The independent senator David Pocock has urged the Albanese government to quickly implement all recommendations from a review of Australia’s carbon credit system, given that it wants to introduce a climate policy that relies heavily on offsets.
Pocock’s is a key vote if the government is to introduce a planned revamp of the safeguard mechanism, a scheme that is meant to reduce carbon pollution from 215 big polluting industrial and resources sites.
The Canberra senator said he wanted to see the 16 recommendations of the former chief scientist Prof Ian Chubb’s review of the system acted on “as soon as possible” given that the government hopes to start the rebooted safeguard mechanism on 1 July.
After years of the safeguard failing to cut pollution, Labor wants to change it so that most heavily emitting sites have to cut emissions intensity by 4.9% a year. Companies could meet targets by making cuts onsite or buying offsets, including Australian carbon credits.
The safeguard mechanism was introduced by the Coalition in 2016. It was promised to put a limit on greenhouse gas emissions from about 200 major industrial facilities.
It applies to facilities that emit more than 100,000 tonnes of carbon dioxide equivalent a year. Each facility is set an emissions limit, known as a baseline.
The Coalition said companies that emitted above their baseline would have to buy carbon offsets or pay a penalty. In practice, facilities were allowed to change their baselines, few were penalised and industrial emissions continued to increase.
Labor plans to revamp the scheme.
It would set new baselines based on emissions intensity – how much a facility releases per unit of production. Baselines will be reduced by 4.9% a year.
Companies could choose whether to make onsite emissions cuts or buy Australian carbon credit units.
New polluting facilities, including gas and coalmines, could open and would be set baselines at “international best practice”.
Companies that emit less pollution than their baseline allows would be awarded a new type of “safeguard credit”. These within-scheme credits could be sold to other polluting facilities that emit more than their baseline and need offsets.
Labor wants the changes to start on 1 July 2023.
Pocock said the “huge reliance” on carbon credits in the safeguard meant there would be doubts about it if it were introduced before Chubb’s recommendations. “This stuff needs to happen as soon as possible,” he said.
Chubb said he agreed his recommendations were urgent. “I agree with the basic point he makes that they should do it quickly,” he said.
A Senate inquiry into the safeguard mechanism changes this week was told department officials had drafted legislation to allow more information about carbon credit projects to be released – a key recommendation of the Chubb review – and it was up to government when it would be introduced.
Other Chubb review recommendations that are yet to be implemented include the creation of a new independent body – a carbon abatement integrity committee – with powers to ensure carbon credit methods provide genuine emissions cuts.
The review said steps should be taken to ensure the most common method used to create carbon credits – “human-induced regeneration” of scrubby forest in outback mulga country – was administered in line with its “current intent”. It would mean all projects could be reasonably expected to become native forest and permanently store carbon “as a direct result of project management actions” – that is, that the forests would not just have grown anyway.
It said no future credits should be issued for any forest regeneration project until it was established that the criteria were being met.
A spokesperson for the minister for climate change, Chris Bowen, said he had already introduced some of Chubb’s recommendations. These included removing responsibility for the development of carbon credit methods from the Clean Energy Regulator – they have been given to the climate change department until the carbon abatement integrity committee is established – and revoking the “avoided deforestation” method, which awards credits to New South Wales landholders for not bulldozing trees if they have a permit that would allow them to clear them.
“The Albanese government is acting to implement the review as quickly as possible and is developing an implementation plan for each of the recommendations which will be published,” the spokesperson said.
On the negotiations over the changes to the safeguard mechanism, Pocock said he did not have a “whole bunch of red lines” that would lead to him blocking the scheme but finding common ground was a “big challenge that’s going to have to be worked through over coming weeks”. “I want to make it better,” he said.
He said Australia would be in a unique position compared with other countries if it did not put some sort of limit on credit use, and he supported the idea of a “hierarchy of mitigation” that required emissions to be avoided or cut onsite before offsets were used.
Pocock said a problem with the safeguard mechanism was that it “lumped together” existing and proposed fossil fuel developments with industries “we desperately need and are here for the long haul”, such as steelmaking, alumina processing and cement production. Emissions from the second group were “genuinely hard to abate” and there was “absolutely a role for offsets” in helping them reduce atmospheric CO2, he said.
But he said sequestering emissions in the land was not the same, or as effective, as preventing emissions from fossil fuels at the source.
He supported steps that would require coal and gas mines and production sites to cut potent methane emissions, which trap more heat than CO2. The International Energy Agency has suggested methane leakage from fossil fuel production is 63% higher in Australia than government and company estimates but that a 75% cut was possible using affordable technology.
The government needs support from the Greens and at least two crossbench senators to pass its safeguard mechanism changes.
