New report analyses impact of regulatory regimes on climate change adaptation by major infrastructure sectors

A NEW report that analyses the extent to which existing regulatory regimes support or hinder action by major infrastructure sectors – including electricity, transport and telecommunications – in adapting to climate change has been released by the Australian Government.

The report, The Role of Regulation in Facilitating or Constraining Adaptation to Climate Change for Australian Infrastructure, was developed by Maddocks Solicitors for the Department of Climate Change and Energy Efficiency.

It was released last Friday by the Acting Minister for Climate Change and Energy Efficiency, Senator Chris Evans, and the Parliamentary Secretary for Climate Change and Energy Efficiency, Mark Dreyfus.

Mr Evans noted that coupled with action to reduce Australia's carbon pollution, scientific advice showed there would be increased risks to infrastructure from the unavoidable impacts of climate change. Risks to infrastructure as cited in the report include degradation and failure of foundations and/or building materials, bushfire and storm and flood damage.

"Most of the regulations for Australian infrastructure were designed without climate change in mind," Mr Evans said.

"This report identifies areas within broad regulatory regimes where issues may arise in the future. It makes suggestions for further analysis by governments, regulators and owners of infrastructure assets."

The report also examines the ability of planning regimes, environmental impact assessment and government procurement processes to take into account risks arising from climate change.

"It is important that regulations in Australia allow companies to adapt effectively to climate change," Mr Dreyfus said.

"This report will be a useful resource for planners and regulators, as well as local and state government decision makers. It is another example of the Commonwealth's ongoing commitment to ensuring regulatory regimes in Australia take account of climate change."

The report will supplement work being undertaken by the Productivity Commission in its current inquiry into regulatory and policy barriers to climate change adaptation.

The report states that: "Resilience of infrastructure to the effects of climate change will depend, at least in part, upon the applicable regulatory framework and the extent to which that framework fosters adaptation to climate change by reducing or eliminating the risk of harm or damage."

While climate change is expected to have direct impacts on infrastructure, the report states that specific consequences of particular climate change risks for infrastructure and associated services will depend upon a range of factors, including the type and location of infrastructure, nature of climate change risk and likelihood/certainty of occurrence.

Further, the report states that "a comprehensive identification and assessment of climate change risks has not been undertaken for the spectrum of Australia's infrastructure" and calls for such an assessment as "a critical first step in determining whether the regulatory frameworks applicable to the various types of infrastructure and associated services are capable of responding to current and future climate change risks."

The report finds a number of regulatory framework elements that could hinder adaptation to climate change, including:

  • Lack of explicit or implicit recognition of the need to adapt to climate change;
  • Regulatory framework only applies to new infrastructure and does not apply to existing infrastructure;
  • Lack of harmonisation and fragmentation of approach within jurisdictions and between jurisdictions;
  • Inadequate, inconsistent or outdated information regarding climate change risks;
  • Inability to review regulations or standards with sufficient frequency;
  • Implementation is ineffective;
  • Compliance is too difficult or too costly; and
  • Enforcement mechanisms are weak or too costly to pursue.

In addition to the above elements, the report also notes that there are elements of particular sectoral regulatory frameworks that could hinder adaptation, including:

  • Building: For the most part, building standards do not account for risks posed by climate change, particularly future risks;
  • Planning: Existing use rights prevent regulation to protect against climate change impacts where existing uses can be established. In some jurisdictions, compensation may be payable for back zoning if this has an impact on existing use rights;
  • Environmental impact assessment: Regimes focus predominantly on the impact of a project or activities on the environment rather than the impact of the environment on the project. These regimes also assume that the environmental context is static and that human impacts are reversible;
  • Economic regulation of utilities (electricity and water): Insufficient account is taken of climate change in regulatory frameworks and may provide a maladaptive incentive for large, additional capital expenditure where operational expenditure and demand management may be more efficient and adaptive;
  • Telecommunications: Telecommunications infrastructure may avoid adaptation measures as a result of exemption from state/territory planning and environmental assessment laws; and
  • Major infrastructure procurement: The Public Sector Comparator and discount rates under the National PPP Guidelines are not sufficiently focused on the full life of the infrastructure asset.

However, the report also finds that regulatory frameworks contain a range of tools that could be particularly useful in facilitating adaptation to climate change, including:

  • Performance-based standards, which provide flexibility to respond to the uncertain effects of climate change;
  • Technical standards or guidelines for new and existing infrastructure to ensure that such infrastructure is designed, constructed and operated in a way that is resilient to climate change risks;
  • Codes of practice, which could be used to ensure that climate change risks are accounted for as part of ongoing management and operation of existing infrastructure;
  • Infrastructure management plans and associated service delivery plans that are periodically reviewed to ensure that climate change effects are addressed as they evolve over time;
  • Licences, approvals and accreditation, which can be made conditional on adequate assessment and management of climate change risks;
  • In-built risk assessment processes, which provide an opportunity for climate change risks to be included in existing regimes for risk assessment;
  • Computer-based modelling tools to assist targets of regulation with assessment of climate change risks and, therefore, compliance with adaptive management regulation;
  • Fitness for purpose obligations that could be used to ensure that infrastructure has been designed to cope with current and future climate change risks;
  • Third party access to infrastructure, which provides an opportunity to diversify infrastructure that may, in turn, increase resilience;
  • Market mechanisms, which can flexibly and dynamically account for climate change risks in determining the most efficient allocation of resources affected by climate change with limited government intervention;
  • Incentives to drive changes in practices to better account for climate change risks;
  • Mandatory disclosure about infrastructure performance and climate change risks to motivate entities to assess risks and provide information to consumers/users about those risks; and
  • Stakeholder engagement in the design and implementation of regulation to foster support for climate change action.

"A new approach is needed to ensure that effective responses to climate change are embedded in relevant regulatory frameworks to ensure that our infrastructure and associated services are resilient to climate change as we move into the future," the report writes.

The report, The Role of Regulation in Facilitating or Constraining Adaptation to Climate Change for Australian Infrastructure, is available from the Australian Government's Department of Climate Change and Energy Efficiency website at <>, or directly from this link (PDF: 1.37 MB).

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