Fossil fuel subsidies should be prohibited and phased out globally. They encourage, rather than deter, the extraction and consumption of fossil fuels, and in doing so set the world back in efforts to address the climate crisis, including through the achievement of the Paris Agreement’s goal to limit global warming to 2°C, and as close to 1.5°C as possible.

Yet the Australian Government, amongst others, continues propping up the coal, oil and gas sectors with public money. The Prime Minister has spoken of a ‘gas-fired recovery’ from the economic hit of the COVID-19 pandemic, a frightening concept following the 2019-2020 Australian bushfire season. To deal with one crisis by exacerbating another is of course not a sensible way to ‘recover’. 

And gas is just one fossil fuel the Government seems determined to support financially. Set to be Australia’s largest mine, the Carmichael Coalmine is being developed in Central Queensland by Bravus Mining and Resources (Bravus), formerly Adani. The Queensland Government has granted the mine a seven-year ‘royalty holiday’, which means postponing the payment of royalty fees for coal sold from the Carmichael Coalmine.

Internationally, subsidies are regulated by the World Trade Organisation’s (WTO) Agreement on Subsidies and Countervailing Measures (ASCM). The ASCM specifically prohibits certain subsidies and classifies other subsidies as ‘actionable’ if they cause adverse effects to other WTO Members.

Is the royalty holiday a subsidy?

For the purposes of the ASCM, a subsidy is deemed to exist if there is a financial contribution by a government or public body and a benefit is thereby conferred. The agreement between Bravus and the Queensland government is that the royalties will be deferred and eventually repayable with interest, which constitutes a loan. While the royalty holiday is not an explicit ‘transfer’ of funds, similar measures including tax concessions and the modification of a loan through debt forgiveness have been held to constitute a direct transfer of funds by the WTO in the past, fitting within its definition of a ‘financial contribution’. Moreover,the annual interest rate of 2-3% is more favourable than any commercial loan available to other Queensland industries or to Queenslanders themselves, meaning the loan confers a benefit to Bravus.

It the royalty holiday prohibited by the WTO?

The ASCM prohibits certain subsidies, including those contingent in law or fact on export performance.

The negotiations of the royalty holiday at issue were shrouded in secrecy, and there has been no disclosure of the loan’s value, size, the length of repayment, or the type of security. We cannot know whether its granting was contingent in law on export performance.

But a subsidy is de facto export contingent when its granting is ‘geared’ to promote the recipient’s ‘future export performance’. Factors that can indicate export contingency include the country’s awareness that their domestic economy is unable to absorb the subsidized product’s production, the recipient’s export orientation, and the scale of exports, amongst other things.

The ASCM is clear that a WTO Member, which Australia is, shall neither grant nor maintain subsidies contingent, in law or in fact, upon export performance.

We know that coal production for domestic consumption, especially on the scale proposed by Bravus, is unnecessary. Demand is met by current production levels, and renewables continue to decrease domestic demand for coal. The Australian economy is unable to absorb the Carmichael Coalmine’s coal. Bravus is clearly export orientated, making well known its intention to export coal primarily to India. And the scale is vast: the Carmichael Coalmine will produce over 2.3 billion tonnes of coal over its 60-year lifespan.

Based on these factors, it seems the royalty holiday is indeed de facto export contingent, and hence prohibited by the WTO’s ASCM.

What next?

Despite the vast scale of fossil fuel subsidies globally, no disputes have been brought before the WTO challenging them under the ASCM. They seem to be tolerated despite being at odds with the WTO’s core values of open markets and trade liberalization, as well as its commitment to sustainable development.

In theory, any WTO member that has reason to believe that a prohibited subsidy is being granted or maintained by another member may refer the matter to the Dispute Settlement Body. This Body will establish a panel to determine whether the measure in question is a prohibited subsidy, and will recommend the subsidy be removed if it is found to be prohibited.

However, the lack of transparency in subsidy reporting in accordance with ACSM requirements may prevent members from taking action on, or negotiating an end to subsidies. The strongest hope for action lies in non-government organisations, notifying Bravus royalty holiday to the WTO Secretariat’s Trade Policy Review Body. This body regularly reports on the trade policies of WTO members, which can shame members into compliance with WTO law, and encourage others to take action through the WTO’s dispute settlement system.

Andonny Papastamatis is a final year Bachelor of Arts and Bachelor of Laws student at the University of Tasmania

Camilla More is a researcher and Australian-qualified lawyer, specialising in international climate law and policy. She holds a Bachelor of Science and Bachelor of Laws with Honours from the University of Tasmania. 

Last week, a group of young Queenslanders – via an organisation called “Youth Verdict” – announced that they are challenging Clive Palmer’s Galilee Coal Project development by lodging objections in Queensland’s Land Court.

The challenge relies on Queensland’s nascent Human Rights Act 2019 and thus represents the first time in an Australian court that a human rights claim has been raised in the context of climate change and fossil fuel development. A summary of the legal and factual basis of the challenge prepared by the Environmental Defenders Office (the lawyers representing Youth Verdict) is available here, and an academic discussion of the potential applicability of Queensland’s Human Rights Act to challenges to coal developments in Queensland can be found here.

This is an exciting test case of the applicability of the Human Rights Act’s protection of the right to life (among other rights) to new fossil fuel developments that will contribute to climate change. The challenge also reflects a continuation of the so-called “rights turn” in global climate change litigation. The stories of the young people represented by Youth Verdict have been front-and-center in the challenge’s early media coverage, suggesting a strategic convergence between climate litigants and the broader, youth-dominated Australian climate movement. And the use of the #youthvcoal hashtag to promote the challenge on social media further indicates a desire to connect the challenge to other youth-focused climate lawsuits globally (e.g. #youthvgov and #youthvcan).

It will be very interesting to see to what extent Youth Verdict appeals to, and to what extent the Land Court adopts, foreign and international jurisprudence on human rights and climate change. Thanks to a series of recent statements from various UN bodies, it is increasingly beyond question that – from the standpoint of international law – greenhouse gas emissions contributing to climate change violate human rights, and governments therefore must reduce emissions to protect human rights. The Urgenda judgment in early-January, which was based in-part on Article 2 of the European Convention on Human Rights’ protection of the right to life, provides a further precedent on which the Land Court potentially could base its reasoning. It is difficult to imagine the Land Court diverging greatly from this body of jurisprudence, let alone rejecting it wholesale.

However, it is not beyond the realm of possibility that the Land Court may find other ways to reject or avoid considering Youth Verdict’s challenge. One reason – foreshadowed by Bell-James and Collins – would be if the market substitution argument (i.e., that if coal is not sourced from this mine it necessarily will be sourced from elsewhere) were accepted, and thereby undermined Youth Verdict’s claim of a causal link between approving new coal developments and human rights impacts from climate change. Given that the proceedings before the Land Court are a merits review, and given recent judgments like Gloucester Resources, such an outcome would run against trends in other Australian jurisdictions.

A further reason for rejecting the challenge could be on justiciability grounds. This too would be somewhat puzzling. Refusing consideration of the human rights impacts from the greenhouse gas emission of new coal developments, in circumstances where Queensland’s parliament has explicitly empowered the Land Court to consider human rights, and where other courts have affirmed that human rights are inextricably linked with climate change, would be emblematic of what Kysar and Ewing have called a “duck and weave” approach to adjudicating climate change. While those authors were referring to tort claims, their cautioning against “a jurisdictional self-limitation that unnecessarily impedes the ability” of the judiciary “to continue to evolve with changed circumstances and to remain open for the airing of future grievances” arguably applies with even greater force where a statutory claim is concerned. On the other hand, a full and thorough consideration by the Land Court of Youth Verdict’s claims – whatever the ultimate result – would mark the first time an Australian court had considered the merits of human rights arguments in a climate change context, and would contribute greatly to the ongoing maturation of climate change litigation in Australia.

Danny Noonan is a climate change advocate, scholar, and Australian-qualified lawyer. He is a co-founder and board member of Breach, a newly-established organisation that partners with frontline communities to advance climate justice through legal advocacy, grassroots organizing, and strategic communications.

Part One of this post summarised the global developments in climate litigation and the climate justice and liability movements since 2018. Part Two turns its focus to developments in Australia, which has had second-most climate cases globally (more than 90 according to the Sabin Center for Climate Change Law). In continuing to recognise that climate change litigation is situated within and a conscious strategic choice of social movements, this Part first considers developments in the Australian climate movement before focusing on litigation.

The two major trends in the global climate movement discussed in Part One are mirrored in Australia. The degree of public outcry––first as part of the globally-coordinated Friday climate strikes and then in the protests responding to the inadequacy of the government response to the summer 2019-2020 bushfires––is arguably unprecedented in the recent history of Australian environmentalism. Indeed, to describe these protests in terms of “environmentalism” seems somewhat antiquated. Reflecting the “rights-turn” in climate litigation, the public discourse around the bushfires increasingly has focused on its human dimensions rather than its ecological dimensions (to the extent that these can be treated as separate concepts, and not to discount the incredible ecological damage wrought by the fires). The momentum and public pressure created by these protest waves has been smothered in recent months––first by the torrential rains that both extinguished the fires and compounded their ecological impact, and then by coronavirus-mandated social distancing that prevents mass protest (although climate activists are innovating here, too)––but is poised to re-emerge post-pandemic and in the wake of future climate disasters. A nascent green new deal discourse is also taking hold in Australia, advanced at the parliamentary level by new Greens leader Adam Bandt and at the grassroots by groups such as the Climate Justice Collective.

Australia, too, is seeing several major developments in the climate litigation landscape. To begin with, I was perhaps too dismissive of the ongoing potential of conventional administrative litigation. The Rocky Hill case is a landmark judgment, and a stroke of strategic genius insofar as it arose out of a targeted community intervention in a merits hearing, in circumstances where the original decision-maker had recommended denying the environmental approval. But even this significant victory has its caveats. Despite influencing a number of successive judgments and administrative decisions, the precedent set in the Rocky Hill Case regrettably has not been any less vulnerable to the same kind of political intervention and legislative override at the behest of the fossil fuel industry that plagued earlier legal victories in Australia. Additionally, I would argue that, to the extent that the success of the Rocky Hill litigation has resonated with the public more profoundly than previous legal actions, this is arguably because the central legal argument in the case does not concern more esoteric environmental considerations or matters of administrative procedure, but instead echoes the “keep it in the ground” discourse contained within the broader movement. 

The potential for ongoing political meddling notwithstanding, an approach focusing on the destructive climate impact of Australia’s fossil fuel exports is perhaps indicative of the direction that conventional administrative climate change litigation will take in Australia. In my opinion, this is a welcome development. Australia’s greatest contribution to the global issue of climate change arguably is not in reducing its in-boundary emissions (although it is of course important that Australia be an early mover on mitigation, energy system transformation and renewable energy development, and shift to being a constructive and non-obstructionist actor in international negotiations) but in keeping its vast coal and gas reserves undeveloped.

Beyond the Rocky Hill Litigation, we are also seeing new approaches being developed and tested in Australia. A clear example of this is the McVeigh litigation testing the duties of Superannuation fund managers to consider climate-related risks to their investment portfolio. This case is slated for trial later this year. Another example is the petition to the UN Human Rights Committee on behalf of Torres Strait Islander representatives. Although the outcome of the petition process is not enforceable domestically, it is an important legal forum to assess the human rights implications of Australia’s conduct on climate change. A strong outcome from the Human Rights Committee may have positive political ramifications, and pave the way for future novel legal approaches under State-level human rights charters or a future Commonwealth charter of rights.

One further development worth mentioning briefly is the decision of each of the formerly state-based environmental defenders offices (EDOs) in Australia to merge into a single national organisation. It remains to be seen what kind of impact this will have in terms of promoting novel litigation approaches. It might be thought that such a move would further homogenise the sector and thereby limit the potential for pioneering litigators to emerge. However, to the extent that this merger allows a national EDO to attract more funding and apply its resources to key fossil fuel struggles without geographic limitation, this could allow the sector-leading EDO to overcome its previous resource constraints and increase the potential for more impactful litigation. That one of the first cases filed by the new EDO seeks to compel the NSW Environmental Protection Authority to regulate greenhouse gas emissions (an argument paralleling Massachusetts v. EPA), and puts the impacts to and stories of its clients front-and-centre, is cause for optimism.

Conclusion

Both globally and in Australia, the climate justice and liability movement has exploded in the last 24 months, and is as strong and vibrant as ever. In particular, we are seeing increasing synergies between the demands of climate change litigation and the broader movement. Many of these trends are catching on in Australia to greater and lesser extents. Nevertheless, we are still yet to see litigation in Australia that has the scope, ambition, framing and transformative potential of an Urgenda or Juliana. The trends covered in this post do suggest, however, that such a breakthrough may be near and that, as the culture outside the courtroom shifts, its prospects and strategic potential are greater now than at any point previously. Furthermore, if and when the climate movement succeeds in achieving its demands ––a rapid economic transformation and deep emission reduction at a scale proportionate to the scientific urgency of the climate crisis, while simultaneously creating jobs and revitalising the welfare state––the work of the legal community may then be needed to ensure that these policies and programs are not undermined by challenges from the fossil fuel industry, and are properly implemented and enforced.

Danny Noonan is a climate change advocate, scholar, and Australian-qualified lawyer. He is a co-founder and board member of Breach, a newly-established organisation that partners with frontline communities to advance climate justice through legal advocacy, grassroots organizing, and strategic communications.