CARBON CHRONICLES
Overhauling the carbon market The Labor Government intends to deliver on its promise to reduce carbon emissions by strengthening the Safeguard Mechanism which, to date, has failed to rein in emissions.
MENTION ‘SAFEGUARD MECHANISM’ to anyone outside
emissions – Australia’s efforts have so far been about as effective as the Titanic’s radar system. The Labor government is keenly aware of the mess it has inherited and needs to address if it is to meet its pledge to reduce emissions by 43 per cent by 2030 and reach net zero by 2050. The ALP put the wheels in motion in August with the release of the ‘Consultation on Safeguard Mechanism reform options’ to help industry reduce emissions in line with Australia’s climate targets. One of the elements of the reform is the introduction of ‘below the baseline crediting’. The consultation paper attracted 240 submissions (181 of which were published) by the due date of Sept 20. This was followed by the release in early October of the draft Safeguard Mechanism (Crediting) Amendment Bill 2022 which presents a new financial incentive “for the big polluters to make the changes they need to reach net zero emissions by 2050”. The draft legislation discusses the [limited] prospect of international credits, greater transparency in and accounting in emissions, and consistent frameworks for information. Consultation on the draft Safeguard Mechanism (Crediting) Amendment Bill 2022 closed in late October.
the renewables industry and you draw a glazed look, but those closer to the action have spent significant time critically assessing the process designed and put in place six years ago to reduce industrial emissions from major polluting facilities. The Safeguard Mechanism formed part of the Coalition’s somewhat disingenuous ‘Direct Action’ plan to replace the Gillard Government’s Carbon Price Mechanism designed to address climate change. Currently 215 or so facilities that each year are producing upwards of 100,000 tonnes of greenhouse gases are subject to the Safeguard Mechanism Time has proven the Safeguard Mechanism more spin than substance: rather than abating, emissions from heavy industry have been rising. During 2020-2021 the 215 facilities accounted for a sizeable 28% of Australia’s total emissions. Industrial emissions actually leapt 7% under the Safeguard Mechanism according to energy analyst RepuTex. Data compiled by the Clean Energy Regulator which sets the Safeguard Mechanism’s baseline emissions of Australia’s largest emitters (the reference point against which net-emissions levels are assessed, including facility operations and carbon credit units for abatement activities) reveals an increase from 131 million tonnes of carbon dioxide equivalent (CO2e) in 2016-17 to 137 Mt in 2020-21
Australian Carbon Credit Units
under the Safeguard Mechanism. The complementary Emissions Reduction Fund (ERF) established alongside the Safeguard Mechanism to purchase abatement in agriculture and land use, which we discuss in more detail in due course, likewise has a woeful scorecard. Despite a plethora of interlinked programs and policies accompanied by authoritative sounding acronyms that might otherwise convey positive action, determination and discipline to rein in
The success and environmental effectiveness of the Safeguard reforms depends largely on the integrity of domestic ACCUs for greenhouse gas abatement activities undertaken as part of the Emissions Reduction Fund, and which represent one tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. The veracity of ACCUs is likewise under the microscope in a review headed by Ian Chubb, former chief scientist and former vice-chancellor of ANU.
Can the ALP’s review of the Safeguard Mechanism reduce emissions covered by the Safeguard Mechanism by between 3.5% and 6% annually. Maybe
48 SUMMER 2022
