Coal miners given free ride under Morrison government emissions “caps”

Some of Australia’s largest coal producers have been able to increase their greenhouse gas emissions without penalty, despite being supposedly subject to emissions ‘caps’ under the Morrison government’s Safeguard Mechanism.

In a new analysis highlighting the lax nature of the scheme promoted to limit emissions growth, the Australian Conservation Foundation has shown that several of Australia’s largest industrial emitters have successfully avoided limits on greenhouse gas emissions by simply being allocated higher emissions “caps”.

The Safeguard mechanism was originally pitched as a way to limit the increase of greenhouse gas emissions from Australia’s major industrial emitters. More than 210 companies have “baselines” set under the Safeguard Mechanism, which covers Australia’s largest emitters outside of the electricity sector and captures around a quarter of Australia’s total greenhouse gas emissions.

The Safeguard Mechanism applies to industrial emitters, including steelworks, aluminium smelters, petroleum producers as well as domestic airline emissions that have annual emissions above 100,000 tonnes of carbon dioxide equivalent.

The baselines are intended to act as a “cap” on each company’s emissions, and if a company exceeded its emissions cap, it would be required to offset the excess emissions, usually through the purchase of Australian Carbon Credit Units (ACCUs), created from verified offset projects, or face a financial penalty.

However, the rules governing the Safeguard Mechanism have been gradually relaxed since its initial introduction, and now allows companies to apply to have their ‘caps ‘ increased. In many cases, a company needs only to demonstrate that there has been an increase in its level of production to secure a corresponding increase in its emissions cap.

The Safeguard Mechanism was implemented under the Abbott government and underwent a review in early 2019, which was largely designed at further loosening the controls placed on emitters in an effort to provide greater “flexibility” to industrial emitters, allowing them to increase emissions in line with increases in production.

Analyst firm Reputex flagged last week that emissions from major Australian industrial polluters had increased by more than 60 per cent over the last 15 years, despite the introduction of the Safeguard Mechanism.

“Companies can make grand statements, but right now Australia has no meaningful policy to make sure companies cut emissions to protect our future,” ACF climate campaigner Suzanne Harter said.

“Our national climate policies are clearly not good enough to curb pollution from industry or meet Australia’s unambitious international commitments.”

“The Government’s safeguard mechanism is not safeguarding the climate we all share,” Harter added.

Federal energy minister Angus Taylor commenced a ‘secret’ review in late 2019, installing former Origin Energy chief and president of the Business Council of Australia Grant King to chair the review.

As revealed by RenewEconomy, the review has undertaken a closed consultation with a select group of organisations that heavily features members of the fossil fuel industry.

So soft are the caps imposed under the Safeguard Mechanism that in the 2017-18 year the Clean Energy Regulator reported a total of 138.4 million tonnes of greenhouse gas emissions under the scheme, but just 260,428 tonnes of emissions (less than 0.2 per cent) were required to be offset by companies.

Analysis from Australian Conservation Foundation has found that companies have used the rules of the Safeguard Mechanism to avoid limits on emissions by repeatedly applying to the Clean Energy Regulator, which administers the scheme, to have their emissions caps increased.

This includes several of Australia’s largest coal mining operations and raises questions over the ability of the Safeguard Mechanism to limit increases in emissions, particularly as activity in the Galilee basin ramps up following the approval of Adani’s Carmichael coal mine.

Centennial Coal avoided the need to purchase $8.3 million in carbon offset credits after the Clean Energy Regulator increased its baseline following a 65 per cent increase in emissions from its coal mining operations.

Anglo American Coal likewise exceeded its cap at the Moranbah North mine by more than a million tonnes, avoiding the need to acquire around $15 million in offset permits, after the Regulator raised its cap.

Resources giant BHP has successfully applied to have its emissions cap increased by 13 per cent after the company exceeded emissions caps across eight facilities.

“BHP has been exceeding its emissions limits, but the company was allowed to adjust its baseline pollution numbers to account for the blowout,” Harter said.

“The emissions from BHP’s mining operations are higher than they were before the Coalition’s Direct Action policy was introduced.”

Increases in emissions from BHP operations follow the resource giant’s commitment to reaching zero net emissions by the middle of the century, and an allocation of $400 million in funds to introduce emissions reduction technologies into its operations.

However, questions have been raised over BHP’s commitment to emissions reductions, following its decision to retain membership of key lobby groups that have long opposed rapid action on climate change.