Miners’ push for unlimited carbon offsets in Turnbull’s NEG
The mining industry wants unlimited use of carbon offsets enshrined in the National Energy Guarantee.
The mining industry wants changes to Malcolm Turnbull’s proposed national energy guarantee to lock in its emissions reductions target, and allow the unlimited use of carbon offsets by generators to enable them to reach the target at the lowest possible cost.
In a submission to the Energy Security Board on its latest NEG design, the Minerals Council of Australia urged more ambitious state-based emissions targets be rolled into the national target, in a call that will be strongly resisted by some jurisdictions.
The MCA said the Paris Agreement commitment to cut 2005 carbon emissions by 26-28 per cent by 2030 should be fixed in legislation, to ensure certainty for investors..
“While legislation can be changed, it would require parliamentary scrutiny. Not embedding the target into legislation would undermine the certainty created by the NEG,” the MCA’s submission said.
The proposal is in conflict with the Australian Industry Group, which warned fixing the target without amendment processes would result in a “brittle target” that would not survive successive governments. Labor has promised to ramp up emissions cuts to 45 per cent.
The NEG detailed consultation paper proposes a 5-10 per cent limit on the use of carbon offsets, such as reforestation projects, to meet the 2030 abatement target.
The MCA said there should be no restriction on the use of appropriate offsets, in the form of Australian Carbon Credit Units or equivalent international offsets, to help minimise abatement costs. ‘‘It remains unclear from an economic and investment perspective why this artificial constraint would enhance investor certainty or lead to lower power prices,” it said.
The government has assured the states, particularly Victoria, Queensland and South Australia, that they will be able to keep their more ambitious emissions reduction targets outside the NEG, to avoid them taking on the majority of the national carbon abatement task.
But the MCA said the state-based targets should be rolled into the national target to provide clarity to investors.
“The federal government is the signatory to the Paris agreement, not the states. Multiple state-based targets create greater uncertainty for investors,” it said.
The MCA also criticised a proposed new rule to large power users to guarantee the reliability of their own energy supplies. It said the reliability obligation would transfer risk from energy providers to users.