Thursday, 9 March 2023
Safeguard Mechanism (Crediting) Amendment Bill 2022; Second Reading
Allegra Spender (Wentworth, Independent) Share this | Hansard source
A few weeks ago I had the pleasure of being at the opening of Sydney's Surf Life Saving Branch Championships down at Maroubra Beach on the south-east coast. The sun was shining, the sky was blue and there was crystal-clear water as far as the eye could see. Between the soft sand running, the sausage sizzle and the amazing performances by people from across Wentworth and the community, I was reminded of the stunning natural environment that we have such a privilege to enjoy. It's an environment that we have a responsibility to protect—for the nippers at the championship, for their children and for their children's children.
Protecting our planet for the next generation was one of the reasons I ran to be a member of parliament. It was one of the reasons that so many people lined the streets of Wentworth to waive a teal placard, and it was one of the reasons Australians across the country, regardless of past political stripes, voted for climate action last May. It is worth remembering this, particularly when we're debating complex and occasionally esoteric issues like the safeguard mechanism. With all the talk of carbon credits, baselines and offsets, it is easy to lose sight of the real reason we are doing this and why strong action on climate change is so important. If we want strong action on climate, getting the safeguard mechanism reforms right is imperative. This scheme covers only 215 facilities in a country of nearly 26 million people but, combined, these polluters account for nearly a third of all our carbon emissions. Around 40 per cent of this comes down to just 12 fossil fuel companies. Together, a small number of firms are a large part of our emission problem, but this means they must also be part of the solution. After a decade of dithering and delay, these long-overdue changes are a step in the right direction.
There are many positive aspects. Safeguard facilities have been told they must do a proportional share of the nation's emissions reduction task. That is only fair; our biggest polluters must pull their weight. The introduction of crediting and trading, which forms the basis of the bill before us, will lower the overall cost of emission reduction, and the government's commitment to consult on a carbon border adjustment mechanism—something the European Union is introducing—is a step towards preparing our economy for the future. It is critical that our businesses have policy certainty and the right financial incentives to invest in the technologies of tomorrow. This is an absolute minimum if Australia is to meet its emissions objectives, and it is the absolute minimum if Australia is to become a clean-energy superpower and if that is to be anything more than just a catchphrase. The proposed reforms go some way to achieving this, but let us not pretend that the reforms are anywhere near close to perfect. People in Wentworth know it, and the evidence shows it.
In the past few weeks, I've received many letters and e-mails from people in my community who are worried that the proposed changes don't go far enough. I've spoken to investors and innovators from manufacturing to finance to clean technology who say incentives to decarbonise are not strong enough, and I've seen the modelling which shows that the government's proposals present the narrowest path to stated emission-reduction goals. Over the course of these discussions, it has become clear that the safeguard reform embodies a choice about the kind of economy and the kind of Australia we want in the future. We can have an economy that continues to revolve around fossil fuel dependency, an economy in which we open up more and more coal and gas projects, an economy in which we ask our aluminium, cement and critical minerals producers to do the hard work on emissions reduction—or, we can have an economy that embraces the industries of the future, that phases out fossil fuels and that truly seizes Australia's opportunity to be a clean-energy superpower.
My community wants to seize the clean-energy opportunity, and I believe the government does too, but the reforms are not good enough. So it must be prepared to compromise and to accept sensible improvements to the bill and to regulations. The first improvement is for the government to legislate the total emissions budget for this scheme. This will enshrine in law the emissions reduction path between now and 2030 for our biggest polluters, and it will provide legislative certainty on this path in the very same way that the House provided legislative certainty for our 2030 and 2050 targets when we passed the Climate Change Bill.
It is particularly important to have this certainty and this guardrail, given the results of the modelling released by RepuTex earlier this month. That showed that even relatively small changes in the production of fossil fuels risk blowing out the safeguard's proposed emissions budget. If the government's estimates of emissions from just 16 well-advanced new coal and gas projects are even slightly out, we could see the budget blown by 35 million tonnes. That's equivalent to the annual emissions of 1.6 million Australians. We cannot take this risk, so we need a legislative guardrail. That is why I will move an amendment to legislate the emissions budget at a maximum of 1,233 million tonnes between 2021 and 2030. This will lock in at least 205 million tonnes of abatement by the end of the decade, consistent with the government's reduction target. This amendment is consistent with the intention of the scheme and consistent with the government's policy. There is no reason not to accept it, and I hope the government agrees.
Legislating the total emissions budget for the scheme is a step in the right direction, but alone it is not enough. We must also address the biggest issue raised with me by my constituents and by the experts, which is the decision not only to allow our biggest emitters to have unlimited access to carbon offsets but to cap the price of these offsets so that coal and gas companies can continue to pollute on the cheap. Reform of the safeguard mechanism might be complicated, but that doesn't even pass the pub test. Nobody is saying that offsets don't have a role to play in climate policy, but the science is clear: they are no substitute for genuine emissions reductions. So they must be used as a last resort to accommodate the small number of sectors where it's particularly hard to reduce emissions in the short term.
There is a fine line between accommodating sectors that are slower to transition and discouraging emissions reductions by those who can. The government's proposal falls on the wrong side of that line. By allowing unlimited access to cheap offsets for all 215 facilities covered by the safeguard mechanism, the government has created the real risk that some will choose to offset rather than abate. The European Union doesn't allow this, the United Kingdom doesn't allow this, New Zealand doesn't allow this; not even China allows this. The only other country in the world with an emissions trading scheme that doesn't limit offsets in some form is Kazakhstan. The government talks about being back at the international table on climate change, but if this is a plan for reducing emissions then we're at the wrong table. So we need to see change, and that's why I'll move an amendment which removes the price cap on offsets so that the true cost of carbon is reflected in investment decision-making and so our biggest emitters can't just continue to pollute on the cheap. We can't offset our way out of a climate crisis. I urge the government to adopt these constructive amendments.
I want to highlight three other areas of concern for people in Wentworth. First, while the safeguard covers our 215 biggest polluters, around 20 per cent of industrial emissions are not captured by this scheme. Given the continued absence of an economy-wide price on carbon, I therefore urge the government to commit to lowering the threshold for the inclusion of this mechanism at its next review, in 2026-27. Second, while it is right that the government provide financial support to those making investments that will reduce emissions, this funding must not be a further subsidy to fossil fuels. Third, this reform of the safeguard mechanism is designed to support only a 43 per cent reduction in emissions by 2030. We know that this is not aligned with the science. We know we must do better. So, when the scheme is reviewed in 2026-27, the government must commit to a scheme that supports a 75 per cent reduction in emissions by 2035.
I also want to address the issue of new fossil fuel projects, which remain a distinct possibility under the government's proposed reforms. Let's be clear: an accelerated transition to clean energy is the best way to reduce our emissions, the best way to reduce our power bills and the best way to support our trading partners and become a renewable energy superpower. So we must aim for a scenario where we do not need any new fossil fuel projects. We should not be exploring for gas at PEP-11, we should not be developing new thermal coal projects and we should not continue to waste nearly $12 billion of taxpayers' money each year on fossil fuel subsidies. We should be very clear: every time we embark on a new fossil fuel project, we are asking everyone else to do more. For me, our goal must be no new fossil fuel projects. It must also be for a smooth and just transition. A decade of climate policy absence means we have been left with a lot of work to do.