Endings and Fairness: The Clean Energy Act 2011 (Cth) and Queensland Nickel

Originally published at Opinions on High, the Melbourne Law School High Court blog.

Australia’s first national laws to put a price on carbon were effective to their end; reportedly leading to reductions in Australia’s combined greenhouse gas emissions. In their absence it has been reported that increases in emissions have resumed. While our new Prime Minister grapples with how to rein in these emissions, the High Court last year confirmed that the carbon price laws were lawful, and through the prism of the Constitution fair, to their end. The history books will show, however, that politicians failed to make the case for a carbon price law, but they devised and crafted a successful, if complex though geographically unfair, legal policy. Over the past few days the protagonist in the High Court case, Queensland Nickel, with the business faltering, has brought claims of fairness into the political discourse around this business’ carbon intensive operations.

The Constitution and no interstate discrimination

In Queensland Nickel Pty Ltd v Commonwealth [2015] HCA 12, notable also as Nettle J’s first judgment, the High Court dismissed a claim by Queensland Nickel that regulations supporting the principal Act, the Clean Energy Act 2011 (Cth), were unconstitutional based on their geographic effect. Arguments relying on s 99 of the Constitution, the non-discrimination provision, that the regulations inadvertently and indirectly discriminated against the Queensland-based refinery business wholly owned by Clive Palmer MP, the federal parliamentary member for Fairfax, were rejected.

The High Court concluded that the additional financial liability imposed on Queensland Nickel relative to other refineries in Western Australia that triggered the case was not a cause of a difference or discrimination on the grounds of physical or jurisdictional geography but a result of past decisions made by Queensland Nickel on purely financial grounds. The effect of the laws as experienced by Queensland Nickel relative to its Western Australian competitors may have had an increased financial burden on Mr Palmer’s company, which has not been attributed to the company’s financial woes, but that burden was not attributable to the law; rather business decisions made by the company in its infancy.

In the High Court case, Nettle J adopted the plurality view in the Fortescue Metals case, and found that the particular parts of the carbon price regulation that set out liabilities for nickel refineries ‘did not discriminate between States. In terms, it applied equally to eligible persons carrying on the production of nickel regardless of the State of production’ (at [56]). Although Nettle J acknowledged a difference in practical effect of the laws for Queensland Nickel, he considered that ‘in this case it does not appear that any of the differences between the plaintiff’s and the Western Australian nickel producers’ inputs, production processes or outputs were due to differences between Queensland and Western Australia in natural, business or other circumstances’ (at [58]).

Instead, Nettle J focussed on past decisions about mining processes as giving rise to the different effect of the laws. The mining process adopted by Queensland Nickel was found to have been the reason for the greater financial burden under the laws. Although Nettle J conceded that the mining process decision ‘was informed by geographic considerations’ (at [61]), the decisions were ultimately based on delivering to each firm the greatest possible financial windfall at the time the decisions were made in the historical technological settings.

This conclusion, which eschews considerations of the geography of place, effect, and time in preference for considerations of financial autonomy offers an appropriate and consistent ending for the Clean Energy Act 2011, because financial interests trumped geographic interests and fairness throughout its invention, implementation and repeal.

The carbon price laws and unfairness

In the lead up to the last federal election Clive Palmer claimed to have advice that the carbon price legislation was unconstitutional, drawing in the then federal opposition leader, Tony Abbott, and then Queensland Liberal National leader Campbell Newman in support of his case. One of the frames developed to oppose the carbon laws was fairness and justice. This particularly included fairness to Australia internationally and fairness for businesses in Australia, especially those smaller businesses facing higher electricity costs, and fairness to families facing higher electricity costs (not all caused by the carbon price laws). At that time, in 2013, however, opposition to the laws was not widespread or strong, with most people ambivalent towards them (as distinct from the deeply felt opposition to the then Prime Minister’s popularly understood broken promise not to introduce a carbon tax). Moreover, opposition to the carbon price laws diminished further in the year following the election of the Tony Abbott led government and in the lead up to their repeal.

There could have been a more sophisticated level of opposition to the laws, not triggered by the financial costs created by the laws (as that was their very deliberate intention), but based on geographic fairness. By geography I mean the distribution between places and jurisdictions and across space, time and scale of social, environmental, political and economic advantages and burdens, whether deliberate or consequential.

The remainder of this short piece tries to record those geographic bases for opposition to Australia’s recent political and legal responses to the issue of carbon emission reductions, which, unlike Mr Palmer’s claims, did not rise to prominence in law or the media. With Mr Palmer’s recent attempt to deploy a discourse of fairness in the context of the financial predicament of Queensland Nickel it is a timely to record these fairness bases.

Geographer Lesley Head has demonstrated that those Australians with lowest incomes experienced the greatest burden of reducing emissions from electricity use under the carbon price legislation. In contrast, the rich simply paid more to run their air conditioners and wine fridges. Indeed, any consideration of the distribution of effect of climate policies and laws across the spectrum of advantage in Australia is typically not prioritised. The recent history of Australian climate policy has examples of ignorance of their geographic fairness, and the discourse of ‘climate justice’ is rarely highlighted in this country while claims about financial business injustices are.

Moreover, the way the carbon price laws were comprised and then administered demonstrated a lack of concern for geographic fairness in place of economic purity and attention to dominant financial interests. For instance, the laws were ultimately not accompanied by regulations that mandated improvements on those coal-fired generators that disproportionately affect carbon exposed communities. Rather the laws did include exemptions to protect trade-exposed business. Moreover, the promise to close down the least efficient power generators in order to achieve significant additional reductions, and indirectly improve the environmental health of the host communities, came to nothing. The long-advocated greenhouse trigger for environmental assessments in the federal Environment Protection and Biodiversity Act 1999 (Cth), which would have protected more communities from future pollution, was dismissed again — this time as being incompatible with the market approach of the carbon price regime.

The repeal of the laws, however, has entrenched localised pollution (an exception is in Anglesea where the generator supplying the local aluminum smelter has been decommissioned on financial grounds). Large coal fired generators are now not required to reduce their emissions at all. The Australian domestic approach to emissions reductions now also reflects its international agenda of using offsets in place of reductions: a policy approach I have previously questioned as being geographically unfair.

While the High Court’s approach to the issue of the geographic effect of the carbon laws was cursory, that should not leave us to think that the recent and current approaches to carbon emissions reduction laws and policies passed the geographic ‘fairness’ test. Rather, these laws created and have embedded geographic discrimination of a type that s 99 of the Constitution is unable to redress.

Queensland Nickel’s financial struggles and retorts to fairness

As for Mr Palmer’s claim that the Queensland government should have guaranteed Queensland Nickel’s immediate financial security on the basis of fairness, that’s far more difficult to unpack. As Antony Green alludes to it seems that Mr Palmer was attempting to use ‘fairness’ as a slogan in the same way the present government has for its current reform agenda: an agenda focused on matters economic and overlooking the geographic unfairness of climate change law and policy. Lost also in the framing of the debate by Mr Palmer, but identified by the Queensland opposition, is the fairness of the State potentially being called upon to rehabilitate the refinery site lest the local community continue to bear environmental harms without any economic advantages from the operation of the refinery.

From environmental citizenship to heritage citizenship? The Victorian Ombudsman, the Brookland Greens gas leak and the Windsor Hotel redevelopment

This an abridged version of a paper I delivered at The University of Melbourne, Australian Institute of Art History “International Conference to explore approaches to the preservation of urban built heritage, with a focus on Melbourne” in October 2014.

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The Victorian Environment Protection Authority’s embrace of the notion and principles of ‘environmental citizenship’ points towards a principled attempt to begin the process for redistributing power and reprioritising community concerns in environmental laws in the state. Lightly grounded in scholarship, particularly the work of Dobson, Victoria’s Environmental Citizenship Strategy positions the community as having a role in environmental regulation and asserts that the authority’s function is to enforce environmental standards and be responsive to community concerns about environmental harms. The enthusiasm for a novel form of citizenship-based policy development, notwithstanding that the policy is part of the broader State government Environmental Partnerships program, has not, however, migrated to heritage laws. There is no policy support for an idea of ‘heritage citizenship’, for instance. I argue that there should be; that we need to reflect on the purpose and function of heritage laws with concepts of citizenship in mind.

My paper relies on two place-based controversies connected by time, by government mishandling, and – most significantly for the paper – by the critique of the Victorian Ombudsman. The environmental citizenship concept can be traced to the Ombudsman’s report into the Brookland Greens Estate gas leak saga in Cranbourne, while the other Ombudsman report – about the redevelopment of the heritage-protected Windsor Hotel has led us to nowhere in particular. This is despite the nature and topic of the Ombudsman’s critiques being comparable. The paper distills the similarities in the Ombudsman’s critique and offers some preliminary thoughts about what a notion of ‘heritage citizenship’ would mean in our existing legal landscape.

The Ombudsman’s report into the Brookland Greens Estate gas leak concluded that the Victorian Environment Protection Authority particularly had mishandled regulatory oversight and made poor administrative decisions about the estate development and regulatory control over the adjacent landfill from where the gas emanated. Specifically, the authority:

  • had poorly enforced the laws it was charged to administer. It prioritised relationships with organisations it was supposed to regulate instead of prioritising the welfare of the people it was supposed to protect.
  • did not compel compliance with the law. It did not adequately respond to improved standards and environmental knowledge and failed to escalate enforcement when there was a clear need to do so.
  • lost sight of its overarching environmental protection objectives.
  • had consolidated decision making within a bureaucratic elite, making the organization unresponsive and rendering itself functionally hamstrung.
  • did not take a formal or influential role in court proceedings when it had the opportunity to do so and the knowledge to influence.

The Victorian Ombudsman, 16 months after its inquiry into the Brookland Greens Estate was directed to inquire into the events that led to the planning and heritage approval of the highly contested Hotel Windsor redevelopment. The Victorian government approved the redevelopment through the Minister for Planning in his role as responsible authority: a role he had because of the proposed size of the redevelopment. His decision was supported by an advisory committee recommendation. The project had the support of the City of Melbourne. Heritage Victoria also promptly granted a heritage permit under the Heritage Act.

The focus of the Ombudsman’s report was a plan hatched within the Minister for Planning’s office to generate community opposition to the project upon the release of the advisory committee recommendation report. This was intended to curate a political imperative to reject the project, but the plan was inadvertently disclosed and the rejection of the redevelopment became a political impossibility (and potentially a legal minefield). From the Ombudsman’s report it can be deduced that:

  • an appointee to the advisory panel was implicated in conflict, having previously worked on the site with a member of the development team, bringing into focus the small and interconnected community working on the Windsor Hotel.
  • key decisions, recommendations and strategies were devised by Ministerial staffers with insufficient oversight, accountability, expertise and management.
  • the community was seen as something to use for political purposes rather than as contributing meaningfully to decisions about heritage.
  • the Department of Planning, through its then Secretary, asserted that decisions made under the Heritage Act can be reached by a decision-maker giving equal weight to impacts on heritage of development and to the impacts of economic use of a heritage place arising from non-development. This dispelled any idea that the administration of the Heritage Act ought to achieve its main statutory goal: ‘to provide for the protection and conservation of places and objects of cultural heritage significance and the registration of such places and objects’.

Across both Ombudsman reports there were findings or suggestions about inappropriate administrative conduct, power resting in an exclusive elite, a failure to prioritise community concerns and expectations. and a sidelining of the community in decision-making. Still, the inquiry into the Windsor Hotel has not led to a policy response comparable to the Environmental Citizenship Strategy, which was triggered by the report of the Ombudsman and others prepared for and by the Environment Protection Authority about the Brookland Greens Estate.

However, there is a breadth of scholarship on urban citizenship and justice that could – or may still – provide a starting point for reconsidering legal and policy frameworks and encounters with heritage and planning laws. A notion of ‘heritage citizenship’ could be extracted from this scholarship. Selectively and notably, Fainstein has argued that a just city is one that is one that is diverse, democratic, and equitable; where the community and its collective “quality of life”, rather than politics, is the central figure. Her work draws upon justice theories and philosophy as well as social geographers, prime among them Harvey, whose work articulates a right of city dwellers to urban identity, citizenship and belonging; a right not to be dispossessed. Of particular relevance to heritage, Szerszynski has argued that urban citizenry includes the right to be and of the visual and a responsibility to the visual. Smith and Mcquarrie argue that urban citizenship is not only about belonging within the city, but also belonging within the law of the city, where ‘belonging’ is different from simply ‘being heard’ in law. Finally, legal scholar, Merryman has argued that the basis for heritage conservation is the public interest. So the public should be central in decisions about heritage.

Under the existing planning and heritage law regime, however, the experience that many in the community have, including those opposing the Windsor Hotel redevelopment, is that they are kept on the periphery. Planning and heritage laws restructured around a concept of heritage citizenship would, however, bring community into the framework more explicitly. Community rights and interests and their position in the city as dwellers and responsibility bearers should mean that heritage laws are primarily and unashamedly about heritage protection for them; rather than their interests merely being a factor to balance against proprietary and capital interests. Heritage citizenship would see also a dispersal of power within the administrative system for heritage protection, with less dependence on a professionalised and hierarchical bureaucracy, power reallocated away from the Minister, and a more purposeful role for all of us urban citizens.

Clearing the Air: Australia, environmental justice and ‘toxic’ pollution

Here is a speech I gave at a public seminar hosted by Environmental Justice Australia on 8 July 2014 on the topic of air pollution and environmental injustice.

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The focus of this evening’s seminar is the recently published ‘Clearing the Air’ report into air pollution by our hosts, Environmental Justice Australia.

However, I want to start my presentation by taking you back a couple of years to the report that saw this organisation shift its attention, and ultimately its name, towards concerns of environmental justice.

In that report, the final report of the Environmental Justice Project (pdf), the Environment Defenders Office (‘EDO’) – as it then was – explained an absence within Australia of a narrative – or movement – for environmental justice and a policy gap in the promotion of environmental justice principles throughout the country.

For those of you unfamiliar with the concept of environmental justice it is a term with an evolving definition: it is defined differently depending on context and perspective. What links the definitions, however, are two concerns about fairness.

First, fairness in terms of where environmental harms are situated. In this respect the concept is understood as having distributional or geographic aspects.

Second, a concern about fairness in decisions about projects or policies that are perceived as having environmentally harmful effects – wherever those effects may be located. So in this respect the concept is also understood as having procedural or political aspects.

When understood at its most basic level within these two terms, I am sure you will agree that for many decades these concerns about fairness have been evident in Australia. I am confident that each of you could recall a case, a project, a decision, a pollution event that either gave rise to concerns about distributional unfairness or procedural or political unfairness.

Some readers of the EDO’s Environmental Justice Project Final Report, however, suggested that the concept of environmental justice is novel to Australia: that the EDO’s work was the first time that environmental justice had been brought into view in Australia. That is not accurate. A review of the footnotes of the EDO report makes plain that there has existed and been recorded for a period of time in Australia events and literature on environmental justice.

In fact, the experience of air pollution in Australia allows you to trace environmental justice concerns for decades. The graphic locating geography hot spots of air pollution in the Environmental Justice Australia report, (pdf, see page 16), offers you an opportunity to reflect on how long those spots have been presenting distributional, unfair health problems to those communities. They have not just appeared over the past two years.

The principal messages in my presentation today, drawn from my research and also what I learned in putting together and recently teaching the subject Toxics, Waste and Contamination Law is that environmental justice concerns have played a part in our pollution laws over the past 40 years.

It is only now are we as a community of scholars and of individuals beginning to frame our laws as being directed to achieve environmental justice. The report we are discussing tonight is part of this movement; part of the trend.

I want to offer two potential reasons for this interest in environmental justice: not simply the concepts but also the words, the discourse, the phrase, the term.

First, we are seeing demands that human health impacts be a priority when governments respond to incidents and reports of degraded environments and, associated with that, a second potential reason (and this is somewhat preliminary and speculative) is the displacement, in the view of non-government entities, of sustainability as the predominant policy goal of environmental laws.

To reach these conclusions, however, it has been necessarily for me to take what is becoming an unconventional route to understanding what environmental justice means.

The conventional route is to see environmental justice as having emerged from the environmental racism movement in the USA, exemplified by the incident in the late 1970s and early 1980s in Warren County where abandoned chemical wastes were relocated in the face of African America led opposition to a tip created in the least wealthy and least white county in North Carolina.

A less specific, less limiting and arguably more global and less instantaneous, alternative starting point for the emergence of environmental justice is in the anti-toxics movement.

Political scientist John Dryzek traces the discourse of environmental justice to this movement and social scientists Buell and Szasz also separately reached this view.

For them ‘toxic’ was and is a word of political power and an expression and encapsulation of human health concerns. Szasz writes of toxic as ‘icon’, a rallying point. Buell writes of the ‘global rhetoric’ of toxicity predating the 1970s. Dryzek notes the difficulty in disproving toxicity: hence it has symbolic and political power.

Toxic was proxy – for justice, for fairness, for protection of human health. It remains so. You are also likely seeing it appear more in our environmental language. Alkon et al in recent scholarship in the journal Local Environment argue that we should not always be looking for environmental justice as a term to understand its meaning and force, but to be mindful of proxy terms.

So if you are looking for a narrative of environmental justice in Australia a search for concerns and complaints about toxicity can be a proxy. You are all likely aware of the long standing National Toxics Network. Some of you might be aware of the book Local Heroes edited by Kathleen McPhillips which recounts incidents of toxic pollution and threats around Australia, including at the periphery of Coode Island here in inner Melbourne. These, as well as some of those locations in the pollution hot spots map, are Australia’s early stories of environmental justice. They date for decades.

What is central in the toxics terminology is the human – toxic effects on humans. So having sketched out a path for you to see environmental justice as having resonated through our experience of pollution laws, I now want to turn to emphasise the centrality of human health to those concerns. To show the parallel experience of health and toxicity in our modern environmental laws.

If you look at the origins of the Environment Protection Act 1970 (Vic), you will see a focus on human health concerns within the broader community.

Former federal MP Lindsay Tanner, in his co-authored 1978 book, The Politics of Pollution, pinpoints the proposal for the Carrum sewerage treatment plan with an effluent pipeline into Port Phillip as a trigger for the public to demand a comprehensive pollution control regulatory system in Victoria: a system that would protect the “quality of life” of the public. Tanner’s book also records the election promise of the Bolte government to create the Environment Protection Authority in May 1970 in response to community demands for government intervention to control pollution for their benefit.

While these laws have changed over the past 40 years, particularly in the post-Rio legal sphere, and while governments have repositioned the laws to achieve environmental protection and meet principles of sustainability, recent reports analyzing the conduct of the Environment Protection Authority reiterate that in the community’s view these are laws ought to protect them, their well-being and their health, and that their health has been missing from the agency’s regulatory enforcement activities.

My research has also led me to suspect that if the community ever signed up to the concept of environmental sustainability it has since signed off.

With Annette Jones I reviewed submissions to human rights dialogues, which clearly (and perhaps naturally because of the subject matter) prioritized human well-being, particularly of the most vulnerable in the community, over environmental sustainability and protection concerns. This was so even when governments invited submitters to consider explicitly a right of ‘environmental sustainability’, as the Tasmanian government had proposed. There the Tasmanian people rejected that right in preference to a right to a healthy environment.

The issue of human health as a regulatory priority of pollution laws will be explored in a forthcoming volume of the Michigan Journal of Environmental and Administrative Law. In the introductory essay by Uhlmann, he notes that:

“I would submit that the environmental laws themselves are human-centric … Our environmental laws focus on the need for pollution prevention to protect public health.”

He argues that in contemporary times: “We regulate hazardous waste, … when it has the substantial potential to be harmful to “human health and the environment (in that order).”

Ulhman is not alone in suspecting an internal US change in approach to greenhouse gas emission regulation (with human health as its core) is symbolic as well as pragmatic. In the same volume he notes that Tracy Bach presents research that shows the community is more likely to accept greenhouse gas regulations if climate change is understood as a human health issue. Bach, an environmental pragmatist, argues that we should attempt to secure atmospheric environmental protection through human interest.

Elsewhere in the US, the need for change climate regulatory responses are framed in environmental justice terms in order to persuade regulators to require emissions reductions from power plants rather than letting markets do that work so that communities that host energy infrastructure should see real benefits and changes in the quality of the air that they breathe. President Obama, admittedly with limited alternatives, has responded in a manner that his advisors claim responds to environmental justice and the claims of environmental justice advocates to limit emissions in vulnerable communities.

So, I want to bring you back to environmental justice in Australia. Now, perhaps as a result of the EDO’s two-year old report, we are seeing a clearer and more conscious and deliberate engagement with the concept in Australia. Chakraborty and Green have produced and analysed National Pollutant Inventory data maps with social advantage data showing a clear and strong correlation in Australia between a lack of advantage and presence of potentially harmful pollutants.

Moreover, Felicity Millner (pdf) from Environmental Justice Australia has written about the need to achieve fair access to justice in the environmental law field in Australia. This organization may take on a role as justice advocate, a role that Alkon et al identified as important in driving the environmental justice narrative, and the Clearing the Air report challenges us to confront and come up with a way to respond to an environmental injustice.

Sharing Melbourne and the Sustainability Business Clinic

This is a short roundtable presentation I gave at the Sharing Economy Leaders Forum in Melbourne on 29 May 2014 in which I introduced the Ashurst Australia / Melbourne Law School Sustainability Business Clinic to a band of sharing economy enterprises and enthusiasts.

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The Sustainability Business Clinic will be the first law clinic set up within Melbourne Law School for the law school’s Juris Doctor students. While this clinic will be new for Melbourne Law School, it builds upon a much longer tradition of clinics in law schools, especially in the United States. In the US there have been efforts to incorporate experiential learning and practical learning in the form of clinical programs for decades.

With the shift at Melbourne Law School to a post-graduate law programs the importance of clinics has been emphasised – with students now taking typically three rather than five years to complete their studies. Students want to pack as much practical leaning into their programs as they can to make sure they are job ready by the time they graduate.

For those of you unfamiliar with law clinics, they are essentially small student populated law firms on campus. Upper year level law students get to use their legal skills and knowledge in a practical setting. Their work is overseen by and supported by experienced lawyers and teachers. The legal service the students offer is provided free to worthy clients.

Within the Sustainability Business Clinic, students will be supervised by lawyers from the global law firm Ashurst, and I will provide the learning framework and supervision to the students.

This year the clinic is running in semester 2 (from July through October) from Melbourne Law School at The University of Melbourne Parkville campus. Eight students will work for eight or nine clients one day a week over 12 weeks.

All of Melbourne Law School’s experiential learning offerings are centred around the objective of advancing the public interest and Ashurst’s involvement builds upon its ethos and commitment to provide pro-bono (that is: free) legal service to worthy clients. The Sustainability Business Clinic has a mission of public interest interpreted through an imperative of sustainability.

Melbourne Law School and Ashurst hope to assist through the clinic businesses or community or non-profit entities that are supporting or leading our transition to a sustainable future through enterprise. For us the sharing economy is an expression of sustainability. So, we are aiming to help business like you: businesses that are thinking creatively about how we, as a community, can share rather than consume, to build more robust and networked communities and improve our environmental well-being. The enterprises we will support might be hoping to turn a profit, or not, but aside from their sustainability objectives what will be common among the clinic clients is that they will not currently have the capacity to pay for specialist legal advice.

Our first tranche of clients are sharing businesses, disruptive business, social enterprises and community co-operatives. They are all taking business initiatives without and before the development of policy support and (sometimes) laws that support or guide their activities. They are all in the formative stages of the evolution of their businesses.

The clinic will help clients in various legal aspects. Starting out, advising on permits or consents, traversing a sometimes complex or uncertain regulatory environment, and preparing standard documents. Our goal is to offer legal assistance for discrete legal questions to many clients, not to build long term lawyer-client relationships. There are emerging law services that can offer those long term relationships once business are up, running and able to afford to pay for legal services.

To best suit the skills of the students who will occupy the clinic, we have asked our first clients to think about legal problems that require thoughtful legal research rather than legal strategy; tasks that will allow the students to develop drafting skills and encounter different types of legal documents.

There is a bit of give and take involved. In exchange for free legal service, we want our clients to interact with, be appreciative of and encouraging of our students. We hope that people like you see the value in giving students practical training – particularly in the areas of law and legal documents that your industries want to see developed further. Moreover, we hope that clients will see the benefit in being involved within an institution – The University of Melbourne – that wants to analyse and research emerging trends in society. That is keen to help shape opinions about the sharing economy, among other sustainability matters, and to critique the laws that affect new, dare I say ‘green’ businesses attempting to do good for the public.

The sharing economy and the law

Last year, when Time Magazine named 10 ideas that will change the world, high on the list was an entirely new concept: ‘collaborative consumption’.

Got a spare driveway? Rent it to a driver using ParkatmyHouse. Extra space in your shed? Let it out via Open Shed. A small job that needs doing? Find someone to do it through Airtasker. Old clothes? Exchange them with Clothing Exchange.

Also termed the sharing economy, the access economy, or the peer-to-peer economy, this new economic model is based on ‘access to’ rather than ‘ownership of’ physical and human assets like time, space and skills.

The ‘sharing economy’ has mushroomed in Australia, and Melbourne in particular has seen a range of initiatives start up.

Back in 2004, Melbourne was among the first to embrace the sharing economy concept with the launch of car-sharing. These days, Melbourne boasts bike-sharing schemes, community-owned energy projects, solar leasing projects, and carpooling schemes for city commuters. Our city rooftops now grow vegetables and host beehives, and the Melbourne City Council is developing other initiatives to encourage a shared use of resources in the city.

Operating in the sharing economy brings multiple benefits: profit, community building, strengthened local economies and reduced waste. But it’s becoming clear that these sharing initiatives also pose major challenges to our legal system.

That’s because our laws are based around ownership of goods, rather than access to them. Our legal frameworks have evolved to regulate established relationships such as employer/employee, landlord/tenant, developer/homebuyer, business/investor and producer/consumer.

The sharing economy often doesn’t fit within these categories. Is a person who spends time tending to a community share garden in return for vegetables an employee? Or a volunteer protected from negligence actions? What is the extent of their contractual rights and obligations?

This has already given rise to legal tensions in the United States. In the US, services like Lyft, SideCar and Tickengo connect individual private drivers with people who are looking for a lift, reducing traffic congestion and the need to own a car. But in many US states, these peer-to-peer car-sharing services are illegal. Last September, California was the first state to legalise technology-based ride-sharing services, providing a regulatory framework for them to operate.

In New York, Airbnb is being investigated for possible breaches of a 2010 law making it illegal to sub-let your apartment. New York City’s Attorney General has filed a subpoena for data on all Airbnb hosts in the city. Peers, an organisation that supports the sharing economy, is currently lobbying New York law-makers to introduce regulations to allow for Airbnb to operate legally.

Similar legal issues are starting to emerge from such initiatives in Australia. Community energy groups are grappling with their incorporation, while initiatives like rooftop gardens are being constrained by planning laws. Food sharers must comply with the same food safety rules as larger not-for-profit enterprises. Despite community support for sustainability projects, overcoming legal barriers is a significant impediment to sustainability projects getting off the ground. However, the need for specialist legal advice comes at a time when many projects do not yet have the capital to pay for lawyers.

The legal and commercial factors sustainability companies need to consider in order to get moving include determining the right legal structure, securing the right legal approvals and licences, developing an effective finance model, raising start-up capital from investors (which may include the community through crowd-sourcing) and offering a service that is in demand, understood by consumers and is simple to use.

Recognising the difficulties environmentally-minded companies face in navigating a minefield of laws and regulations, leading global law firm Ashurst has teamed up with University of Melbourne to establish a Sustainability Business Clinic.

The first of its kind in Australia, the Clinic begins this year and will see law students provide legal advice to start-up companies under the supervision and guidance of environmental lawyers.

Projects that are in the public interest benefit the environment and do not have the capacity to pay for specialised legal advice may have access to the Clinic. It is expected that a broad range of legal issues will arise, spanning environmental, planning, property, corporate, finance, intellectual property and energy law.

It is hoped the clinic will not only help sustainability initiatives get off the ground, but will also equip the lawyers of the future with the practical skills required to advise companies operating in the emerging and rapidly growing sharing economy. If Time Magazine is right, then these skills will certainly be in demand.

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This article was co-authored with Katherine Lake and was first published in The Voice.

The constitutional fate of the Clean Energy Act

This post was first published on Opinions on High on 6 August 2013 as ‘News: Waiting for the mining tax case and forgetting about any carbon price case’
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Tomorrow we will learn of the High Court’s decision on the challenge by Fortescue Metals and others to the Commonwealth’s mining tax legislation – the Minerals Resource Rent Tax Act 2012 (Cth). The court heard that case in March this year. Professor Michael Crommelin from Melbourne Law School will be writing about the Fortescue case for Opinions on High.

Readers might recall that when public opposition, and threats about constitutional challenges, to the minerals resource rent tax was at its height, there were similar discussions about the carbon price legislation (the Clean Energy Act 2011 (Cth)). Here is an opinion by Professor George Williams from the time foreshadowing the likely constitutional objections to the mining tax and carbon price.

Nevertheless, there has still been no application made to the High Court to challenge the Clean Energy Act 2011. This is despite the many months of threats of challenge, and a writ and statement of claim being lodged with the court only a little over a month ago by Queensland Nickel.

Having reviewed that writ, it is apparent that the future of Australia’s carbon price is destined to be decided at the forthcoming election, and not by the High Court afterall. This is because the writ does not attack the legislation that creates and embeds within the economy the mechanism for pricing carbon. Instead, what Queensland Nickel is challenging is the constitutionality of the way the compensation scheme for trade exposed polluting industries was devised under separate regulations. Queensland Nickel argues that the compensation scheme discriminates across the states, inconsistently with section 99 of the Constitution, because it advantages some states, like Western Australia, over others, including Queensland. It does not challenge the carbon price.

Let’s link up: joining our carbon price to California’s

Here is a piece I co-authored with Katherine Lake for The Conversation.

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As the pace of international climate negotiations has slowed, the interest and attention of international organisations and climate policy watchers has been diverted to national climate change responses.

National programs are seen as a major driver of the next international climate change deal. In this setting, Australia is searching for partners to shape the future of a global market response to climate change.

Perversely, given that it was ostracised in climate negotiations for so long, Australia – with its climate price in place and a connection with the European Union’s emissions trading system assured – is now being portrayed as a climate leader and broker.

We recently attended a gathering in the United States of policy-makers, lawyers and scholars from Australia and California, and got the impression the carbon price has given Australia negotiating clout. While presentations were being made inside the conference venue, outside Australian government officials, led by Parliamentary Secretary for Climate Change and Energy Efficiency Mark Dreyfus, were discussing linking Australia’s carbon price scheme with California’s cap-and-trade system.

California has recently linked its now operational cap-and-trade system with Quebec. There is a real possibility of Australia linking its carbon price with California’s and further extending and entrenching cross-border carbon markets. In the next five years we might see Australian emissions reductions or emissions offsets being transferred between companies in Perth, Rome, Los Angeles or Montreal.

The contextual differences

There are contextual differences that Californian and Australian negotiators have begun to explore as a precursor to striking any deal to link carbon schemes.

As Australian legal scholars, including Godden and Prest have noted, Australia’s carbon policy has been framed by economics and market theory. Bureaucrats have acknowledged that Australia’s carbon laws are not environmental laws. They are laws that create a carbon market.

Australia’s carbon price and the market it creates is the centrepiece of Australia’s carbon laws. It is supplemented by incentives to promote renewable technologies (such as the Clean Energy Finance Corporation) and create offsets (like the Carbon Farming Initiative).

The Californian cap-and-trade system reflects a broader stakeholder concern than in Australia, and is described as a “back-stop” by the agency that designed and will implement it. It is only needed to address those carbon emissions that are not mitigated through the range of other environmental regulatory measures. These include:

  • ratcheting emissions and fuel standards;
  • bans on the expansion of coal and fossil fuel generation;
  • prohibitions on the purchase of carbon intensive fuels; and
  • statutory obligations on utilities to find energy efficiency savings.

Cap-and-trade is only expected to meet 20% of California’s emissions reduction target, whereas in Australia the carbon price is expected to deliver most of, if not all, Australia’s emissions reduction target.

Just as it did when negotiating its EU deal, Australia might need to modify its carbon legislation should California seek greater complementarity between systems.

Ultimately, we do not see the broader contextual differences as a barrier to linking. Once Australia’s scheme converts from a fixed price to a trading scheme, the structure and operation of the carbon pricing regimes will be fundamentally the same across both jurisdictions. There will be general compatibility between emissions reductions and emissions offsets, even if California’s scheme is only intended to achieve a minor proportion of its mitigation objectives.

The barriers

There are barriers that could delay or frustrate linking. There are reports California is concerned about the lack of an auction reserve price in Australia. While this has price implications, it is not a barrier to linking. Removing a price floor (and associated reserve price) was a feature of the European system that Australia adopted. California may also drop the feature if it wants to connect with Europe.

A more substantial barrier, in our view, is that despite California being a larger economy with a bigger population than Australia, it lacks international personality. Australia cannot negotiate a treaty with California to formalise any system connections. Both jurisdictions will likely be limited to non-binding memoranda of understanding and regulatory endorsement of each other’s schemes. Australia will face the risk of Californian regime change should the Unites States federal government limit or implement a carbon market.

A related issue is that Australia will need reassurance from the United States government that it will recognise Californian emissions reductions at the national level and in a global climate change agreement. It will also presumably be necessary to get the EU on side with such a link. This is because ultimately, once linked, Californian offsets allowed into Australia, at least indirectly, will also flow into the EU emissions trading system.

The prospects and opportunities

There is one positive to not being able to formalise the linking of schemes with a treaty. It means linking can be achieved relatively quickly, as was the case with the arrangement for one-way linking with the EU. We therefore do expect some form of linkage soon, possibly ahead of the Australian federal election.

The simplest way would be to link through offsets. California has a similar offsets mechanism to Australia’s Carbon Farming Initiative, covering the land and agricultural sectors. An initial link could be agreed through a one-way or mutual recognition of these domestic offset credits. For instance, emissions reductions generated by the capture of methane at landfills or the planting of vegetation could be traded between the two schemes.

This option was raised in the public discussions last week. California is currently seeking comments on using offsets from linked schemes. Significantly, the recognition of Californian offsets in Australia’s scheme could be achieved without further amendments to Australia’s carbon legislation.

There are significant political and structural opportunities for linkage for both Australia and California. California will continue to lead the United States, as it desires, on climate change – reaping the rewards of innovation and the plaudits of progressive law-makers. And it will continue to exert political pressure on the Obama administration to act.

For Australia, the more credentials it receives and the more connected its carbon price becomes, the more difficult and humiliating it will be for any future Coalition government to extricate itself from the system. This is a win-win scenario for the current government both politically and for its approach to taking action against climate change.

This article was co-authored by Katherine Lake, Senior Associate in the Climate Change and Energy Practice at international law firm, Ashurst.

Brad Jessup is a member, and owns a share, of Hepburn Community Wind Park Co-operative Ltd, a community-owned wind farm in rural Victoria, and is a member of the Victorian Environment Defenders Office. He has previously received funding from the Energy Pipelines CRC.

Katherine Lake does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

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