“Coal truck-sized loopholes” loom as Labor floats Safeguard Mechanism reforms

Federal Labor has unveiled its plan to deliver a “fit for purpose” Safeguard Mechanism, with a suite of proposed reforms it claims might actually work to ratchet down the emissions of Australia’s major polluters.

The proposed package of reforms, considered by some to be the most important climate policy the government will release this term, includes a requirement for big polluters to cut their greenhouse gas emissions by nearly 5% a year out to 2030.

“We decided we will require safeguard facilities to do their fair share – 28% of emissions come from safeguard facilities, we require 28% of emissions reduction to come from safeguard facilities,” Bowen said on Tuesday.

“We will start primarily by taking the starting position as the emissions of each facility, and then between now and 2030 we will move to more of an industry baseline.

“We will have production intensity baselines, so if the production goes up or down that will be taken into account in a requirements of safeguard facilities.”

On the flip-side, however, the reforms propose allowing polluters unlimited access to carbon offsets, via both Australian Carbon Credit Units and Safeguard Mechanism Credits.

As a further concession to trade-exposed industry, federal energy minister Chris Bowen is also promising an initial $600 million in funding from the newly announced $1.9 billion Powering the Regions Fund, to help cover the cost of emissions reduction.

According to Bowen, these and many more tweaks and reforms the government is proposing – including a $75 cap on the price of carbon credits – together make up “a pro-competitiveness measure, a pro-climate measure and a pro-industry measure.”

But the immediate cry from green groups and from the Australian Greens is that climate comes in a poor third in that equation, while some of the nation’s biggest polluters are let off the hook.

“Labor says this law is about Australian industry, but really it’s directly about coal, oil and gas, with 57% of the pollution covered by the law coming from those three climate-destroying industries,” said acting Greens leader Maureen Faruqi.

“Buying offsets is just coins down the back of the couch for them. Coal and gas can’t be allowed to just buy their way out of real pollution cuts with dodgy offsetting.”

The Australian Conservation Foundation says that while Labor’s redesign significantly improves on the Coalition’s safeguard mechanism, it doesn’t do enough.

“Unlimited offsets allow big, publicly listed companies like Woodside, Glencore and Santos – which have done more than enough climate damage already – to pay to keep polluting,” says ACF climate change program manager Gavan McFadzean.

“Companies hoping to get new coal and gas projects approved will breathe a sigh of relief. New entrants to the safeguard mechanism scheme should be tightly regulated from day one.”

The Australasian Centre for Corporate Responsibility says the reforms continue to ignore Australia’s fossil fuel exports.

“Managing Australia’s 137 million tonnes of domestic industrial greenhouse gas emissions is important, but the billion tonnes of fossil fuel emissions that we export every year must be a higher priority for the government,” says ACCU’s lead analyst, Alex Hillman.

The Australian Industry Group, meanwhile, welcomed the Albanese government’s decision to explore longer-term options for an Australian Carbon Border Adjustment Mechanism.

But Ai Group CEO Innes Willox was less convinced by other aspects of the proposed reforms, saying these would reforms require “more urgent analysis” given the July 2023 commencement date for the new system.

“Building Australia’s future economy requires policies that can underpin transformative long-term investments by business.

“The evolutionary approach to strengthening the Safeguard is vastly preferable to further rounds of policy whiplash,” Willox said.

The Climate Council said the reforms mooted on Tuesday would put big polluters on notice to pull their weight on emissions reductions.

“Cutting down the artificially high caps on carbon pollution given to these corporations by the Morrison government is a welcome step to kickstart emissions reduction,” said head of advocacy Jennifer Rayner.

“Capping the total emissions which can be produced by facilities in the Safeguard Mechanism is also important for driving towards net zero.

“However, allowing facilities in the Safeguard Mechanism to use cheap and easy offsets to write off all of their emissions will send completely the wrong signal. This will simply incentivise Australia’s heavy industry to engage in tricky carbon accounting to cover up pollution as usual instead of investing in genuine transformation,” Rayner added.

Solutions for Climate Australia director Barry Traill welcomed Bowen’s efforts on climate policy to date, but said the Safeguard Mechanism reforms created “loopholes you could drive a coal truck through.”

“The biggest problem in the draft regulations released today is that they would allow the fossil fuel industry to keep putting the same amount or more pollution into the air and then purchase unfettered amounts of carbon offsets through activities such as tree planting to cover for it,” Traill said.

Where to from here remains to be seen, but the Greens have already flagged that they will use their parliamentary muscle to push for tougher reforms.

“The Greens want to work with the government to ensure the Safeguard Mechanism delivers real and deep pollution cuts, not just dodgy offsetting and an excuse for coal and gas to expand and keep polluting, said Faruqi on Tuesday.

“The Greens will use our balance of power position to push Labor to stop opening up new coal and gas projects and ensure real cuts to pollution, not just hot air.

“The more we let coal and gas off the hook, the more everyone else will have to do. Australian households and manufacturing shouldn’t be asked to do more just so coal and gas can keep on expanding.”

For Bowen’s part, he says Labor has put forward a balanced package which will now be open for consultation with industry, climate groups and the community.

“I know that inevitably when you announce a big climate policy, almost inevitably half the people will say it doesn’t go far enough. That’s fine. We work it through carefully and methodically and we get it right,” the energy minister said.

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