extreme weather events and greater fi re risks. The Government will ensure the right mix of policies and tools are available to Victorian businesses, households and communities to understand and prepare for climate change pressures before they occur. Adapting to the unavoidable impacts of climate change will also require the State to change the way it manages the State’s natural resources and the way it delivers public services, in particular health services.

In these ways the Victorian Government will ensure that as the State makes the transition to a low carbon world, its economy remains strong, households are assisted and the response to climate change is consistent with a broader commitment to social justice.

The Government has developed fi ve priorities for action within this framework that will give Victoria a strong foundation for further developing its long term response to climate change. The Government is particularly interested in receiving suggestions for policies or projects that fall within these fi ve priorities.

The Victorian Government will: Drive innovation to position Victoria to capitalise on new jobs and skills, new technologies and new markets and accelerate the transition to a low carbon economy Support private action to adapt to a changing climate, and undertake adaptation actions on behalf of the Victorian community to protect the environment, key public assets and manage major public risks Help vulnerable regions, businesses and communities adjust to a carbon price, particularly the Latrobe Valley Promote low emissions energy technologies as the key to Victoria’s energy future Establish future-focussed transport, planning and building systems to support a low emissions future and accommodate a changed climate.

Through this Green Paper, the Government is keen to listen to the views of all Victorians on how we can achieve these priorities over the next decade and more.

What Victorians are saying Many individuals and organisations around Victoria contributed to the Government’s community consultations on climate change, conducted during 2008. While coming from different backgrounds, places and perspectives, the suggestions and submissions made to the Government share some common themes.

• Victorians are deeply concerned about climate change, but are unsure about the urgency or severity of the problem. Many people are worried about how climate change will affect their daily lives and their local communities. They are especially concerned about the possibility of increased prices for petrol, electricity and water.

• While Victorians are prepared to signifi cantly reduce greenhouse gas emissions to infl uence the course of climate change, many people do not have a clear idea of what actions they can take in their personal lives to help to achieve this goal or adapt to the impacts of climate change.

• Victorians are interested to understand the availability of Victorian Government programs and services that can help people to reduce their greenhouse gas emissions or become more energy effi cient.

• Protection of the environment and biodiversity are important priorities for Victorians.

• There is broad agreement that low income households must be protected from increasing energy prices and that disadvantaged communities should receive support to help them to adjust to a carbon price.

• There is strong support for emissions reduction targets.

• There is a strong desire to make the switch to renewable energy such as wind, solar, biomass, biogas and geothermal power.

• The need to reduce our reliance on cars and to encourage people to drive ‘greener’ cars is a strong theme in consultations and submissions. Many people support increased investment in Melbourne’s public transport network and greater support for walking and cycling.

• Encouraging sustainable planning and building design is advocated by many organisations and individuals. There are calls for substantial planning reform in urban areas, including greater residential density, provision for solar power and on-site co-generation, and sustainable urban fringe developments. Containing urban sprawl is also supported by many people.

• Across the state, a signifi cant number of community groups are leading the way in taking action on climate change, including community owned renewable energy projects and community bulk purchase schemes for energy effi cient goods and services. Many people felt that stronger support should be given to such community-based initiatives.

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Front cover image: Ararat, Source: Tourism Victoria

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Image: Codrington Wind Farm. Source: Pacifi c Hydro

Victoria’s Climate Change Framework

The Victorian Government wants to set strong, clear goals in responding to climate change.

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As part of the upcoming Climate Change White Paper, the Victorian Government wants to set strong, clear goals in responding to climate change. These goals and priorities should refl ect the State’s contribution to national efforts to reduce emissions, as well as Victoria’s ambitions for managing and adapting to the impacts of climate change. The Government also wants to ensure that Victoria is positioned to take advantage of the new opportunities emerging from the introduction of a carbon price.

What is the Victorian Climate Change Green Paper? Green Papers are draft policy documents, designed to stimulate community discussion on a particular issue.

This Green Paper is intended to stimulate discussion about the Victorian Government’s policy response to climate change.

After the Government considers feedback on this Green Paper, it will produce a fi nal White Paper, which will outline new initiatives, investment and timetables for action on climate change.

STEPS TO THE CLIMATE CHANGE WHITE PAPER

STEP 1 The Premier attends the 13th Conference of the Parties to the United Nations December 2007 Framework Convention on Climate Change, where the Australian Government formally

ratifi es the Kyoto Protocol.

STEP 2 The Premier hosts a Climate Change Summit at Parliament House, bringing together April 2008 100 delegates from industry, non-government organisations, peak bodies, local

government, community groups and regional Victoria. Following the summit, the Government releases a discussion paper – A Climate of Opportunity – as the fi rst stage in the White Paper process.

STEP 3

May 2008 to November 2008

The Victorian Government conducts consultations throughout Victoria, seeking ideas and input into the Green Paper. Submissions are also received from members of the public.

The Government conducts an audit of its climate change policies and programs.

STEP 4 (This The Government publishes a Green Paper, which: Document) • Outlines the climate change issues facing Victoria June 2009 • Identifi es the role of government in dealing with these issues

• Proposes climate change goals and priorities for Victoria

STEP 5 The Government seeks comment on the Green Paper within a set time period, asking June 2009 to Victorians for their views on the paper’s proposals and to put forward new ideas to September 2009 implement the Government’s climate change framework.

STEP 6

June 2009 to October 2009

The Government considers all feedback, comments, ideas and suggestions as part of its ongoing review of Victoria’s climate change strategy.

STEP 7 The Government releases a White Paper, which sets out its fi nal position and includes Late 2009 new investment, policies and actions on climate change.

The Government also releases a draft Climate Change Bill to complement the new policies and actions included in the White Paper.

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1.1 Reviewing our approach to climate change

The Victorian Government is already taking action to respond to climate change. While strong progress has been made, the Government believes that Victoria needs a new and comprehensive, statewide climate change strategy. The Government also understands the necessity of keeping pace with rapid advances in climate change science and the evolving national and international policy framework.

2002 In 2002, the Government launched the Victorian Greenhouse Strategy and commenced a three year program of action to reduce Victoria’s greenhouse emissions across a range of industry sectors.

2005

In 2005, the Government released the Victorian Greenhouse Strategy Action Plan Update to take into account national and international developments in climate change policy.

2006

In 2006, the Victorian Government released the Our Environment, Our Future – Sustainability Action Statement, which provided $200 million for actions aimed at securing a sustainable environment for the State’s future and for future generations of Victorians.

2007 In 2007, the Government announced major new investment of $4.9 billion to secure Victoria’s future water supply through the Victorian Water Plan.

2008 Work on climate change progressed throughout 2008. As the fi rst step in updating Victoria’s climate change strategy, the Government hosted the Premier’s Climate Change Summit and released a discussion paper – A Climate of Opportunity. Over the past year, the Government has consulted widely on climate change, meeting with individuals, businesses, peak industry bodies and community groups across the state. The Government has also received submissions from Victorians in response to the summit discussion paper.

The Victorian Government is playing an active role in the rapidly developing national debate about climate change. In 2008, the Commonwealth Government moved to implement at a national level many of the measures advocated by the Victorian Government to lower greenhouse gas emissions and promote renewable energy. In July 2008 it released its CPRS Green Paper setting out the framework for national emissions trading. This was followed by the release of the fi nal report from the Garnaut Climate Change Review, which for the fi rst time provided detailed analysis into the costs of climate change for Australia and recommendations on our long-term policy response to climate change.

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Image: Brighton Beach bathing boxes. Source: Tourism Victoria

Work at the national level on climate change has continued this year. As part of its Nation Building and Jobs Plan, the Commonwealth launched the $3.9 billion Australian Government’s Energy Effi cient Homes Package to improve the energy rating of Australian homes. These developments have been welcomed by the Victorian Government as a clear indication that the Commonwealth is taking action at the national level.

Today, Victoria needs a renewed climate change agenda in order to ensure that the State is best positioned to respond to both:

The Commonwealth Government’s intention to put a price on carbon emissions through the CPRS; and

The continuing unavoidable impacts of climate change.

These signifi cant changes give the Victorian Government the opportunity to sharpen and strengthen its policy approach to climate change to ensure we are achieving the best outcome for Victorian households, communities and businesses.

This Climate Change Green Paper is the next step in reviewing Victoria’s approach to climate change. Through the Green Paper, the Government is seeking ideas, suggestions and input into how Victoria can reduce greenhouse gas emissions, adjust and adapt to climate change, and make the shift to a low carbon economy. This process will conclude with the release of the Climate Change White Paper.

Climate Change Policy in Australia – The Story So Far The climate change policies of governments in Australia have been rapidly evolving in recent years. In many respects, the Victorian Government has played a leadership role amongst Australian governments in the development of climate change policy.

Before 2007, the Commonwealth Government did not support the use of a carbon price to reduce emissions in Australia. In the absence of national leadership, Victoria took on the responsibility for the development of carbon emissions abatement policies. Victoria implemented many Australian policy fi rsts for emissions abatement during this time including:

• Being the fi rst state to set a Renewable Energy Target to mandate a target of 10 per cent of Victoria’s electricity acquisitions being from renewable sources by 2016

• Launching a $200 million package of initiatives to drive environmental sustainability: Our Environment, Our Future

• Establishing the $370 million Energy Technology Innovation Strategy to support the research, development and demonstration of large scale low emissions energy technologies, such as coal drying, carbon capture and gasifi cation, and solar

• Helping Victorians reduce their household energy use through the internationally recognised ‘Black Balloons’ awareness campaign

• Introducing the Victorian Energy Effi ciency Target and Energy Saver Incentive scheme, to help more families reduce greenhouse gas emission and cut their power bills

• Being the fi rst state in Australia to introduce 5-Star standards for new residential buildings

However, perhaps most signifi cantly, the Victorian Government, in conjunction with the other Australian States and Territories, commissioned and supported the Garnaut review into medium-to-long term national policies to respond to climate change. The Secretariat for the Review was based in the Victorian Department of Premier and Cabinet and the State provided signifi cant resources to assist the work of the Review.

After the 2007 election, the Commonwealth Government joined the Garnaut Review and committed to the introduction of a national emissions trading scheme. Now that the Commonwealth Government is in the process of implementing this commitment through the Carbon Pollution Reduction Scheme, Australian climate change policy is entering a new phase.

1.2The Commonwealth CarbonPollution Reduction Scheme– a new policy landscape The Commonwealth Government’s commitment to national emissions abatement through the Carbon Pollution Reduction Scheme changes the Australian climate change policy landscape. As the Commonwealth Government’s approach to emissions abatement has changed, so too must the Victorian Government’s climate change policy agenda.

As already outlined, the introduction of a carbon price will create opportunities for a policy agenda designed to capitalise on the transformation of the Victorian economy caused by the introduction of a carbon price. Similarly, the introduction of a carbon price will create a challenge for the Government to assist Victorians to adjust to the impact of such a price on their lives. However, the most signifi cant impact of the CPRS on the Victorian Government’s policy agenda will be in the area of emissions abatement.

As Professor Garnaut notes later in this Green Paper:

The CPRS should be the main instrument for reducing emissions in Australia. Supplementary policies should be about reducing the cost to the economy of complying with the carbon emission trajectories that are part of the scheme.

In this new phase of climate change policy, the CPRS will be the primary mechanism for driving reduction of carbon emissions in Australia. To this end, once the CPRS is operational, the focus of Victoria’s climate change policies will need to be on actions complementary to the CPRS.

One example of this need for a change in policy focus is state based emissions reduction targets. As Professor Garnaut further notes in this Green Paper:

The introduction of the CPRS means that there is no longer any value in state and territory governments setting their own binding targets for reducing statewide emissions. Because circumstances vary across Australia, meeting national targets will be most effi ciently achieved by allowing some states to make greater cuts than others. This is a major advantage of implementing a fl exible policy tool like an emissions trading scheme.

In 2006, the Victorian Government set a long-term target to reduce greenhouse gas emissions by 60 per cent by 2050, compared to 2000 levels. This target was based on the best available scientifi c evidence at the time and – when introduced – was a world-leading initiative to tackle climate change.

While Victoria has been a leader in setting emissions targets, the introduction of the CPRS means that a binding emissions reduction target set by the Victorian Government would distort the operation of the scheme by mandating that a set level of reductions should take place within the State, regardless of the effi cient allocation of national emission reductions that should be achieved through the CPRS market. Accordingly, the Government does not see any benefi t in legislating for a state-based emissions reduction target that is inconsistent with a national target.

The Victorian Government has long argued for the introduction of a national emissions trading scheme. Victoria will play its part in ensuring the success of this new scheme. The Government, however, reserves its fi nal opinion on the design of the CPRS until the relevant legislation is passed by the Commonwealth Parliament. In the event that the fi nal CPRS design fundamentally differs from the proposals currently set out by the Commonwealth in key areas, the Victorian Government will consider its options for addressing any outstanding gaps. In particular, Victoria will not abolish or scale back State emission abatement initiatives until an effective Commonwealth equivalent is in operation.

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1.3 Governments working together – a new role for Victoria

Victoria cannot respond successfully to climate change in isolation. Addressing climate change will require national action. It will require Australian governments to work together at all levels – local, state and territory, and national – to establish shared goals, deliver consistent messages on climate change, set clear divisions of responsibility and take action in areas of common interest and concern.

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While Australian governments are already working together on a number of climate change-related matters, much more needs to be done.

Irrespective of the policies and actions initiated by state and territory governments, national cooperation will be crucial to success in a number of areas, including implementing an effective national emissions trading scheme, meeting national emissions targets, boosting investment in low emissions energy technologies, and creating a dynamic and robust national economy that has the capability to meet climate change challenges.

Each level of government in Australia has an important role to play in addressing climate change. But it is not always a simple matter to determine which level of government is best placed to take action. Responding successfully to climate change will require clear lines of responsibility between each level of government to reduce duplication and confusion, and to make sure that public investment is coordinated, effi cient and effective.

Determining the level of government that should act in specifi c instances requires consideration of which government has the appropriate power to act (for example, if the activity comes within one of the Commonwealth’s heads of power under the Australian Constitution), which can deliver objectives at the lowest cost and which is best placed to coordinate delivery. More broadly, all Australian governments will need to deliver clear and consistent messages on climate change, champion agreed policies and initiatives, and demonstrate leadership in their decision making and operations.

The role of the Commonwealth Government The introduction of the CPRS by the Commonwealth Government is consistent with the Commonwealth’s constitutional role. The importance of national coordination and consistency in relation to the scheme requires the Commonwealth Government to take the lead in implementing and administering the CPRS, and in funding the major adjustment policies that will need to go alongside this signifi cant policy change. As part of this, the Commonwealth – in collaboration with the states and territories – will also need to address any perverse environmental outcomes that emerge from the implementation of the CPRS, such as damaging impacts on ecosystems and biodiversity.

The Commonwealth will also lead national efforts to adapt to climate change. In turn, state and territory governments – with support from local government – will play a key role in designing and delivering adjustment and adaptation programs at the community level, and in ensuring that local markets and regulatory frameworks create an environment in which the CPRS and other climate change policies can be effective. Considerable cooperation and coordination between all three levels of governments will be essential to meeting these responsibilities.

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The role of the Victorian Government Generally, the Victorian Government should direct policy in those areas where specifi c issues have been identifi ed that are relevant to Victoria’s circumstances. As with other Australian state and territory governments, the Victorian Government has the predominant role in:

Managing adaptation issues specifi c to Victoria’s circumstances and jurisdiction (for example, in important agricultural sectors such as dairy and horticulture)

Promoting industry development based on Victoria’s competitive advantages

Managing adjustment policy to help Victorian communities and businesses to respond to a carbon price (such as providing support for energy effi ciency improvements)

Delivering policies where the State has a specifi c regulatory role, such as primary industries, transport, waste, education, environmental protection and planning.

The states and territories also have better access to local and regional knowledge. They are in a better position to assess the success of national measures and augment or amend these measures to suit specifi c local needs. They also have control over the critical regulatory levers of planning and natural resource management, as well as emergency services.

One of the strongest roles for the Victorian Government in climate change policy will be in the area of adaptation. Across the State, regions face different risks and challenges based on their geography, demographic mix and resilience to the various impacts of climate change. Industries also face differing risks and challenges depending upon their energy intensity, trade exposure, size, market power, preparation for climate change or location (urban or rural). Action to adapt to these impacts is best managed at the local or regional level.

National reform on climate change Over the last 25 years, Australia has enjoyed strong long-term economic growth, one of the highest rates of productivity growth in the developed world, and resilience in the face of tough economic conditions. This is due largely to major waves of economic reform that have opened up the Australian economy and increased its competitiveness. This prosperity is threatened by climate change, which has the potential to disrupt our economy, damage our environment and diminish our quality of life. Alongside other countries, Australia must take strong action to avoid irreversible and dangerous climate change and make the transition to a low carbon economy.

The current cooperative approach being adopted by Australian governments on a range of national issues builds on the success of the 2006 National Reform Agenda (NRA) led by the Council of Australian Governments (COAG). The COAG National Reform Agenda refl ects a new, collaborative approach to governments working together in Australia. It aims to deliver national outcomes agreed to by all governments in the areas of human capital, competition and regulation – while supporting policy diversity and fl exibility, and local solutions and responses. Through this new approach, the NRA aims to maximise the benefi ts of reform across the Australian community.

As a result of the NRA, and previous rounds of reform, Australia is better placed to deal with the structural transition that will be required as both mitigation efforts and adaptation activities gather pace. Nevertheless, climate change will present unique challenges. There will be opportunities for improvement in targeted areas through a collaborative national approach that will be mutually benefi cial for all jurisdictions and the Commonwealth. Recognising this, COAG has already put in place some arrangements to facilitate cooperation. However, more is required.

Victoria is calling for a signifi cant escalation in COAG’s efforts in relation to climate change, underpinned by an intergovernmental agreement on national climate change reform and new institutional arrangements.

A cooperative national approach offers the best prospects of delivering effective and effi cient actions to complement the CPRS, achieve economic effi ciency, and deliver environmental and social objectives including an effective adaptation response in the longer term. The approach should fi ll key gaps and enable us to deliver on COAG’s overall goal of an effective national response to climate change.

The new reform push should have four key objectives:

• The development of an overarching implementation framework for a national adaptation response.

• An agreed way forward among jurisdictions and the Commonwealth in relation to those areas of CPRS design that have the potential to impact materially on states.

• An agreed way forward among jurisdictions and the Commonwealth on streamlining measures to complement the CPRS, including a commitment to retain the principles of complementarity into the future.

• Agreement among jurisdictions and the Commonwealth to collaborate effectively in areas that will be critical in the transition to the low carbon future under the CPRS. In particular:

- Structural adjustment policies for affected regions - Innovation

- Skills and training - Energy effi ciency

- Infrastructure

All jurisdictions and the Commonwealth must be involved in the process of reform. COAG offers the best prospects of developing a coherent national approach to climate change, addressing issues of national signifi cance and giving Australians confi dence that climate change is being tackled across the nation.

This would also signal that climate change policy in Australia has truly come of age and that all Australian governments recognise the urgency and scale of the challenge facing our nation as we respond to the threats and opportunities presented by climate change.

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The role of local government Local government is a critical partner in the response to climate change – and climate change is increasingly becoming a priority for local governments. Local governments deliver a wide range of programs and administer regulations that infl uence climate change mitigation and adaptation. Regional development agencies, local councils and regional business and industry organisations have a major role to play (in conjunction with state and territory governments) in helping to design and deliver policies and programs that have a particular regional and community focus. Local government also has an important role in monitoring the effects of national policies on local and regional communities, industries and economies. Local governments are best placed to address local climate change impacts and to build community capacity to respond and adapt to climate change. Working on behalf of – and in partnership with – Victorian communities, local government has been at the forefront of

local climate change response for several years. Currently, councils across Victoria are playing a major role in developing and facilitating local climate change initiatives, customising responses to suit local circumstances and engaging their communities in discussion about the potential local impacts of climate change. In 2005, the Victorian Government and fi ve key local government peak bodies signed the Victorian Local Sustainability Accord – a landmark partnership agreement that aims to improve environmental sustainability by strengthening cooperation between the state government and local government. To date, approximately 70 local councils have signed up to the Accord, developing Local Environmental Priority Statements and delivering a range of innovative local projects supported by Accord funding. This strong support for the Accord demonstrates the commitment of Victoria’s local government to play a leading role in meeting sustainability challenges.

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Image: Sunset over coastal Victoria.

1.4Our long-term goalsAt the Premier’s Climate Change Summit, the Government articulated its preliminary view on ten strategic goals in responding to climate change.

These goals were developed to refl ect the State’s contribution to national efforts to reduce emissions, as well as Victoria’s ambitions for successfully managing and adapting to the impacts of climate change and to ensure that Victoria is positioned to take advantage of the signifi cant new opportunities emerging from the introduction of a carbon price.

After consulting and receiving feedback on the outcomes of the Summit, the Government proposes the following ten goals for Victoria’s climate change strategy across the critical policy areas of complementing the CPRS, adjustment, adaptation and a shared responsibility (community and government). These goals refl ect the Government’s longer term ambitions as Victoria moves into an era of carbon constraint.

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VICTORIA’S CLIMATE CHANGE GOALS

COMPLEMENTING THE CPRS – A NEW WORLD OF OPPORTUNITIES

GOAL 1 Contribute to global and national emissions reductions

GOAL 2 Develop a portfolio of energy options for a low carbon future

ADJUSTMENT – THE LOW CARBON ECONOMY – A CLIMATE OF OPPORTUNITY

GOAL 3 Help communities and industries to adjust to a carbon price

GOAL 4 Capitalise on new opportunities emerging from a carbon price

ADAPTATION – A NEW REALITY

GOAL 5 Enable Victoria’s regions, industries and communities to capture opportunities and adapt to a changing climate

GOAL 6 Promote resilience and improve the management of Victoria’s natural resources, ecosystems and biodiversity

GOAL 7 Manage the risks to Victoria’s infrastructure, built environment and communities through good planning and emergency response systems

A SHARED RESPONSIBILITY

GOAL 8 Work in partnership with Victorians to provide the knowledge and information needed to respond effectively to climate change

GOAL 9 Help to ensure vulnerable communities are not further disadvantaged as a result of climate change

GOAL 10 Take action to reduce emissions across government operations and ensure that climate change is considered in all government decision making

1.5 Our priorities To support its long-term goals, the Government has developed fi ve priorities for action that will give Victoria a strong foundation for developing a successful long term response to climate change. The Government is particularly interested in receiving suggestions for policies or projects that fall within these fi ve priorities.

VICTORIA’S CLIMATE CHANGE PRIORITIES

Drive innovation to position Victoria to capitalise on new jobs and skills, new technologies and new markets and accelerate the transition to a low carbon economy

- It is essential that the Victorian economy is prepared for the transition to a low carbon economy to ensure that large scale emissions abatement is achieved at least cost.

- This is a key area where State Government action can complement national emissions trading to make sure that the right conditions exist for businesses and communities to explore new ways of doing things. The Government can help Victorians to become more innovative in their responses to climate change by ensuring Victoria has a fl exible and dynamic economy, with good infrastructure, institutions, low regulatory burden, and especially by promoting a strong skills framework.

Support private action to adapt to a changing climate, and undertake adaptation actions on behalf of the Victorian community to protect the environment, key public assets and manage major public risks

- Irrespective of current mitigation actions, a signifi cant degree of change is already built into our climate system. These impacts will be felt locally, giving state and local governments a strong role to play in undertaking research, disseminating information and taking action to assist the Victorian community to prepare for climate change.

- Adaptation actions by Victorian households and businesses will generally result in the most innovative, locally- appropriate and cost effective adaptation responses. However governments have a key role in facilitating this response by ensuring that adequate information is available and that markets and regulation support decision making.

- As well as enabling the adaptation response by households and businesses, government will need to act on behalf of the community to protect vital public assets or manage signifi cant public risks. For example, government will have a role in helping the natural environment to prepare for, and adapt to, climate change, and in undertaking adaptation action to protect long-lived or high-value public assets such as buildings, bridges and dams. Government will also need to drive the response in areas such as essential and emergency services.

Help vulnerable regions, businesses and communities adjust to a carbon price, particularly the Latrobe Valley

- While there are long term, unambiguous benefi ts of acting to reduce climate change, there are likely to be some adjustment costs in the short term. Some regions, businesses and communities of the State will be more immediately affected by the introduction of a carbon price than others.

- Where those affected are particularly vulnerable (eg: the Latrobe Valley), the Victorian Government has a role in working with the Commonwealth to ensure that the transition to a low carbon economy is a smooth one.

Promote low emissions energy technologies as the key to Victoria’s energy future

- The energy sector will have to undergo the most fundamental transition if we are to signifi cantly reduce our emissions to address the cause of climate change.

- The Victorian Government can continue to play a strong role in fostering industry and regional development by attracting new investment and signalling Victoria’s intention of becoming a location for new energy ideas, expertise and initiatives. Further activity in this area has the potential to drive important innovation in clean energy technologies, and to boost regional development through large-scale projects.

Establish future-focussed transport, planning and building systems to support a low emissions future and accommodate a changed climate

- Urban development and the performance of new and existing buildings are critical areas because of the high contribution that the built environment and transport make to total State emissions – and because the decisions made now will have lasting implications for Victoria’s ability to adapt to climate change in the future.

- Planning and infrastructure delivery is also an area of responsibility that sits clearly with state and local governments. A failure to address this area in the short term will make the transition to a low carbon economy more diffi cult and may limit the potential for gains from the growing market for sustainable buildings and the interest in liveable communities.

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1.6Choosing between different policy ‘levers’

The uncertainty surrounding the impacts of climate change makes choosing the right policies a particularly diffi cult and challenging task. This uncertainty means that we have to make our policy choices very carefully, balancing the costs and benefi ts of each decision and building in fl exibility to shift direction if conditions change.

Once public consultations are complete, the Government will apply a consistent and rigorous approach to making decisions about which climate change policies it will pursue. The Government will ensure that each new climate change policy demonstrates:

1. A clear and appropriate role for government 2. A role for the Victorian Government and

compatibility with the Commonwealth’s climate change strategy

3. Alignment to Victorian policy objectives 4. Policy efficiency 5. Policy effectiveness

There are a range of different policy ‘levers’ that can be applied to the various problems that Victoria may face as a result of climate change. Often one single policy is not as effective as a suite of policy options to deal with a problem or opportunity. Each of these ‘levers’ has pros and cons, as set out below. These trade-offs need to be considered when deciding which options to pursue.

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POLICY LEVERS OPEN TO GOVERNMENT

PROS CONS

Can reduce overall levels of effi ciency in the economy when resources are diverted away from areas where they could be used most productively

Can provide certainty and clarity where requirements and

LEGISLATION AND

REGULATION

Imposes costs on the community when people are compelled to undertake actions that are not least cost.

standards are set out in detail

Can be a cost effective way of achieving outcomes if well targeted

Government mandating or using co-regulation or voluntary agreements to control certain activities

May impose a signifi cant burden on affected parties (such as high compliance costs)

Significant resources may be required to establish and maintain the regulatory framework

Can be more inflexible than other forms of intervention

Can be diffi cult to determine

Provides greater fl exibility for participants in achieving compliance

optimal caps or tax levels if suffi cient information is not available

Encourages economically effi cient allocation of resources and least-cost methods of compliance

Avoids problems associated with centralised discretionary

MARKET-BASED

INSTRUMENTS

Interventions that work by affecting prices in markets

Does not work as well where:

• Solutions to a problem are similar across fi rms and households;

• There are site specifi c issues (e.g. air pollution hotspots)

decision-making Firms and households do not have experience with similar markets.

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Disseminates information about compliance requirements

May be less effective than other regulatory approaches as it relies

Can reduce resources EDUCATION AND on voluntary action expended on implementing and enforcing regulatory programs

Can educate the community about the virtues of a particular

INFORMATION STRATEGIES

Establishing education / information campaigns

The community can become de­sensitised to or weary of messages for long term problems, reducing effectiveness

policy, increasing acceptance or compliance

Specifi c groups may hard to target

Can be mobilised quickly and targeted in specifi c areas

Can demonstrate Government leadership and commitment to specifi c issues

GOVERNMENT SPENDING

Using Government funds directly or to promote or

Signifi cant resources may be required to establish and maintain programs

Can drive private sector investment to deliver broader

support certain activities or markets

Reduces resources available to spend on other areas

public benefi ts in multiple areas

Can save costs associated with developing new regulation by more effectively using the Could result in legislation that is existing legislative framework BROADER POLICY SETTINGS too complex

Promotes consistent treatment of related issues or concerns

Can be an important pre­

Supporting polices that account for climate change and build capacity for change

Current resources may not be able to deal adequately with all matters covered by the legislation

requisite for further policy development

(can include advocacy and organisational structures)

Not as fl exible as other options when technology is

May promote a high level of changing rapidly

compliance where existing legislation is well understood

The White Paper will lay the foundations for Victoria’s response to climate change. It will also complement the Government’s policy statements across the spectrum of issues that relate to climate change, including the Victorian Water Plan, Melbourne 2030, the Future Farming statement and The Victorian Transport Plan. In turn, future policy statements will complement the direction of the Climate Change White Paper, including the forthcoming Future Energy Statement and the Land and Biodiversity in a Time of Climate Change White Paper.

A QUESTION TO CONSIDER

Has the Government set the right priorities for short-term action on climate change? Should there be others?

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Premier’s Climate Change Reference Group In May 2008, the Government established the Premier’s Climate Change Reference Group to provide expert, independent advice on a range of climate change issues. In particular, the Government has used the group’s advice as a guide to climate change policy in the context of a national emissions trading scheme, the opportunities for Victoria in terms of innovation, technology and industry, and the type of support and assistance vulnerable communities will need to make the shift to a low carbon economy.

The group has strongly advocated early action by Victoria on climate change, stating that “the urgency of climate change cannot be underestimated” and calling on the Government “to invoke a ‘call to action’ from our communities and businesses”.

The group has made a number of recommendations to the Premier. In particular, the group has recommended that the Victorian Government should:

Emissions

• Advocate for a peak in total national greenhouse gas emissions by 2010, a national emissions reduction target of 25 to 40 per cent below 1990 levels by 2020 and an ‘aspirational’ national emissions reduction target of at least 80 per cent below 1990 levels by 2050. In the absence of national targets that meet these standards, the Victorian Government should commit to these targets at the state level

• Develop a Climate Change Action Plan, to be revised every fi ve years

• Implement an aggressive energy effi ciency strategy through public education, fi nancial incentives and regulation

• Establish a major statewide initiative to ensure the achievement of 7-Star energy standards for all Victorian residential buildings by 2020, with building codes for new buildings adjusted to meet world’s best practice energy effi ciency standards by 2015

Adjustment

• Investigate the climate change-related structural changes and social impacts in the Victorian economy

• Deliver an assistance program for low income households that includes the provision of information, energy effi ciency measures, material assistance and the engagement of these households in seeking solutions

• Ensure transport infrastructure planning considers the needs of low income, vulnerable and regional communities

• Increase the level of research and development in new energy and transport technologies

• Increase Victoria’s skills base through additional training places and university partnerships, in areas such as energy effi ciency, carbon accounting and low emissions technology

• Develop urban and regional planning policies that encourage low-emission transport options, sustainable building design and green urban areas

Adaptation

• Develop and implement a Victorian Climate Change Adaptation Strategy that includes local/regional Adaptation Plans, sectoral adaptation responses and the regular review of existing laws, regulations and protocols to assess their responsiveness to climate adaptive needs

• Establish an independent statutory Victorian Climate Change Adaptation Council to oversee statewide adaptation activities

• Close knowledge gaps through ongoing research into climate vulnerability and resilience, and climate threats to Victoria

A shared responsibility

• Develop a behaviour change information campaign to encourage the Victorian community to reduce emissions and energy consumption

• Establish regular business and industry forums to increase information sharing and develop strategies to assist Victorian

businesses reduce emissions and adjust to the Carbon Pollution Reduction Scheme

• Establish a process to ensure climate change factors are explicitly considered in all Victorian state and local government decisions.

• Regularly review and audit Victorian legislation, including all State and local government regulations and policies, to ensure their harmony with current climate change mitigation and adaptation requirements.

The members of the Premier’s Climate Change Reference Group are:

David Karoly – Professor of Meteorology and Federation Fellow in the School of Earth Sciences at the University of Melbourne (Chair)

Kate Auty – Magistrate and Chair of the Victorian Ministerial Reference Council on Climate Change Adaptation

Robin Batterham – Group Chief Scientist with Rio Tinto Limited and President of the Australian Academy of Technological Sciences

Peter Christoff – Coordinator, Environmental Studies, Faculty of Land and Environment at the University of Melbourne and member of the Victorian Ministerial Reference Council on Climate Change Adaptation

Erwin Jackson – Director of Policy and Research at The Climate Institute

Amanda Lynch – Professor and Federation Fellow with the School of Geography and Environmental Sciences at Monash University

Tony Nicholson – Executive Director of the Brotherhood of St Laurence

Bob Welsh – Chief Executive of VicSuper

The Group’s recommendations are set out in full at www.climatechange.vic.gov.au.

Image: Young people recycling

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The global economic crisis: no excuse for inaction onclimate change The current economic crisis is not an excuse for inaction on climate change; it is an opportunity for innovation.

Innovation potential is one of the major value drivers of any industry sector’s long term profi tability and economic performance.

This current economic crisis is now shaping up as the most extensive since the Great Depression nearly 80 years ago. In light of this, some business leaders have called for a moratorium on the Commonwealth and state governments’ policy commitments to tackle the climate crisis.

This view is short-sighted for two reasons.

First, the current fi nancial crisis, while severe, can be treated with short to medium term intervention by governments

around the world using policies and tools that have been effective in the past. If history is a reasonable guide, confi dence in credit markets can be restored, the fi nancial system can be recapitalised and economic activity revitalised.

In contrast, the climate crisis is pervasive, entrenched and accelerating, and cannot be treated with short to medium term intervention measures by governments. The climate crisis requires considerably longer term intervention using new policies and tools and a fundamental redesign of business. This calls for innovation on a scale not seen before.

Secondly, the fi nancial crisis provides unprecedented opportunities to use innovation to combine policies to stimulate the economy with policies encouraging greenhouse gas abatement.

For example, policies that promote retrofi tting Australian housing stock with insulation and thermal solar power have considerable potential to provide jobs and stimulate the economy, as well as providing meaningful reductions in greenhouse gas emissions.

There is no time for trial and error with climate change. If we fail in our quest to tackle it, there will be no opportunity for a government-led bailout. If we fail in arresting greenhouse gas emissions, the economy will become irrelevant – and in the end, we will fi nd that we cannot eat and breathe our money.

Bob Welsh Chief Executive of VicSuper and member of the Premier’s Climate Change Reference Group

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The challenge of our generation

Image: Drought in regional Victoria

Australia’s climate is changing as a result of global warming

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Australia’s climate is changing as a result of global warming. In the decades ahead, further changes are inevitable, with consequences that are likely to include increases in temperature, rises in ocean levels, more severe storms and droughts, and the loss of plant and animal species.

These consequences pose a real and serious threat to Victoria’s future – unless global action is taken, climate change will have a signifi cant detrimental impact on our cities, towns and communities, our economy and our industries, and our natural environment.

2.1 Our changing climate The Victorian Government accepts the consensus of the Australian and international scientifi c communities that human activities have resulted in substantial global warming over the last 60 years and that the continued growth in greenhouse gas concentrations caused by these activities is generating a high risk of dangerous climate change.

Since 1950, the annual average temperature in Victoria has increased. Between 1950 and 2007, daily maximum temperatures increased by about 0.8˚C, while daily minimum temperatures rose by only half as much. Australia experienced an exceptionally hot and dry decade from 1998 to 2008. In Victoria, 2007 was the warmest year on record, with the mean annual temperature around 1.2˚C above the long-term average. The average daily maximum temperature over the decade for Victoria was also 0.6˚C warmer than the 30 year average (1961 to 1990), while the average daily minimum temperature was 0.2˚C warmer (Figure 1).

Victoria is expected to warm at a slightly faster rate than the global average, especially in the north and east of the state. By 2030, annual average temperatures in Victoria are expected to increase by around a further 0.8˚C on 1990 levels (although the results of climate change modelling suggest a range of 0.6˚C to 1.2˚C). By 2070, the average annual temperature could increase by 1.4˚C under a low emissions scenario or by more than 3˚C under a high emissions scenario.

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Figure 1: Victorian annual average temperatures since 1910 (variations are from the 1961 to 1990 mean) Source: Climate Change in Victoria: 2008 Summary (Victorian Government, June 2008)

Image: Wartook Lake, Halls Gap

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What is climate change? Over the last 200 years, human activities have increased the amount of ‘greenhouse gases’ in the atmosphere, especially carbon dioxide, methane, and nitrous oxide. These gases occur naturally and are vital for sustaining life on earth. However, the rate of growth in these gases – and their accumulated quantities – is increasing the earth’s surface temperature to artifi cially high levels and changing the climate.

Intergovernmental Panel on Climate Change (IPCC) projections indicate that by 2100, the earth will have warmed by between 1.1˚C and 6.4˚C. The actual warming we will experience will depend on the net greenhouse gas emissions produced in the next couple of decades and beyond. Because of the inertia in the climate system it is projected that the globe is committed to at least a further 0.6˚C of warming by 2030.

However, there is broad agreement within the scientifi c community that these projected temperature increases may be conservative. There is evidence to suggest that global emissions have grown much more rapidly than estimated, that a number of climate change processes may have a greater infl uence on temperature increases than is presently understood and that the world may be in danger of crossing climate ‘tipping points’ in a number of areas, where the damage caused by climate change may be impossible to reverse.

The climate averages themselves do not show the full extent of change. Regional variations will be signifi cant, and in many instances the climate will become more variable, with more signifi cant extremes.

Already, signifi cant climate change impacts have been observed, including:

• Rapid reduction in Arctic sea ice, thinning and loss of ice shelves around the Greenland ice sheet and ice thinning around the Antarctic Peninsula

• Decreased snow cover in the northern hemisphere for every month except November and December

• Increased permafrost warming in the Arctic and on the Tibetan plateau

• Changes in sea surface temperatures and ocean current strengths, and acidifi cation of oceans

• Rapid reduction of tropical glaciers, such as on Mt Kilimanjaro and in Bolivia

• Drying of the climate in southern Asia

• Increase in the number and proportion of tropical cyclones reaching 4 and 5 intensity levels since 1970

• Changes in seasonal activities of animals and plants, such as earlier fl owering times

• Substantial decline in rainfall in southern Australia.

Unless addressed, the global warming trend will have damaging and far reaching consequences.

Many animal and plant species may not survive the next 100 years. Unique natural features, such as the Great Barrier Reef, may be damaged beyond repair or destroyed.

More severe weather events, such as fl oods, cyclones and droughts, are likely to occur more frequently. Sea levels are expected to rise by between 18 cm to 59 cm by 2100, with a possible additional contribution from ice sheet melts of 10 cm to 20cm. This would lead to the inundation of coastal areas in a number of countries, causing the disappearance of some nations altogether, contaminating freshwater supplies in many regions and displacing millions of people.

Agricultural yields are expected to decline in many regions (although they may increase in some areas). As some places become hotter and drier, and more extreme weather events take place, disruptions are likely to occur in food supplies.

Climate change will increase the frequency and impact of fi re related events. It will also increase the distribution of vector and water-borne infectious diseases and the number of people dying or suffering from disease and injury due to heatwaves and severe weather events such as fl oods, bushfi res, storms and cyclones.

HOW IS CLIMATE CHANGE LIKELY TO AFFECT VICTORIA?

OUR CLIMATE IN 2030 OUR CLIMATE IN 2070

• Average annual temperatures up to 1.2˚C higher • Average annual temperatures rising by between than in 1990 1.4˚C and more than 3˚C on 1990 levels

• More hot days where the temperature is above 35˚C • An even greater number of hot days where the

• Less rain and fewer rainy days temperature is above 35˚C

• Drier conditions across the state, including more frequent droughts

• A decrease in annual average rainfall on 1990 levels by between 6 per cent and 11 per cent

• Signifi cant reductions (of more than 30 per cent) in run-off for major water catchments

• An increase in the frequency of drought by between 10 per cent and 80 per cent in the southern half of the state and by between 10 per

• Increases of water temperatures and changes cent and 60 per cent in northern Victoria in fl ows and currents in inland and marine environments • Even greater reductions in run-off in our rivers – by

up to 50 per cent in some places • More extreme weather events, such as severe

storms, high winds and fl oods • By 2050, the number of ‘extreme’ fi re days could increase by between 15 per cent and 230 per cent

• More frequent bushfi res, with the number of (relative to 1974-2003) ‘extreme’ fi re danger days increasing by between 5 per cent and 40 per cent by 2020 (relative to 1974-2003)

• Continuing, more frequent extreme weather events, such as storms, high winds and fl oods

• Rising sea levels and an increase in storm surges • Continuing rising sea levels

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What would an increase of 2˚C actually mean for Victoria? Since 1950, Victoria has become warmer and drier, and this trend is likely to continue due to projected increases in greenhouse gases. Although the projections have a wide range of uncertainty, carbon dioxide emissions have been tracking the upper limit of IPCC projections since 1990. If we continue to follow a high emissions path, Victoria is likely to experience a warming of 1.8˚C to 3.8˚C by 2070, with a rainfall change of -25% to +3%. The warming is likely to be greater in northern regions and the drying is likely to be greater in southern regions. This means that the impacts of climate change will vary across the state.

Different regions also comprise a unique combination of sectors. For example, the minerals and resources sector is less exposed to direct changes in climate, although exposure to fi re, fl oods, off-shore storms and potential reduced access to water are likely to have a negative impact. In contrast, the natural resources and biodiversity sector – often noted as an ‘invisible economy’ – is highly sensitive to climate change. Primary production is likely to be vulnerable to decreases in rainfall and increasing frequency of extreme events, particularly droughts.

The potential impacts of climate change may not be very high on a statewide basis, but larger impacts are possible for some regions and this is related to their sectoral, geographic and

climatic composition. Regions with a large reliance on grain-fed primary production, like the Wimmera, may be more economically and socially vulnerable than others. Regions with coastal exposure are likely to be affected by sea-level rise and therefore exposed to associated infrastructure impacts. Regions with ski­fi elds may face a reduction to tourism.

Potential impacts can be managed through adaptation. However, there are barriers and limits to adaptation, so some degree of vulnerability will remain. In the shorter term, vulnerability will be encountered through extreme events becoming more frequent and/or larger. The extreme events most likely to increase in frequency and intensity are heatwaves, drought, fi re, fl ooding from extreme rainfall and coastal storm surge. For 2070, when annual average temperatures may be 2˚C warmer than present, the major issues will be related to the limits of adaptation being exceeded in a range of systems. Some groups of people are more vulnerable than others, as are some places. Much greater emphasis is needed on identifying vulnerable regions and sectors, raising awareness, building adaptive capacity and implementing appropriate risk management measures.

Leanne Webb, Roger Jones and Kevin Hennessy CSIRO Marine and Atmospheric Research

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A more detailed examination of the impacts of climate change on Victoria can be found at www.climatechange.vic.gov. A comprehensive analysis of climate change impacts across Australia can be found in the Final Report of the Garnaut Climate Change Review, which is available at www.garnautreview.org.au

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Image: Yallourn Power Station. Source: Department of Primary Industries

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The latest climate change science and its global impacts Early in 2007, the Intergovernmental Panel on Climate Change (IPCC) released its comprehensive Fourth Assessment Report on climate change science, concluding:

"Warming of the climate system is unequivocal..."

"Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic [human­induced] greenhouse gas concentrations."

"Anthropogenic warming and sea level rise would continue for centuries... even if greenhouse gas concentrations were to be stabilised."

These alarming conclusions are based on scientifi c research only up to early 2006 and may be conservative. A number of recent publications suggest that some aspects of climate change have accelerated, with recent observed changes at the upper levels or even outside the range of changes projected by the IPCC for the early 21st century.

Observed rates of sea level rise over the last decade are at the upper range of IPCC projections. Recent research indicates that the upper limit of their projected sea level rise of 59cm in 2100 may be too low, as it does

not take into account possible accelerated melting of the Greenland and Antarctic ice sheets. The observed minimum area of Arctic sea ice in September 2007 set a new record low, which was substantially smaller than the lowest value of all IPCC projected Arctic sea ice decreases for the 2000s and consistent with the lowest projected value for the 2030s.

Observed decreases of annual rainfall over south eastern Australia since 1970 are already greater than the range of projected decreases due to climate change for 2030. Emissions of carbon dioxide from burning fossil fuels in 2005 and 2006 were greater than in all the emission scenarios used by the IPCC.

Even with no further emissions of carbon dioxide, the observed atmospheric concentrations of greenhouse gases in 2005 have likely committed the world to future global-average warming of 2.4˚C (1.4˚C to 4.3˚C) above pre-industrial temperatures, double to seven times the warming already observed. This range of committed warming exceeds the perceived threshold for dangerous anthropogenic climate change.

Professor David Karoly Federation Fellow, University of Melbourne, and member of the Premier’s Climate Change Reference Group

2.2Our current emissions

2.2Victoria must play its part in Australia’s efforts to reduce

greenhouse gas emissions. To date Victoria has enjoyed a competitive advantage in many industries due to the availability of low cost, accessible fossil fuel resources such as brown coal. Now – to reduce emissions – we must change our approach to these resources and turn to low emissions and renewable sources of energy.

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Victoria’s emission reduction challenge Victoria faces some particularly difficult challenges in reducing emissions because of our heavy reliance on brown coal (a high greenhouse gas emitting fuel) to generate electricity. To move to a low carbon future, we will need to adopt a new approach to managing and using our energy resources.

Our stationary energy sector will need to undergo a significant transformation, especially in the production of electricity. We will need to invest to a much greater extent in renewable and low emissions energy technologies, such as wind, solar, geothermal and biomass. One such technology is carbon capture and storage, which involves the storage of carbon dioxide emissions in underground geological reservoirs. This technology offers the potential for very deep cuts in Victoria’s greenhouse gas emissions.

Making these changes will not only help to reduce emissions and the longer term impacts of climate change, it will also boost Victoria’s chances of taking up the new opportunities emerging as other countries shift to low carbon economies. It will also have many flow-on benefits in other areas, such as better building design, cleaner industries, less pollution and the restoration of damaged land.

The Victorian Government has long argued for the introduction of a national emissions trading scheme. Victoria will play its part in ensuring the success of the new national emissions trading scheme (the CPRS). While the commencement of the CPRS will provide a strong incentive to reduce emissions, shift

to cleaner sources of energy and adopt more energy efficient practices, the Victorian Government will still need to take action in key areas to contribute to the effective, efficient and equitable operation of the scheme.

The Government reserves its final opinion on the design of the CPRS until the relevant legislation is passed by the Commonwealth Parliament. In the event that the final CPRS design fundamentally differs from the proposals currently set out by the Commonwealth in key areas, the Victorian Government will consider its options for addressing any outstanding gaps.

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Victoria’s emissions Victoria’s net greenhouse gas emissions are calculated by subtracting carbon dioxide removed from the atmosphere and stored in plants from the total carbon dioxide equivalent (CO2-e) emissions. From 1990 to 2006, Victoria’s net greenhouse gas emissions increased by 13.1 million tonnes (Mt) or 12.2 per cent (Figure 2).

Figure 2 – Trends in Victoria’s net greenhouse gas emissions – 1990 to 2006 Source: Victorian Greenhouse Gas Inventory – Information Sheet (2006)

In 2006 (the most recent data published by the Commonwealth), Victoria produced 120.3 Mt of CO2-e – around 21 per cent of Australia’s national emissions. Carbon dioxide accounted for around 80 per cent of Victoria’s emissions; methane accounted for 15 per cent and nitrous oxide 4 per cent. The energy sector (including transport) was responsible for more than 80 per cent of the State’s total emissions (Figure 3).

Figure 3 – Victoria’s greenhouse gas emissions (breakdown by sector) – 2006 Source: Victorian Greenhouse Gas Inventory – Information Sheet (2006). Note: The land-use change and forestry sector is not included in this chart as it acts as a carbon sink

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Image: Petrol Bowser, Rural Victoria. Source: Department of Premier & Cabinet

From 1990 to 2006, emissions from the industrial processes and agriculture sectors increased by 9.9 per cent and 2.5 per cent respectively. Waste sector emissions declined by 15 per cent and the land-use change and forestry sector moved from being a net source of emissions in 1990 to a net sink of emissions in 2006, due largely to the impact of controls on land clearing.

The main driver of the increase in Victoria’s emissions since 1990 is economic activity and growth, with emissions from the commercial sector increasing by almost 80 per cent from 1990 to 2006 – demonstrating the importance of de-coupling emissions growth from economic activity.

Per capita emissions provide a good means of comparing emissions from different states and territories, or between countries, as they take population size into account. In 2006, Victoria’s per capita greenhouse gas emissions were 23.5 tonnes CO2-e per person, in line with per capita emissions from NSW and below the economies of Queensland and Western Australia, which specialise in energy-intensive production for domestic and export markets.

While there are signs that Victoria is starting to bring down its emissions per capita and reduce its energy related emissions, we need to continue to decouple economic growth from emissions of greenhouse gases. We have made a start, but if we are to make the reductions in emissions that science tells us are necessary, driven largely by the CPRS, the way Victoria’s economy grows will need to continue to change.

However, Australia’s per capita greenhouse gas emissions remain one of the highest levels in the world because of the dominant use of coal for electricity generation. Australia’s per capita emissions are nearly twice the OECD average and more than four times the world average.

State and Territory per capita emissions of greenhouse gases – 2006

STATE/TERRITORY EMISSIONS (tonnes of CO2-e per person per year)

Northern Territory 76.9

Queensland 41.8

Western Australia 34.2

New South Wales 23.5

Victoria 23.5

South Australia 17.9

Tasmania 17.4

ACT 3.3

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3

Complementing the CPRS: A new world of opportunities

Image: Black Balloons advertising campaign. Source: Department of Sustainability & Environment

A low carbon future – attracting green investment and creating green jobs.

Our climate change goals Two of the Government’s proposed long term goals are relevant to Victoria’s efforts to reduce emissions.

GOAL 1 Contribute to global and national emissions reductions

GOAL 2 Develop a portfolio of energy options for a low carbon future

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The establishment of a carbon price at the national level will be the key driver for emissions reductions across the Victorian economy. With the expected introduction of the national Carbon Pollution Reduction Scheme (CPRS), the Victorian Government has a key role to play in helping the State capitalise on the opportunities created by the transition to a carbon constrained economy, attracting green investment and creating green jobs. The Government can help make Victoria a leading green economy by funding research and development, assisting the take-up of emissions abatement opportunities in sectors not covered under the CPRS, encouraging innovation, supporting the take up of new technologies, and providing modern, effi cient energy and transport infrastructure. 3.

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The role for government in reducing emissions The commitment to the introduction of the CPRS, the setting of a national target for emissions and other actions being taken by the Commonwealth Government have significantly reduced the scope for action by Australia’s state and territory governments in reducing emissions. In many areas, national collaboration by the Commonwealth, state and territory governments through the Council of Australian Governments offers the best prospects for success in reducing Australia’s overall emissions. However, action and leadership by the Victorian Government will still be critical to success in a number of areas.

Complementing the CPRS Once established, the CPRS will be the key driver of reductions in emissions across the Australian economy. Large

carbon emitters will trade the right to pollute within an overall cap set at the national level. Individual firms will decide the best course of action for reducing their carbon costs. This will spur innovation. However, in some circumstances, governments may need to intervene even after the CPRS is in place, where circumstances prevent the take-up of inexpensive opportunities to reduce emissions.

Extra measures to ‘complement’ the work being done by the CPRS in a limited number of areas may include:

Where industry sectors are not covered by the scheme Where a lack of information about actions to increase energy effi ciency, or the tendency for consumers to ignore future energy savings, may prevent the take-up of low-cost opportunities for reducing emissions Where the CPRS is unlikely to provide suffi cient incentives for optimal levels of

investment in new technologies Where effective government action is necessary (such as the removal of barriers in the planning and regulatory system) to support the development of network infrastructure to drive more substantial emission reductions Where the CPRS creates inequitable impacts or increases disadvantage and hardship Where a specifi c regional or local focus would be benefi cial

The Commonwealth, as the level of government introducing the national emissions reduction target and the CPRS, has the primary responsibility to ensure that policy action in these areas is suffi cient. However, collaboration between the Victorian and Commonwealth governments will be critical in identifying the particular measures required in Victoria under each of these areas and ensuring that they do not undermine the effectiveness of the CPRS, are monitored carefully and meet Victoria’s specifi c needs and circumstances.

VICTORIAN GOVERNMENT’S ROLE IN COMPLEMENTING THE CPRS AND MOVING TO A LOW CARBON ECONOMY

MITIGATION ADJUSTMENT

• Drive cost effective mitigation in sectors not • Design and implement adjustment and behaviour covered by the CPRS in cooperation with the change policies that smooth the introduction of Commonwealth a carbon-price

• Address market failures not addressed by the • Ensure a dynamic and fl exible economy through CPRS in sectors covered by the scheme where good regulation these will lead to cost effective abatement (such as by providing lower cost energy effi ciency options in support of Commonwealth programs)

• Provide incentives in R&D in areas of specifi c interest to Victoria

• Ensure good economic fundamentals (such as skills, education and infrastructure)

• Ensure that arrangements in areas of state responsibility (for example, transport and urban planning) support a low emissions future

• Provide leadership by demonstrating ways to reduce emissions from government buildings, services and operations

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Image: Power Lines in regional Victoria.

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The likely effect of introducing a carbon price through the CPRS At any given point in time, there are a multitude of abatement opportunities available across the economy, ranging from very cheap ones (such as householders turning appliances ‘off at the wall’) to very expensive ones (such as some renewable generation technologies). Not all abatement opportunities will be used up at the same time. The CPRS works by setting a target for emissions reductions and then using up abatement opportunities from the cheapest to most expensive in turn until the target is reached.

This means that it will make sense to delay taking up some abatement opportunities until the emissions reduction target is tightened. While there are many good ideas around about how to reduce emissions, not all of these will ‘make the cut’ in the early days of the CPRS. This does not mean that relatively expensive abatement options will never be feasible; rather, from a mitigation perspective, that it does not make economic sense to take up relatively expensive options at an early point in the overall abatement ‘journey’.

Options such as cost effective energy effi ciency in households and buildings are likely to be viable in the early days of the CPRS because they offer inexpensive opportunities to reduce emissions that will compare well with the CPRS carbon price. Other options, such as carbon capture and storage or electric cars, are unlikely to be economically viable until the carbon price rises in the later years of the scheme.

For Victoria, modeling undertaken by the Commonwealth Treasury on the likely economic impacts of introducing the CPRS suggested that both Victoria’s and Australia’s aggregate economic costs of mitigation are small and similar. Although the costs to sectors and regions vary, emissions prices are generally found to be insuffi cient to induce signifi cant industry relocation. As the following table shows, under both a 5 per cent and 15 percent emission reduction

target through the CPRS, our economy will continue to grow strongly. On average, the CPRS will reduce the rate of growth of GDP by only about 0.1 per cent per annum.

Victoria is relatively reliant on emission-intensive industries — coal-fi red generation, aluminium and gas. However, Commonwealth Treasury found that adverse impacts on these industries are, at least partially, offset by improvements in export-oriented or import-competing manufacturing.

CPRS -5 CPRS -15

Permit price at 2011 $10 / t Co2-e $10 / t Co2-e

Possible permit price at 2020

$35 / t Co2-e $50 / t Co2-e

Average annual reduction in GDP growth

to 2020

0.11 % per annum

0.15 % per annum

Average Victorian household electricity

price increase 2010-2015 $5 per week $5 per week

Permit price at 2050 $115 / t Co2-e $158 / t Co2-e

Average annual reduction in GDP growth

to 2050 0.09 % 0.13 %

It should be noted the above modelling was undertaken prior to the Commonwealth’s recent changes to the scheme. However, the changes announced are not expected to change the above fi gures signifi cantly.

4.4

Setting emissions targets In 2006, the Victorian Government set a long term target to reduce greenhouse gas emissions by 60 per cent by 2050, compared to 2000 levels. This target was based on the best available scientific evidence at the time and – when introduced – was a world-leading initiative to tackle climate change.

In 2008, the Garnaut Climate Change Review proposed that Australia should undertake its proportionate share as part of any effective international agreement to reduce emissions. Depending upon the success and scope of international negotiations, this would require Australia to commit to a reduction of net emissions of between 5 and 25 per cent by 2020 and a reduction of between 60 and 90 per cent by 2050 (relative to 2000 levels).

Based on the most recent science, some countries have increased their targets – including the United Kingdom and the United States, which have announced their intention of reducing emissions by 80 per cent compared to 1990 levels.

These developments mean that Victoria’s target of reducing emissions by 60 per cent by 2050 should now be seen as the absolute minimum target for Australia. The Victorian Government considers that Australia should actively pursue a robust agreement to stabilise atmospheric concentrations of greenhouse gases at a level to avoid dangerous climate change.

If a satisfactory global agreement to combat climate change post­2012 is reached, the Victorian Government will strongly urge the Commonwealth Government to place Australia on a trajectory to achieve a reduction in Australia’s emissions of at least 80 per cent by 2050.

While Victoria has been a leader in setting emissions targets, the introduction of the CPRS means that a binding emissions reduction target set by the Victorian Government would distort the operation of the scheme by mandating that a set level of reductions should take place within the state, regardless of the effi cient allocation of national emission reductions that should be achieved through the CPRS market. Accordingly, the Government does not see any benefi t in legislating for a state-based emissions reduction target that is inconsistent with a national target.

Questionable value in state emission targets The introduction of the CPRS means that there is no longer any value in state and territory governments setting their own binding targets for reducing statewide emissions. Because circumstances vary across Australia, meeting national targets will be most effi ciently achieved by allowing some states to make greater cuts than others. This is a major advantage of implementing a fl exible policy tool like an emissions trading scheme.

It may still be feasible to stimulate commercial efforts aimed at reducing emissions by announcing indicative goals for specifi c activities or sectors. However, I would advise caution in how such policies are designed. Any intent to apply penalties for not meeting them should be avoided and any pressure to turn voluntary targets into mandatory targets be guarded against.

The CPRS should be the main instrument for reducing emissions in Australia. Supplementary policies should be about reducing the cost to the economy of complying with the carbon emission trajectories that are part of the scheme.

Anything else is problematic.

Professor Ross Garnaut Professor of Economics, Research School of Pacifi c and Asian Studies, Australian National University and author of the Garnaut Climate Change Review

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The opportunities to reduce emissions in Victoria Victoria’s emissions stem from a number of different sectors across the economy, with stationary energy, transport and agriculture being the largest contributors.

To understand where emissions reductions might be found in Victoria, the Government commissioned a study that looked at practical options to reduce emissions and examined the impact of these options acting together.

The study found that, even when restricting analysis to known or likely technologies, a large number of opportunities are available

to reduce emissions across the economy. The study revealed considerable scope for reducing emissions over short, medium and long term time horizons, but found that no measure alone could deliver the scale of reductions required.

The graphs below show how some of these options contribute to long term emissions reductions. Each coloured ‘wedge’ represents the amount by which emissions could be reduced.

EMISSIONS REDUCTION OPPORTUNITY POLICIES TO ACHIEVE REDUCTIONS

There is signifi cant scope for reducing emissions by pursuing

Coal drying and carbon capture and storage policies in this area. There are two clear issues relevant to clean coal technologies. The fi rst relates to the need for a carbon price, without which carbon capture and storage (CCS) and coal drying will never be economic. When CCS becomes a preferred technology due to higher permit prices under the CPRS, the market will naturally move in this direction. However, the high carbon price required for the uptake of clean coal technologies (especially CCS) means that the Victorian Government, at least in the short to medium term, may need to consider extra measures to ensure the uptake of these technologies. The second issue relates to positive spill overs from research and development into new technologies such as CCS and coal drying. This can be boosted by Government policies directed towards increasing spending on clean coal research, development and demonstration, and making sure all regulatory barriers are removed. Further work will be needed to identify potential storage sites in Victoria and to assess

39 Mt of reductions in 2030 whether there is a role for the Government in facilitating investment in CCS infrastructure.

Alternative sources of electricity

(new gas, renewables, small scale renewables, waste to energy)

This area will be addressed by the CPRS, allowing the market to determine how best to generate electricity. However, as with CCS, there may be a need to support R&D or demonstrate the application of new technologies to local conditions. This could be achieved through government funding or regulatory options. Governments can also seek to stimulate an industry before a carbon price makes it viable, as in the case of Victoria’s Renewable Energy Target. Actively stimulating the development of renewable energy technologies in the short term will enable Victoria to realise the long term benefi ts (clean, commercially viable and unlimited energy supply) of these technologies sooner. This investment will give renewable technologies access to larger markets, helping reduce their costs. It will also assist with the orderly integration of renewable technologies into the energy system. Governments can also make sure that regulations are not acting as a barrier to new technologies. Demonstration projects at Government facilities can also be used to encourage the take up of alternative

27 Mt of reductions by 2030 electricity sources.

4.4

Many studies show that signifi cant low cost emissions can

Building effi ciency be achieved through improved building effi ciency. Studies of residential buildings suggest cost-effective emission reductions of 20 to 30 per cent in this sector. While it is likely that a CPRS will cause some people to look more closely at their energy use, a number of complicating factors mean that a carbon price alone will not capture all the benefi ts. The owners and operators of buildings can be different people – especially in commercial settings. This means there are ‘split incentives’ between the people who need to undertake improvements (owners) and the people likely to benefi t from them (tenants). It is also diffi cult to for owners or tenants to determine accurately the potential savings from building improvements as they accrue over long periods and the information specifi c to their circumstances may not be easily accessible. Policies in this area could include strengthened building standards, minimum performance standards for heating or cooling appliances, mandatory disclosure of building energy effi ciency performance and incentives to undertake retro-fi ts.

6 Mt of reductions by 2030 Incentives could also be provided through the Victorian Energy Saver Incentive scheme for activities that improve building effi ciency, such the installation of double glazing and insulation.

Fuel effi ciency Fuel effi ciency has the potential to provide very low cost emissions reductions. This is because there are a variety of ways of performing the transport task with much lower average emissions than is currently the case. However, for a variety of reasons, people will not necessarily change their preferences based on a carbon price alone. In some instances, this is because it is not easy to make the link between the purchase cost of a vehicle and the running cost. This could be addressed through improved information provision or additional incentives at the time of purchase. Additional support could also be given for development of next generation fuels and low emissions technologies. The Government could also promote supply side change by setting targets for the effi ciency of the overall vehicle fl eet.

4.1 Mt of reductions by 2030

Changing transport modes While the CPRS will impose an additional cost on more carbon-intensive travel, our transport choices are also infl uenced by a number of non-price factors including availability, convenience and safety of alternatives. The Victorian Government can infl uence some of these factors, acting alone or in partnership with private operators or the Commonwealth or local government. The frequency and reliability of public transport can be improved through infrastructure provision. Greater traffi c priority can be given to trams and buses and more walking and cycling paths can be provided. The Government can also promote the use of sustainable transport through behaviour change programs.

1.6 Mt of reductions by 2030

Note: The wedges are presented as reductions in emissions from within their appropriate sectors: as a result, the scale for each of the charts varies. For more details on how the reduction potential of activities was determined, see Nous Group (2007) Understanding the Potential to Reduce Victoria’s Greenhouse Gas Emissions, available at www.climatechange.vic.gov.au.

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3.1The stationary energy sector

As the major contributor to Victoria’s overall greenhouse gas emissions, the stationary energy sector will need to undergo a major transformation to make the transition to a lower emissions future.

A CLIMATE CHANGE PRIORITY FOR ACTION

Promote low emissions energy technologies as the key to Victoria’s energy future.

Victoria’s stationary energy sector covers the production, supply and use of energy that is not transport-related, including electricity and gas, and liquid and solid fossil fuels. In 2006, the stationary energy sector contributed 67 per cent of Victoria’s net greenhouse gas emissions – by far the largest contributor to the state’s overall emissions profi le. The key contributor to emissions in the stationary energy sector (79 per cent of emissions) is electricity generation – due to Victoria’s heavy reliance on brown coal to generate electricity. Brown coal is the highest greenhouse gas emitting form of electricity generation in Australia’s National Electricity Market. In 2007, around 95 per cent of Victoria’s electricity generation was provided by brown coal fi red generation capacity.

What we need to do Achieving substantial emissions reductions from thegeneration of electricity will require investment in loweremissions generation technologies. These technologiesmay include renewable capacity (such as wind, solar,geothermal and biomass), combined cycle gas fi redcapacity and cleaner coal technologies. Shifting to thesetechnologies in Victoria will require a large scale investmentof resources – physical and fi nancial – and will likely takeseveral decades to complete.

The introduction of the CPRS will be the key driver ofemissions reductions in this sector over the longer term,because it will create incentives to shift away from higheremitting sources of electricity generation (such as brownand black coal fi red capacity) to lower emitting sources ofgeneration (such as more effi cient gas fi red capacity andrenewable energy sources). The carbon price generated bythe CPRS makes it highly unlikely that there will be any newbrown coal generation capacity without carbon capture andstorage, clean coal and other new technologies.

However, no single technology will provide suffi cientcapacity to meet Victoria’s total energy needs in the future.For example, the output from wind generation capacity candecline in periods of light or excessively high winds; solarpower generation relies upon the availability of sunlight;and carbon capture and storage will require technologicaladvances and secure storage sites. All of these forms ofenergy generation are also considerably more expensivethan existing forms. We will need to adopt a diverseportfolio of technologies to reduce our emissions and secureour energy future.

What we’ve already done The Government wants to establish Victoria as a global leader in clean energy technology. The Government is taking action to develop a mix of energy options that will support the stationary energy sector’s transition to a low carbon future: • Establishing the $370 million Energy Technology

Innovation Strategy to support the research, development and demonstration of large scale low emissions energy technologies, such as coal drying, carbon capture and gasifi cation, and solar power

• Introducing the Victorian Renewable Energy Target, a market based certifi cate scheme that sets a target of 10 per cent of Victoria’s electricity acquisitions being from renewable sources by 2016

• Introducing a feed-in tariff that pays households a fair price for any excess power they generate from wind, solar, hydro and biomass systems

• Creating the Renewable Energy Support Fund, which helps businesses to develop and install renewable energy technologies

• Strongly promoting and attracting new investment in solar technology – including a $50 million contribution to secure the construction of one of the most advanced solar power stations in the world and committing to provide up to $100 million to develop a solar power station which can produce about 330GWh of electricity per year or enough power to run 50,000 homes

• Setting new regulatory frameworks to guide and attract investment in geothermal energy, wind energy and carbon capture and storage.

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While making this shift poses many challenges for Victoria, it will also deliver new opportunities – including major technological advances, new jobs, increased capital investment and a diversifi cation of electricity supply.

Our Focus Actions taken by the Commonwealth Government (including the CPRS, the Renewable Energy Target and direct investment in renewable energy) are the key measures to reduce emissions from this sector, however, complementary policies will be needed at the state level. These policies may include funding for research and development in areas of vital importance to the Victorian economy, investment in network infrastructure and technologies (such as carbon capture and storage and large-scale solar), support for skills and training, and measures to overcome the regulatory barriers to reducing emissions or shifting to renewable energy.

The Victorian Government’s main objectives for the stationary energy sector into the future are to:

Support the provision of an effi cient, reliable, safe and secure energy system that recognises and addresses the need to reduce greenhouse gas emissions Maintain access to energy by ensuring a fair, competitive market Promote energy supply and use that is environmentally sustainable and less greenhouse intensive Address planning barriers to the promotion and uptake of low carbon energy forms.

These objectives will be reflected in the policies adopted through the Climate Change White Paper and the forthcoming Future Energy Statement, which will guide the transformation of the State’s energy sector.

Meeting the energy challenges ahead will require a comprehensive, systematic response. While some renewable and low emission energy technologies are already available and others are under development, integrating these technologies into our energy system, market and regulatory framework will require careful planning and design. The scale of the task facing Victoria means that we cannot succeed by acting alone: all Australian governments will need to work with industry and other stakeholders to ensure that measures are put in place to deliver effective, long-term solutions for our energy needs.

The Victorian Government has a range of measures available to it to enable the transformation of Victoria’s energy sector under the CPRS, including:

Direct investment in large-scale low-emission energy projects Regulation and removing regulatory barriers (such as wind farm planning approvals and regulatory frameworks for the operation of new technologies such as carbon capture and storage). Innovation and R&D support (such as the Energy Technology Innovation Strategy) Information provision and market facilitation (such as mapping energy resources across Victoria and informing the market of the business case of investment in Victoria). Skill development and training to provide the skills for low energy industries

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A QUESTION TO CONSIDER

What actions are required to enable Victoria to develop a diverse portfolio of low emissions energy sources to ensure supply, create jobs and attract investment and minimise costs?

What might Victoria’s energy system look like in 10 years? Victoria’s supply of energy will still be secure and reliable in 10 years, but it will be much more sustainable.

While rising carbon prices will have increased energy costs, the more effi cient use of energy – and a greater awareness about the benefi ts of energy effi ciency – will make the increase more manageable. Energy effi ciency will be a natural part of our daily lives and simple measures (such as using energy effi cient appliances and washing clothes in cold water) will have signifi cantly reduced greenhouse emissions from Victorian households. Smart metering means that households will better understand their energy use and every new home or renovation will incorporate state-of-the-art energy effi ciency features.

Small and large business will also be much more energy effi cient. In 10 years, the Carbon Pollution Reduction Scheme will be transforming our energy sector – with a clear limit on the amount of carbon emissions industry can emit and companies actively trading permits for emissions. Many companies will have taken action to reduce their emissions, rather than buy permits. The investment of billions of dollars in innovative low emission energy technologies will be reducing greenhouse gas emissions, maintaining a secure energy supply and creating thousands of ‘green’ jobs. Government will have clearly articulated a strategy to ensure that future infrastructure investment in response to the CPRS is effi cient from an economy wide perspective and to facilitate appropriate investments through a stream-lined planning and approvals framework. While there will still be concerns about new energy developments, most Victorians will welcome the use of more sustainable energy generation – generation that is taking place, in some cases, closer to communities.

The national Renewable Energy Target scheme will have driven investment in renewable energy generation. Almost 20 per cent of Victoria’s electricity consumption will come from renewable sources (up from less than 5 per cent in 2009). Although many different technologies will be in use – or being trialled – most new renewable energy supply will be from wind, with supply from bagasse, waste, geothermal and large-scale solar energy plants also expanding. Renewable energy will be more competitive with coal and gas-fi red generation technology, and research and development into energy generation and effi ciency will be opening up exciting new options. Even if there are substantial advances in the storage of renewable energy, there will also be investment in gas-fi red generation to ensure continuous supply when there is insuffi cient wind or sun.

Coal-fi red generation will still provide the majority of our electricity. But new generators will be much more effi cient, often emitting less than half the emissions of old generators. With carbon capture and storage (CCS) becoming a proven and well understood technology, millions of tonnes of CO2 from power stations will begin to be safely injected into permanent storage sites deep underground.

The complete transformation of Victoria’s energy supply will still take several more decades. But in ten years’ time, the foundations for a secure, reliable and sustainable future will have been laid.

3.2Energy effi ciency

Image: Energy effi cient lighting: Source: Sustainability Victoria

Energy efficiency is an area with the potential to achieve signifi cant cost effective reductions in greenhouse gas emissions.

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All Victorians – individuals, households, businesses and government agencies – can contribute to reaching our national emission reduction targets by using energy more effi ciently: from relatively simple household actions, such as replacing ineffi cient light globes or turning off appliances when they are not in use, through to making major changes in commercial and industrial practices.

What we need to do The CPRS will result in higher energy prices, encouraging many of us to think more carefully about our energy use and become more energy effi cient as we seek to manage these rising costs. However, historic evidence indicates that electricity prices do not have a major impact on the demand for electricity, suggesting that the introduction of a carbon price is unlikely to drive the necessary energy savings – especially in the early stages of the scheme.

Where there are issues the CPRS will not address, complementary action may be needed at the state level to drive greater energy effi ciency and to assist households and businesses to minimise their energy costs as the price of carbon rises.

Our Focus Due to the considerable scope to improve energy effi ciency and due to Victorian expertise in delivering energy effi ciency programs, action by the Victorian Government is likely to be most effective in the following areas:

Improving household energy effi ciency

Improving energy effi ciency in owner-occupied homes

Improving the energy performance of private rental properties

Improving commercial and industrial energy effi ciency

Improving the energy effi ciency of community organisations

The Victorian Government acknowledges that some areas of energy effi ciency policy are best advanced at the national level. Recently, the Commonwealth Government announced a $3.9 billion Energy Effi cient Homes Package to substantially improve the energy rating of Australian homes. However, there is still scope for greater improvements in energy effi ciency. While taking action at the state level to improve energy effi ciency, the Government will continue to work with the Commonwealth Government in developing the National Strategy for Energy Effi ciency, which will propose a single overarching framework for accelerating energy effi ciency reforms and assist households and businesses to adjust to the impacts of the CPRS.

The Victorian Government has a range of tools available to enable households, businesses and community organisations to become more energy effi cient, including:

Information provision

Financial incentives such as rebates

Promoting the development of energy effi ciency services to make taking action easy for households and to create green jobs

Enabling the proliferation of effective fi nancial models for investment in energy effi ciency improvements, such as energy performance contracting

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What we’ve already done The Victorian Government already has a number of programs in place to improve energy effi ciency in households and businesses, including:

• An innovative new Energy Saver Incentive scheme that will support 18 energy effi ciency activities in households at no or discounted cost, including replacing ineffi cient light bulbs, shower roses and window sealing, switching to less greenhouse intensive fuels and removing old refrigerators

• The Black Balloons campaign, which highlights simple measures that families can take to reduce their energy bills

• 5-Star sustainability standards for new homes

• Introducing minimum energy effi ciency standards for commercial buildings in 2006

• Right Advice at the Right Place program, which provides retail staff with materials, resources and training to promote energy effi cient products to their customers

• A range of rebates for energy effi ciency improvements, including solar hot water

• Rolling out smart electricity meters to all residential and small business electricity consumers to help people to better manage their energy use and reduce their energy bills

• Requiring large users of energy and water to prepare Environment and Resources Effi ciency Plans that identify actions to reduce energy and water use and waste generation.

QUESTIONS TO CONSIDER

• What information, incentives or assistance would help households, businesses and community organisations to become more energy effi cient?

• What would drive the development of the new green jobs, skills and services needed to make it easy for households, businesses and communities to become more energy effi cient?

• What is the role of regulation in helping Victorian businesses achieve effi ciency savings, driving industry development and establishing energy effi ciency standards?

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3.3 Transport

There is no simple, single solution to reducing transport emissions.

A safe and effi cient transport system is vital to Victoria’s future. As well as moving people, Victoria’s transport network meets the needs of business and industry by moving goods around the state, and to and from national and international markets.

What we need to do Transport is the second largest producer of greenhouse gas emissions in Victoria after stationary energy production, with almost 90 per cent of transport emissions coming from road transport – private vehicles, trucks, buses and commercial vehicles.

Transport emissions are infl uenced by the total demand for travel. Substantial growth in the demand for travel in Victoria is predicted over the coming decades, including forecasts of a signifi cant increase in motor vehicle travel. If this growth in the demand for travel is not accompanied by a shift to low emissions modes of transport or improvements in vehicle fuel effi ciency, it will result in a signifi cant increase in emissions.

The combination of a carbon price and volatility in the global price of oil means that transport emissions are likely to become a fi nancial issue as much as an environmental one in the years ahead. While the Commonwealth Government has indicated that motorists will be protected from the impacts of the CPRS on fuel prices for the fi rst three years of the scheme, it remains vitally important to begin moving to low carbon forms of transport sooner rather than later. This will be as relevant to households as it will be for businesses relying upon transport for the movement of freight.

Figure 4 –Melbourne’s annual metropolitan train patronage growth to 2008

A CLIMATE CHANGE PRIORITY FOR ACTION

Establish future-focussed transport, planning and building systems to support a low emissions future and accommodate a changed climate.

What we’ve already done The Victorian Government is delivering record levels of investment in the state’s transport system and is driving the take up of low emission transport choices.

• In December 2008, the Government released The Victorian Transport Plan, which provides for major new investment in public transport to manage stronger than expected growth in demand, (as illustrated in Figure 4) especially for peak period metropolitan rail services.

• The Victorian Transport Plan is complemented by Melbourne @ 5 million, which sets out the Government’s strategy for integrated transport and land-use planning.

• In addition to infrastructure investment, the Government has developed programs such as TravelSmart to encourage Victorians to reduce their reliance on cars and use walking, cycling or public transport for travel to and from workplaces, schools and universities.

• The Government is promoting the use of fuel effi cient vehicles through its support of hybrid vehicles for taxis and in the Government car fl eet, registration discounts for hybrid vehicles and trials of hybrid public buses.

• In June 2008 the Premier announced that the fi rst hybrid car to be manufactured in Australia would be built at Toyota’s Altona plant – with the Government committing to purchase 2000 hybrid Camrys over two years.

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Research by the National Transport Commission has found that a carbon price alone will not lead to a signifi cant short to medium term reduction in emissions from transport, especially freight transport. Additional measures will be needed, including a more integrated freight network, the greater use of high productivity road vehicles, more rail freight services and innovative applications of new technologies within the freight supply chain.

Our Focus There is no simple, single solution to reducing transport emissions. This conclusion is echoed in a wide range of studies from Australia and overseas, which indicate that there are three broad options for reducing emissions from the transport sector. These options represent potential areas for further action through the Climate Change White Paper.

Reducing the number of trips

Encouraging mode shift

Promoting low emissions vehicles and transport

The Victorian Transport Plan outlines the Government’s vision for Victoria’s transport system to 2020 and beyond. Consideration of the need to reduce emissions and support communities and businesses in adjusting to the CPRS has been integral to the development of the Plan.

The Plan includes more than $38 billion in projects to integrate transport and land use planning to link our jobs, services and homes, minimising the need for trips and enabling effi cient movement of people and goods. The Plan aims to:

Increase development and job opportunities through transport investment

Develop future housing in Melbourne’s established areas along the train and tram network

Invest in new transport links to promote more jobs closer to homes in Melbourne’s fast growing west and north

Take pressure off inner-Melbourne by developing six Central Activities Districts

Support Melbourne’s growth areas with high capacity public transport links

Support regional growth with signifi cant investment in more transport services that link regional centres to Melbourne and smaller towns to regional cities

Future policies will need to complement the new infrastructure investment being delivered under the Plan by encouraging more sustainable travel habits and improving the overall fuel effi ciency of the State’s vehicle fl eet. Any future reviews of the State’s transport and land use plans will also need to have a strong focus on addressing climate change and reducing emissions from the transport sector.

QUESTIONS TO CONSIDER

• How can the Government build on the Victorian Transport Plan and Melbourne 2030 to encourage concentration of housing, jobs and recreation opportunities around key centres to minimise journeys?

• What activities are needed to drive the development of low emissions vehicles to reduce emissions and create jobs and investment in Victoria?

• What information and assistance is needed to encourage mode shift?

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What might Victoria look like in 10 years with much lower carbon emissions from the transport sector? On the surface Victoria could look very similar to how it does today. We could still get around as quickly and safely as we currently do, but our approach to how, when and why we travel may be different.

Advances in telecommunications and more fl exible working conditions may mean that we have fewer journeys to make. Those trips we do make will be shorter due to the changes in urban landscape of our cities and towns.

We may still see small white vans moving around the city and large freight vehicles on our highways, but thanks to a more integrated freight system, every one of these vehicles will be at or near maximum capacity for every load. These vehicles may also be powered by different fuels or technologies – beyond those currently in use.

When we do need to move around, we are likely to have the ability on our mobile phones to access all the different transport options at our disposal. We will be able to assess the best mode of travel to use, based on the cost, the time it will take and the health benefi ts of using each mode.

As we move around, we may see that public transport has become more prevalent and is used by more people at all times of the day. When combined with more car pooling, we will notice that one person per vehicle has become the exception rather than the rule.

Private motor vehicles will appear more 'fi t for purpose'. Larger cars will be fi lled with more people or goods, with those travelling by themselves are more likely to be using small vehicles or on motorbikes and scooters.

While not noticeable on the outside, if we look under the hood we will see that almost all new cars have smaller, very fuel effi cient engines. There will be many more hybrid-electric or fully rechargeable 'plug in' vehicles in cities and more effi cient diesel vehicles in rural areas – some of which will be Victorian made. We may also notice that petrol stations have evolved to cater for the different fuels required, including battery replacement terminals.

Interspersed with cars and public transport, there will be a much greater presence of people moving under their own power. More cyclists will be taking advantage of dedicated lanes or roads as part of a fully interconnected cycling network. The footpaths will be full of people, not just sitting at café tables, but getting to where they need to be.

All these small changes may come together to give us much better places to live and a better quality of life. In just a decade, we may fi nd ourselves moving around a state that has much lower transport emissions, less congestion and a more physically active and socially integrated population.

3.4The built environment

Victorians are now much more conscious of the financial and amenity benefits of improving the energy performance of our homes and other buildings, but this knowledge is not always translated into action – for a variety of reasons. Much more can be done to reduce emissions from the built environment, although we may need to think differently about the shape, nature and appearance of our cities, towns and neighbourhoods. Traditionally in Australia, relatively low prices have meant that energy considerations have not been a major factor in how settlements or developments are planned or how buildings are designed and constructed. This has been a signifi cant factor in the built environment being a major contributor to Victoria’s greenhouse gas emissions.

What we need to do Residential and non-residential buildings, their operationand the activities that occur within them, account for around33 per cent of Victoria’s greenhouse emissions. Whileemissions from these areas are growing significantly, thereis great potential for improving their energy performance.Many studies have shown that the building and constructionsector can deliver some of the most substantial emissionsreductions at the least cost of any sector, mainly throughimprovements to new and existing buildings. Analysisundertaken for the Victorian Government shows potential fora nine per cent reduction in emissions from a selected rangeof energy efficiency measures in buildings. Other researchhas indicated the potential to reduce emissions by 20 to 30per cent across the sector.

In particular, there is considerable scope to reduce emissionsby making improvements across the ‘lifecycle’ of buildings– in the design, operation, refurbishment and demolition ofbuildings, in the occupants’ behaviour and in the appliances,fittings and energy sources used in the building.

Planning and urban infrastructure decisions are also vitallyimportant to reducing emissions. Significant emissionsreductions can be delivered by planning for communities anddevelopments to be more energy efficient and encouragingmore compact cities and towns.

Creating a sustainable built environment will involve policies,decisions and actions across the areas of land use, precinctand building design, transport planning and investment,energy supply and efficiency, and community behaviour. Wewill also need to apply new technologies and approachesto improving emissions from buildings and developments.Changing the way we do things in these areas representsa major challenge, but the benefits will be substantial.Partnerships between industry, government and thecommunity will be important to delivering these benefits.

A CLIMATE CHANGE PRIORITY FOR ACTION

Establish future-focussed transport, planning and building systems to support a low emissions future and accommodate a changed climate.

What we’ve already done The Government is already delivering programs to improve the energy performance of Victoria’s built environment, including.

• Being the fi rst state in Australia to introduce 5-Star standards for new residential buildings

• The Melbourne 2030 framework, which promotes a more energy effi cient urban layout

• The Planning for All of Melbourne statement, which aims to ensure that land use planning supports emissions reduction

• Precinct Structure Guidelines that will deliver better planning at the precinct level, with a focus on renewable energy and energy and water effi ciency

• Developing prototype Victorian communities to showcase low emission lifestyles under the Zero Emissions Zones program

• An extensive maintenance and retrofi tting program for public housing

• A major overhaul of skills development and training in Victoria that will also improve skills in the building and planning sectors.

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Image: Yarra Tram. Source: Tourism Victoria

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Our Focus The Victorian Government has a role to play in complementing the CPRS to drive emissions reductions in the built environment, particularly through policy in land use planning and development processes, and building regulation.

One of the top areas for action in the Climate Change White Paper will be to drive improvements in the energy performance of the State’s built environment, with potential areas for action including:

Planning and urban infrastructure decisions

We will need to capture opportunities to improve the energy performance of urban areas from the scale of individual buildings through to the design of new suburbs. Substantial energy benefi ts can also be delivered from more consolidated development and more compact cities and towns, although there are challenges in achieving this higher density while maintaining community liveability.

Buildings

Emissions reductions from new and existing buildings can be achieved in a variety of ways, including more stringent building standards for energy effi ciency, the use of new building materials and computerised building management systems, loans and subsidies, retrofi tting existing buildings and encouraging people to change the way they use buildings.

Skills in the built environment

Skills in the Victorian building sector have been in short supply. Meeting the challenges involved in reducing emissions from the built environment will require a broad range of new skills. Greater investment in skills and training will be needed to support growth in ‘green jobs’ and improvements in the energy performance of buildings and urban developments.

Innovation and industry development

The development of new building designs, materials and techniques will be essential to the transformation of our built environment. This will create green jobs in Victoria and the mainstream production and economies of scale which enable sustainability and affordability to go hand in hand.

QUESTIONS TO CONSIDER

• What actions are required to ensure our cities, towns, suburbs and homes produce low emissions and are located and designed to deliver comfort and affordability as our climate changes?

• What actions are needed to make Victoria a centre of innovative and sustainable building products and services?

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What might Victoria look like in 10 years with a climate-smart built environment? Global attention to climate change and the adoption of a carbon price will contribute to the greatest change across our urban areas since the post war boom of the 1950s.

Over the next decade, there is likely to be an intensifi cation of residential and business activity around transport hubs and along tram routes. The value of living closer to transport routes and working closer to home will increase.

Trends toward a more compact city will heighten as the outward spread of Melbourne and Victoria’s major centres is tempered with greater attention to reducing transport costs and greenhouse gas emissions from vehicles. The design of our urban areas will support more services and activities in our neighbourhoods that are within walking and cycling distance from our homes.

Some neighbourhoods will be producing their own energy; others will have integrated a range of renewable and energy effi cient technologies, resulting in zero emissions buildings and precincts.

Some buildings will have roof gardens, helping to reduce the heat load on buildings associated with climate change and the Urban Heat Island effect.

New homes will be operating more effi ciently, with much greater use of solar hot water systems, recycled water integrated into the plumbing, solar panels on the roof and landscaping that shades our homes and captures stormwater on-site to keep our gardens green. Our existing homes will be retrofi tted with energy and water saving technologies.

In some places, innovative building designs will use wind for power generation, and the use of natural ventilation to supplement or replace mechanical air conditioning will be more widespread in our homes and our workplaces.

Mindful of the increased risks associated with fi re, fl ood and coastal inundation, new homes, buildings and infrastructure in potentially vulnerable locations will be sited, designed, protected or adapted to avoid and be resilient to the future impacts if climate change.

Our commercial and residential buildings will use water more effi ciently, consuming less fresh water and capturing more water for reuse and recycling. Water sensitive urban design will protect and enhance city parks and open spaces, which will in turn improve the thermal comfort of our built up areas.

In commercial and residential precincts, opportunities to generate and distribute energy will become more attractive. Extracting the energy from waste heat from commercial and industrial processes and using it for heating and cooling (co- and tri-generation) will be much more common.

The increased use of natural light and ventilation and more appropriate materials in our buildings, alongside improved transport options and connections to local activity centres, will mean that our homes, workplaces and cities will be safer, healthier and more effi cient – and part of a climate smart built environment.

Figures 5 and 6 show how a climate smart built environment might look in 2020 at the buildings and precinct levels.

Figure 5: What a Climate Smart Built Environment might look like in 2020 - Buildings Level

Figure 6: What a Climate Smart Built Environment might look like in 2020 - Precinct Level

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3.5 Solid waste management The solid waste management sector plays a vital role in Victoria’s economy, society and environment. It ensures the safe and hygienic disposal of the waste generated as a result of our everyday activities. New waste technologies will also be a key part of Victoria’s Green Economy.

What we need to do The waste generated by Victorians has a direct impact on climate change, with the decomposition of garden and food waste, paper, cardboard and timber being the primary source of direct emissions from the sector. This decomposition occurs in landfi lls and leads to the release of methane gas, which has 21 times the global warming potential of carbon dioxide.

The waste sector also plays an important role in tackling climate change through its close links with other industrial and commercial activities. Through better diversion of materials for recycling and energy recovery, Victoria will be able to alleviate emissions that would otherwise occur through the primary production of these materials.

Compared with other sectors, solid waste disposal is unusual as annual emissions have decreased by 20 per cent since 1990 and by just over 2 per cent since 2002. This decrease is due to the use of more effi cient gas capture technologies in landfi lls.

Our Focus The Victorian Government’s Metropolitan Waste and Resource Recovery Strategic Plan shows that new technologies that process organic waste to create renewable energy and products like compost will reduce greenhouse gas emissions and create jobs and economic activity in Victoria.

While waste will be a covered sector under the CPRS, there are a number of supply chain and market settings that need to be in place to make new waste technologies viable. These include the effective separation of wastes, the pricing of landfi ll to recognise its full costs, the development of markets for end products and Commonwealth tax and depreciation arrangements.

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What we’ve already done The Government is already taking action to reduce waste levels, including:

• Towards Zero Waste Strategy, which sets the Government’s objectives and targets to encourage new processing and recovery technology to generate less waste, increase the amount of recycling and reprocessing, and reduce damage to the environment caused by waste

• Victorian Advanced Resource Recovery Initiative , which will facilitate investment in new resource recovery technology to divert organic waste and other usable materials from landfi ll in Melbourne

• Waste management groups that work with Victoria’s local councils and their communities to plan and achieve more sustainable outcomes for municipal solid waste.

• Contributing $650,000 through the Sustainable Energy Research and Development Grants Program for a project led by Monash University to research the recycling of waste plastics for the production of diesel fuel

• Acting through the EPA to assist business and industry to improve the lifecycle of products and services

Through the $10 million Victorian Advanced Resource Recovery Initiative (VARRI) the Victorian Government will work with local government to demonstrate the business case and facilitate investment in new waste technologies for Victoria.

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QUESTIONS TO CONSIDER

• What actions are required to make Victoria a centre for resource recovery industries and technologies? • How can the Government create the investment environment and demonstrate the business case for new

waste technologies? • How can we reduce emissions and save households and businesses money by reducing waste?

3.6Land use and forestry

The carbon stored in forests and other natural systems makes a significant positive contribution to Victoria’s emissions profile and Victoria has significant opportunities to exploit our comparative advantage in this sector to achieve further emission benefi ts.

What we need to do Changes in the way we manage and use land have the potential to make a major contribution to reducing emissions by increasing the potential for bio-sequestration (the process by which carbon dioxide is removed from the atmosphere and absorbed by living organisms, especially trees and plants). Victorian Government policies have already led to signifi cant emissions reduction from land use changes: from 1990 to 2006, net emissions from these changes declined by 192 per cent, due in large part to controls that have led to a major reduction in the rate of land clearing in Victoria.

Victoria’s forestry sector has also delivered signifi cant emissions reductions in recent years and has made progress towards greater sustainability. It will be important to continue the success Victoria has achieved in reducing emissions from land use change and forestry to ensure that these sectors are in a good position to continue to reduce emissions, adjust to the CPRS and take up opportunities within a low carbon economy. As the sector adjusts to a carbon price, signifi cant environmental benefi ts can be achieved from increased reforestation, including maintaining biodiversity, reducing salinity and improving water quality.

Reforestation will be included within the CPRS on a voluntary opt-in basis. To ensure that Victorian forestry is well placed to take up the option of being involved in the CPRS, industry peak bodies and forestry businesses will need to start investing now in activities that will manage emerging risks and position the sector to take advantage of new opportunities.

In particular, the CPRS White Paper suggests that most forests established as a result of the CPRS are likely to be not-for-harvest forests grown on marginal or less productive

What we’ve already done The Government has been a strong supporter of helping Victoria’s forestry sector to adjust to change and become more sustainable. Two important initiatives are underway that will assist the sector to respond to climate change:

• The White Paper for Land and Biodiversity, which includes strategies to maximise opportunities from the carbon market

• A new Timber Industry Strategy that will help forest managers and related industries to adapt to the impacts of climate change.

Victoria has also taken action to ensure the sustainability of public native forests, resulting in a reduction in harvest levels and larger areas of forest being protected in parks and reserves.

The State’s fi ve regional forest agreements (RFAs) have increased parks and reserves by 960,000 hectares or 36 per cent. Currently, a small proportion of native forests (around 10 per cent) are logged on a sustainable basis for wood products.

In 2008, the Government also ended logging in the Otway Ranges.

land. This means new investment opportunities may emerge in environmental and biodiverse plantings, as well as farm forestry.

To ensure that forestry and land use changes continue to play a positive part in reducing emissions, we need to develop a much greater scientifi c understanding of the carbon cycle in forests and different land uses. For example, recent evidence shows that the stock of carbon

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for intact native forests in south eastern Australia is much greater than previously estimated. This research also shows signifi cant differences between the carbon dynamics of natural forests and those of plantation forests. A better understanding of these dynamics will be needed to inform future forestry policy under the CPRS.

Our Focus The Victorian Government can play a key role in supporting the sector to further reduce emissions by investing in research, providing information to forest owners and assisting the sector to change its systems and practices. The Government can also show leadership in the management of its own forests.

Potential areas for further action under the Climate Change White Paper include:

Countering perverse outcomes

Because of the way the CPRS works (and the way forest carbon is currently measured), some perverse outcomes may result from the operation of the scheme. These outcomes may include unsustainable changes in land use (which could lead to reduced water supply), a shift to permanent forest plantings (with implications for wood production) and incomplete coverage of emissions (such as the exclusion from the CPRS of some sinks and sources of emissions, such as carbon stored in soil and harvested wood products).

Preparing for carbon market opportunities

To make decisions about opting into the CPRS, assess risks and take up new opportunities, forestry businesses in Victoria will need much better estimates, models and information about carbon accounting and management. As outlined in the Timber Industry Strategy, Victoria will create a modern, sustainable and high value timber industry and will continue to work alongside the Commonwealth Government to understand the implications of the CPRS for Victoria’s timber industry. The Victorian Government will also need to show leadership in the stewardship of public land and forests, by sustainably managing forests to increase the carbon asset and investigating the possibilities of ‘opting in’ to the CPRS.

Beyond carbon, the Victorian Government is also developing markets for other ecosystem services. EcoMarkets is a world-leading business model approach that pays private landholders and businesses for making improvements to the environment. The Victorian government is using the ecoMarkets business model to formalise the environment’s role in the economy. This is resulting in new long-term green jobs – securing the future of rural and regional economies and the environment.

Image: Wheat harvesting, Horsham. Source: Tourism Victoria

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• How can we maximise the benefi ts for Victoria of the wise management of our carbon assets and ecosystems (under the CPRS and in other green economy markets)?

• How can we best develop a modern, sustainable and high value timber industry under the CPRS?

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3.7Agriculture

Climate change is already having an impact on Victoria’s agricultural sector – creating opportunities for new technologies, products and services.

What we need to do The need to reduce emissions, adjust to the impacts of the CPRS and adapt to changing climatic conditions will lead to major changes in land use across Victoria over the next decade. The changing values involved in using land for food, fi bre, energy or carbon sequestration could lead to a number of outcomes, including a possible increase in forest plantings, a move from away from grazing towards cropping in high rainfall areas, a reduction in the reliability of irrigated horticulture and an increase in land used for energy production.

With direct emissions from agriculture accounting for 12.6 per cent of Victoria’s total greenhouse emissions, the sector has a vitally important part to play in reducing the State’s overall emissions.

While not covered by the CPRS until at least 2015, Victoria’s agriculture sector will still feel the ‘ripple’ effects of the scheme through rising input costs. Farm business profi tability may be affected by the CPRS via:

The impacts of increases in input costs (direct increases in electricity and liquid fuel prices and indirect fl ow-on costs from the producers and suppliers of other farm inputs such as fertiliser and feed)

The impacts of food processors passing their increased costs back up the supply chain to farm businesses

The impact of direct emissions of methane and nitrous oxide from agriculture being included in the scheme from 2015 or later (a decision on agriculture’s inclusion in the CPRS will be made in 2013).

The inclusion of agriculture in the CPRS could offer potential advantages for Australia, but key technical issues will fi rst need to be resolved. The Victorian Government will continue to work closely with the Commonwealth to analyse the benefi ts and costs of including agriculture in the CPRS and to address current technical impediments. The development of a reliable and accurate way to monitor, measure (or estimate) and verify the sector’s emissions without creating perverse incentives will be crucial to these efforts.

What we’ve already done The Victorian Government has made a substantial investment in helping Victoria’s agriculture sector to adjust to change and become more innovative and sustainable. Government actions range from direct support to individual producers through to statewide strategies. Important initiatives include:

• The Responding to Climate Change program, which is exploring practical methane abatement technologies that can be implemented on farms

• The Future Farming strategy, which provides farmers in key industries with new technologies and strategies to adapt their operations in the face of climate uncertainty

• Supporting research into the impacts of climate change on the production of selected agricultural commodities, research into new varieties of drought-resistant crops and research into decoding and sequencing the DNA of soil microbes

• Increased investment in tackling weeds and pests.

Across the State, many farmers are already taking action to reduce biological emissions (methane from livestock and emissions from soils, fertiliser and manure), increase sequestration of carbon and reduce emissions associated with their transport and energy use. Many farm businesses are investing in changes to practices (such as fertiliser application), technology applications (such as feed supplements) and systems (such as switching industry or land use). A range of options are open to farmers in each of these areas and, as the impacts of climate change are felt across the agriculture sector, new and better options will continually emerge. The development of new, effi cient and marketable agricultural practices, products and services is an area of potential opportunity for Victoria.

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Agriculture in Victoria will also be affected by changing consumer choices. As community awareness about climate change grows, some consumers will seek out low carbon products – and these products may attract price premiums. Currently, such products exist mainly in agricultural niche areas, but they have the potential to generate new growth opportunities more broadly across the sector in the coming years.

Our Focus The Victorian Government has an important role in helping primary producers to reduce their emissions, prepare for possible inclusion in the CPRS and adapt to climate change. The Government can assist by removing any barriers to effective emissions reduction and adjustment to the CPRS, investing in infrastructure (such as road and rail freight networks), improving the management of public land and water resources, and effectively regulating industry activities.

Where appropriate, the Government can also drive emissions reduction in the agriculture sector by funding research and providing information and other support for primary producers to change practices, systems and land uses.

There is also a need to improve our knowledge and understanding of the emissions profi les for different agricultural systems, along with developing practical measurement and accounting tools for these systems.

Areas where the Victorian Government could take action under the Climate Change White Paper include:

Improving the data available for carbon accounting

Assisting in the development of technologies, practices and systems for reducing agricultural emissions

Assisting small to medium sized farm businesses to improve their energy performance and take advantage of new opportunities.

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QUESTIONS TO CONSIDER

• How can Victoria develop and commercialise new, effi cient agriculture practices, products and services to prepare the agriculture sector for inclusion in the CPRS, reduce costs for the sector and make Victoria a leading green economy?

• How can we build Victoria’s “Clean and Green” credentials, to ensure our products meet increasing community and international market desire for low carbon products?

Emissions and the food we eat The most important role of agriculture is to provide food. In doing so, a viable and sustainable agricultural sector not only generates signifi cant economic benefi ts; it also plays a vital role in our collective health and wellbeing.

As agriculture is a major contributor to greenhouse gas emissions, reducing emissions in the sector has the potential to signifi cantly reduce the embodied emissions in the food we eat. Efforts by farmers to reduce emissions and increase the resilience of farming systems to climate change will be of great benefi t in the future, ensuring that Victoria can continue to produce safe and affordable agricultural products for domestic consumption and export.

Reducing Victoria’s direct (biological) emissions from livestock and soils will require changes in farming practices or technologies. Some Victorian farmers are already taking action to develop sustainable livestock management practices that retain carbon sequestered in the soil – enabling greater carbon sequestration than crop production systems, while also restoring degraded land.

But agriculture is only the fi rst stage in bringing food to our tables. Emissions also occur in downstream processing and distributing. For example, in the meat and dairy industries, the farm is where the majority of greenhouse gas emissions occur. For the viticulture, grains and horticulture industries, the energy used in processing, packaging, refrigeration, transport and even cooking makes a major contribution to emissions.

Improvements are needed in the development and application of carbon accounting to better understand the link between on-farm and post-farm gate emissions from food production and to ensure that consumers have access to accurate information on the emissions associated with the food they eat. However, we can contribute to reducing emissions along the entire food supply chain by:

• Minimising the amount of heavily packaged food we buy

• Reducing the amount of food we waste

• Supporting leading farmers and food businesses where they can demonstrate a lower carbon footprint

Image: Council House 2. Source: City of Melbourne

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Adjustment: The low carbon economy ­

a climate of opportunity

Victorian industry can capitalise on the new jobs, technologies and markets that will fl ow from a low carbon economy

Our climate change goals Two of the Government’s proposed long term goals are relevant to Victoria’s efforts to adjust to the impacts of a carbon price.

GOAL 3 Help communities and industries to adjust to a carbon price

GOAL 4 Capitalise on new opportunities emerging from a carbon price

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Victorian industry can capitalise on the new jobs, technologies and markets that will flow from a low carbon economy. The Government can enable businesses to take these opportunities by providing access to reliable information, facilitating the co-ordination of strategic planning, entering into partnerships for funding infrastructure and R&D, and promoting innovation.

The introduction of a national emissions trading scheme means that energy and other prices will rise. Victorian industries, businesses, households and communities can take action to reduce the impact of these price increases – from making relatively small adjustments, such as switching off unused lights and appliances, to making major changes in industry production systems. Most of these adjustments will be made without government assistance, however, in some specifi c areas, the Victorian Government may need to provide support.

Our success in building an economy for the future – one that is well prepared for climate change and that can capture new opportunities – is dependent upon:

Creating opportunities – There are a number of areas where strongpotential exists for Victoria to take up new opportunities andbecome a national, regional and global leader as we move towardsbecoming a Green Economy.

Driving innovation – Successfully adjusting to climate changewill require new ways of thinking, being open to new ideas andbecoming more innovative in how we do things – in our homes, inour businesses and workplaces, and in government. Support forinnovation across the Victorian community will be critical to fi ndingsolutions to climate change challenges and realising climatechange opportunities.

Developing skills – Engineering, construction and technical skillswill be needed to develop and adopt new energy technologies andcreate energy effi cient, climate resilient buildings and infrastructure.‘Green collar’ jobs are expected to grow rapidly. Skills shortagescould delay and increase the costs of making the shift to a lowcarbon economy.

Supporting adjustment to change – To adjust successfully to climate change, the Victorian economy will need to be dynamic, diverse and fl exible. In some parts of the state – and in some industries – where change has the capacity to be particularly disruptive, this may require taking strong preparatory action and providing structural adjustment support.

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What is adjustment? Adjustment refers to the changes that people, households and businesses make in their behaviour as they adjust to the introduction of a price for carbon.

Some adjustment costs will be relatively low (such as switching to more energy effi cient appliances in our homes); others will be substantial.

In some cases, adjustment to a carbon price may deliver benefi ts – or result in short-term costs that can be recouped or that are outweighed by benefi ts over the longer term.

The longer we leave it to take action to reduce emissions, the sharper – and more costly – the adjustment to the economy will be in the future.

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The energy revolution The world’s energy system is on the cusp of a revolution. This is the conclusion of the International Energy Agency who reported that 30 per cent of power generation installed globally in 2007 was renewable energy. Looking at Victoria and our current energy systems, the thought of a shift towards clean energy sources seems a distant and far fetched reality. We know that our current energy system is not economically sustainable in the long-term but some are daunted by the task of responding to the climate change energy challenge.

I see things differently. Responding to climate change will open up new opportunities for economies that embrace change. In the short-term, Victoria’s good investment environment for gas and renewable energy generation can meet growing energy demand. With smart policies, we can turn our back on our history of energy gluttony and develop new industries based on energy effi ciency. Our buildings can be comfortable but use much less

energy. Homes, housing estates, CBD offi ce blocks and factories can become decentralised power sources through the use of co-generation and solar energy. Each of us can become our own power company executive.

In the longer term, shining examples of scientifi c, community and business innovation and ingenuity can drive technological breakthroughs such as in large scale solar energy and fossil fuels with carbon capture and storage.

The world is not waiting for us to start the switch to global clean energy. The question for Victoria is: play catch up or reap the early benefits of becoming one of the world’s smart clean energy economies?

Erwin Jackson Director of Policy and Research at The Climate Institute and member of the Premier’s Climate Change Reference Group

The role for government in adjustment - smoothing the transition Adjusting to a changing climate and a carbon price will involve a joint effort across our entire community. While government will be a key player, individuals, households, businesses, industries and communities will need to assess their own exposure to climate change and the CPRS, calculate their own risks and make their own decisions about what action they need to take.

Generally, the main role for government is to create the right conditions in which individuals, fi rms and the community can make timely, well-informed and effi cient decisions about adjusting to climate change. Government action will be particularly important in creating a robust economy by encouraging innovation, reducing red tape, facilitating the take up of opportunities from climate change, and supporting skills development and tackling skills shortages.

Equity – or fairness – is also an important consideration for government in relation to adjustment. While markets can deliver an effi cient allocation of resources, they give less focus to equity issues. The CPRS will generate structural changes in the Australian economy that may

result in uneven impacts across society. For this reason, governments may need to take action to reduce any inequitable impacts by:

Redistributing income through changes to taxes and welfare payments

Providing access to public services

Promoting policies that will assist individuals, businesses and communities to adjust to changed circumstances and enhance their ability to capture the opportunities that come with change.

The Commonwealth Government has a clear role in funding adjustment policies to deal with the effects of the CPRS, as it is a national policy and auction revenue from the sale of permits under the scheme will fl ow to the Commonwealth in the fi rst instance. In particular, the Commonwealth has made a commitment to compensate low and middle income households for the energy and general price increases that will arise from the CPRS. The Victorian Government will closely monitor the basis for distributing these funds and the use of CPRS auction revenues and make representations to the Commonwealth to ensure that low income Victorian households are not relatively worse-off as a result of the scheme.

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Image: SmartBus, Source: Department of Transport

As part of the implementation of the CPRS, the Commonwealth Government has committed to provide assistance to emissions-intensive, trade-exposed industries (EITE industries) to reduce the risk that these industries will relocate offshore due to competition from countries without carbon constraints and to support the transition to a carbon constrained economy. Recently this assistance was increased by the Commonwealth, in recognition of the challenges faced by many EITE industries due to the Global Financial Crisis.

In addition, the Commonwealth Government has committed to provide one-off assistance to the most emissions intensive electricity generators and grants to reduce fugitive emissions in the coal sector. The Commonwealth Government has also committed to support fi rms not eligible for other assistance by making funds available for small to medium enterprises and community groups to invest in energy effi ciency activities.

While the assistance from the Commonwealth will support the transition to a low carbon economy, the extent and speed with which industries can respond will be dependent upon the availability of skills, knowledge and capital to adjust – providing a rationale for action by the Victorian Government to assist EITE industries.

Climate change is opportunity Climate change is opportunity. We compete with the rest of the world and turning climate change into opportunity is no exception. Whether it is smart meters, more bike lanes in cities, 5-star green buildings or upgrading old buildings, we must seek out the chance to excel. Every school should be a leading example of energy consciousness. Every building approval should be a chance to change. We should label our foods so that the embedded energy is obvious (transporting water from California to Australia is not smart). In short, partnerships, consciousness and profi le are the levers for change.

There are many opportunities for Victoria in transforming to a low carbon economy. Here are just a couple:

Cars for climate – In our large cities, over 90 per cent of journeys are less than 20km. When renewable energy sources make up a greater part of the electricity supply, why not have ultra lightweight vehicles, hybrid or electric; plug-in at parking lots and at home with the batteries of the cars providing some of the storage capacity needed? In Victoria we have the design skills, the components and car manufacturing capabilities. Even the advanced composites needed are already made in Victoria (for aircraft components). How to get this act together? Try the City of Melbourne combining with the Government to buy 10,000 such vehicles.

The brown coal elephant – Over 95 per cent of our electricity comes from brown coal and much of the plant still has a long economic life. We cannot walk away from this economically effective ‘elephant in the room’. The answer of course is to see brown coal as a bridge to the future, with carbon capture and storage the planks of the bridge. How to fast track this development? We need to fast-track access to our offshore depleted oil and gas reservoirs and fi nance the full scale deployment of capture technologies with their initially higher costs.

In summary: it’s all do-able, but there’s a long way yet to go. As Alexander the Great once said: “Let’s just get on with it!”

Robin Batterham Group Chief Scientist with Rio Tinto Limited, President of the Australian Academy of Technological Sciences and member of the Premier’s Climate Change Reference Group

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4.1Creating opportunities

Adjusting to climate change is generating challenges and opportunities on a global scale. Many nations are now taking action to reduce emissions and bolster the capacity of their economies to deal with climate impacts and tighter carbon constraints. These actions will inevitably result in a shift away from ‘traditional’ production processes and an increase in the demand for low emissions goods and services.

This means that, worldwide, significant opportunities and markets are likely to develop as investment flows towards more energy efficient products, processes, skills and services, and towards activities that will help people, businesses, communities and governments to adapt to climate change. In Australia, similar opportunities will be created as the introduction of a carbon price drives substantial changes across the market.

What we need to do While identifying and capturing opportunities from climate change is primarily the role of industry, the Victorian Government can play a role in facilitating the development of these opportunities. Different opportunities will have different requirements: some may require investment or innovation support, some may require new skills; in others, market access will be the greatest challenge.

Opportunities exist across many industry sectors; however, there are a number of areas where strong potential exists for Victoria to take up new opportunities and become a national, regional and global leader.

A CLIMATE CHANGE PRIORITY FOR ACTION

Drive innovation to position Victoria to capitalise on new jobs and skills, new technologies and new markets and accelerate the transition to a low carbon economy.

Our Focus The sectors discussed in detail in Part 3 highlight the compelling case for State action to capitalise on new job and investment opportunities that the CPRS will create. The range of potential areas of opportunity for Victoria is wide, and will be limited only by preparedness and capacity of the Victorian Government, economy and community to take action.

Below is a snap shot of just some of the new Green Economy opportunities potentially available to Victoria. More information about the prospective opportunities for Victoria can be found in the report Victoria’s Greenhouse Opportunity Set: new growth prospects in a carbon constrained world, prepared by the Allen Consulting Group and available at www.business.vic.gov.au

Four key opportunities While there are diverse opportunities emerging from climate change in Victoria, four particular areas where Victoria is well placed to succeed are described below.

Sustainable food and farming systems Significant opportunities exist for Victoria to become a global leader in sustainable food systems. More than 10 per cent of Victorian jobs are related to food and the Victorian food system makes a significant contribution to local and global food supplies – providing around one quarter of Australia’s total food and fibre exports.

Victoria’s expertise and knowledge in areas such agricultural production and processing, biotechnology, water management and waste processing could be used to lead the development of innovative, sustainable food and farming systems that contribute to reducing emissions and that are more resilient to the impacts of climate change.

Advanced water management Victoria has developed signifi cant capabilities in water resource management and ‘smart’ water technologies, including innovations for some of the State’s largest agricultural, energy and manufacturing users. As the impacts of climate change become more evident, water management products and technologies will become increasingly sought after throughout Australia and overseas. There is also likely to be an increasing interest in and demand for technologies to support urban water management and alternative water sources, including stormwater, recycled water, grey water and drainage water to complement ‘traditional’ conventional water supplies.

Victoria can capitalise on our existing research, manufacturing and practical expertise in these areas to become a leader in advanced water technologies, exporting products and technologies for ‘smart’ water management to the rest of the world.

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Carbon markets Expertise that supports the CPRS and related carbon market activity offers signifi cant opportunities for Victorian business within global markets. This expertise includes carbon trading, brokerage, asset management and training, verifi cation and audit services. Melbourne is already developing its credentials as a domestic carbon market services hub and new carbon trading services in Victoria will build on well-established energy and water trading markets. This cluster of industrial, energy and fi nancial fi rms provides a sound foundation for expanding into the Asia Pacifi c region. The Government has established a Melbourne Carbon Market Taskforce to advance this agenda and is undertaking a feasibility study into a Cooperative Carbon Market Institute.

Cleantech ‘Cleantech’ covers fi rms operating across the spectrum of renewable energy, energy effi ciency, advanced water technologies, waste management and environmental services. The world market for environmental technologies and services is predicted to grow to $688 billion by 2010 and almost $800 billion by 2015.

The Victorian Environment / Cleantech sector has globally recognised expertise that can be converted into signifi cant economic and environmental outcomes. A recent survey of Victorian providers of environmental products and services suggests that the industry already directly employs over 17,000 people and earns revenue of over $3 billion per annum. The response to climate change presents an unprecedented opportunity for this sector to make its mark in what is – relatively speaking – a highly contestable, immature global market. The challenge will be to use the current window of opportunity to best position the Victorian cleantech sector to meet the massive growth in domestic and international demand for environmental goods and services.

VICTORIA’S CLIMATE CHANGE OPPORTUNITIES – ADJUSTING TO A CARBON PRICE

Renewable energy Creating leading-edge large and small-scale renewable energy projects and driving the further development of our cleantech capabilities.

Clean coal technology Developing the Latrobe Valley as a hub for clean coal research and development and exploring technologies and building expertise in carbon capture and storage methods, such as geo-sequestration.

Advanced manufacturing Using our strong manufacturing base to shift into new areas of clean technology, and materials such as advanced materials technology and nanotechnology.

Design Building on the Design Victoria Strategy to develop Melbourne and Victoria as a hub for innovative planning, architectural and industrial design that supports more sustainable industrial processes, buildings, transport, goods and services.

Information and Using the strengths of our ICT industry to transform other sectors. Communications

Technology

Financial, legal and risk Providing fi nancial and legal advice and services to governments and businesses management services to support new enterprises and initiatives related to climate change. This includes

the development of carbon markets to support the CPRS and related carbon market activity.

Carbon markets Enabling Victorian businesses to successfully participate in carbon markets and positioning Victoria to be the home for key CPRS functions and regulatory and market services.

Energy effi ciency Developing new products and services to assist people to identify and implement low cost energy effi ciency changes made more attractive by the CPRS.

Ecomarkets / ecosystem Building on Victoria’s world-fi rst ecoMarkets scheme to give farmers further services incentives to protect the health of our soil, land, waterways and biodiversity.

Opportunities also exist to further commercialise our signifi cant capabilities in water resource management and develop innovative and sustainable food and farming systems.

A QUESTION TO CONSIDER

What new sectors offer the greatest opportunities for Victoria’s green economy under the CPRS?

4.2Driving innovation

The imperative to respond to climate change over the next decade and beyond means that this is not a time for simply hoping that existing practices will continue to serve us well: this is a time for innovation – a time when new ideas will be needed to solve new problems.

What we need to do Successfully adjusting to climate change means thatwe will need to fi nd new ways to do things: fromsimple everyday household tasks to complex industrialprocesses. Through innovation, we will create newproducts and services for use in Victoria and for export tothe world; we will develop and adapt new technologiesto help us to respond to climate change in our homesand businesses; and we will generate high quality jobs inemerging industries.

Innovation for climate change is not only about particularniches where new products and services can makeimprovements; it is also about becoming more innovative inour systems of transportation, buildings, energy and water,and the ways in which we produce and consume goodsand services. Businesses will also need to become moreinnovative in their operations and processes.

The step-up in innovation required to respond to climatechange in Victoria will require a culture of support forcreativity, ideas and experimentation across government,businesses and communities. A key challenge for Victoria isto fi nd ways to encourage and equip people from all walksof life to come up with new ideas, experiment with newapproaches and solutions, and convey their knowledge andexperience to others.

The CPRS will drive innovation by giving companies buyingpermits under the scheme a strong incentive to fi nd newways to reduce their emissions. The CommonwealthGovernment is also supporting climate change innovationthrough major initiatives such as the $240 million CleanBusiness Australia Initiative, the $150 million EnergyInnovation Fund, the $500 million National Clean Coal Fundand the $500 million Renewable Energy Fund.

While it is diffi cult to predict where these changes willlead, Victoria will need to ensure that our infrastructureand systems support as wide a range of innovative actionsas possible – keeping our options open in the face ofuncertainty about the future extent and consequences ofclimate change.

A CLIMATE CHANGE PRIORITY FOR ACTION

Drive innovation to position Victoria to capitalise on new jobs and skills, new technologies and new markets and accelerate the transition to a low carbon economy.

What we’re already doing Victoria’s leadership in innovation is widely acknowledged and the Government is supporting innovation initiatives that will advance Victoria’s climate change response. These include:

• The 2008 innovation statement – Innovation: Victoria’s Future – which lists sustainability and climate change as one of three priorities

• Demonstrating sustainable energy technologies and carbon capture and storage through the Energy Technology Innovation Strategy (ETIS)

• Supporting new technology and innovative farming practices through the Future Farming statement

• Using high-resolution images and digital models to track the impact of climate change on coastal communities and assets as part of the Future Coasts project

• Supporting businesses, communities and individuals to develop innovations in response through the Sustainability Fund, the Smart Water Fund and Community Action Grants.

• Creating the Victorian Advanced Resource Recovery Initiative (VARRI), which is exploring new waste recovery technologies for Melbourne

• Incorporating climate change within broad innovation and research policies and programs, such as Victoria’s Science Agenda.

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Our Focus The Victorian Government has an important role in facilitating innovation alongside the CPRS. In particular, the Government’s main role is to foster innovation in areas that are of national or state interest or in which Victoria has a clear comparative advantage.

Potential areas for further action in the Climate Change White Paper include:

Creating a culture of innovation Worldwide, there is increasing recognition of the value of innovations that are generated by individuals and small groups coming up with good ideas as they apply existing technologies to meet their own needs or to fi t new market niches. A successful response to climate change will involve encouraging individuals, businesses and communities across Victoria to develop knowledge, test solutions and demonstrate new ways of living and working that will make it easier for the rest of the community to adjust.

Driving new technologies and markets Victoria is a leader in scientifi c research and many of the State’s capabilities (such as energy, biotechnology, advanced materials and ICT) have the potential to contribute to Victoria’s response to climate change. As the home of some of the premier universities in the nation and leading scientifi c infrastructure – such as the Australian Synchrotron – there are opportunities to direct more of Victoria’s scientifi c research effort towards climate change. Signifi cant opportunities also exist to capitalise on Victoria’s excellent capabilities in climate science; for example, building upon current support for cleantech ventures and programs such as ETIS and the Sustainability Fund could further drive the development of innovative technologies.

The Government can also support Victorian businesses to overcome barriers to innovation by sharing the risk of being ‘fi rst movers’ in taking up new technologies, products and services. As a major purchaser of goods and services, the Government can also use its procurement practices to drive innovation in ‘everyday’ products and services, and to assist innovative climate change-related products and services to fi nd a stable niche in the Victorian market.

Smarter regulation The Victorian Government has been a national leader on new, innovative forms of regulation that prepare business for the CPRS, increase effi ciency and reduce their costs, such as the EREPs program. This type of smart regulation can play a role in further positioning Victoria as a leading green economy. With innovative solutions to climate change likely to play a critical part in our response, the Victorian Government has an important role to play in working with the Commonwealth to make sure that the ‘rules of the game’ at the national level encourage and enable innovative new products, services and processes.

A QUESTION TO CONSIDER

What is the right mix of tools available to Government to foster innovation and maximise the benefi ts to Victoria under the CPRS? 4.

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Image: Bridgewater Solar Facility. Source: Solar Systems

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4.3Developing skills

The shape and nature of Victoria’s future workforce will be different to the one we have today. To secure opportunities and move smoothly to a low carbon economy, we will need to develop an appropriately skilled workforce. Developing these skills is not only essential to our ability to respond to climate change, it is also vitally important to making sure that young Victorians can participate and succeed in the new industries and careers that will emerge over the coming decades.

It is possible that well over 200,000 new jobs couldbe created nationally in sectors with high potentialenvironmental impacts. There are also likely to be a numberof ‘green skills’ areas where the demand for jobs willincrease, including:

Design and construction (in relation to energy and watereffi cient buildings and infrastructure, renovations andretrofi ts, and the installation and maintenance of effi cientappliances and machinery)

Restructuring of the energy system and the introductionof renewable energy

Developing alternative transport systems

Changing the ways in which food is producedand provided.

What we need to do Victoria has introduced reforms for a demand-drivenVocational Education and Training system that is responsiveto the changing needs of the State’s industries andworkforce. However, a lack of awareness of skill needs fromindustry and students could delay and increase the costof transition to a low carbon economy and exacerbate thechallenge of responding to climate change. Overcomingthese skills gaps and building Victoria’s workforce for a lowcarbon future will require a focus on:

Training individuals (including disadvantaged workersand those who may already have experienced long-termunemployment) in occupations that will be critical inresponding to climate change, such as engineering,science and the trades.

What we’ve already done The Government is already making the changes needed to respond to the climate change skills challenge, including:

• Releasing Securing Jobs for Your Future: Skills for Victoria, a groundbreaking package of reforms to the Vocational Education and Training system that aim to build a training system that is responsive to the changing needs of Victoria’s industries and workforce

• Supporting skills programs through Sustainability Victoria, such as a course in energy effi ciency for electricians and a course in Home Sustainability Assessment

• Supporting initiatives through Skills Victoria, including the National Centre for Sustainability based at Swinburne University, the Centre for Sustainable Construction in Ballarat and the Centre for Environmental Technology at the Gordon Institute of TAFE

• Introducing the Skills for Growth – Workforce Development Program, which supports small and medium sized enterprises to identify and meet their skills development needs

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Training individuals in ‘green collar’ jobs – jobs in all sectors of the economy that will contribute signifi cantly to preserving or restoring environmental quality.

Re-skilling workers who will be displaced as Victorian industry and the economy adjust to a carbon price.

The Victorian Government recognises that achieving the transition to a low carbon economy will require a major mobilisation of skills and training. The Government has nominated skills as one of the areas for immediate action; however, many other parties will also need to take action on skills – individuals, businesses, industry bodies, training providers and higher education institutions.

Our Focus While already taking action to improve skills development in areas relevant to climate change, the Government has identifi ed three key areas where it can take further measures through the Climate Change White Paper:

Identifying the skills required in a strong and successful low carbon economy

We need to know the types of skills that will be required in the future and the level of demand for these skills. Research is also needed to help industry, training providers, government and others to understand and respond to emerging trends.

Supporting our VET and higher education sectors to provide the required skills

Having people available and willing to undertake training is only part of the solution; the qualifi cations being delivered must be suited to the changing needs of the Victorian economy. We will need to revise existing qualifi cations to incorporate green and climate change components, introduce new qualifi cations to respond to emerging technologies and new occupations, and make sure that we have qualifi ed teachers in the relevant areas.

Attracting and training new entrants and existing workers Climate change will add to the demand for higher level skills and qualifi cations. To meet this demand, we will need to encourage young Victorians to consider careers in areas of skills shortage and climate change-related professions. As the transition to a low carbon economy will reduce employment in some industries and occupations, we will need to re-train workers in these areas.

A QUESTION TO CONSIDER

How can we ensure Victoria has the skilled workforce needed for the transition to a low carbon economy? 4.

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tyThe Green Jobs Action Plan In the Statement of Government Intentions on 3 February 2009, the Premier announced the Victorian Government would develop a Green Jobs Action Plan.

The opportunity for Victoria to consider the challenge of climate change and the global economic crisis together could generate a “double dividend” where mutually reinforcing actions are put in place to aid Victoria’s recovery from the global economic downturn, and position Victorian industry on a pathway towards a low carbon and more sustainable future.

The Action Plan will build upon recent policy initiatives that are already creating signifi cant job opportunities in the environment sector, for example: the Victorian Renewable Energy Target (VRET) which will create 2000 jobs, mostly in rural and regional Victoria; and the Rebates for Being Green scheme which will upskill hundreds of ‘green plumbers’ and other tradespeople. The plan will identify how new green skills will be delivered through the training system as well as how Victorians will be encouraged to take advantage of new future green job opportunities. A preliminary assessment suggests that these opportunities fall into a number of categories including:

• Green buildings and urban design

• Water effi ciency and water markets

• Lower emissions technology and renewable energy

• Development of the Australian carbon market

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4.4Supporting adjustment to change

Smooth adjustment to a carbon price will require new ways for governments, communities, businesses, households and important sectors such as NGOs and universities to work together. Introducing a price on carbon is a major economic reformthat will lead to lasting changes in the way businesses,governments and individuals act. It will also lead to arestructuring of many industries and the Victorian economyas a whole. The Victorian Government will establish newpartnerships or accords to bring together the right mix ofskills and perspectives to plan for and achieve a smoothtransition to a carbon price for key regions, communitiesand industries.

The Victorian economy has evolved through many significanteconomic reforms in recent decades, including the loweringof tariff barriers, the deregulation of labour markets, theintroduction of the GST and the floating of the Australiandollar. Our economy is also affected by many external forces,including the rise of manufacturing sectors in countries suchas China, volatility in the value of the Australian dollar andthe global economic downturn.

In meeting these challenges, the Victorian Governmenthas sought to facilitate the economy’s transition in a waythat ensures that regions and communities maintain theirprosperity, diversity and vibrancy during times of change.

What we need to do The Government will continue to adopt this approach as theintroduction of a carbon price leads to major changes for manybusinesses, regions and communities. The Government willseek to facilitate a smooth adjustment to a carbon price, whilesecuring the prosperity and vitality of the State as we makethe transition to a low carbon economy.

However, it is clear that some workers, regions and industrieswill experience particular difficulties in adjusting to climatechange. In Victoria, the industry sectors that are most likely tobe affected by future carbon constraints are carbon-intensiveactivities, such as coal-fired electricity generation and firmsthat rely on large amounts of electricity to produce goods, suchas the manufacturing sector and aluminium industry.

A CLIMATE CHANGE PRIORITY FOR ACTION

Help vulnerable regions, businesses and communities adjust to a carbon price, particularly the Latrobe Valley.

What we’ve already done The Government has already introduced a number of initiatives that support adjustment to changing economic conditions. These include:

• Community Regional Industry Skills Program (CRISP), which contributes to industry development, new jobs and increased skills in rural and regional communities

• Regional Industry Investment Program (RIIP), which aims to strengthen the diversifi cation of Victoria’s regional industry base

• Skill to Transition, a new program to support the securing of training places for up to 6,400 Victorian workers who want to retrain or who are in industry transition

• Experience Counts, which delivers strategies to re-engage mature age workers in the workforce

• Planning for Change, which assists local councils to improve community adaptation to economic and social change

• Major investment in the Latrobe Valley to secure the region’s future.

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The Commonwealth Government has made a commitment to support a large number of these fi rms and provide one-off assistance to the most emissions intensive electricity generators. While this assistance will help these industries to make the transition to a low carbon future, the extent and speed with which industries can respond to climate change is also heavily dependent upon their access to the skills, knowledge and capital needed to adjust.

Our Focus The Victorian Government recognises that it may need to act to address any uneven distribution in the impacts of the CPRS. The Government will establish new partnerships or accords to bring together the right mix of skills and perspectives to plan for and achieve a smooth transition to a carbon price for key regions, communities and industries.

Key groups that may need additional measures include:

Workers While the introduction of a carbon price will have a positive effect on workers with skills demanded by industries that will expand under the CPRS, it will have a negative effect on workers in industries that will decline. Extra support will be needed to assist affected workers to transfer their skills to new areas.

Businesses Generally, businesses must manage their own risks in adjusting to the CPRS. However, in some areas, businesses may need additional support to assist them to become more energy and resource effi cient, exploit new opportunities and source new skills and expertise. For example, the tourism sector will face: higher operating costs from fuel and electricity and fl ow-on price impacts to other items such as food; potential changes in demand due to higher transport fuel costs (this may be offset by local consumers choosing to spend holidays locally); and changes in demand patterns driven by changing consumer sentiment about the carbon footprint of different travel choices. The adjustment risks to this sector will be compounded as consumer preferences for tourist destinations are affected by climate change (such as the extent and duration of snow cover). Businesses in this sector will need the right advice and tools to help them adjust and adapt to climate change.

Regions Regions with less economic diversity are likely to experience larger effects – positive and negative from the CPRS. Regions that experience climate extremes (for example, those that have signifi cant requirements for winter heating but will also face increasing demand for cooling in summer) and that are dependent upon more greenhouse-intensive fuels (such as those areas that are not part of the gas reticulation network and are reliant upon electricity) will be particularly affected. These regions may need additional assistance to adjust.

Gippsland is likely to experience the largest adjustment pressures under the CPRS. This region may require the most transitional support, principally because it is home to the brown coal-fi red electricity generators in the Latrobe Valley. However, the Gippsland region could also benefi t as its forestry sector expands in response to the extra incentives for forestry activities provided by the CPRS.

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The Latrobe Valley The Latrobe Valley is one of Victoria’s key economic regions: home to over 73,000 people. It is the centre of Victoria’s electricity generation sector, which is based primarily on brown coal. The region’s recent history has seen its economy evolve following signifi cant structural change over a decade ago to today boast a diversifi ed economic base, with activities in the services, retail and manufacturing sectors.

However, power generation still dominates the Valley’s economy. Over 3,000 jobs, or about 10 per cent of all employment in the Latrobe Valley, rely directly on the power industry. Importantly, one in three of the Valley’s higher paid jobs are held by workers in the electricity and associated industries. Likely impacts of putting a price on carbon include long-term structural transitions to the region’s economic base and initial short-to-medium run employment changes and associated adjustment impacts for the region’s coal generation and mining industry.

This suggests that any employment impacts resulting from the CPRS in the electricity sector are likely to have a signifi cant fl ow-on impact on spending in other areas of the region’s economy. The longer term outcomes for the electricity sector in the Latrobe Valley will depend on many unknowns - whether and when technologies to reduce emissions from brown coal are perfected, which renewable technologies will emerge as commercially viable and whether these can be located in the Valley. The region’s broader outcomes relate to continuing the economic diversifi cation of the Valley and whether industrial uses for brown coal can be identifi ed and emerge as commercially viable.

The Victorian Government is committed to maintaining the Latrobe Valley as a centre of energy production and expertise, while also creating new opportunities to diversify the regional economy. To achieve these outcomes, the Government is considering a suite of policy options to be negotiated and delivered in partnership with the Commonwealth and local government. These options will cover the following areas:

• Ensuring that the transition in the coal-based energy sector is gradual and orderly

• Maintaining the Valley’s high skills base while driving new research and development opportunities

• Maximising business opportunities in the region

• Providing support through transitional adjustment strategies

• Creating opportunities for new types of investment in the region

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Communities Across Victoria, some communities will be particularly affected by regional adjustment challenges. While many of the issues faced by these communities could be addressed through generic policy options (such as measures to build community resilience, assistance to low income households and support for skills development), there may be some instances where the Government will need to consider specifi c additional adjustment assistance.

Low income households The effects of climate change, including rising temperatures and reduced water availability, are likely to contribute to higher water and energy costs. Carbon pricing will further affect the price of goods and services, with businesses passing on the increased cost of carbon to consumers. Electricity and gas prices will rise in the early stages of the CPRS and these costs will quickly fl ow through into other areas of household spending, such as food and transport.

There is a clear role for the Victorian Government to work with the Commonwealth Government in assisting low income households to make the transition to a low carbon economy and ensuring that the impacts of the CPRS are distributed equitably across the community. The Commonwealth Government has committed to fully compensate low income households for the impacts of these costs, however, potential areas for action where the Victorian Government could work with the Commonwealth include:

Seeking to make sure that low income households are not left worse-off when compared to the broader population as a result of the CPRS

Seeking to ensure the continued affordability and provision of essential services to low income households

Developing the capacity of households and communities to deal with the impact of the CPRS, recognising that an effective way to minimise costs for low income households is to help them to improve their energy effi ciency

Improving community knowledge about the impacts of the CPRS and climate change to enable communities to develop local responses.

Coordination between the Victorian and Commonwealth Governments will be needed to ensure that support for low income households is delivered effi ciently and without duplication. The Victorian Government recognises that assistance provided to low income households should strike a balance between ensuring that these households are not disproportionately affected by rising costs under the CPRS and maintaining incentives for them to reduce their overall emissions.

The Government also recognises that further support may be warranted for people who are likely to be disadvantaged by rising transport costs, such as incentives to improve the energy effi ciency of vehicles for those most at risk, assistance to Local Government to develop car pooling systems in their communities, support for community transport and an extension of the Transport Connections Program.

What we’ve already done The Government already has a number of programs in place to facilitate energy effi ciency and support low income households with the cost of utilities, including:

• Energy and Water Task Force, which provides energy effi ciency and water audits and modifi cations to low income households

• Rebates for household energy effi ciency improvements, including higher rebates for insulation and gas hot water systems for concession card holders and their landlords

• Climate Change Proofi ng Low Income Households program, which provides funding for retrofi ts and energy improvements in social housing

• Concessions on essential utilities such as electricity, water and gas to low income households

• The Transport Connections Program, which delivers innovative transport solutions for people in regional, rural and outer suburban areas who are experiencing transport disadvantage

• Upgrades to public housing across the State

• Hardship policies, which are implemented by energy retailers to assist consumers experiencing fi nancial diffi culties

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QUESTIONS TO CONSIDER

• What types of new partnerships and shared actions between Government, communities, businesses, households and other important sectors are needed to achieve a smooth adjustment to a carbon price?

• Which communities, regions and sectors would most benefi t from a targeted adjustment partnership or accord?

• What opportunities are there to provide a coordinated approach between the State, Commonwealth and Local Government, NGOs, industry and the community to ensure that low income and vulnerable households are assisted to make the transition to a low carbon economy?

Image: Household Solar. Source: Sustainability Victoria

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Climate change and disadvantaged households Climate change itself and climate change mitigation measures, such as the CPRS, have the potential to have signifi cant impacts on disadvantaged members of the community.

Energy prices are already on the rise and the costs of goods and services will increase further as a result of the CPRS. Low income households will face proportionally higher price rises because they spend a higher proportion of their weekly expenditure on carbon intensive goods and services, even though they use less carbon overall. They are also less able to adapt their spending patterns in response to price increases – for example, they cannot refi t their homes or buy a more fuel effi cient car.

Alongside the impacts of the CPRS, unchecked climate change will have a direct and negative impact on the wellbeing of low income and disadvantaged Victorians. The most up to date science tells us we will face more extreme weather events, reduced rainfall, increased evaporation, higher temperatures and sea level rises. Low income and disadvantaged Victorians will be extremely vulnerable to the rising energy, food and water prices which follow from these climatic changes. At the same time, the changing climate is likely to put pressure on particular regions and industries with resulting job losses – just as the drought is doing now.

Considered policy interventions can reduce the vulnerability disadvantaged households face and increase their capacity to adapt to changing circumstances. The Federal Government’s

household compensation package in response to the CPRS combined with the insulation program announced in the economic stimulus program will provide an essential buffer for low income households. There is however more that needs to be done. The Victorian Government has a key role to play in leveraging its energy effi ciency program experience to develop new initiatives (or expand existing ones) specifi cally targeting low income households. Victoria can also play a key role in ensuring coherency occurs between State and Federal programs to ensure comprehensive energy effi ciency assistance for disadvantaged Victorians. Comprehensive household retrofi ts have the potential to save each Victorian household between $390 and $500 per year and also reduce vulnerability to extreme weather events, such as heatwaves, which are expected to increase as a result of climate change.

Increasing the adaptive capacity of disadvantaged households and communities will need to be at the core of our response to climate change – because without assistance these already stressed households will be more vulnerable. One important step will be to ensure low income households are part of the solution to climate change. In order to achieve this, new green job schemes should prioritise disadvantaged and unemployed job seekers.

Tony Nicholson Executive Director – The Brotherhood of St Laurence and member of the Premier’s Climate Change Reference Group

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Image: Cattle feeding in regional Victoria

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A sectoral case study: adapting and adjusting to change in agriculture, forestry and fi sheries Victoria’s agriculture, fi sheries and forestry sectors provide an excellent case study of the need to meet the challenge of adjustment to a carbon price and adaptation to climate impacts simultaneously.

These sectors contribute signifi cantly to the State’s wealth and wellbeing and are especially critical to the ongoing vitality of Victoria’s rural and regional economies. They also rely directly on natural systems – water, land and biodiversity – that will be fundamentally altered by climate change. Impacts such as reduced water availability, higher temperatures, damage from extreme events (such as fl oods, bushfi res, droughts and storms) and more or different kinds of pests and parasites will have signifi cant consequences for agriculture in Victoria. Reduced freshwater fl ows and changes in oceanic current dynamics and water temperatures will infl uence Victoria’s aquatic environments, with consequences for the productivity of wild harvest fi sheries and aquaculture.

These sectors will also be affected by changing global trading markets and shifts in consumer preferences towards products with lower carbon footprints and - while agriculture is not expected to be included in the CPRS until at least 2015 – as a carbon price fl ows through the economy businesses in this sector will need to adjust to meet the cost increases for energy, fuel and other commodities, that the CPRS will cause.

An example of the exposure of the agriculture sector to the adaptation and adjustment challenge is Victoria’s dairy industry.

As well as adapting to drought, heat stress and possible increasing susceptibility to pests and diseases caused by climate change, the dairy industry will also need to adjust to the imposition of a carbon price, both on production and supply chains and in preparation for agriculture’s prospective inclusion in the CPRS in 2015.

Early estimates suggest the dairy farm sector could reduce its emissions intensity by up to 20 per cent by 2020, if all of the available mitigation technologies were adopted by 100 per cent of Victoria’s farm businesses. However, the costs of these technologies need to be considered along with their benefi ts and the industry will need advice and support as it transitions to a low emissions footing.

What we need to do These impacts mean that – right across the State – our agriculture, fi sheries and forestry sectors are likely to be transformed in many ways as a result of climate change. However, while climate change brings new risks and pressures to these sectors, it will also create new opportunities – including shifting distributions of fi sh species, crop varieties that are currently unsuitable for Victoria becoming profi table, improved crop yields and the production of carbon neutral products to supply to new markets.

Image: Fishing boat, Lochsport. Source: Tourism Victoria

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Flexibility, productivity and sustainability will be crucial to the ongoing viability and profi tability of Victoria’s agriculture, fi sheries and forestry businesses in the face of a changing climate. In particular, the success of these businesses will depend upon their ability to adapt to, ameliorate the adverse impacts of and capture the benefi ts from the changing climate and from changing policy and trading environments. A major challenge for these businesses is knowing what action to take now, given the uncertainty around the future risks of climate change.

The Victorian Government believes that the best way to assist these sectors to adapt to the reality of climate change will be to facilitate research into new technologies, systems and practices, provide businesses with the information they need to manage their own risks and support businesses to adopt best practices in managing the impacts of climate change.

Our Focus While adaptation and adjustment in these sectors must be business-driven, the Government can help to create the right conditions for adopting best practices, including:

Giving producers and businesses the information they need to have confi dence that the climate really is changing and to develop new practices to avoid risks or take up opportunities

Researching and demonstrating new technologies and systems that will enable change to occur

Identifying and promoting new markets that will infl uence and drive change

Providing support during transitions to new management or new land uses

Supporting any changes to transport and market infrastructure that may be needed

Developing an effective monitoring and evaluation system to learn which adaptations work well, which do not and why.

In April 2008, the Victorian Government released its Future Farming strategy. As well as boosting services to farmers, the strategy provides support to encourage productive, innovative and competitive farm businesses. Climate change-related initiatives include: a new Planning for Climate Change program, which gives farm businesses access to information and research about climate change, carbon markets, and reducing emissions; a New Technologies and Strategies program, which will provide farmers with new technologies and strategies to adapt farming systems and practices in the context of a changing climate; a four year program to manage climate change in Victorian fisheries and aquaculture. The Government has also commissioned a three year study on the resilience of agricultural businesses to various climate change scenarios

The Green Paper seeks feedback from farmers about the usefulness of these services, systems and products in relation to adjusting and adapting to climate change – and how they might be improved.

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Image: Port Fairy Lighthouse, Source: Tourism Victoria

Adaptation: A new reality

Dealing with climate change will be a part of the reality of life in Victoria for many decades to come.

Our climate change goals Three of the Government’s proposed long-term goals are relevant to Victoria’s efforts to adapt to climate change. GOAL 5 Enable Victoria’s regions, industries and communities to capture opportunities and adapt to a changing climate GOAL 6 Promote resilience and improve the management of Victoria’s natural resources, ecosystems and biodiversity GOAL 7 Manage the risks to Victoria’s infrastructure, built environment and communities through good planning and emergency response systems

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Victorians will need to adapt to the new reality of a changing climate. Many of the actions that we take to adapt to climate change will generate signifi cant social and environmental benefi ts and ultimately lead to more vibrant and resilient communities, industries and ecosystems.

The Victorian Government will take action to enable people, regions, industries and communities across the State to manage the risks ahead, capture new opportunities and adapt to the impacts of a changing climate. The Government will also take action to manage Victoria’s natural resources responsibly and sustainably, and to minimise the damaging effects of climate change on the State’s infrastructure, built environment and communities.

VICTORIA’S CLIMATE CHANGE OPPORTUNITIES – ADAPTING TO CLIMATE CHANGE

Water management Becoming a world leader in effi cient water management technologies, including technologies sustainable irrigation, water recycling and water markets.

Biotechnology Building on our growing leadership in biotechnology to develop products and services that will reduce the impacts of climate change, such as drought resistant crops, soil remediation technologies and treatments for infectious diseases, biofuels and petrochemical replacements.

Emergency responses Building on a record of world’s best practice in hazard prevention, mitigation, response and recovery.

Education and training Providing education about climate change – and training in the skills needed to adapt to climate change – to countries in our region.

Sustainable food and Becoming leaders in advanced sustainable food and farming systems that provide farming systems quality food, reduce greenhouse emissions and deliver natural resource outcomes.

Why do we need to adapt? Even if all greenhouse gas emissions ended today, some climate change will still occur due to past emissions already in the atmosphere. This means that some damage from climate change – possibly substantial damage – will be experienced by people around the world for the foreseeable future. Victoria’s ability to adapt quickly to this new reality and make the most of new opportunities will be critical to our future economic prosperity and quality of life.

Across the State, people, communities, businesses and industries are already adapting to the impacts of climate change. But as time goes on, these impacts will become more signifi cant, wide ranging and complex – and they will affect all Victorians.

Some of these impacts will develop gradually; others will be in the form of big events and shocks. Changes in climate will also have different effects on different people and places, and the risks and impacts will vary.

If managed well, these changes will present opportunities for Victoria in new markets, technologies and industries. But if we fail to adapt successfully to climate change, we may face severe and lasting consequences, including lower productivity, property and financial losses, higher costs for many goods and services, reduced health and wellbeing, and negative impacts on natural features, habitats and species.

A CLIMATE CHANGE PRIORITY FOR ACTION

Support private action to adapt to a changing climate, and undertake adaptation actions on behalf of the Victorian community to protect the environment, key public assets and manage major public risks.

In many cases, we are now in uncharted territory. The past is no longer a reliable guide to the future. Instead, we must rely on climate scientists to model a range of plausible future scenarios for climate change and then try and fi t our decisions to these scenarios.

This high level of uncertainty makes it challenging for governments, individuals and the community to know how to best prepare for the future. On the one hand, we must recognise that a failure to plan for the more extreme, yet scientifi cally plausible, climate change outcomes could expose communities to the risk of severe – possibly even catastrophic – impacts. On the other hand, to attempt now to ‘climate-proof‘ communities and the natural environment against these uncertain events may impose unnecessary costs on current and future generations of Victorians. This is not a reason for resignation or inaction; it simply acknowledges that adaptation to climate change comes at a cost.

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The best adaptation responses will change over time. It clearly makes sense to undertake some adaptation actions now, while in some other areas, the costs of acting today will outweigh any benefi ts that might be realised in the future. A number of factors need to be considered in determining which early responses should be adopted; in particular, early action will be appropriate where:

It is more effi cient because retrofi tting at a later date will be expensive and inconvenient – for example, making adjustments to long-term development plans and the design stages of long-lived infrastructure investments such as water supply, bridges and ports

It gives rise to benefi ts in the short-term – for example, measures that will help to ameliorate the impacts of climate variability (such as improvements in long-term weather forecasting) or that strengthen the resilience of natural ecosystems

It locks in long-term benefi ts at reasonable cost – for example, by preventing long term damage to ecosystems.

What is adaptation? Adaptation is about taking deliberate actions to avoid, manage or reduce the consequences of a hotter, drier climate (with more extreme weather events) and to take advantage of the opportunities such changes may generate.

Adapting to climate change must be built into the normal planning and risk management activities of individuals, businesses, community groups and government agencies.

Adaptation can take many different forms. It may include education and training about climate change; it may involve proactive responses such as the development of emergency plans to deal with severe weather events, large scale tree planting or providing greater protection for coastal communities; or it may require more technical and scientifi c solutions, such as developing drought-resistant crops, increasing energy effi ciency and changing agricultural and industry practices.

The role for government in adaptation Adaptation to climate change will involve a joint effort across the Victorian community, with many actions – small and large – being taken by households, fi rms, governments and communities. While government will be a key player, the role of individuals, businesses and the community sector will also be critical because of the scope and scale of the Government involvement in adaptation to climate change is very different from its role in mitigating greenhouse gas emissions. Without direct government intervention in reducing emissions, individuals do not have a strong incentive to change their behaviour to benefi t the climate. This creates a clear role for government to step in and deliver the right incentives for individuals and businesses to act in a way that improves environmental outcomes – the CPRS, which puts a price on carbon, is the most obvious example of this. In contrast, there are strong incentives for individuals to take action to adapt to a changing climate because it is in their own best interests to do so, irrespective of the actions taken by government.

Accordingly, the key role for government in adaptation is to create the right conditions for individuals, fi rms and communities to make timely, well-informed and effi cient decisions as they adapt to climate change. In particular, government can assist by creating a market and regulatory environment that encourages individual adaptability and fl exibility in responding to climate change.

Government can also undertake adaptation actions where these will not be initiated by the private or community sectors because of market failures. For example, government will have a role to play in helping the natural environment to prepare for and adapt to climate change, and in protecting long-lived or high-value public assets. Government will also need to drive the response in areas such as essential and emergency services (for example, public health and water supply).

State and Local Government have a clear role in leading and implementing adaptation strategies because they are closer to local communities and have access to the tools needed to respond to the complex, interrelated impacts of climate change. Moreover, the most affected areas – in particular, the natural and built environment fall within State Government responsibilities.

The Commonwealth Government has clear roles in providing research on national priorities, creating opportunities for sharing knowledge between the states and funding adaptation actions. While these roles and responsibilities are well-established, a coordinated approach across all levels of government will be needed to deliver the best outcomes for Victorians.

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The role of the private sector Actions taken by the private sector in Victoria are vitally important to adapting successfully to climate change. These actions should result in the most innovative, locally-appropriate and cost effective adaptation response. Commonwealth, State and Local Government should facilitate this response by ensuring that private markets (insurance, for example) and regulatory structures (such as water markets) are effective.

The ‘best’ way to adapt to a changing climate may vary greatly for different individuals, different locations and different types of communities. Depending on circumstances, some individuals will be happy to ignore the risks or delay decisions, while others will be keen to ‘lock in’ high levels of protection today. Where the benefi ts of adaptation actions are experienced by individuals (such as the protection of private property), the private sector is generally best placed to manage climate change risks.

Businesses and the community sector will often be best placed to respond to the needs and preferences of individuals and communities. Over time, fi rms will develop products and services to satisfy the demands of Victorians who are responding in their own ways to climate change.

Victoria’s diverse and robust market economy means that we are well placed to respond to these changing demands. Because of this diversity, a single, ‘one size fi ts all’ adaptation strategy is not likely to represent the best approach.

Building resilience to climate impacts To successfully adapt to climate change, we need to understand that different systems are connected: natural systems (which support life and provide resources that we often take for granted), human systems (businesses, networks and communities), the infrastructure that supports our industries and livelihoods, and the buildings where we live and work. All these systems are vulnerable to climate impacts and all are connected to each other.

The connection between these systems means that the Victorian Government and community will need to simultaneously build the resilience of ecosystems, the community, industries and our supply and distribution networks (including for food).

To do this the Government plans to focus on:

Sustainably managing public assets, including natural resources (such as state forests and national parks, plant and animal biodiversity, beaches, groundwater, rivers and marine environments) and infrastructure (such as roads, our rail network and bridges)

Sponsoring research that will provide a robust base for taking action to address the specifi c impacts of climate change (such as the Future Coasts project and examination of potential biosecurity threats or changes in weed and pest distributions)

Building the Victorian community’s capacity to assess and manage risks by providing appropriate information, resources, incentives and skills to adapt to climate change impacts

Identifying and addressing the barriers that may preventcommunities, regions and industry sectors from adapting toclimate change

Identifying and managing specifi c risks to the safety and security of the community that are beyond the capacity of individuals, businesses and not-for-profi t groups to manage (such as biosecurity threats, pandemics and catastrophic events)

Working in partnership with the private sector and the not-for-profi t sector where coordinated effort is required to address public and private risk (for example, to ensure the electricity transmission network is resilient to a changing climate).

A major area of potential action is using the State’s planning system to build resilience in communities, industries and natural systems. Victoria’s planning system determines what land is suitable for particular uses and could act as a trigger to consider the climate change risks associated with new developments. To do this, planning provisions must be based on accurate and relevant information, clear policies and robust standards in areas such as sea level rises, fl ooding, bushfi re risk and natural resource management. The Climate Change Green Paper is seeking input from Victorians on new actions that can be taken through the planning system to manage the repercussions of climate change.

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ityWhat is resilience? Resilience means the ability of human or natural systems to withstand, recover from or adapt to signifi cant pressures and stresses without losing their essential characteristics.

Community resilience refers to the ability of a place – a town, suburb or community – to absorb and recover from climate shocks, extreme weather events and long term impacts without suffering major, long lasting physical, fi nancial, economic or social damage.

Ecological resilience refers to the ability of an ecosystem, habitat, population or organism to withstand and recover from climate stresses and retain their essential processes and functions.

Many of the actions we take to build resilience into communities and ecosystems will not only help us to cope with a changing climate; they can also lead to other positive outcomes.

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Image: Ararat. Source: Tourism Victoria

HOW WE CAN ADAPT TO A CHANGING CLIMATE

GOVERNMENT • Providing an enabling environment for the private and community sectors to respond (such as providing information and putting in place price signals for water consumption)

• Ensuring regulatory structures allow a fl exible individual response (such as via the planning system)

• Providing adaptation as a ‘public good’ where it would not otherwise occur (such as protection of public assets, including natural resources, essential services and emergency response strategies)

HOUSEHOLDS • Keeping up to date with the best available information on the likely nature, timing and scale of climate change impacts – and choosing to respond in line with individual circumstances

• Changing lifestyles and homes to account for risks such as rising sea levels and increased bushfi re risk (for example, by protecting or renovating existing homes to account for new risks)

• Re-locating - in extreme cases - to less-vulnerable areas

• Purchasing insurance

BUSINESSES • Engineering and construction sector - ensuring that infrastructure and housing stock is resilient to climate change, including through changes in materials, design and location

• Media sector - monitoring hazards and communicating risk

• Banking and fi nance sector - fi nancing adaptation investments and providing risk coverage, including innovative risk management products

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Adapting to climate change in our regions The impacts of the changing climate will be felt differently across Victoria’s regions. As a result, there can be no ‘one size fi ts all’ approach to making sure that our regions are resilient to climate change.

One critical aspect of ensuring that our regional communities adapt successfully to the impacts of climate change is to develop a robust understanding of likely regional changes in the climate. The Victorian Government provides fi nancial support for the work of the CSIRO in developing regional climate change projections for Victoria. These projections provide the basis of our understanding of the broad impacts in Victoria’s regions of the growth in global greenhouse gas emissions. Specifi c information about these possible impacts is set out in regional climate change projection brochures produced by the Victorian Government. These brochures can be found at www.climatechange.vic.gov.au.

The Government has also commissioned a specialist analysis, Sectoral and Regional Vulnerabilities to Climate Change in Victoria, which has assessed vulnerability to climate change in nine industry sectors across Victoria’s 11 statistical divisions. This study illustrates the range of climate impacts that Victoria’s regions are likely to experience and gives a broad indication of the possible impact of a carbon price on regional jobs and income.

We need to build on this important work to further develop our understanding of the specifi c impacts of climate change across Victoria’s regions. In particular, we need to investigate ‘cross cutting’ issues to better understand how biophysical constraints will affect the socio-economic framework of regions.

In the short-term, the major adaptation challenge for our regions will be coping with an increasingly variable water supply. The Government is tackling this challenge and is developing regional sustainable water strategies to plan for long-term water security across Victoria through the Our Water Our Future action plan. Each sustainable water strategy sets out a long term regional plan to secure water for local growth, while maintaining the balance of

the area’s water system and safeguarding the future of rivers and other natural water sources.

Climate change will have a multiplying effect on the other challenges facing regional Victoria, such as unprecedented population growth and an increasingly competitive economic environment. Integrating climate change considerations into regional planning is a key challenge for many regional communities over the coming decades. The Government’s Regional Strategic Planning Initiative will provide a comprehensive framework to manage change in provincial Victoria. This initiative will focus on developing long term regional and sub-regional plans, which provide a vision and a set of actions to achieve common goals for the development of productive, sustainable, liveable communities in regional and rural Victoria.

Similar to the regional sustainable water strategies being rolled out through the Our Water Our Future Plan action plan and the development of the regional catchment strategies, Victoria’s regions will need access to detailed region-specifi c information on planning, practices and technologies to ensure that decision makers, entrepreneurs and individuals can make informed decisions.

Some of these decisions will be hard. Patterns of settlement in regional areas are likely to require careful consideration of the risks posed by fi re and the availability of water supply. Some industries will become more diffi cult to sustain and others will need to alter their practices signifi cantly. The Government will need to support these decisions through integrated regional planning and regionally specifi c approaches to adaptation. The Government will also need to provide support and access to accurate information to help regions to resolve the diffi cult issues of climate change and deliver positive outcomes for the wider regional economy in Victoria.

QUESTIONS TO CONSIDER

• What support do you need from the Government to better prepare for climate change in your household, business or community?

• What are the barriers preventing you from preparing effectively?

• How can we ensure government, households and businesses are able to prepare for and take early action to reduce the costs of adapting to climate change?

• What are the roles of government, households and businesses in preparing for the impacts of climate change?

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5.1Managing our water resources

As all Victorians know, we face some tough choices and difficult decisions about how we use our scarce water resources and secure our future water supply. These choices and decisions may become even more challenging as the impacts of climate change are felt across the State.

What we need to do For more than a decade, large parts of southern and eastern Australia have suffered from dry conditions that are without precedent. Since 1997, rainfall has been signifi cantly below the long-term average across most of Victoria and there have been large reductions in streamfl ows. The severity of the situation has resulted in depleted storages, widespread water restrictions and constraints on rural water supplies. Rivers, wetlands and aquifers have suffered due to the combined effects of extended low fl ows, reduced recharge and the over-allocation of water resources. Estuaries and inlets are being affected by reduced freshwater infl ows that include important nutrients and breeding environments. Groundwater levels have also declined due to reduced recharge and greater demand.

These persistent dry conditions have brought into stark relief the central importance of water to Victorian communities, the State’s economy and our quality of life. Understanding the impacts of climate change on Victoria’s water resources is essential to adapting to climate changeand to making good planning decisions about our water into the future.

Research is continuing to improve our understanding of the uncertainty of future water supply under climate change. At this stage, it is not possible to determine the extent to which the weather trends observed over the last 11 years are evidence of a permanent step down in water availability due to climate change or whether this refl ects natural variability. However, we can say with some degree of confi dence that it is very likely that the current low rainfall and run-off in Victoria is at least partly due to global warming and that the persistent dry conditions of the last decade may continue.

This uncertainty means that in developing strategies for managing Victoria’s water resources, we must consider thpossibility that we will face dry conditions well into the

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What we’ve already done The Government is delivering record levels of investment to secure Victoria’s water future. Actions include:

• Acting on a long-term plan for water – Our Water Our Future – which aims to secure Victoria’s water future for the next 50 years and includes more than 100 initiatives for water conservation across every sector of the community

• Allocating $4.9 billion for the Victorian Water Plan (the Next Stage of Our Water Our Future), which includes building Australia’s largest desalination plant, modernising irrigation infrastructure in northern Victoria, upgrading the Eastern Treatment Plant and expanding Victoria’s water grid

• Expanding the effi cient use of recycled water and setting and achieving a target of recycling 20 per cent of Melbourne’s wastewater

• Achieving a 30 per cent reduction in total per capita water consumption in Melbourne

• Introducing the Water Smart Gardens and Homes Rebate Scheme, which has saved more than 1.8 billion litres of water since 2003 by providing more than 190,000 rebates

• Developing regional sustainable water strategies to plan for long term water security across Victoria

• Requiring businesses that use large amounts of water to develop Water Management Action Plans.

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future. We must plan to manage our water in a way that will enable us to respond if this scenario eventuates.

While we have made big improvements in improving water effi ciency and reducing water consumption, there are still many opportunities for Victorian households, businesses, farmers and irrigators to source and use water more sustainably.

Our Focus The Victorian Government has a crucial role in managing the State’s water resources. Since the introduction of the Our Water Our Future: Securing Our Water Future Together plan in 2004, the Government has already adopted many of the options available to improve water management in Victoria.

Through this framework the Government will continue to plan for the State’s water security in the face of rainfall variability, an increasing population and a growing economy through a broad range of demand and supply measures.

Dealing with the ‘new normal’ In January 2004, I came to sit in the chair at the head of the table at Melbourne Water, feeling – equally - a strong sense of responsibility for providing water and sewerage services to Melburnians, a sensation of being a link in the long chain of the organisational history, and a sense of pride in the depth of knowledge, skills and commitment of our people.

In 2006 the organisation faced perhaps its biggest climate change challenge. The streamfl ows that our reservoirs rely on dropped to levels that were unprecedented – similar to what the CSIRO had predicted for 2050 under a ‘severe’ climate change scenario.

That single year, on top of a decade of drought, illustrated that we could no longer rely on history to predict water security. It was a clear sign that we needed to bring forward actions in the Victorian Government’s water plan in order to fi nd another 240 billion litres of water by 2012.

The projects that were accelerated – reconnection of Tarago Reservoir, the Sugarloaf Pipeline and the desalination plant – are the only solutions that could secure Melbourne’s water supply in time. We are now modelling the past 10 years of streamfl ows as the ‘new normal’ and not assuming a return to historical infl ows. It is a prediction being played out again in 2008, as our storages continue to test fresh lows.

Melbourne Water is now planning mitigation and adaptation measures for water supply, sewerage treatment, drainage, waterways management and fi re protection in our catchments – for climate change affects every aspect of our business. We are evaluating renewable energy options, better ways to mitigate and manage fl oods, protect our valuable assets such as the Western Treatment Plant and our catchments, as well as the provision of large volumes of recycled water as an alternate water source for non-drinking purposes.

Leadership is about accountability. I am fortunate to have a role in the history of Melbourne Water when we are repositioning the organisation for Melburnians to account for future variabilities in our climate and still delivering high quality water, sewerage, drainage and waterways services.

Cheryl Batagol Chairman, Melbourne Water Corporation

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Our Water Our Future: the next stage of the Government’s Water Plan Unprecedented low infl ows in the calendar year of 2006 demonstrated the need for large scale augmentations to Melbourne’s water supply system.

An extensive examination of the range of large supply options capable of meeting the shortfall revealed that the best approach for Victoria was to move away from relying on one major source of supply (reservoirs) to a portfolio of diverse water sources. This approach will create a balance between traditional water sources and contributions from water conservation, rainfall independent sources of water and water reuse from recycling. The Government is investing nearly $5 billion to achieve this more diversifi ed water portfolio, including:

•Building Australia’s largest desalination plant near Wonthaggi – This rainfall independent source of water will start supplying up to 150 billion litres a year in 2011 (one third of Melbourne’s annual requirements).

• Saving water by modernising leaky, old irrigation infrastructure in northern Victoria’s Food Bowl region – The Northern Victoria Irrigation Renewal Project will recover 425 billion litres of water now being lost through evaporation, seepage and system ineffi ciencies. Eighty per cent of the water saved will stay in northern Victoria for use by irrigators and the environment.

• Updating the Victorian water grid by building new pipelines to move water to where it is needed most – Projects include the Goldfi elds Superpipe supplying Bendigo and Ballarat, and the Wimmera Mallee, Hamilton-Grampians, Sugarloaf and Geelong-Melbourne pipelines.

• Increasing recycling – Opportunities for recovery and reuse of water from waste water systems can provide valuable alternative water supplies. As an example, the Government has completed a recycled water business case for the Eastern Treatment Plant.

• Supporting new and existing water conservation programs for homes and industry – The Government will continue to develop its approach to water conservation and household and industrial use of water, building on the efforts made by Victorians to conserve water (such as the Water Smart Gardens and Homes Rebate Schemes).

A QUESTION TO CONSIDER

How can we build on the Government’s Water Plan to secure Victoria’s water future, by using water differently as individuals, households, communities and businesses?

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5.2Victoria’s natural ecosystems

Many of our natural systems are already under stress and climate change adds a further major pressure – one that will stretch the limits previously encountered by many ecosystems. Victoria’s natural ecosystems are vitally important to all aspects of life in Victoria. They provide the food and natural resources that are essential to life, as well as supporting important industries, communities and regional economies. A healthy natural environment is also essential to our physical and emotional wellbeing, providing opportunities for recreation and relaxation. All Victorians have ethical and inter-generational obligations to ensure that our behaviour does not lead to the loss of habitats, iconic natural assets, and plant and animal species.

What we need to do The failure to build resilience into our natural systems – and help them to adapt to and recover from the impacts of climate change – will have far reaching and long lasting consequences. Without action, ecosystems, habitats and plant and animal species may be lost forever or irretrievably damaged.

Victoria’s ecosystems provide many tangible and intangible benefi ts that are essential for human wellbeing, including water purifi cation, climate regulation, biodiversity, nutrient cycling, carbon storage and support for fi sheries. These benefi ts mean that building ecosystem resilience is not only important to protecting the quality and beauty of Victoria’s unique natural environment; it is also critical to strengthening the ability of ecosystems to contribute to reducing the impacts of climate change.

Biologically diverse, resilient ecosystems are better able to withstand and recover from disturbances such as fi re, drought and pest invasions. Such systems can also sustain carbon storage over time. When the resilience of an ecosystem is reduced through loss of biodiversity or habitat destruction, fragmentation and isolation, the system’s ability to retain and store carbon and deliver other vital natural services is put at risk.

It is also important to recognise that social, economic and ecological resilience are intertwined. For example, where particular natural environments also generate tourism revenue, local communities are more likely to support limits on particular activities to better manage these environments and build their resilience to future pressures. This interconnection between natural and human systems means that the good management of our natural systems should be seen as an opportunity to

secure the future not only of Victoria’s unique habitats, ecosystems and species, but also of our economic andsocial wellbeing – and, ultimately, our quality of life.

All Victorians share a responsibility to help to strengthen ecosystem resilience and biodiversity. While the Government can lead the way in many areas, actions taken by individuals, businesses and communities will be critical to protecting our unique natural assets and environment.

What we’ve already done The Government is already taking action to protect and build the resilience of Victoria’s natural assets and ecosystems, including:

• Developing the Land and Biodiversity at a Time of Climate Change White Paper, which will set the agenda for land, fresh and marine water, and biodiversity management over the next 20 to 50 years

• Releasing a new Victorian Coastal Strategy, which includes new actions to help coastal regions to adapt to climate change over the next fi ve years

• Establishing the Future Coasts project, which is assessing areas of the coast that are most vulnerable to the impacts of sea level rise and climate change.

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Areas where the Government can take action to increase natural system resilience are being addressed through the Land and Biodiversity White Paper. These include:

Building ecosystem resilience statewide The Government wants to increase efforts to build ecosystem resilience at the broader, statewide level. This will require taking action at the ‘landscape level’ (including a focus on maintaining native species diversity and supporting threatened species), improving the connections between ecosystems and protecting high-value natural assets, which provide important ecosystem services.

Further action is also continuing in the following areas:

Sustainable land management Despite widespread efforts by Government, landholders and community groups, the condition of private land in Victoria is still declining, and climate change will place even greater pressure on landscapes and aquatic environments. The Government is taking action to enhance the health of productive ecosystems, including supporting landholders to improve land management practices, encouraging new ideas and innovation in adaptive management, and developing a land stewardship approach among communities and land managers.

Coasts Climate change poses signifi cant risks to the Victorian coast and managing these risks presents considerable challenges for the Victorian Government and Local Governments (which share responsibility for planning and managing natural and built assets on the coast) and for residents, businesses and communities. To make good decisions about the future of the coast, we need to better understand the potential impacts of climate change on key coastal and marine assets, water patterns, biodiversity and ecosystems. We then need to translate this research into policy and planning approaches that address sea level rises and climate change risks, and into new approaches to managing key coastal and marine assets, water patterns, biodiversity and ecosystems.

Our Focus

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A QUESTION TO CONSIDER

How can we ensure the resilience of our ecosystems at a time of climate change, and the crucial role they play in our social and economic wellbeing?

Our large ecological footprint As the global economy expands, humanity is using more and more of the earth’s natural resources. Since the Industrial Revolution, continued growth in demand has been met by exploiting previously untouched resources, encouraging a belief that there is no limit to expansion.

The limitations of the earth’s resources, however, are now becoming apparent. WWF’s Living Planet Report 2008, the organisation’s biennial assessment of the natural world, paints a bleak picture of our future.

Living Planet Report 2008 shows that the drain on natural resources and increasing volumes of waste created by our consumption are putting the planet’s wildlife at risk of extinction, as well as putting strain on the lives of people in developing communities.

Living Planet Report 2008 also shows that the average Australian’s ecological footprint, the land needed to produce the food and services used and absorb all the waste, is bigger than that of someone in the U.K, China, Russia or India.

It is reasonable to suggest that Australia’s and the world’s economy will continue to expand into the future; however, it will not be possible to continue the current model for using natural resources – access, process, single use and disposal. Economies must try to ‘close the loop’ between production and disposal, reducing the waste of energy and materials at each step.

Implementing circular fl ows of resources will take time, but it is achievable. Some well established examples already exist, such as renewable energy and the materials recycling industry. An aluminium drink can made from recycled materials has just 5 per cent of the embodied energy a virgin product would contain.

Our lives and livelihoods depend on the earth’s natural resources. Put simply, we are consuming the planet’s resources faster than they can be replenished.

Greg Bourne Chief Executive Offi cer – WWF Australia

5.3Adapting to change in the built environment

Victoria is entering uncharted territory when it comes to the impacts of a changing climate on our homes, commercial and industrial buildings, public buildings (such as museums and galleries), community facilities (such as schools and hospitals) and major infrastructure (such as roads, rail networks, bridges and ports).

What we need to do Climate change will alter the range, exposure, intensity and frequency of natural hazards such as bushfi re, fl ooding, coastal inundation, heat waves and infectious diseases. Across Victoria, many buildings and structures are vulnerable to these impacts. Almost all types of major infrastructure such as roads, rail networks, bridges, airports, tunnels, ports and pipelines are potentially at risk from storms, coastal inundation, extreme rainfall events and higher temperatures. Water, sewer and stormwater infrastructure is also likely to be affected. Our cities and towns are also vulnerable, with buildings, transport systems and essential services likely to be affected.

Over time, our settlements, buildings and infrastructure will need to adapt to these impacts to avoid unacceptable social, economic and environmental outcomes.

As in many other areas, we are grappling with considerable uncertainty about these impacts. Wemust plan ahead to make sure that we are prepared for these impacts and do not make them worse by failing to consider all possible scenarios. This means that consideration of the impacts of climate change will need to be incorporated into all aspects of the built environment, including land use planning, the planning and design of infrastructure, building performance and the design of urban systems. This will require a planning system and a regulatory environment that takes into account climate change to a far greater extent than at present.

While these impacts create signifi cant potential risks, the technology, knowledge and experience are available to address most of these risks. We will need to apply this expertise in planning, designing, constructing and maintaining buildings and infrastructure. Similar expertise will also need to be applied in relation to land use and urban planning, where historic risks (such as 1-in-100 year fl ood levels) are no longer an appropriate guide when planning for future climate change impacts.

What we’ve already done The Government is taking action to minimise the risks to Victoria’s built environment from climate change, including:

• Carrying out the Infrastructure and climate change risk assessment for Victoria (2007), which identifi ed the types of buildings, structures and facilities as particularly vulnerable to many of the risks associated with climate change

• Undertaking work to identify and map risks in relation to the coast (Future Coasts), fl ooding (Victorian Flood Strategy) and bushfi res

• Releasing the Planning for all of Melbourne paper, which starts the process of incorporating climate change risks into Victoria’s planning system

• Revising the Precinct Structure Planning Guidelines to take climate change impacts into account when planning and designing new communities

• Contributing $370 million to the Melbourne Convention Centre Development - accredited with the fi rst 6 Star Green Star environmental rating in Australia for a convention centre.

Our Focus The Victorian Government has an important role in preparing the built environment for climate change through government policy in land use planning, urban infrastructure and systems, and building performance.

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Making sure that climate change considerations are incorporated into planning policies, legislation, regulations and processes

Identifying and acting to protect critical public infrastructure that may be at risk from the impacts of climate change and constructing protective infrastructure where appropriate

Updating policies for the design, construction and retrofi tting of buildings, transport systems and other urban infrastructure – and for the planning of new and existing suburbs – to refl ect the latest assessment of climate change risks

Providing decision makers (such as planners, developers, architects and local councils) with appropriate risk management tools and guidance materials

Increasing the resilience of buildings and structures to climate change impacts by strengthening building performance standards and regulations

Providing up to date, accurate information to enable people to make decisions about how and when to retrofit existing buildings to higher performance standards

Supporting further research into improving building performance in an era of climate change

Mapping vulnerable locations and households with a limited capacity to respond to climate impacts and assessing the risks for communities and assets.

Across the State, many people already reside in potentially vulnerable communities – in locations that are likely to be affected by rising sea levels, higher flood levels, an increased bushfire risk and other impacts. Information, consultation and participation will be essential elements in understanding the risks and uncertainties facing these communities and fi nding workable solutions to assist them in making decisions about the best way to manage the impacts of climate change.

The Government can assist in a number of areas, including:

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A QUESTION TO CONSIDER

What are the critical areas the Government needs to address in relation to adapting our urban built environment and infrastructure to climate change?

Stormwater and climate change Climate change means we have to change the way we run our urban water systems.

In the past we relied on plentiful stream fl ows into our dams. No longer.

Reduced rainfall and drier soils mean substantially less run-off and less water in the dams. In the last decade, infl ows into Melbourne’s dams were 34 per cent lower than the long term average. With climate change and increasing temperatures, the situation is likely to get worse, not better.

We will need to use a diversity of water sources to survive climate change: desalination, recycled water, and stormwater as well as dams. We will also need to continue to conserve water – the cheapest and most environmentally friendly way to cope with less water. Not wasting water means less money needs to be spent on expensive infrastructure.

Stormwater is a ‘new’ source of water that has been under­utilised to date. Stormwater can be harvested for use close to where it is needed – for example, for gardens or fl ushing toilets in new housing developments. Stormwater harvesting systems can function with very low energy use and provide relatively low-cost water.

Stormwater harvesting has other benefi ts that are important in a world that must adapt to climate change. Stormwater harvesting can be used to minimise fl ooding. This will become increasingly important as we experience more severe weather events.

Our cities are getting warmer not only because of climate change, but also because of the urban heat island effect. Hard urban surfaces can raise local temperatures by 5 degrees. Building wetlands and using vegetation for natural stormwater treatment will make our cities more liveable and reduce the urban heat island effect.

More stormwater runs through our drainage system causing pollution in our creeks and bays than the total amount of water used by households. By harvesting as much of this stormwater as possible, we can help to overcome water shortages, reduce urban temperatures and improve the liveability of our cities.

John Thwaites Chair – Monash University Sustainability Institute and former Deputy Premier of Victoria

5.4Building responsive emergency servicesClimate change will result in more frequent, more intense weather events (such as storms, strong winds, floods and heatwaves) and a higher risk of fi re.

With more parts of the State likely to be affected by these events, Victoria needs to be well-prepared to respond quickly and effectively to these crises. We also need to take action where we can to prevent the more damaging and disastrous consequences of these events and to improve our ability to restore and rehabilitate communities, infrastructure and the natural environment once they are over.

What we need to do Victoria’s emergency services have been early adapters to climate change. In many cases, this process of adaptation has been necessary to cope with climate change impacts that are already being felt across the State, including an increase in the number of signifi cant weather-related emergencies over the past decade. An 11-year drought, major bushfi res in 2002-03, 2005 and 2006-07, the Gippsland fl oods of 2007 and a major windstorm in Melbourne and surrounding areas in early 2008 represent a substantial rise in emergency activity. Since 2002-03, there have been signifi cant spikes in Victoria State Emergency Service activity (the VICSES being the agency with primary responsibility for dealing with fl oods and storms) and fi re service activity related to major bushfi re events. While these events cannot all be attributed to climate change, they illustrate the challenges that we will confront as climate change causes more extreme weather events. The catastrophic and tragic fi res of 7 February 2009 – on the hottest day in Victoria’s history and following on from the record heat wave just over a week before – demonstrate the scale of the challenge confronting our communities and emergency services.

The Victorian Government has made a commitment to review all aspects of the February 2009 fi res and the State’s preparedness and response to these fi res. The Government has established a Royal Commission, chaired by Justice Bernard Teague, to investigate the fi res. The Commission will detail the lessons the Victorian Government and community need to learn as we rebuild and prepare for future extreme fi re events. Projections of the impacts of climate change on Victoria suggest that we will need to prepare for a higher number of days throughout the year that can lead to extreme confl agrations. The Forest Fire Danger Index (FFDI) provides one indication of fi re risk based on a combination of weather variables including temperature, rainfall, humidity and wind speed. In both 2020 and 2050, this index is predicted to increase for Melbourne, indicating higher fi re danger, particularly in spring, summer and autumn. By 2020 it is expected that the number of ‘extreme’ fi re danger days for Victoria will generally increase by between 5 per cent and 40 per cent relative to the period from 1974 to 2003. By 2050 (as Figure 7 shows), the number of ‘extreme’ fi re days is likely to increase much more signifi cantly.

Figure 7 – Change in the occurrence of extreme fi re days in Victoria.

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Coinciding with this rising fi re threat is the growing number of communities, infrastructure, industries and natural assets under threat from bushfi res. Strong population growth in high bushfi re risk areas, has also increased the exposure of communities to fi re risk.

What we’ve already done Victoria’s emergency services are preparing for climate change. For example:

• In September 2007, the Country Fire Authority endorsed a set of priorities aimed at reducing climate change impacts across the organisation, including Improving the environmental performance of buildings and vehicles, and identifying a date by which the CFA will become carbon-neutral

• The Government has provided record levels of funding and resources to Victoria’s emergency services – including increasing base level funding for the annual fi re effort from around $30 million in 1999 to more than $100 million in 2008

• We have developed specific programs in place to deal with extreme weather events such as drought, flood, fire and heatwaves

• The Government is reviewing regulations and guidelines applying to the location and design of new fringe settlements

• The Living with Fire – Victoria’s Bushfi re Strategy, released in 2008, sets out a new approach to managing the increased fi re risk that is likely to occur as a result of climate change.

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Our Focus While the focus of adaptation action to date has been on the physical impacts of weather-related events, the February 2009 bushfi res show that a large scale event also has wide ranging social and economic impacts that need to be considered. These include loss of life, social dislocation, dispersal of local populations, the destruction of entire communities, disruption to industries and economic activity, and widespread health effects, especially in relation to mental health.

In the future, our emergency services will not only be dealing with more frequent and more extreme events, such as fires, they will also face climate-related problems (such as water shortages) and business impacts (such as minimising their carbon footprints and ensuring that buildings and infrastructure are climate resilient). The capacity of emergency services to respond to climate change is also being hampered by a decline in general levels of volunteering across the community.

We also face the challenge of preparing for events that have not yet occurred (or have not occurred for some time) but are more likely to occur because of climate change. Similarly, health-related emergencies such as pandemics, aeroallergens, vector-borne and other diseases and have been comparatively rare and would have far-reaching physical and social consequences.

To be more effective with fi nite resources in the face of increased demands, the Government’s view is that Victoria will need to focus more intensely on prevention, mitigation and preparedness. Adopting this approach – and successfully responding to emergencies – will require cooperation between all levels of government, emergency services agencies, non-government organisations, community agencies, private landholders and public sector land managers.

In the short-term, helping Victorian communities (including vulnerable households) to become more resilient in the face of future emergencies is one of the most important things the Victorian Government can do to adapt to the impacts of climate change.

Climate change and bushfi res It is no longer relevant to talk about above average fi re seasons. Evidence shows we must now prepare for fi re seasons that start earlier, last longer and include more extreme fi re weather days. The fi re and emergency services, government and – most importantly – the community, must all be prepared to play their part in managing this growing risk.

In Victoria between 2000 and 2007 there was a 62 per cent increase in the average number of fi re weather warning days issued by the Bureau of Meteorology when compared with the 22 year average. During the 2006-07 fi re season, there were 44 fi re weather warnings, the highest number ever recorded. This exceeded the previous high of 35, recorded just four years earlier. The 2007-08 fi re season was considered by many to be a ‘quiet’ season, yet our fi re services attended 696 fi res on public land, a 7 per cent increase on the long-term average.

Not only is the number of fi res increasing, so is the severity of fi re behaviour. Around the world, we are hearing about the emergence of ‘mega-fi res’ – and Victoria is not immune, with the Alpine Fires of 2002-03 and the Great Divide Fires of 2006- 07 each burning more than 1 million hectares. The Alpine fi res were the largest in 60 years, but just two years later they were exceeded in size by the Great Divide fi res.

In early 2009, Victoria experienced a record heat wave, with three consecutive days above 43 degrees C in Melbourne. This was followed by Black Saturday, when the temperature reached 46.4 degrees C – the hottest day recorded in Melbourne since records began. Other parts of the state recorded even higher temperatures. Extremely low humidity and very high northerly winds were followed by a south-westerly change late in the day. All of this came on top of 12 years of drought. More than 170 lives were lost, over 2,000 homes destroyed and nearly 80 townships directly affected.

Worldwide, the threefold increase in the occurrence of extreme weather events between the 1960s and 1990s has been accompanied by a ninefold increase in damages. With this in mind, it is essential that we plan now.

International experts predict days of extreme fi re risk will continue to increase – by 25 to 50 per cent in 2050. Such is the impact of climate change on fi re risk that CSIRO models highlight the need to change the Fire Danger Index to include two new categories of risk, recognising very extreme and catastrophic fi re conditions.

Fire management is a shared community problem that requires a shared community solution. We must work together – government, land managers, emergency services and the community – to increase mitigation and prevention to prepare for the challenge of climate change.

Bushfi re preparedness is no longer something we can do just for the “bad” years; climate change means it is something we must do all year, every year.

Bruce Esplin Victorian Emergency Services Commissioner

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A QUESTION TO CONSIDER

What are the critical steps the Victorian Government can take to ensure that we are prepared and can respond quickly and effectively to deal with increasing extreme weather events?

5.5Health and wellbeingin a changing climate

While much of the discussion about climate change has focussed on the environmental and economic consequences of climate change, there is growing recognition that there may also be significant impacts on human health.

What we need to do

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Climate change is likely to have a number of adverse impacts on the health and wellbeing of Victorians. While determining the precise health impacts will require further investigation, likely health and wellbeing impacts include:

An increase in the number of people dying or suffering from disease and injury due to heatwaves and severe weather events such as fl oods, storms and bushfi res

Mental health consequences of social, economic and demographic stress and dislocation

Emotional stresses and mental health problems in children, caused by family stresses

An increase in food-borne infectious diseases

An increase in vector-borne infectious diseases (for example, dengue virus and Ross River virus)

An increase in water-borne infectious diseases and health risks from poor water quality

Diminished food production, leading to yields, affordability and nutritional consequences

Increases in air pollution (for example, from bushfi re smoke), which may exacerbate asthma and other allergic respiratory diseases.

What we’ve already done The Government is working to increase knowledge about the impacts of climate change on human health, including:

• Research into caring for elderly people during heatwaves

• A mapping exercise to identify those areas of Melbourne that are most vulnerable to the health impacts of heatwaves

• Working with the Bureau of Meteorology to develop a better national heat alert system

• Commencing an assessment of climate change impacts on population health

• Implementing a Victorian Heatwave Strategy, which includes pilot projects to develop heatwave response plans in local areas and commissioning a basic heatwave warning system for Melbourne.

The Government has also put in place best practice or mandatory planning frameworks in health (in conjunction with local government) that could be used to deliver appropriate responses to the health impacts of climate change. These frameworks include:

• Victorian emergency management arrangements

• State Health Emergency Response Plan

• The Municipal Public Health Plans

• Municipal Emergency Management Plans.

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Image: Queen Victoria Market. Source: Tourism Victoria

While some of these impacts are relatively well understood, the mental health implications and social impacts of climate change are not fully known. However, the experience of drought in Victoria has shown that the impact of crop failures and the loss of economic stability in communities can lead to increased mental health problems as places and people struggle to cope with change. Mental health impacts may arise as a direct result of extreme weather events or disruptions to the many social, economic, demographic and environmental conditions that support good mental health in our community. The general threat of climate change – and uncertainty about its impacts – may also create emotional distress and anxiety about the future.

Our Focus The health impacts of climate change are likely to be unevenly distributed across Victoria, refl ecting differences in socioeconomic circumstances, regional preparedness, infrastructure and local adaptation strategies. In particular, adverse health impacts will be greatest among people on lower incomes, the elderly, people with disabilities and the sick. People who lack access to a good standard of housing are also likely to be at a disadvantage.

These impacts will place even greater demands on Victoria’s health and community services, which will need to develop strong adaptation strategies to minimise and manage these impacts. The Government can support adaptation to these impacts by maintaining strong public health and human services infrastructure, increasing knowledge of risk factors and vulnerable populations, and promoting resilient communities and individuals. The Government can also assist by incorporating climate change responses into existing health policies and programs.

A QUESTION TO CONSIDER

What help does your community need in adapting to the possible health impacts of climate change?

New risks and opportunities The winds of climate change are already blowing across regional Victoria.

In the past, Victorian irrigators have had access to secure and reliable water entitlements. Reduced seasonal allocations of irrigation water will mean that primary producers will need new tools to manage those risks to protect permanent plantings in horticulture and provide adequate feed for dairy cows.

Warmer temperatures and increased carbon dioxide might improve productivity of some crops, but less frosts and an increased number of severe weather events will reduce productivity in some horticultural crops.

Some of the threats to our environment such as salinity will be reduced, but our rivers and streams will require extra care if they are to remain healthy, provide clean water for farms and towns and support our unique fl ora and fauna.

In some areas, there will be major land use change as traditional forms of agriculture are no longer profi table and irrigation systems are reconfi gured to minimise water loss. We will need to encourage new opportunities such as carbon sequestration through forestry, but we must make sure that these trees are planted in the right place and do not put further stress on our water resources and rivers and streams.

In my region of south west Victoria, major land use change is already taking place. South of the Hamilton Highway, the dairy industry is expanding; to the north, extensive grazing areas supporting millions of sheep and cattle are changing over to cropping. Wet, cold winters have given way to dry autumns, mild winters and hot summers.

The drying climate has encouraged the expansion of the cropping industry as water logged soils are a thing of the past. However, as the winter and spring rainfall drops off, the industry needs to develop new skills to make the most of the dwindling soil moisture and emergence of new pest threats.

Farms will probably get bigger as viable and productive farmers will need more land to spread their risks across a number of enterprises and increasing mechanisation and contracting in the cropping industry will mean fewer jobs. Smaller farms will need access to off-farm income to provide for more extreme years.

Climate change is just one of the many risks that the farmers of the south west will need to manage. Farming enterprises have a strong exposure to international markets and will need to improve business skills to take account of increasing costs of inputs, such as fuel and fertilisers, and the volatility of the global prices.

Small towns, remote from large regional centres, will struggle to maintain vibrant communities as farmers adapt to climate change. Abundant water supplies and water based recreation may be a thing of the past in some areas.

Rural Victorians are very resilient but they will need to develop new skills to manage a new set of risks and make the most of opportunities that climate change presents.

Christine Forster Member of the Ministerial Reference Council for Climate Change Adaptation, former Chairperson of the Victorian Catchment Management Council and a woolgrower in Western Victoria

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A shared responsibility Images: Mario’s Melbourne / Hot air balloon, Victoria. Source: Tourism Victoria

We all share a responsibility to take action to respond to climate change

Our climate change goals Three of the Government’s proposed long-term goals are relevant to sharing the responsibility for responding to climate change across Victoria: GOAL 8 Work in partnership with Victorians to provide the knowledge and information needed to respond effectively to climate change GOAL 9 Help to ensure vulnerable communities are not further disadvantaged as a result of climate change GOAL 10 Take action to reduce emissions across government operations and ensure that climate change is considered in all government decision making

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Responding successfully to climate change is a shared community responsibility. As the impacts of climate change become apparent, all Victorians will need to make some changes in our lives to reduce emissions, conserve resources and manage our exposure to climate change risks.

For many of us, this will involve making signifi cant changes in the way we do things on a daily basis. Some people, groups and communities will experience more hardship than others in making these changes and will need help to deal with the impacts of climate change.

We all share a responsibility to take action to respond to climate change: individuals, households, businesses, industries, communities and governments.

For most of us, this will mean making changes – some large, some small – in our daily lives. Many of these changes will involve personal choices, decisions and lifestyle changes as we weigh-up the costs and benefi ts of taking, or not taking, action. In most instances, households and businesses are best placed to make these decisions for themselves, with governments providing support by giving people current, accurate information and advice.

However, the broader impacts of climate change – and the need to meet statewide and national goals – mean that governments must lead the way in many areas, actively promoting and supporting community responses to climate change, as well as encouraging more widespread changes in behaviour and attitudes. Across Australia, the Commonwealth Government, State and Territory Governments, and Local Government will need to work together, cooperating to ensure that policies and programs are effective and well-targeted.

Partnerships between the Victorian Government, local councils and

community groups will also be essential in strengthening the resilience of communities in the face of climate change and encouraging local action to maintain community liveability as the impacts of climate change become more apparent.

Governments will also need to change their own practices and operations, leading by example in reducing emissions from public services and facilities such as schools and hospitals and becoming ‘fi rst movers’ in using new technologies and adopting new ideas.

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Sharing the responsibility: things we can all do The Victorian Government’s consultations on climate change show that most Victorians are keen to play their part in tackling climate change. However, many people see climate change as a daunting, global problem over which they have no control and they are confused about what they can do as individuals.

There are many things we can do in our homes and workplaces to reduce the impacts of climate change. Some of these things are relatively easy; others will require major changes in our lifestyles and habits. Depending upon our circumstances, most of us can take at least one or two of these actions to reduce the risks, impacts and costs of climate change in our lives, while making a contribution to national and international efforts to address climate change.

• Change our travel habits – consider using public transport more often (especially for commuting to work or going to and from school), walking or cycling for shorter trips, using car pools or combining trips to reduce the number of car journeys we make each week

• Change our car ownership habits – consider purchasing a more fuel efficient car or thinking about whether a smaller car would suit our daily needs

• Change our energy use habits – consider upgrading to more energy effi cient appliances, replacing ineffi cient light globes, installing low emissions hot water systems or simply thinking more carefully about our use of energy (such as turning off appliances when not in use, using our air conditioners less often and drying our clothes outside)

• Change our water consumption habits – consider buying and using water saving devices, installing a rainwater tank or thinking more carefully about how and when we use water (such as reducing the time we spend in the shower or washing clothes only when we have a full load)

• Change wasteful consumption – consider refusing excessive packaging, purchasing more fresh food and less pre­packaged food, eating more local produce, reducing our use of plastic bags, repairing appliances and furniture rather than replacing them, buying secondhand goods and recycling as much material as we can

• Change our approach to the natural environment – consider the effects of our actions on natural ecosystems, such as not littering our beaches and riverbanks, planting more trees on our properties or joining a LandCare or Coastcare group

Contribute to changes in our local community – consider shopping locally more often, getting involved in community activities such as tree planting or setting up neighbourhood alternative energy schemes or participating in local programs designed to reduce car use (such as school ‘walking buses’)

Adapt to the risk of climate change – consider adapting our homes to protect them from the impacts of climate change such as the increasing risk of bushfi res or fl oods, purchasing insurance to protect against catastrophic events, and gathering information on climate change that might directly affect our lifestyles.

urther information on the ways in which all ictorians can make a difference can be found t www.sustainability.vic.gov.au

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6.1Communities and climate change

Image: Tree Planting, Cann Valley, Source: Department of Sustainability and Environment

All communities across Victoria will be affected by climate change – although some communities will face more dramatic and damaging consequences than others.

Developing the capacity of communities to become more resilient, maintain their liveability and secure their economic futures in the face of climate change will take action by governments, households, businesses and community groups. These actions may range from making relatively small changes in our daily lives (such as walking to our local shops instead of driving) through to large scale community activities (such as developing new emergency plans or building new infrastructure to prepare for rising sea levels or the higher risk of bushfi res).

What we need to do In helping communities to respond to the challenges of climate change and the introduction of the national emissions trading scheme, the Victorian Government intends to work in partnership with local councils and community groups to deliver programs that will assist Victorians to adapt and adjust to the changes ahead. In particular, the Government intends to deliver information and education programs that support changes in lifestyle and build the capacity and resilience of Victorian communities.

The Government proposes to focus its efforts through the Climate Change White Paper on:

Helping people and communities to reduce their energy use, access renewable energy, save money and make the most of new opportunities

Strengthening the resilience of Victorian communities to meet the challenges of climate change and enhancing people’s capacity to contribute to theongoing liveability of their local communities.

Our Focus - Helping people to change their behaviour For many of us, the uncertainty and complexity surrounding climate change can make it diffi cult to work out the personal and household options that are available to reduce our contribution to greenhouse gas emissions, adjust to the introduction of a carbon price and adapt to the impacts of climate change. However, it is clear that changing our current patterns of consumption could prove vitally important for Victoria in addressing climate change.

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As the impacts of climate change become more evident, we will need access to current, accurate and relevant information to enable us to make decisions about changing our behaviour and taking action as members of our neighbourhoods and communities.

The Victorian Government already provides a number of information and education programs to help Victorians to adapt to climate change. Programs such as the Black Balloons Campaign, GreenHome, and our EcoLiving Centres offer hands-on sustainability advice to households and provide the support to design, deliver and evaluate behaviour change initiatives. However, as the demand for information about climate change grows, the Government may need to expand investment in information, education, community engagement and behaviour change initiatives and place an even greater emphasis on making sure that information is locally relevant, practical and easily accessed.

The Government also believes that action by communities is a powerful tool in promoting behaviour change and that communities across Victoria should be encouraged to design and deliver groundbreaking climate change projects that will generate signifi cant and lasting benefi ts.

Our Focus - Building resilient communities ‘Community resilience’ refers to a community’s ability to cope with change over time and how well it responds to and recovers from emergencies. The Victorian Government has a clear role in working with local government and communities to increase their resilience to climate change and carbon pricing. The Government can assist by:

Supporting research and the sharing of information, tools and models

Encouraging community innovation

Providing knowledge and resources to support local expertise

Identifying gaps, barriers and priority areas for action

Supporting local networks

Investing in community infrastructure

Acting as a coordination point, offering information and support to leverage government and other investment, and providing existing service delivery mechanisms that can be used by the Commonwealth Government and local agencies.

What we’ve already done The Victorian Government already operates a range of programs to help Victorian communities to meet climate change challenges, including:

• The highly successful Black Balloons Campaign that aims to give Victorians an understanding of how their activities at home are linked to emissions and climate change

• Programs such as GreenHome, the Regional Sustainable Living Program and EcoLiving Centres, which give hands-on sustainability advice to Victorians

• Support for local councils to develop sustainable energy precincts (known as Smart Energy Zones) to bring energy generation closer to communities

• The ResourceSmart Program, which provides practical support to reduce emissions in businesses, schools, households and communities

• The Victorian Solar in Schools Program, which is installing grid-connected solar photovoltaic systems in 500 schools and community buildings across the state

• The Australian Sustainable Schools Initiative (AuSSI Vic), which provides a framework for schools to incorporate education for sustainability into school operations and infrastructure

• The Victorian Local Sustainability Accord, an agreement between State and Local Government aimed at promoting Local Government action on sustainability.

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Image: Cycling Horsham. Source: Tourism Victoria

Local Governments helping communities to tackle climate change

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Victorian Local Government has, for more than a decade, been working to reduce its greenhouse gas emissions, largely by the development and implementation of mitigation strategies. The focus of initiatives has been to reduce emissions from day-to-day operations. Councils have also sought to assist community and local businesses progress their emissions reductions; often through partnerships andincentive programs for improved practices.

With the introduction of a national Carbon Pollution Reduction Scheme, councils will look for further opportunities to improve the effi ciency of their activities to reduce their corporate exposure to a carbon price. They will provide strong community leadership and education, in collaboration with the other levels of government, on the implications of a carbon price. Collaborative action will assist communities make a smoother transition to a low-carbon economy.

Vitally important to Local Government activity on climate change is adaptation

to the impacts arising from change in the climate system. This stems from recognition that our national and global emissions reduction efforts will not be suffi cient to prevent a wide range of impacts occurring. Local Government acknowledges that climate change has thecapacity to dramatically affect the viabilityof regions; shifting patterns of food supply, reducing rain-fed water supplies and causing destruction of many of the ecosystems that we value and rely on.

In recent times, some Victorian councils have undertaken research to inform their understanding of the vulnerability of their community to the impacts of climate change. Such studies have considered change to the biophysical environment and fl ow through implications on the local or regional economy, social structures, health and wellbeing, natural landscapes and cultural assets. Equipped with this knowledge, councils are planning their long term future; ensuring adaptation to climate change is a central tenet of all decisions made.

Councils are, and will continue to, adapt the way they do business, operate their facilities and manage their assets to be more resilient to the impacts of climate change. Councils are at the forefront in supporting their communities build resilience in the face of climate change.

Whilst climate change presents a great many challenges, it also presents opportunities. As community leaders, and economic and strategic planners councils are positioning themselves to attract new industries to their region that provide solutions to climate change.

In addressing the three facets of mitigation, adaptation and adjustment councils are working hard to ensure their communities remain viable and vibrant places to live, and able to respond to climate change.

Rob Spence Chief Executive Offi cer, Municipal Association of Victoria

A QUESTION TO CONSIDER

What do you think are the barriers to people changing their behaviour to address climate change in your community and across Victoria?

6.2Government leading the wayThe Victorian Government’s operations cover a wide range of activities and assets. Almost all of these operations will feel some impacts from Victoria’s changing climate – ranging from short-term and relatively minor effects to substantial, long lasting consequences.

Across all of its operations, the Government is a substantial greenhouse gas emitter. For example, Victorian Government buildings are responsible for around 1.5 per cent of Victoria’s energy consumption and 1.2 per cent of the state’s greenhouse gas emissions. The Government spends approximately $150 million on energy every year. In particular, health care and educational facilities are responsible for around 75 per cent of Victorian Government building energy consumption. There are substantial opportunities for emissions and costs from these sources to be reduced.

The introduction of the CPRS will have a signifi cant impact on the Victorian Government’s operations. Like the rest of the community, the Government will face increased energy costs and will need to take action to reduce its emissions and become more energy effi cient.

Through the Climate Change White Paper, the Government proposes taking action across three key operational fronts to reduce emissions and promote more sustainable practices:

Further improving the energy effi ciency of government buildings and infrastructure

Reducing emissions from government travel

Reducing the emissions intensity of products and services used by government

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QUESTIONS TO CONSIDER

• How should Government lead the way in reducing its own emissions and adjusting to a carbon price?

• In which areas can Government use its signifi cant expenditure on goods and services to drive Victoria’s green economy?

What we’ve already done The Government is already taking action to improve its performance. We have:

• Increased the energy effi ciency of key buildings by 15 per cent between 1999-2000 and 2006-07

• Commenced energy performance contracts (EPCs) in 16 key Government-owned offi ce buildings, aiming to achieve a 30 per cent energy reduction across these buildings

• Started developing a program to make government buildings more energy effi cient (as part of signing the 2008 MOU with the Clinton Climate Initiative)

• Made a commitment (in the Victorian Transport Plan) to establishing an emissions target for the Victorian Government fl eet and to purchasing 2000 hybrid Toyota Camrys

• Introduced 150 hybrid vehicles into the Government fl eet and achieved a net reduction of 8 per cent in greenhouse gas emissions from departmental vehicle fl eets between 2002-03 and 2006-07.

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6.3Making decisions in atime of climate change

Making good decisions across government is a complex, but vitally important, factor in Victoria developing a successful response to climate change.

What we need to do Climate change means that decision makers are working in changed economic and environmental circumstances. For example, local councils now need to consider sea level rises when granting planning permits; transport planners need to address infrastructure needs to support new vehicle technologies; and water managers need to take into account greater variability in infl ows.

Climate change also means that decision makers have to use different tools and see problems differently. They have to take into account the unprecedented time and geographic scales that are involved in climate change science and policy, with greenhouse gas emissions having impacts that reach far in time and location from their sources. Long-term challenges are complicated further by the fact that in some cases effi cient adaptation requires early action while, in other cases, the best option is to respond closer to the time of the projected impact. All these factors have signifi cant implications for government decision making.

In dealing with these challenges, it will be important to ensure that all levels of government and public sector authorities recognise the changed decision making environment in which they are operating and have the capacity and skills to respond to these changes.

Our Focus The Government has identifi ed a number of areas where action could be taken in the Climate Change White Paper to embed climate change considerations into all government decision making:

Mainstreaming climate change Consideration of climate change will need to become part of wider discussions across government and become fi rmly embedded in mainstream government decision making. This includes ensuring that climate change impacts are explicitly recognised by all decision makers and incorporated across all areas of government through departmental adaptation plans. Existing procedures will be improved through new decision making processes and tools.

Building capacity A better decision making environment requires everyone involved to have the appropriate level of knowledge, skills, tools and resources. Training, education and information could improve the sophistication of decision making in relation to the impacts of climate change and a carbon price.

Aiding decisions Building capacity to deal with climate change issues will involve the development and roll-out of a range of tools to aid decision making – especially in areas dealing with risk and managing uncertainty. It will also be important to give the ‘right’ people access to the ‘right’ tools to support their decision making.

Getting structures right The Climate Change White Paper offers a unique opportunity to improve government decision making in relation to climate change. Through the White Paper, the Victorian Government will identify the key changes in decision making processes that should be made across government and by specifi c departments over the next few years, and incorporate these changes into formal accountability mechanisms. The capacity of departments to meet these changes will be assessed, defi cits identifi ed and plans developed to provide the training, knowledge, skills and information staff will need to deliver the required changes. Such a process could be coordinated centrally to optimise the shared use of resources and focus on climate change risks across critical areas of government service provision.

QUESTIONS TO CONSIDER

• How can Government ensure that climate change is central to its planning, policies and decision making?

• What elements of the Government’s climate change agenda should be enshrined in legislation through the Climate Change Bill?

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Image: Climate Change Summit, Parliament House. Source: Department of Sustainability and Environment

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Backing action with legislation At the 2006 state election, the Victorian Government gave a commitment to introduce a Climate Change Bill to ensure that actions taken on climate change are backed by legislation and protected under Victorian law.

Since 2006, a number of the measures that were originally planned for inclusion in the Bill have been delivered through separate state legislation (including feed-in-tariffs for solar panels for households and the Victorian Energy Effi ciency Target Act) or through the emissions reporting requirements that will underpin the CPRS.

The Government remains committed to introducing a Climate Change Bill, recognising the importance of conveying Victoria’s intentions, policies and actions on climate change simply and clearly within one piece of legislation. Such legislation is necessary to ensure that government agencies have the authority – including powers of enforcement in some instances –to implement the range of policies being developed through the White Paper process. Legislation is also important to give people and businesses certainty about Victoria’s climate change regime.

The Premier’s Climate Change Reference Group has recommended that the Government introduce a Climate Change Bill, noting that such legislation can be used to achieve several goals, including:

• Ensuring enduring whole-of-government and whole-of-society commitment to mitigation and adaptation

• Assisting in the coordination of activities across State and Local Government, industry sectors and communities.

The group also noted that associated subsidiary legislation can be used to address specifi c complementary measures (such as Renewable Energy Targets and the establishment of specifi c independent statutory bodies).

As part of the process of developing the Climate Change Bill, the Government intends to consider any amendments that may be required to existing legislation to take greater account of Victoria’s climate change goals.

The Government plans to introduce the Climate Change Bill into the Victorian Parliament around the same time as it releases the Climate Change White Paper. The Government welcomes suggestions as to what should – or should not – be in the Bill and how the Bill could best be used to drive further action on climate change.

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Having your say

Since the Climate Change Summit in 2008, the Government has consulted widely about possible policies and actions to include in Victoria’s climate change response.

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Since the Climate Change Summit in 2008, the Government has consulted widely about possible policies and actions to include in Victoria’s climate change response. The Government has also received many submissions from members of the public, expressing their concerns about the impacts of climate change and putting forward their ideas and suggestions. These consultations and submissions have been considered by the Government in preparing the Green Paper.

The Government now wants to give all Victorians the opportunity to comment on the ideas put forward in the Green Paper and to convey their views on how Victoria can best respond to the challenge of climate change.

The closing date for comment on the Green Paper is 30 September 2009. Submissions can be sent:

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BY POST Premier of Victoria Climate Change Submission GPO Box 4912 Melbourne Victoria 3001

OR VISIT OUR WEBSITE www.climatechange.vic.gov.au

The Government will also be conducting climate change community forums across Victoria throughout 2009. Details of these events will be advertised through local media outlets and will also be listed on the Victorian Government’s climate change website at www.climatechange.vic.gov.au.

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Image: How to save the world. Source: Ms Demi Avdalis (aged 8) Back cover image: Great Ocean Road. Source: Tourism Victoria

The Department of Premier & Cabinet