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Labor & Greens Deal on Safeguard Mechanism a bare start for climate action, far from perfect in meeting science or climate targets

March 28, 2023 at 11:30 pm John Englart Leave a comment

On Monday 27 March both the Climate minister Chris Bowen and Greens Leader Adam Bandt announced a deal had been reached on the Safeguard mechanism. The Liberals have completely dealt themselves out of all negotiations, even though the Safeguard mechanism was originally devised by Minister Greg Hunt as part of the Abbott Coalition Government.

The deal is far from perfect and does not match the science of no new fossil fuel projects, although it lets both the Labor Party and the Greens (and Teal independents) claim some success.

The originally proposed Safeguard mechanism proposal targeted the top 215 carbon polluters with a moving cap on emissions, a yearly emissions reduction of 4.9 percent, with polluters able to access Safeguard mechanism credits or Australian Carbon Credit Units (ACCUs) for up to 100 percent of their yearly emissions reduction commitment. Questions about the integrity of Carbon offsets was also debated, as well as the need for actual emissions reduction done at point of source.

The Safeguard Mechanism Deal

The Greens argue they achieved as part of the negotiations:

• A hard cap or ceiling on actual or absolute (gross) emissions, which won’t be able to exceed current pollution levels (140 MT per annum), and there will be a decreasing cap over time. Pollution will actually now go down, not up, and the coal and gas corporations can’t buy their way out of it with offsets. This puts a limit on coal and gas expansion in Australia. Actual pollution from safeguard entities was forecast to rise under Labor’s original safeguard, from about 140MT now to between 155-184MT in 2030.
• A pollution trigger in the Safeguard Mechanism Bill that will require the Climate Change Minister to test a new or expanded project’s impact on the hard cap and net carbon Budgets. If the assessment finds that the project would contribute to exceeding the cap or Budget, the Minister must consult and recalibrate the rules (such as by limiting ACCUs, reducing the value of ACCUs or adjusting the decline rates of baselines) or impose conditions on new entrants. Using these wide-ranging powers, the Minister could set baselines at zero and ACCU allowance at zero, effectively stopping a project from proceeding. The Minister’s action or lack of action would be subject to legal enforcement. Approvals under the EPBC and advice from the Climate Change Authority would trigger the assessment as would assessment of emissions data and forecasts.
• All Scope 1 emissions from the Beetaloo gas project will have to be net-zero with Scope 2 and 3 emissions referred to the Ministerial Energy Council. This will be a significant financial barrier in the way of the project proceeding.
• All new gas fields for LNG export will need to be net zero CO2 from day one.
• The agreement will significantly improve the integrity of ACCUs with a freeze on the most dubious offset class (Human Induced Regeneration) until they are subject to an independent audit. 
• The Bill will include a requirement for incentives for onsite abatement and to ensure facilities are encouraged to actually cut pollution.
• Corporations will be required to justify their use of offsets if they use offsets for more than 30% of their baseline.
• A review by the CCA in 2026-27 will look at the use of offsets and implementing measures to restrict their use if on-site abatement isn’t occurring to satisfactory levels.
• The Powering the Regions fund will not be used to fund coal or gas projects. 
• The grant funding power the Liberal government used to subsidise fossil fuel projects will be changed in the Act to prevent funding for extracting coal and gas.
• Increased methane monitoring, leading to greater coal and gas emissions reductions.
• A Climate Change Authority-led sectoral emission reduction plans to make it harder for coal and gas projects to get financed and to support the litigation of greenwashing.
• For the first time the Act will require reporting of all types of gases and offset generation use creating greater transparency and pressure on corporations to do more.

Leader of the Australian Greens Adam Bandt media conference saying that for the first time there will be an absolute limit on emissions by the top carbon polluters, and for the first time a pollution trigger to put restrictions on existing or new projects that exceed the cap.

Climate Minister Chris Bowen claims the negotiations had “Extensive industry and public consultation and constructive discussions with the Australian Greens and crossbench have delivered a strengthened design that bolsters the scheme for the economy and the climate.”

An attachment to the Climate Minister’s statement lists key reforms negotiated:

Providing flexibility and additional support for industry

1.       Targeted funding: At least $1 billion in funding for the manufacturing sector and trade-exposed industries through the Powering the Regions Fund, including:
a.       A targeted $400m for industries providing critical inputs to clean energy industries (incl. steel, cement/lime, aluminium/alumina), in addition to both the $600m Safeguard Transformation Stream, and other funding pools (NRF, CEFC, ARENA)
b.      This funding will be focussed on decarbonisation, rather than expansion of fossil fuels

2.       Specific treatment for hard-to-abate, value-added manufacturing including:
a.       Inclusion of a different threshold for manufacturers to qualify for a discount on their decline rate, which reflects the particular characteristics of this sector as a value-adding industry.
b.      Reduce the minimum annual baseline decline rate for manufacturers that meet the new threshold to 1 per cent.

3.       Address risks of carbon leakage
a.       The Government will commission a review to examine the feasibility of an Australian carbon border adjustment mechanism (CBAM). The review will give particular consideration to a CBAM for the steel and cement sectors (including clinker and lime production).
 
Ensuring accountability, transparency, and integrity

1.       Accountability – making sure that the policy intent – driving down emissions over time, is met through:
a.       Ensuring the scheme delivers a proportional share of the national 2030 target (205 million tonnes by 2030). Updates to the National Greenhouse and Energy Reporting Act 2007 (NGER Act) will clarify that:
i.      the policy intent is for aggregate emissions to go down over time –through measurement of a rolling average, and
ii.      to not exceed the conservatively estimated 1,233 million tonnes of CO2-e to 2030, or 100 million tonnes in 2030.

b.       New facilities will have their baseline set at international best practice, adapted for the Australian context
                                         i.      As proposed in the original design, new entrants will need to meet international best practice to ensure emissions decline over time, and manufacturers in particular are not disadvantaged from additional carbon constraints caused by new entrants.

–          New gas fields supplying existing liquefied natural gas facilities will be treated as new facilities so that they are given international best practice baselines for the carbon dioxide in their new fields. For these fields’ reservoir CO2 emissions, best practice is zero given the existence of low-CO2 fields and opportunities for carbon capture and storage.

–          Beetaloo – In relation to the Beetaloo basin, all new gas entrants in the basin will be required to have net zero scope 1 emissions from entry, consistent with the then-Commonwealth Government’s April 2022 commitment to “work with the [Northern] Territory to support its implementation of recommendation 9.8 of the [Hydraulic Fracturing Inquiry] using available technology and policies”.

c.       The Government is already obligated to report on progress against climate reforms, however we will strengthen transparency and accountability by ensuring the following in full:
i.      As part of the Annual Climate Change Statement, the Climate Change Authority (CCA) must report on progress against emissions reduction goals, with specific reference to new entrants and expansions in the preceding and following year.
ii.      In response to the Samuel Review, the Government has committed to “require reporting of Scope 1 and 2 emissions and related management actions over the life of the project”. EPBC approvals of new projects that are expected to enter the Safeguard Mechanism will cause an assessment by the Government of that project’s reported emissions against the Objects above.
iii.      The Minister would need to act where the Secretary of the Department, based upon emissions information including from the Clean Energy Regulator and EPBC approvals, considers changes to the Rules may be needed to meet the Objects.

2. If any of these tests find that Safeguard emissions have or will breach the Objects, and that this is not due to temporary factors, the Bill will require the Minister to consult and amend the Rules, or take other policy actions to ensure the Objects are met.

3.       Transparency – ensuring information relevant to the scheme is made available to the Minister and the public
a.       While no limits will be placed on ACCU use to ensure flexibility for industry, where companies are using over 30% offsets to meet their requirements, they’ll explain to the regulator their choice for doing that (e.g., cost, technology availability etc.)
b.       Improve methane reporting
i.      Require methane and nitrous oxide emissions to be publicly reported
                                      ii.      Ask the CCA review to include a look at updating methane measurement, verification and reporting and implement any improvements by 1 July 2024 where practicable.

4.       Integrity – making sure emissions reduction under the scheme is real
a.       Chubb Review implementation – continue with implementation of the Chubb Review to ensure integrity in the carbon market. Consistent with recommendation 8, ensure that new HIR method projects can only be credited when they comply with the entirety of recommendation 8.

Prime Minister Anthony Albanese announces the deal with the Greens and Crossbenches on the Safeguard mechanism.

Solutions for Climate (CANA) response

Solutions for Climate, Australia, an advocacy arm of Climate Action network Australia issued a media statement saying:

Dr Barry Traill, director of Solutions for Climate Australia said: “For decades, we have known that climate pollution from coal and gas needs to be slashed. It is a historic milestone that the Australian Parliament – Labor, the Greens, the Teal Independents – has worked together to create something better for our climate. 

“We need to drive down climate emissions urgently and this sets us on that path.

Solutions for Climate Australia said the Federal opposition has missed an opportunity to play a constructive role on climate policy by deciding to abstain from the Safeguard Mechanism negotiation:

“It’s worth highlighting that Peter Dutton and his Liberal and National colleagues have missed a huge opportunity by vacating the field on Safeguard Mechanism reform. They’re being left behind while the momentum to move Australia on climate policy moves forward.

“Business groups will now have greater certainty as the economy moves ahead with decarbonisation.”

Solutions for Climate Australia said the litmus test for climate policy is whether or not it delivers real emissions reductions this decade. More work will be needed to deliver the deep emissions cuts needed to meet the Paris goal of limiting global warming to 1.5°C. 

“It’s good to see that new coal and gas facilities will have obstacles to their development put in place, further eroding their relevance in the new global clean tech boom. And the myth from industry that offsets like tree planting can replace coal and gas pollution has been eroded too, and polluters will need to justify the use of offsets for more than 30% of their baseline.”

The agreement between Labor and the Greens comes after a strong community campaign calling on Australia’s fossil fuel polluters to slash their emissions, and for the Albanese Government to protect the community’s well being over polluter profits.

Leigh Ewbank, climate outreach manager for Solutions for Climate Australia said he knows of 47 meetings between community groups and Federal Parliamentarians about the Safeguard Mechanism. 

“The community has been loud and clear throughout the Safeguard Mechanism debate: it’s past time that the big fossil fuel polluters start pulling their weight when it comes to cutting emissions.

“The deal between Labor and the Greens is recognition of the deep reservoir of community support for substantial cuts in climate pollution this decade.”

“Communities across the country will keep fighting to stop pollution from coal and gas, and for national climate policies that align with the global goal to limit warming to  1.5°c.”

Discepancy in Climate Minister’s statement on Beetaloo

Australia Institute Director of Climate and Energy Polly Hemming highlighted in a tweet thread that under the NT Fracking Inquiry (9.8) Beetaloo Gas Scope 1, 2 and 3 emissions needed to be net zero.

“Minister @Bowenchris has said that scope 1 emissions from the Beetaloo Basin will have to be net zero in line with Recommendation of 9.8 of the NT fracking inquiry. Actually the inquiry recommended that LIFECYCLE emissions be net zero. That is Scope 1, 2 and 3. #climate #auspol”

“This was always the requirement of Beetaloo being allowed to proceed. The NT Gov accepted the terms of the Inquiry without having the support of the federal govt (which, to be clear, was always very happy for the fracking to happen, it just didn’t want to to agree to this req)”

“The NT Govt *could* perhaps have been subject to some sort of legal intervention that *may* have held up/stopped fracking in the Beetaloo b/c it was proceeding with fracking without being able to meet its commitments to implement the recommendations of the Inquiry.”

“Now what has happened is that the fed govt has essentially given regulatory cover & social licence to fracking in the NT. It’s being allowed unequivocally to proceed – still not adopting the full 9.8 requirement – but is also able to frame it as a ‘win’ for climate.”

Climate Council Response

A significantly strengthened Safeguard Mechanism will drive down emissions from Australia’s 215 biggest industrial polluters, and make it more difficult for new coal and gas projects to be approved.

Amanda McKenzie, Climate Council CEO said: “This will be the Federal Parliament’s first reform to genuinely cut pollution in a decade. 

“Almost one year ago, Australians sent a clear message at the polls that they wanted our Parliament to act on climate change. Today, they are getting on with it. This will mean more clean, renewable power, and less pollution. Finally, as a nation, Australia is starting to tackle the climate crisis.

“The Climate Council has been meeting with politicians across the Parliament to provide reliable, evidence-based information in advocating for a strengthened Safeguard Mechanism that will result in genuine emissions reductions. We welcome some of our suggestions being picked up, and included. This proves how important and powerful a community-funded and independent climate organisation can be.

“Today’s agreement is a massive wake up call to any board or business executive who thinks they can keep stalling genuine climate action. The era of climate gridlock in Australia is over and the only viable path for any business is genuine, deep cuts to carbon pollution this decade.”

The agreed Safeguard Mechanism reform package incorporates key improvements the Climate Council has advocated for, including: 

• Capping total emissions under the Safeguard Mechanism to ensure new and expanded fossil fuel projects can’t blow this carbon budget out and drive up national emissions
• Making new gas facilities accountable for their onsite emissions from day one, so they are not forcing other future-focused industries to make even deeper cuts to their emissions 
• Subjecting any new project that would add significantly to emissions under the Safeguard Mechanism to a rigorous assessment and acting on the findings of this
• Ensuring public funding through the Powering the Regions Fund is not directed to coal and gas projects and only supports future-focused industries.       
• Sending a clear signal that big polluters should genuinely cut their emissions, not just rely on offsets to account for their pollution  

“We thank and recognise every Parliamentarian who put Australians first in negotiating in good faith and will be passing laws that finally start to regulate the biggest polluters,” Ms McKenzie added. 

Once a stronger Safeguard Mechanism has passed both houses of Parliament, and with the law due to kick in from 1 July this year, the focus will now shift to improving other important national climate policies.

“The Safeguard Mechanism is just one weapon in the war to drive down Australia’s emissions. We need to throw the whole arsenal at tackling harmful climate change,” Climate Council Head of Advocacy Dr Jennifer Rayner said.  

The Climate Council said that Strengthening the Safeguard Mechanism is an important step forward on climate action for Australia. But they also emphasised the need to build on this momentum to drive even deeper cuts to emissions. They highlighted that to avoid the worst impacts of harmful climate change, Australia should be working to cut our emissions by 75 percent by 2030, and reach net zero by 2035, and also end the development of new coal and gas projects, and start a managed phase out of existing fossil fuels.

“To be clear: we know, of course, that this policy still isn’t in line with what climate scientists say is necessary to avoid dangerous global warming. We still have big fights ahead of us when it comes to stopping new fossil fuel projects and making the rapid economy-wide emissions cuts required.”

Richard Dennis (Australia Institute) on the Hard Emissions Cap

Some hard choices for the government with a Hard emissions cap that will constrain the number of new fossil fuel projects. The Safeguard mechanism doesn’t apply to about 75% of the economy, including many relatively easy to abate sectors, argues Richard Dennis.

What the Safeguard mechanism was like before the deal

The Juice Media researched and presented a video on the proposed Safeguard Mechanism in February 2023. It needed a lot of improvement. It was like Rudd Labor’s CPRS that handed out too many free credits.

On a more serious level, here are Richard Denniss & Polly Hemming before the Senate Committee Hearing in early February 2023:

References

• Greens Media statement, 27 March, 2023, https://greens.org.au/news/media-release/greens-secure-hit-coal-and-gas-safeguard-deal
• Climate Minister Media Statement, 27 March 2023, https://minister.dcceew.gov.au/bowen/media-releases/safeguard-mechanism-one-step-closer-parliamentary-passage
• Climate Council Response, 27 March 2023, https://www.climatecouncil.org.au/resources/safeguard-mechanism-win-big-polluters-on-notice-australias-era-of-climate-gridlock-ends/
• Polly Hemming on Beetaloo Gas Tweet Thread, 27 March 2023, https://twitter.com/pollyjhemming/status/1640188623135064066

Entry filed under: climate change info, Labors Climate Record, news. Tags: Australian Greens, climate policy, Labor, Safeguard Mechanism, SafeguardOurClimate.