Labor have secured the support they need from the Greens to pass their key climate change mitigation legislation in an effort to bring emissions down by 43% by 2030.
The ‘safeguard mechanism’, as it’s known, has caused a ruckus over the past few months, with industry saying it will kill gas and coal jobs in the country and activists saying it doesn’t go far enough and could, in fact, allow emissions to rise.
The safeguard mechanism is the government’s centrepiece climate change policy that will require the country’s 215 largest greenhouse gas emitters to keep their emissions below a baseline which will then be lowered over time.
Legislation to impose the emissions limit is currently being debated in Parliament. However, it has split the Labor Party and moved the Greens to make demands of the government in exchange for their support.
Energy Minister Chris Bowen has said the opportunity to cut emissions is now or never, warning his party, and the Greens, not to “squander” their chances.
“The opportunity before the parliament over the coming weeks is either to seize the opportunity to reduce emissions by 205 million tonnes or to squander it,” Bowen told ABC Breakfast Radio.
“The choice for the parliament is: Do you want business as usual — which is seeing emissions from these facilities go up, existing and new — or do you want a constraint in place [that] will see emissions go down?”
The recent and final IPCC report warned that the world needs to take immediate and drastic action on emissions, halting the development of any new fossil fuel projects. However, the Labor government have said that their plan “accounts” for new coal and gas facilities, suggesting that they will greenlight more of them in the future.
Numerous high-level climate analysis organisations have such actions are “incompatible” with the 1.5C target of warming that the Paris Agreement — of which Australia is a signatory — is trying to keep the planet under.
So, what is all of this about and will it soon become law? Here’s what you need to know.
The Safeguard Mechanism Bill
The safeguard mechanism works by requiring any site that emits more than 100,000 tonnes of carbon dioxide each year to cut its emissions by 4.9% each year. At least, that’s what Labor is hoping for.
There are 215 sites that do this in Australia, half of which are fossil fuel operations while the others are industrial operations, big transport companies, and airlines. Collectively, they make up 28% of Australia’s total carbon emissions.
Now, Australia already has a safeguard mechanism in place. It was built by the Coalition under Tony Abbott in 2013 to replace the carbon pricing scheme that required industries to pay for their emissions. The Abbott scheme gave these polluters a baseline emissions limit, but it was virtually unenforced and many companies were allowed to increase their limit. Emissions subsequently rose dramatically.
Labor, fearing opening old wounds on carbon pricing, has decided to revamp the system in place. In addition to the new reduction requirements, the plan would allow businesses to offset their emissions by as much as 100% which is where the trouble comes in. More on this in a moment.
In addition, Labor wants to introduce “safeguard crediting” that would allow companies who have reduced their emissions to sell credits to companies that haven’t. This was a policy floated under Scott Morrison that Labor picked up. The Coalition has since said that they won’t support it.
What’s the Issue With the Safeguard Mechanism?
The Greens took issue with the proposal and said that they will only support the policy if the government rule out any new coal or gas projects. Under the system Labor propose, the door could be opened to more big fossil fuel projects, as long as they offset their emissions.
Offsetting is controversial as it’s not typically well regulated and gives companies an excuse to look like they’re doing something when they’ve in fact changed nothing about the way they operate. Often, offsetting comes in the form of tree planting to soak up all the carbon emitted by a business, but that idea relies on those trees reaching maturity and not, you know, burning down in a catastrophic bushfire. There are many flaws with the concept.
The Australian Conservation Foundation (ACF), which commissioned a report into Labor’s safeguard mechanism, said that offsets were likely necessary but that “they should be a last resort and they are very risky.”
“They are no replacement for genuine emissions reduction on the ground,” the ACF has said.
“We will put aside our concerns with the government’s legislation, pass it, give the scheme a chance to get running — but we have to deal with this question of coal and gas because you can’t put the fire out while you are pouring petrol on it,” Greens Leader Adam Bandt told 7:30.
What they want to see is a tightening of environmental planning laws that would take into consideration the carbon emissions of all new projects. This “climate trigger” policy is something that Labor has previously rejected.
The Climate Council has said that the safeguard mechanism could work if it is properly enforced and if crediting is allowed only after companies have demonstrated how they are trying to cut their emissions.
Otherwise, “it will continue to be cheaper and easier to account for emissions by buying offsets than to make genuine cuts by investing in process and technology changes,” they write, noting that the cost of complying could simply be bought for less than 0.1% of the profits made by large mining and gas companies.
Opening New Coal and Gas Projects
Bowen has rejected the Greens’ counter-offer of ruling out new coal and gas projects. There are currently 114 new coal and gas projects in the pipeline in Australia, something that, if completed, would create 1,331 million tonnes of carbon dioxide each year, more than double the country’s current emissions.
The government has said that any new coal or gas project would have to fit within the total emissions allowed under the new safeguard mechanism scheme. That cap is set at 1,233 million tonnes of carbon dioxide per year by 2030 for all 215 of these big polluters and any new projects.
Last year, Labor legislated a target of cutting emissions by 205 million tonnes by 2030. The safeguard mechanism, Bowen says, will deliver on that and more.
“The scheme has an additional buffer of 17 million tonnes, which makes sure that even if there was higher than expected production and emissions from existing or new facilities, we can still ensure the scheme delivers the emissions reduction it’s designed to,” he said.
While there are 114 new projects waiting in the wings, it’s unlikely many of these will come to fruition. The government has said that it doesn’t want to interfere with the market, and investors are currently shying away from new fossil fuel developments.
Still, energy analyst RepuTex has released a report showing that the safeguard mechanism is cutting it very fine indeed.
“Even relatively small changes in the production of coal and gas risk higher emissions blowing the government’s proposed carbon budget for the Safeguard Mechanism,” the report states. That’s without new fossil fuel projects coming online.
The emission from just the already “well-advanced” projects in the pipeline would add 56.6 million tonnes of CO2 to the budget by 2030, well above the 17 million tonne “buffer” that Bowen has put in place.
That analysis, therefore, indicates that there is hardly any wiggle room, as the carbon cost of the government even “modestly” underestimating emissions produced would send us over the limit.
Adding more coal and gas projects is akin to trying to put out a fire while pouring petrol on it, Bandt has said.
“The best chance of stopping climate collapse and staying within even Labor’s weak targets is by listening to the International Energy Agency, the UN Secretary-General and the world’s scientists and not opening any new coal and gas mines,” he has said.
The Greens are saying that new coal and gas is not a “red line” for them and that they are negotiating in “good faith” with the government over the legislation. Labor will need their support if they are to get their bill through the Senate.
Safeguard Mechanism Reform
The Greens have since announced that they will now support the government’s bill, all but guaranteeing it will soon become law. In exchange for their votes in the Senate, the party say they have halved the number of viable new coal and gas projects, but they have not managed to shift Labor on not opening any new ones.
Still, they’ve styled it out as a win and said that they will keep pushing the government on the issue.
“With our significant amendments, the Greens will be voting to pass the Bill and will back the regulations but the fight against all new coal and gas continues,” Bandt said.
“Coal and gas have taken a huge hit. The Greens have stopped many of the 116 new coal and gas projects in the pipeline from going ahead, pollution will actually go down, and we’ve derailed the Beetaloo and Barossa gas fields”.
The concessions they’ve won are not insignificant. Under the original plan, emissions were designed to rise slightly before coming down. The Greens have secured a “hard cap” on those emissions, which cannot be offset.
They have also introduced a “pollution trigger,” which will require new projects to be tested against their impact on the carbon budget and rejected if they significantly affect it.
A range of restrictions have also been placed on the financing of new fossil fuel projects, the use of offsets.
However, the bill, in its current form, still does not offer deep enough reductions to keep Australia in line with its 1.5C warming target.
The updated safeguard mechanism will come into effect on July 1 of this year.
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