The nation’s 215 biggest emitters will be required to reduce their emissions by 4.9% each year until 2030 under proposed reforms to the safeguard mechanism by the Albanese government.
The plan is expected to shave 205 million tonnes of Australian emissions by the end of the decade, just shy of 30% of the nation’s total output.
The figures align with the 28% contribution these companies collectively make to Australia’s emissions. It’s expected to put Australia on track to meet the government’s 43% emissions reduction target by the end of the decade, but experts warn that an over-reliance on offsets and variabilities built into the scheme — including an open-door policy for new emitters — makes these numbers look flimsy. There are 114 coal and gas projects seeking approval in Australia.
“If you are serious about achieving it, then not only the government but existing polluters should be determined to keep new polluters out,” executive director of the Australian Institute Richard Denniss told Crikey.
“More polluters means more demand for offsets and that’s going to make the abatement task more expensive for incumbents.”
The safeguard mechanism was set up by the Abbott government in 2016 to counter companies contributing an excess of 100,000 tonnes of greenhouse gas emissions a year. The scheme operates exclusively on size and was intended to cap carbon outputs by building in an “emissions baseline”. In short: keep your outputs below the baseline.
Under successive Coalition governments, the baseline was set high enough that safeguard facilities could largely sidestep emissions reduction. The Albanese government has put forward plans to gradually lower this baseline in line with the staged decarbonisation of dirty industry.
The system is designed to give industry time to adjust but concessions for facilities deemed internationally significant for trade (formally deemed “trade-exposed”) as well as other market ebbs and flows could see the baseline fall slower than expected or even jump up.
Denniss said the scheme’s fixation with size rather than emissions make-up would also have an impact on Australia’s ability to meet its 2030 obligations under the Paris climate accord.
“The safeguard facilities were selected because of their size not because of the reasons they generate so many emissions,” he said. “It’s much easier for some big polluters to change their technologies and change their energy mix than it is for others.”
The government has set aside $600 million from the Powering the Regions Fund to help “exposed” facilities adopt and implement emissions reductions pathways, but Denniss said none of this money extended to non-safeguard industries like the cattle industry that genuinely cannot decarbonise with current available technology.
“Because only the biggest polluters are covered we have no idea what’s going to drive emissions reduction in the rest of the economy where most people work,” he said.
Jennifer Rayner, head of advocacy at the Climate Council, said safeguard facilities getting a helping hand from the government and taxpayer pocket were those best resourced to transition.
“These big emitters are some of the biggest and well placed to shoulder change. They’re not your small-scale mum-and-dad businesses,” she said, adding that the ability to lean into carbon credits to keep emissions below the baseline would further stall action.
There is no cap on the number of credits companies can buy to ensure they stay beneath the baseline. The role of offsets in emissions reduction follows the release of the government’s Chubb review on Monday, which looked into the legitimacy of the carbon credit scheme established under the Gillard government.
“There is a role for offsets, but they’re meant to be used as a last resort, that last little share of emissions that can’t be reduced,” Rayner said. “Too many companies are using it as their first and only resource.”
Climate Change and Energy Minister Chris Bowen said yesterday that “70% of facilities, representing over 80% of scheme emissions” already have corporate commitments to net zero by 2050 and the scheme is merely a mechanism — albeit “ambitious” — to provide a “predictable” pathway for them to get there.
Denniss argued that for that to be true it required a rule-out of low integrity offsets, a percentage limit on how heavily companies could rely on these offsets, and the exclusion of new entrants into the scheme.
“Alternatively, you require new entrants to offset 100% of their emissions from day one,” he said.
