Nuts and bolts of new safeguard mechanism
How will Labor’s emissions safeguard mechanism work? | All your questions answered
What is the safeguard?
The safeguard mechanism is Labor’s key climate policy central to the government achieving its 43 per cent emissions-reductions target by 2030. The scheme will force the nation’s 215 biggest-emitting facilities to cut nearly 5 per cent of emissions each year until the end of the decade.
The scheme requires big emitters – including fossil fuel companies such as Santos, Woodside, BHP and Rio Tinto – to reduce their net emissions below a limit (a baseline), under new laws. The laws are set to pass parliament this week to ensure the scheme can start on July 1.
The government says facilities captured under the safeguard – which account for 28 per cent of the nation’s emissions – will be incentivised to make genuine cuts to emissions by investing in green technologies and paths to decarbonise. Companies will also be able to buy Australian Carbon Credit Units to offset emissions elsewhere.
The Labor-Greens deal
Labor struck a deal with the Greens to amend the safeguard mechanism and impose a “hard cap” in the scheme targeting coal and gas projects.
The cap will ensure emissions under the scheme cannot exceed 1233 million tonnes of carbon to the end of the decade, or for annual emissions to be at 100 million tonnes in 2030. Emissions were about 140 million tonnes in the past financial year.
Despite the Greens’ claims that this amendment would stop more than 50 per cent of new projects in the pipeline from going ahead, the figures are based on figures previously released by the department for projected emissions reductions under the scheme.
The figures are not new, but inserting them into the legislation means Energy Minister Chris Bowen is legally obliged to ensure a cut to real emissions under the scheme.
What happens if emissions rise?
In the event that real emissions do rise above the cap, the government will work with facilities to help them reduce emissions by either reducing their baseline rates or through more funding from Labor’s Powering the Regions fund, or amend the cap.
Amid concern that hard-to-abate industries will struggle under the scheme, Labor committed $1bn in funding for manufacturing and trade-exposed industries to decarbonise, which included an extra $400m for critical industries such as steel, cement and aluminium.
How are new gas companies affected?
All new gas entrants in the Beetaloo Basin in the Northern Territory will be required to have net-zero carbon emissions from the first day of operation, while new gas export fields will need to meet this target.
How will the scheme be monitored?
Labor has also agreed to a range of amendments to bolster the transparency of the scheme, including a rule that requires companies to justify their use of offsets if they use them for more than 30 per cent of their baseline emissions to the regulator. It will also require the Clean Energy Regulator to publish data on the use of carbon credits to ensure accountability.
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