When the safeguard mechanism was first floated as part of the former Coalition government’s Direct Action climate policy, it was branded as something of a “fig leaf” for real climate action.
But even if it imposed no real limits on emissions, and kicked the problem into the future for another generation to solve, it did at least give a nod to the concept that governments might one day be compelled to govern the greenhouse emissions driving global warming.
Seven years and a couple of terrifying IPCC reports later, the LNP’s “confusing and complicated greenwashing mechanism” – as Ketan Joshi described it – wasn’t looking much better in the hands of the Labor Albanese government.
The preservation of so many of the Abbott-era loopholes, Joshi and numerous other critics said, gave a strong impression that Labor was seeking only to “update and upgrade” the mechanism to the current best-practice habits of the fossil fuel industry.
And yet this jerry-built policy persists, resurrected this week by a mix of Greens, Teals, independents and the Labor Party – everyone but the Coalition – in a barn-raising effort that might impress the Amish.
But what does this leave us with? We take a look at some of the finer details of the changes and see what the experts have to say about the big ticket changes.
A little something for renewables
According to the briefing notes from federal energy minister Chris Bowen on Monday, the at least $1 billion in funding for the manufacturing sector and trade-exposed industries through the Powering the Regions Fund will include $400 million for industries providing critical inputs to clean energy industries.
This chunk of money comes in addition to both the $600m Safeguard Transformation Stream, and other funding pools (NRF, CEFC, ARENA) and is focused on decarbonisation, rather than expansion of fossil fuels.
Bowen says specific treatment for hard-to-abate, value-added manufacturing includes the inclusion of a different threshold for manufacturers to qualify for a discount on their decline rate, reflecting the particular characteristics of this sector as a value-adding industry.
It also reduces the minimum annual baseline decline rate for manufacturers that meet the new threshold to 1 per cent.
Speaking on ABC’s Radio National on Tuesday morning, Bowen said the measures to better support strategic manufacturing were born of “eight months of consultation, three rounds of consultation, many, many meetings with climate groups, with industry groups, with business groups, listening to views.”
“[These] industries … like steel, cement and lime, aluminium and alumina … are absolutely vital for our renewable energy transition,” Bowen said.
“We’re going to need a lot of steel, a lot of aluminium, a lot of cement for this big task ahead of us. So, I’ve taken that on board.”
Firmer boundaries for fossil fuels?
Early signs, including shouty headlines from Murdoch mastheads warning of an “effective carbon tax” on households, suggest the “hard cap” and “pollution trigger” amendments to the policy have made the fossil fuel lobby uneasy, which in turn suggests they might actually have some teeth.
According to Bowen, the Safeguard Mechanism’s hard emissions cap will reduce to 100 million tonnes (from a starting cap of 140 million tonnes) by 2030.
“What we negotiated was a very clear cap on emissions, which is perfectly reasonable and sensible for the country,” Bowen said in an interview on Tuesday morning.
“And there should be various mechanisms, [Climate Change Authority] advice, transparency, public transparency, about whether that budget is likely to be met, whether it’s being threatened, including if there are any new proposals.”
“Maintaining Australia’s competitiveness is crucial so that industries with a bright future in a net zero emissions world can achieve that here,” says Ai Group’s Innes Willox.
“Changes to the Trade Exposed Baseline Adjusted settings are helpful in that regard.
“Even more so is the addition of competitiveness to the objects of the Act and the clearer commitment to review the potential for an Australian Carbon Border Adjustment Mechanism to address crucial industries like steel and cement.”
As noted above, the amendments also ensure the Powering the Regions Fund is not directed to coal and gas projects and only supports future-focused industries.
This change, as 350.org Australia’s CEO Lucy Manne put it, rules out the fund’s use “for wasteful spending on expensive, unproven carbon capture and storage which we know won’t deliver real cuts to pollution.”
Keeping closer tabs
As Bowen’s department put it on Monday in a briefing, essentially some of these changes ensure that the government keeps a “sharp eye” on how safeguard emissions are tracking and how that compares to goals set out in the objectives.
Further changes on transparency include that the Clean Energy Regulator will publish greater detail regarding the emissions of covered facilities, including their gross emissions, their baseline and their use of compliance units, including safeguard mechanism credits and Australian Carbon Credit Units.
Offsets
On the matter of offsets, Labor has agreed to boost integrity measures, including putting a freeze on the more controversial Human Induced Regeneration offsets until an independent audit has been conducted.
“We’ve agreed to full and proper audits and an independent audit of one particular method, which is controversial, the Human Induced Regeneration method,” Bowen said on Tuesday morning.
“We will audit those through a five-year process with the Clean Energy Regulator employing independent and arm’s length auditors.
“That’s perfectly appropriate. More than happy to progress that. There’s been some interest in that from the Greens and the Crossbench, Senator Pocock in particular, and they are sensible and important reforms.”
Leftover loopholes?
University of New South Wales professor Thomas Wiedmann says that while the “hard cap” means that total emissions from big polluters in Australia will not rise, even if new coal and gas is approved, this is “something of a Pyrrhic victory” for climate action.
“It does not guarantee that emissions are reduced fast enough to keep global warming close to 1.5°C,” Weidmann says.
“This is because a) offsets (which are inefficient) will still be allowed and b) the cap only includes domestic (Scope 1 & 2) emissions but not those from burning exported fossil fuels overseas (Scope 3). These could potentially still go up.”
Professor Peter Newman, the John Curtin Distinguished Professor of Sustainability at Curtin University, says how new coal and gas projects fit into this latest iteration of the Safeguard Mechanism is still “clouded in process detail.”
Newman also points to the problem that 70-80% of the emissions from new gas projects are not considered to be part of the Australian climate accounting due to their product being exported.
“These emissions are the big problem globally and will be accounted in other nation’s emissions.
“I can only think that in the detailed processes now being created by the Safeguard Mechanism legislation there will be wriggle room for the Minister to stop more of these new fossil fuel projects and create a historic legacy of serious climate change mitigation,” Newman says.
Annika Reynolds, climate policy advisor at Ember, says the changes to safeguard do nothing to address Australia’s coal mine methane pollution.
“If methane intensity targets were introduced to the safeguard mechanism, as suggested by Zali Stegall MP, we estimate that it could lead to an additional methane reduction that would be equivalent to 29 million tonnes of CO2-equivalent by 2030,” says Ember climate strategy advisor Chris Wright.
“That would have the same climate impact as stopping every plane in this country for five years.”
The final word
“This is progress,” says Professor David Schlosberg from the Sydney Environment Institute at The University of Sydney.
“Remember The Safeguard Mechanism is an Abbott-era invention, designed to fail. Labor said they wanted to improve it, and with this agreement with the Greens, they have.
“But, as the IPCC reminded us last week, current policies simply are not enough.
“Australia needs to push harder, and faster, to eliminate emissions from fossil fuels in all sectors,” Scholsberg says.
“Ironically, while the Safeguard Mechanism was originally developed by the Abbot government, it is a Labor-Greens deal which will see it finally begin to impact on industrial emissions,” says Dr Jonathan Symons, a senior lecturer in global climate change politics at Macquarie University.
