After years of debate and political instability surrounding climate change, Australia's controversial carbon scheme finally got the go ahead this month, creating plenty of work for lawyers as they help businesses comply. Briana Everett reports

Although Opposition Leader Tony Abbott made a theatrical "pledge in blood" to repeal the Gillard Government's carbon legislation on 12 October, climate change lawyers and their clients will now be quickly preparing for the reality of a July 2012 deadline.

Following years of robust political debate, the Gillard Government's version of a carbon pricing scheme was finally passed through the lower house of Parliament on 12 October and is set to pass through the Senate in November.

As a result, Australian businesses now have no choice but to get themselves prepared for the commencement of the scheme in just eight months.

"There has been this underlying sentiment which is, 'I'll believe it when I see it', because so many businesses prepared on previous occasions for different incarnations, like the carbon pollution reduction scheme (CPRS), put time and money into it, recruited people and that sort of thing, only to see those things fall over at the last minute," said Norton Rose global head of climate change and carbon finance, Anthony Hobley.

"I think many people couldn't believe it was going to happen this time so a lot of people have put off trying to understand (the scheme) and prepare for it. Now, although many businesses prepared for the previous versions, there are some key differences ... They have no choice [but to prepare]."

An "Abbott proof" scheme

Abbott's dramatic pledge to repeal the legislation should he become Prime Minister would be problematic.

If elected, Abbott will more than likely need a double-dissolution to effectively wipe away the Gillard Government's scheme - an event which most say is not probable.

For Allens Arthur Robinson lawyer Fergus Green, the time, money and e­ffort it would actually take to repeal the legislation makes it an unlikely event and one not worth worrying about at this stage.

"I don't think it's a really big issue because there are so many 'ifs' along the way. It creates a bit of a shadow of uncertainty over the whole thing but I think only a small one," said Green.

Recognising that a number of clients will understandably be concerned about the possibility of its repeal and whether the legislation is "Abbott proof", Hobley said aside from being a particularly difficult task, repealing the legislation would also have significant practical implications.

"To water it down ... they would have to amend the legislation which means they would have to get the Senate to vote to do that. And, of course, the Senate is controlled for the next five-plus years by the Greens. One would not expect them to vote to repeal it, which means they're into double-dissolution territory," he said.

"They've either got to find other ways to (provide funding) or they've got to withdraw the tax benefits, the rise in the tax-free threshold, some of the pension benefits, all the help for the low-income households ... They'll have to take away the $15 billion in support of renewable energy and clean technology. I think, critically, that would plunge businesses back into the realm of uncertainty."

The preparation begins

With relatively little time before the scheme's commencement, climate change lawyers must now help their clients understand the new legislation and how it will impact upon their businesses.

According to Hobley, clients will need to appreciate how their existing contracts will be a­ffected, how liability will flow through the contractual supply chain and what they should be doing now to upgrade their contracts.

In some cases, preparing clients and advising them with respect to their liability under the scheme will be relatively straight forward, but as Green noted, some of the legislation's provisions are particularly complex.

"We will be helping clients understand who will be liable for which emissions and from which facilities. In some cases that will be simple, but in other cases there are complicating factors, for example, with joint ventures or in the case of natural gas," explained Green. "There are issues around transferring liability among corporate groups and some issues about identifying who will be liable, the extent to which there are options to transfer that liability, and how best to structure that."

Before July next year, Green said his team will also be helping clients in relation to their existing contracts, including considerations around the extent to which carbon costs can be passed through to their customers.

"There will be a lot of examining contracts and, where necessary, drafting or renegotiating contracts, drafting specific carbon pass-through clauses that are tailored to the Clean Energy Act and to their specific circumstances," he said.

Green added that clients will need advice in relation to industry assistance under the scheme. "There are a number of industry assistance packages ... Some companies will need advice in structuring their applications for that assistance and / or advice as to whether they're eligible and what the quantum is likely to be," he said. "That is unlikely to happen immediately, but further down the track."

Hard work for little gain?

While the carbon scheme will create more work for climate change lawyers as they prepare their clients for the 1 July 2012 start date, Green said the Gillard Government's carbon scheme is not going to give Australia a "clean energy future" on its own.

"It's a necessary and significant step but it's a very, very small step. I think the target is weak, the price will be low," he said. "It will help reduce our emissions by some amount but it's not going to give us a clean energy future."

But for Hobley, Australia's carbon legislation, which has been "broadly welcomed overseas", is a win for the country's renewable energy sector and will give emerging hubs like Singapore, Beijing and Tokyo a "real run for their money" in terms of the green economy.

"There is a lot of interest from financial institutions in the renewable and clean energy market in Australia," he said. "This package will make Australia very attractive as a market for them to invest in renewable energy projects and clean technology."

For Baker & McKenzie partner Martijn Wilder, the scheme is "a well-balanced package that will reduce emissions and start Australia on a path to a reduction in national levels of GHG emissions".

Discussing the reaction of his colleagues, Wilder said: "[We] see this as an important evolution of the global carbon markets and the implementation of what has been many, many years of policy debate in Australia."