The Albanese government has agreed to the Greens’ demands to ban the national reconstruction fund from direct investment in coal, gas and native logging projects.
The deal secured the passage of the NRF bill through the lower house on Thursday and gives Labor a likely pathway to pass it in the Senate with the support of the Greens and crossbench in late March.
The breakthrough on the NRF could also help pave the way for a deal on the safeguards bill, with Greens leader Adam Bandt suggesting parliament had accepted fossil fuels must be treated differently, a principle which could also be applied through a limit on their use of carbon credits.
The NRF bill establishes an off-budget $15bn investment fund to support manufacturing and emerging industries.
The bill was opposed by the Coalition, which has labelled it a slush fund and argued that large-scale investment might be inflationary, forcing Labor to deal with the Greens.
The passage in the NRF bill in the lower house comes as Labor and Greens are still deadlocked on the safeguard mechanism bill requiring big emitters to reduce emissions intensity by 4.9% a year, with the Greens calling for a ban on new coal and gas projects and Labor insisting it has a mandate to reject a condition it says would reduce supply of gas as a transition fuel.
Bandt and industry spokesperson, senator Penny Allman-Payne, announced that its amendments, supported by the government, would prevent the NRF “directly financing the extraction of coal or natural gas”, pipeline infrastructure for extraction of gas, or the logging of native forests.
The Greens have also secured a government amendment so that investments made by the NRF board will have to align with the legislated climate targets and any future updated commitment by Australia under the Paris agreement.
Bandt said that “coal and gas are the biggest cause of the climate crisis, so this is a big win for the climate and a big win for jobs and the economy”.
“We thank the government for the constructive approach they have taken in the negotiations and hope this can continue in the safeguard and housing bill discussions in the coming period,” he said in a statement.
Bandt told reporters in Canberra it’s “clear that parliament is willing to acknowledge coal and gas are making the climate crisis worse”, arguing they must be “treated differently to the rest of Australian industry”.
Bandt said the Greens were concerned that under the safeguards mechanism bill fossil fuel projects could buy unlimited carbon credits, hinting that limiting their use of credits could be a fall-back position if Labor continues to reject the Greens’ “principal position” to ban new coal and gas projects.
Bandt said that other options proposed by the Climate Council and Australian Conservation Foundation were “on the table”, including a pause on new coal and gas, an option already rejected by climate minister Chris Bowen.
Allman-Payne said the Coalition “tried to use public money to fund coal and gas through the Clean Energy Finance Corporation and they were unable to do so because of the guardrails that the Greens and Labor put in place”.
“We have the same assurance that the NRF won’t be used to fund the climate crisis.”
To pass the NRF bill Labor will still require the votes of senator Lidia Thorpe, who has committed to vote with the Greens on climate; and independent senator David Pocock, who is meeting the government to discuss the bill next week; or the Jacqui Lambie Network.
JLN senator, Tammy Tyrrell, responded furiously to the deal, arguing it breached a commitment by Anthony Albanese in May 2022 to support native forest harvesting.
“Giving in to the Greens’ demands is a smack in the face to Tasmanians,” Tyrrell said.
Earlier, the deputy Liberal leader, Sussan Ley, told the lower house it was “disappointing” that Labor had struck the deal, particularly because “gas has played a key role in the transition to renewable energy”.
In a statement Ley said that “every expert is calling on the prime minister to unlock more supply of gas” but the “awful deal” with the Greens would make this harder.
In the house the industry minister, Ed Husic, thanked the Greens and others who had “engaged constructively on this bill”, confirming that although “we can’t agree on everything” Labor accepted the Greens amendments.
Husic rejected claims the NRF could be used as a “slush fund”, by noting that investment decisions will be made by an independent board.
Husic said the NRF is a fund for the “evolution and diversification of Australian manufacturing”. He noted that there “may be other vehicles that support” the list of investments now prohibited in the NRF, that is in coal, gas and native-forests logging.
The Albanese government is preparing to stare down a 4pm Thursday deadline to respond to a Senate order for forecasts of how big industrial emitters would use carbon credits to meet obligations created by the proposed safeguard mechanism.
