The Federal Government has secured additional parliamentary support for reforms to the Safeguard Mechanism, which will reduce 205 million tonnes of greenhouse gas emissions to 2030.
The reduction is equivalent to taking two-thirds of the nation’s cars off the road over the same period.
The government says the reforms ensure that Australia’s largest emitters are competitive in a decarbonising global economy, and make a fair contribution towards the nation’s emissions reductions task.
Minister for Climate Change and Energy, Chris Bowen, said the finalisation of the Safeguard Mechanism Bill was a key milestone in achieving Australia’s 43 per cent emissions reduction target by 2030.
“Today, we are a step closer to achieving net zero by 2050.
“We thank those across the parliament who continue to approach this legislation in a constructive way to ensure accountability, transparency and integrity for the scheme, and ensure flexibility and support for industry. We will continue to work with people of good faith across the parliament to secure passage.
“These reforms are the culmination of months of extensive feedback from Safeguard businesses, industry associations, climate and community groups, academics and private individuals.
“These reforms are crucial to our climate and our economy – supporting Australian industry and ensuring they will continue to be competitive in a decarbonising world,” he said.
The changes complement the over $24 billion investment the Federal Government is already making in cleaner, cheaper energy, and emissions reduction.
The Safeguard Mechanism was put in place by the previous coalition government. It requires facilities that produce more than 100,000 tonnes of greenhouse gases annually (around 215 facilities) to keep their net emissions below a baseline (or ceiling). However, under the former government’s settings, scheme emissions actually increased by four per cent.
Extensive industry and public consultation and constructive discussions with the Australian Greens and crossbench have delivered a strengthened design that bolsters the scheme for the economy and the climate.
However, the Australian Petroleum Production & Exploration Association (APPEA) says the changes to the Safeguard Mechanism ignore the central role of natural gas in meeting Australia’s climate goals.
APPEA Chief Executive, Samantha McCulloch, said the deal would ultimately make Australia’s climate change targets harder and more costly to meet.
“Australia’s natural gas is critical to reaching net zero in Australia and the region, supporting the transition away from coal and providing reliable backup for renewables while powering Australian manufacturing,” Ms McCulloch said.
The changes to the scheme are in keeping with the policy’s intent – ensuring that both flexibility and support are provided for industry to remain competitive, and that the scheme delivers accountability, transparency and integrity.
The changes build on previously confirmed design features of the Safeguard Mechanism – including the creation of Safeguard Mechanism Credits that will enable large industrial facilities to earn credits when they reduce their emissions below their baselines.
The Government will finalise detailed Safeguard Rules in April 2023. The updated Safeguard Mechanism scheme will be in operation as of 1 July 2023.