Coalition warn Labor’s safeguard changes risk higher energy costs

Penalising businesses for their carbon emissions through the safeguard mechanism is a “trojan horse for a carbon tax” the Coalition has warned, amid fears Labor’s deal with the Greens will derail gas investment.

Penalising businesses for their carbon emissions through the safeguard mechanism is a “trojan horse for a carbon tax” the Coalition has warned, amid fears Labor’s deal with the Greens will derail gas investment.

The Opposition has accused the federal government of “ceding control” of the nation’s energy policies to the Greens for which consumers would pay the price, but Labor has defended its safeguard reforms as a “good balance” backed by industry.

In addition to a binding “cap” on pollution, the Greens negotiated a rule that would force any new gas wells for export projects to start operation at net zero emissions through either offsets or carbon capture and storage.

This has sparked concern fewer gas projects would get off the ground and the resulting supply shortfall would drive up energy prices.

“Labor and the Greens have the gas industry in their sights and they won’t be satisfied until all investment has dried up and Australians are paying the price through higher electricity bills,” Opposition climate change and energy spokesman Ted O’Brien said.

The Albanese govrnment’s safeguard mechanism has attracted criticism for its expected impact on gas projects. Picture: Gary Ramage

“If businesses don’t collapse under the weight of Labor’s reckless reforms, they will simply pass the costs onto their customers.”

But Climate Change and Energy Minister Chris Bowen said the requirements for new gas projects were “international best practice” and pointed out emissions had gone up under the Coalition without a cap on pollution.

“Others in the opposition disagree (but) I happen to think our country deserves having our new projects at international best practice,” he told ABC.

Mr Bowen said new gas projects would have to factor the net zero requirement into investment decisions.

“That’s quite appropriate for our country,” he said.

“I’ve seen very balanced commentary from most players … in business saying, ‘yes, we can work with this. This is a good balance.’ And I believe it is.”

The Opposition believes the move will impact investment in the gas industry across Australia. Picture: Nathan Edwards.

Opposition assistant climate change and energy spokeswoman Hollie Hughes argued financially forcing big polluters to reduce emissions — either through investment in technology or the purchase of carbon credits — amounted to a tax.

“Make no mistake, this is a trojan horse for a carbon tax,” she said.

“Penalising businesses financially for their carbon emissions? Sounds like a tax to me.”

Australian Petroleum Production and Exploration Association (APPEA) chief executive Samantha McCullock said natural gas would play a “central role” in meeting Australia’s climate goals as a “reliable back up” for renewable energy, as well as fuelling manufacturing.

“New gas supply is needed to support emissions reductions and put downward pressure on prices while avoiding projected gas shortages,” she said.

There are 215 heavy polluting facilities captured by the safeguard, with most still seeking clarification about the government’s deal with the Greens.

A spokesman for mining company Glencore, which already has 15 safeguard facilities, said Labor’s reform “has to achieve emission reductions without destroying the jobs and investment that are critical to the national economy”.