Greens’ win over Labor on emissions costly to energy producers, economy

Greens leader Adam Bandt on Monday. Picture: NCA NewsWire / Gary Ramage

The Greens have secured a bloody-minded victory over Labor that will impose high costs on energy producers and the economy in a way that does not apply to our international competitors.

The deal makes a value judgment that fossil fuel emissions cannot be offset by other measures. And it applies a new bureaucratic and legal stranglehold on all future developments that will make it all but impossible for them to proceed.

Adam Bandt was not exaggerating when he said coal and gas had “taken a huge hit”. He said the Greens had stopped many of the 116 new coal and gas projects in the pipeline from going ahead. The other certainty from what has been agreed to pass the federal government’s safeguards mechanism is that this is the beginning, not the end.

The Carbon Market Institute said this must be viewed as a starting point for a scheme that must be regularly reviewed to meet the significant challenges of achieving net zero then negative emissions.

Energy Minister Chris Bowen and Prime Minister Anthony Albanese. Picture: NCA NewsWire / Gary Ramage

Greenpeace Australia Pacific welcomed the announcement but warned “stronger action on coal, oil and gas projects is needed”.

Outside of coal and gas, industry groups have welcomed certainty that the safeguards mechanism changes will proceed, avoiding more years of uncertainty.

Their support is based on more money for trade-exposed businesses and workers as well as areas designated as critical sovereign capabilities.

Industry has welcomed changes to the Trade Exposed Baseline Adjusted settings and the addition of competitiveness to the objects of the Act.

There is also a clearer commitment to review the potential for an Australian Carbon Border Adjustment Mechanism for industries such as steel and cement.

Clearly, coal and gas are the targets.

The mechanics of the Greens amendments involve a set limit on carbon dioxide emissions and a ban on coal and gas companies from being able to offset future growth through tree planting or other trading measures.

More significantly, there will be a climate trigger that will force new projects to be judged on whether they will add carbon dioxide emissions to the national total. Again, the oil and gas sector is constrained in how it can offset them.

Importantly, these decisions will be actionable in the courts, setting the scene for protracted lawfare and delays to future projects. The climate trigger will likely be included in a revised environmental protection and biodiversity conservation act (EPBC) and be within the remit of the independent Climate Change Authority.

The Queensland Land Court has given an indication on how courts are starting to look at the issue. In a ruling against a new coal mine development being proposed by Clive Palmer in the Galilee Basin, the land court rejected the application because of the impact it would have on the world’s remaining carbon budget. An appeal against this decision was dropped.

Penalising Australia’s resource industry will have perverse impacts that go against the bigger global imperative.

It will limit development of an offset market in Australia that could have co-benefits for the environment through the rehabilitation of degraded land and proper management of areas that have been locked up for conservation.

It will weaken our energy security and strain relations with our closest regional allies who depend on us for reliable supplies.

It will strengthen the economic hand of our potential adversaries, notably Russia.

And it will simply further export our first world emissions to China, where Xi Jinping is ramping up coal-fired power at a rate that dwarfs any contribution Australia can make to the greater environmental good.