Australia parliament debates safeguard mechanism bill

The Australian government has introduced the Safeguard Mechanism (Crediting) Amendment Bill 2022 into the lower house of parliament that allows large industrial facilities to earn carbon credits when reducing their greenhouse gas (GHG) emissions below baselines.

The ruling Labor government's reform of the safeguard mechanism, which imposes emissions caps on all facilities emitting over 100,000 t/yr of CO2 equivalent (CO2e), include around 215 facilities. The reform is due to come into force at the start of the 2022-23 fiscal year to 30 June, providing it passes both houses of the Australian parliament without drastic amendments.

Australian independent Woodside Energy has interests in six Australian oil and gas facilities that it either operates or has a financial interest, and most of its domestic facilities would be subject to the mechanism.

The bill amends the National Greenhouse and Energy Reporting Act 2007 (NGER Act) and Australian National Registry of Emissions Units Act 2011 to establish Safeguard Mechanism Credits (SMCs), covering how credits are issued, purchased, and included in the Australian National Registry of Emissions Units.

"The reforms will support industry to reduce emissions efficiently, while maintaining competitiveness as the global economy decarbonises," Australian energy and climate change minister Chris Bowen said. The introduction of the safeguard mechanism is one of the government's policies to reduce GHG emissions to meet its target of a 43pc reduction by 2030 from 2005 levels.

The government said on Thursday that Australia was on track to reduce GHG emissions by 40pc by 2030 from 2005 levels, or just short of its target of 43pc based on current emissions reduction polices. Canberra said it was confident of meeting its target based on the emissions reduction policies it plans to legislate, including the safeguard mechanism.

The 215 facilities that will be subject to the mechanism accounted for 28pc of Australia's total GHG emissions in 2020–21 fiscal year to 30 June, which totalled 486.6mn t of CO2e. To contribute this proportional share of the national emissions target of a 43pc fall by 2030 from 2005 levels, aggregate baselines need to fall to 99mn t of CO2e by 2030 from around 137mn t of CO2e in 2020-21. Australia's national emissions were 621.1mn t of CO2e in 2005 and must fall to 354mn t of CO2e by 2030, if Australia is to meet its international target.

The safeguard mechanism was first introduced on 1 July 2016, and was previously amended in March 2019. There were no meaningful baselines imposed for facilities to reduce their GHG emissions under the original mechanism or through the changes made in the amendments.

By Kevin Morrison