House debates

Thursday, 9 March 2023


Safeguard Mechanism (Crediting) Amendment Bill 2022; Second Reading

12:35 pm

Photo of Allegra SpenderAllegra 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.

12:45 pm

Photo of Zaneta MascarenhasZaneta Mascarenhas (Swan, Australian Labor Party) Share this | | Hansard source

Action on climate change—it's one of the reasons I stood for federal parliament. That was a strong desire. I wanted to see action on climate change. In the last 12 years I've spent a lot of time in my professional career helping some of the largest companies on the ASX work out what their climate action journey is and how they need to reduce emissions.

I remember when the Abbott government attempted to tear down the Clean Energy Finance Corporation and I remember the destruction of the Climate Commission. It was when the Abbott government didn't send a ministerial delegate to the Warsaw climate summit. Days after that decision the government doubled down on their policy of denial, destruction and delay, committing to only a five per cent reduction in emissions on year 2000 levels by 2020. That decision for a five per cent commitment came from the fact that the conditions were already in place for a five per cent reduction by 2020, thanks to the work of previous Labor governments. It was a commitment to do nothing—and that was only the tip of the iceberg for the denial, destruction and delay by the previous government.

When Prime Minister Abbott said that the Clean Energy Finance Corporation should not invest in established clean energy technologies, it sent massive chills through the clean energy sector. Finally, the previous government had to drag the Nationals kicking and screaming to agree to a net zero pledge. But even after that you had Senator Matt Canavan suggesting there were still wriggle room, and who would blame him for thinking that, when the previous government's policy didn't include a legislated target and allowed for voluntary reductions by major emitters?

All that the business community wanted was some certainty to help them decarbonise. Australians wanted action on climate change, and businesses were already stepping up and working to reduce their emissions. Where was the government? It was cowering in its duty to show leadership and fighting internal battles to try and reach consensus that climate change is real.

Sometimes you have to ask yourself how far the opposition have fallen when you feel nostalgia for Prime Minister Howard's approach to climate change. He recognised the need for action on climate change. He accepted the science and put first steps in place for a framework to manage our emissions. In 2006 we had Prime Minister Howard come out and say the following:

… I think the weight of scientific evidence suggests that there are significant and damaging growths in the levels of greenhouse gas emissions and that unless we lay the foundation over the years immediately ahead of us to deal with the problem, future generations will face significant penalties and will have cause to criticise our failure to do something substantial in response.

What a great previous Prime Minister! Prime Minister Howard may have come out years later and described himself as climate agnostic, but at least he was pragmatic enough to identify where the community sentiment was at the time, and he made the political calculations to stay out of the so-called climate wars.

Instead of attempting to mount a scare campaign, being obstructive and marching headways against community sentiment, I ask the coalition to join us in supporting this bill. One of the first bills passed by the Albanese Labor government was the Climate Change Bill. Australians were sick of delay, and the business community needed clear signals to inspire confidence and invest in our transition to net zero. This bill put an end the climate wars and restored national leadership on climate change by setting legislated and achievable targets. These targets created a clear road map to our pathway to net zero by 2050.

I support the safeguard mechanism bill because it creates a supportive policy framework for industry to meet their legislated climate reductions. It's predictable and known. It gives clear signals to business that they've long asked for and that previous governments have failed to provide. Under this bill, emissions will reduce by about four per cent each year to 2030: it aims to deliver 205 million tonnes of emissions abatement by the end of the decade. That's the equivalent of cutting emissions from Australia's cars by about two-thirds over the same period.

Let's remember the theory of the safeguard mechanism. The previous government created the Emissions Reduction Fund, and the goal was to get companies to bid in a reverse-auction process to reduce greenhouse gas emissions and to pitch projects. So while they were reducing emissions in one part of the economy they wanted to make sure that they safeguarded emissions elsewhere in the economy from increasing. That was the purpose of the bill. However, what ended up happening was that the safeguard mechanism in the previous design didn't actually reduce greenhouse gas emissions. Instead, baselines were calculated and set to be very generous—they didn't actually help to reduce greenhouse gas emissions. Setting half-hearted targets is ineffective, and might as well be the same as not setting a target. I could see, from my extensive experience in the private sector and in dealing with some of Australia's biggest companies, that that wasn't the signal they were looking for. It wasn't meeting community expectations either.

Our bill meets the expectations of people in the heart of Swan. When I was knocking on doors and listening to residents, they were looking for a plan to act on climate change. Time and time again, people said that they wanted action on climate change. In Forrestfield, High Wycombe, Belmont and elsewhere people were telling me that they were so distraught at seeing floods in one part of Australia whilst seeing fires in other parts at the same time. The thing that we know about climate change is that the intensity of events will increase. We can't say that a single event is necessarily related to climate change, but the thing that we do know is that where there's more energy in the system the intensity and severity will increase.

Our country can't afford to ignore the impacts of climate change. The earth's average temperature has risen by about 1.2 per cent, and the scientific consensus is that this has been human induced. The consensus is also that climate change results in our weather systems being affected. The patterns of wind and rain are changing, and extreme weather events are increasing in frequency and intensity. So we know that emissions are affecting our climate. We also know that 30 per cent of Australia's emissions come from 215 different facilities. It makes sense that the government meets community expectations and actually helps these big emitters to reduce their greenhouse gas emissions.

Our pathway to net zero requires a foundation built on a regulatory framework that incentivises these top 215 emitters with abatement measures—also known as greenhouse gas reductions. And it needs to disincentivise emissions that exceed baselines. This builds on the National Greenhouse Emissions Reporting Act, which sets out a mechanism to ensure that covered emissions of greenhouse gases from the operations of a large designated facility—essentially, a facility with more than 100,000 tonnes of carbon dioxide equivalent—don't exceed the baseline applicable. By creating a baseline that decreases predictably by four-ish per cent each year, this bill empowers the stick that exists in the National Greenhouse Emissions Reporting Act, while also disincentivising emissions. It also provides the carrot by rewarding and encouraging when emissions abatement measures are undertaken by the 215 emitters.

The opposition has spent some time in my home state of WA, trying to demonise these effects. I remember when the West Australian had an article about me: the headline was something like 'Labor star candidate linked to carbon tax'. That wasn't factual, but the overwhelming community sentiment was: 'Oh, this is a person who's an engineer and who has worked in climate change action. She knows what she's talking about—yes, we're going to vote for her.' That was because they wanted to see predictable climate change action. From my time in working in this professional area, I would say that companies understand their climate footprints and they understand their social responsibility. They need a legislative framework to decarbonise.

The truth is that there are many companies across Australia that are very supportive of this. Toll said: 'We believe that building upon the safeguard mechanism will promote policy certainty and stability, while delivering on the government's climate targets in a way that minimises costs and shares the effort across the economy.' Doesn't that sound fair? Rio Tinto said that they support the use of a reformed safeguard mechanism as part of a suite of policy measures to incentivise genuine industrial abatement. The Australian Chamber of Commerce and Industry said:

The business community has been very clear in its support for reforms to the Safeguard Mechanism. This is the best way to secure the planning, investment and innovation that will underpin the decarbonisation of our economy without sacrificing reliability or affordability.

Approximately 80 per cent of safeguard facilities are covered by corporate net-zero commitments and represent about 86 per cent of the scheme. How can those opposite continue to peddle the myth that this will harm the economy when industry is clearly rallying around this policy? There are so many great examples, and the member for Curtin has also been involved in doing some great climate-change-reduction work over the years.

One of my favourite examples of greenhouse gas reductions in WA is from Wesfarmers and CSBP. They have a nitric acid plant. Nitrous oxide is a greenhouse gas that has a higher warming potential than methane and carbon dioxide. They actually put a catalyser in their nitric acid plant, basically to abate the nitrous oxide emissions. It significantly reduced the emissions. They did this because they thought that it was the right thing to do, but they also knew that there was going to be a price on greenhouse gas emissions and that they needed to reduce their greenhouse gas emissions.

The thing that this bill will do is incentivise great industry examples like that. This scheme has the credit, which is the carrot bit, and the baseline, which is the stick bit, and will be a wonderful asset for companies going forward. It provides predictable policy, and it provides vision. The thing that I'd love the opposition to do is join us in bipartisan support. Let's do this together, let's give the business community what they want and let's give the Australian community what they want.

12:57 pm

Photo of Kate ChaneyKate Chaney (Curtin, Independent) Share this | | Hansard source

Thank you to the member for Swan for her contribution on this topic. As she mentioned, I take great pleasure standing here today knowing that, nearly a decade ago, the member for Swan and I were working on climate change issues. I was working at a big emitter, and she was working in a consulting capacity—supporting us on both reporting and abatement. It's fantastic to be part of that debate today. Back then, and now, the thing that was most important to business was certainty. That is why today I rise to provide my qualified support of the Safeguard Mechanism (Crediting) Amendment Bill 2022 and of the proposed safeguard mechanism rules, because certainty is really important here.

Australia has already warmed by about 1.4 degrees since pre-industrial times, more than the global average. If we want to slow the impacts of climate change, such as floods, droughts, bushfires, acidifying oceans, marine heatwaves and rising sea levels, we need to reduce emissions. To meet our current emissions targets of 43 per cent by 2030 and net zero by 2050, the industrial sector must play its part. The industrial sector represents 28 per cent of our total emissions and so should bear the weight of at least 28 per cent of those reductions. I believe that markets are generally good at finding efficient outcomes, and it is government's role to set the rules within which markets can operate to ensure that the efficient outcomes are in line with the public interest. We definitely need to set the rules so that the industrial sector can effectively and efficiently play its part in decarbonisation.

The question is: will the safeguard mechanism in its current form deliver this? In reality, the most efficient and effective way to do this would be by setting a carbon price. This is acknowledged by nine out of 10 economists. It draws on principles, taught in year 10 economics all over the country, about the efficiency of putting a price on a negative externality such as pollution. Unfortunately, this is politically unpalatable after the last decade of polarising debate and scare tactics. So, instead, we have the safeguard mechanism, a compromise between previous Liberal policy and Labor government election promises.

Since the safeguard mechanism's introduction, in 2016, it has failed to reduce industrial emissions. Instead, emissions have increased as baseline limits have been set far above actual emissions, due in part to the practice of individual facilities negotiating their baselines with the government. An Australian Conservation Foundation investigation found that, even where baselines have been breached, no facility has ever been penalised by the Clean Energy Regulator for a breach.

There's no doubt that the safeguard mechanism is imperfect in its current form. Even with the changes proposed by the current government, it permits unlimited new entrants—baselined at global best practice emissions standards, which may be subject to negotiation—and it permits unlimited offsets of potentially variable quality. But the reality is that we need in place as soon as possible a mechanism that starts to turn the ship around. Government needs to provide certainty to business by setting the rules of the game and getting out of the way. We need to do this to ensure that Australian industry is incentivised to innovate and invest in technology that will ensure we remain competitive in a low-carbon global economy—and the member for Swan mentioned the example, from when we were working on this nearly a decade ago, of a large emitter investing in a piece of technology that reduced emissions on the expectation that there would be a price on carbon.

By establishing a framework for creating safeguard mechanism credits, the bill will incentivise facilities to reduce emissions below their baselines. It's a clumsy version of a carbon price. It does establish a mechanism for carbon trading, even if it does create some inefficiencies. I have no doubt that we'll look back on this version of the safeguard mechanism as a crude early draft. It doesn't do the brave work needed in shifting our economy away from fossil fuels by limiting new fossil fuel entrants. It perpetuates the idea that we can offset our way to net zero. But it is at least a start.

We will need a market for offsets. While offsets cannot be seen as a panacea and as permission to keep emitting, every credible pathway to zero emissions includes at least a small number of offsets, ideally limited to five to 10 per cent of total abatement. We do need to create and nurture this market and incentivise investments in offsets, and this bill will start to do that.

In the interests of committing to a path of action, rather than endless debate, I urge all parts of the parliament to pragmatically work towards trying, and continuing to improve, this mechanism, rather than either rejecting it outright, which makes little sense from the coalition opposition which invented this beast in the first place, or letting the perfect become the enemy of the good, which the Greens have heard a lot about lately.

Many of the mechanisms of the regulatory framework will sit in the safeguard rules, which are subordinate legislation and therefore won't be debated in parliament. But I will take this opportunity to discuss the aspects of the entire mechanism that need to be improved, preferably now but possibly down the track, to ensure that this regulatory framework is effective in delivering carbon emissions reductions. One of the biggest issues with the safeguard mechanism in its proposed form is that it creates room for new fossil fuel facilities to be developed. I acknowledge that new entrants to our industrial sector will be required in various industries. We'll still need to make cement, steel and other things, and we can't afford to freeze the profile of our industry as it is in 2023. Baselining new facilities in line with global best practice should mean that they replace less-emissions-efficient facilities over time through natural competitive forces. There are more than a hundred coal and gas projects at various stages of development across Australia. Many of these are export projects. These projects have no viable role in a clean, climate-safe future economy. The climate impact of these projects would be immense. Most of these projects have not yet been financed or received regulatory approval, and most will not be able to go ahead. The additional emissions generated by new fossil fuel projects would have to be absorbed by existing safeguard mechanism projects in order for us to reach our decarbonisation goals. This means that, by creating new room in our limited carbon budget, we're shifting the burden to everyone else. This makes absolutely no sense.

I'm not proposing that we shut down existing gas facilities; we will need gas as a firming fuel while we transition. But that doesn't mean we need new developments. There are multiple forecasts and experts who show that, globally, we have enough gas to see us through our transition. We have seen the US commit to the Inflation Reduction Act, potentially a trillion-dollar commitment to repositioning the US for prosperity in a net-zero economy. This is great for the planet. It will create scale and drive down costs. But we're massively underestimating the impact of this on Australia. By continuing to develop new coal and gas projects, we're free-riding, relying on other countries to do the heavy lifting on emissions reduction while we reap the profits from fossil fuels while they last. We're also reducing the likelihood that we can continue to be as prosperous as we used to be, as sooner or later our fossil fuel infrastructure will become stranded assets. We are accelerating towards a wall.

We have a small window in which to transition our economy and play a leading position in green energy. Instead, we're arguing over the details of a scheme that allows us to keep producing fossil fuels. We're even considering subsidising trade-exposed new entrants with access to the $600 million safeguard transformation stream under the Powering the Regions Fund. This makes absolutely no sense. There are various ways the safeguard mechanism can reduce the potential for new fossil fuel projects to better align with the economy we need to build, and I will continue working with the government to find opportunities to do this.

The unlimited use of offsets by covered facilities threatens to undermine the integrity of the safeguard mechanism by allowing absolute emissions under the scheme to increase. We cannot offset our way to zero. We must actually reduce the amount of carbon that we're omitting. Offsets should sit at the very bottom of a hierarchy that starts with avoiding, minimising and mitigating emissions. They should be a last resort and used only until mitigation technologies and operational changes can take effect for hard-to-abate-but-necessary industries. They should not be the primary means of achieving pollution reduction. Allowing 100 per cent of emissions reduction to be met with offsets puts us up there with Kazakhstan, the only other country that allows this.

The unlimited use of offsets is even more concerning when you think about it in the context of fossil fuel export facilities. Due to the globally accepted approach to accounting, as a country, we have no direct accountability for scope 3 emissions, or emissions from using the fossil fuels that we export. If we're allowing 100 per cent offsets on fossil fuel projects, we're effectively finding accounting loopholes to continue emitting and contributing to climate change globally. While this may make sense from an accounting perspective, it's hard to see how it's a good idea for the planet. There must be a limit on the use of offsets.

There are a number of ways this could be done, and I will continue to talk to the minister and the government about possible approaches. It could be done through a hard limit, a sector based limit or a weaker 'please explain' approach that depends on the public to drive accountability. I acknowledge that the opportunities for abatement vary significantly from sector to sector. This makes it hard to set hard caps on the use of offsets, but it may be something we need to consider after the first review, in 2026. At the very least, there must be a hierarchy of offsets to make it clear that abatement efforts must come first, followed by real abatement elsewhere in the industrial sector via safeguard mechanism credits, with ACCUs to be used only in limited numbers as a last resort.

On the quality of offsets, I am glad to hear that the recommendations of the Chubb review will be fully implemented. While there are some differences of opinion on the quality of existing credits, the Chubb review recommends changes that will improve the integrity of future carbon methodologies.

Given the flaws in the safeguard mechanism model, transparency will be vital. We'll need to be honest with ourselves about whether it's actually working. This includes the need for improved methane reporting. New measurement approaches are available and should be required. This may show that we're emitting a lot more methane than currently reported. As signatories to the Global Methane Pledge we're starting to acknowledge the vital role methane plays in climate change, but now we need to deliver on the pledge and improved reporting is a good next step.

The bill being debated only relates directly to the creation of safeguard mechanism credits, a necessary step to ensure that all covered facilities are incentivised to abate emissions, even if they're already below industry standards. Many of the changes needed relate to the regulations. Along with other members of the crossbench, I will be working with the minister and the government to find ways to address the issues that I've raised, specifically around new entrants, improving the use of ACCUs, and transparency and accountability. The things that I will be specifically advocating for: on new entrants I would like to see the definition tightened to ensure new gas projects disguised as expansions by using the same processing facilities will be seen for what they are, new projects. Existing facilities that are planning expansions or extensions to their current operations should be treated as new entrants if their expansion will create a significant new level of emissions. We cannot allow current coal and gas projects to continue to expand and explore and emit without regulation.

I would also like to see better measurement and regulation of methane emissions. There are more accurate measurement methods available and facilities should be required to use them. A specific methane reduction target would be good to see in due course, in line with our Global Methane Pledge. I will also support any amendments requiring new entrants to meet their baselines and targets without the use of ACCUs. On the use of offsets, I will be supporting any amendment that implements the Chubb review recommendations into law. I support amendments that create a hierarchy, as discussed, and if facilities do use SMCs or ACCUs they should be required to report on why abatement was not feasible. Lastly, I will be pushing for any amendments that improve the transparency and accountability of this bill. This includes beefing up reporting obligations and improving the appointments process. The review in 2026 will need to take an honest look at whether the safeguard mechanism is actually delivering on our targets.

In conclusion, there are many ways that this mechanism could be improved, and I will continue to work with the government and the crossbench to make those improvements. I appreciate the collaborative approach the minister has taken to working with the crossbench to genuinely improve this mechanism. It may not be perfect but it's a start. It's vital that we put something in place to give business some certainty, so facilities can invest in abatement technology as soon as possible. Turning the economy around is a huge challenge. We need to keep improving the mechanism and I urge government to keep trying.

1:12 pm

Photo of Dan RepacholiDan Repacholi (Hunter, Australian Labor Party) Share this | | Hansard source

I rise today to contribute to the debate on the Safeguard Mechanism (Crediting) Amendment Bill 2022. This government cares about action on climate change, as any responsible modern day government should. Last year, we did what those opposite pondered about for so long and not only committed to our goal of net zero emissions by 2050 but we legislated it. These changes to the safeguard mechanism are the next step in this journey. An enhanced safeguard mechanism is a crucial building block for Australia's progression towards net zero.

What we are proposing is nothing radical and it's certainly nothing big business should be intimidated by. This bill will simply require Australia's largest industrial facilities to reduce their emissions gradually and predictably in line with our national targets. There are no demands for instant, significant changes risking the feasibility of the business but rather gradual, predictable, achievable changes that are beneficial for business and beneficial for emissions reduction.

This bill addresses one element of the reform: crediting. It aims to support and encourage industries to unlock emissions reductions where they are most efficient. Some businesses are even ahead of the pack and have low-cost opportunities to reduce their emissions available to them now. These businesses are ready to go and could reduce their emissions faster than required by the safeguard mechanism. We want to encourage this as much as we can. Businesses should go after the opportunities that are already available to them to reduce their emissions. To help encourage these businesses to do this, this bill enables these businesses to be issued with tradeable safeguard mechanism credits. But we also recognise that not all businesses have these opportunities for emissions reductions available to them just yet. These businesses with more limited options could buy these credits to help them meet their required emissions reductions.

This is also about making sure that Australian businesses are keeping up with their competitors in the international market. This bill will give the businesses encouragement to use the newest technology, including technology that will assist them in emissions reduction and that, in many cases, is already being utilised by their competitors in many parts of the world. It is a bit like weight loss: some of us have a goal to lose weight, and all our government is doing is providing an incentive and trying to help out along that journey. This bill lowers the cost of reducing emissions, it makes it more achievable and it helps increase the ambitions of businesses to do so. This is a scheme that is balanced. It is a scheme that is effective, equitable, efficient and, more importantly, very simple. This is a scheme that will assist businesses to grow and meet their targets of emissions reduction at the same time, without hindering their operations.

As a member who represents an electorate home to 10 large emitters—which comes part and parcel when your electorate is in the heart of the mining industry in New South Wales—I must address this one very important point. We hear a lot of chatter from those opposite about what this bill might mean for the mining industry. But that's all it is: chatter. Let me assure you, Deputy Speaker Goodenough, and let me assure this House and the mining communities in my electorate, that I will never stand in this place and support anything that poses harm to the mining industry or its workforce. I was a miner. My mates are miners, and much of my electorate is made up of mining communities. Let me make one thing clear: I support the mining industry and, more importantly, I support the miners in it. I want their jobs to continue, providing them with secure employment for decades to come. As long as there is a market that still demands coal, I want the last piece of coal burnt on this planet to be from the Hunter, as it's the cleanest coal in the world.

Contrary to the chatter coming from those opposite, this bill is about supporting the mining industry. It is about supporting mines in my electorate to continue their operations nonstop, in a way which does less harm to the environment. This legislation is about supporting mines to meet their own net zero goals, which they all have, by 2050. These are goals they set on their own accord, goals no government forced them into making. Before the desperate voices from the 'no-alition' interject, I'd like to mention that I've spoken to all the major mine owners in my electorate, and they don't feel threatened by this legislation; they just want to know the details of it, which will be coming out in the near future. If the companies themselves don't feel like this bill will negatively impact on them, don't listen when those in the 'no-alition' begin to yell and shout with their scare campaigns, trying to convince voters that this bill will be bad for mining.

By introducing this bill, we are in no way saying or indicating that the way mining operations are conducted now is bad. Mining has given us our modern world, which we all of us enjoy. Every single person in this country should be grateful for mining, and it will continue to play a vital role in the coming decades. This is about acknowledging that we can conduct mining better and about encouraging this to happen. These reforms have been supported and even called for by peak bodies like the Australian Industry Group and the Business Council of Australia. The Australian Chamber of Commerce and Industry has stated that business has been very clear in its support for reforms to the safeguard mechanism. This is the best way to secure the planning, investment and innovation that will underpin the decarbonisation of our economy without sacrificing reliability or affordability. It seems as though the only ones opposing it are those in the 'no-alition'. But, of course, we can't forget that this was actually first proposed by the former government. Yes, that's right—they're the same bunch of people who now seek to oppose it. It was initially a recommendation of the 2020 expert panel, which the then government accepted. When announcing the safeguard mechanism in August 2021, the member for Hume, then minister for energy and emissions reduction, said:

The Morrison government knows the best way to reduce emissions across the economy is to drive innovation and technology, and we are doing this without imposing new costs that would hurt businesses and communities, or destroying jobs.

But now, in a shocking plot twist, the honourable member has turned against his own policy. I have trouble making up my mind on things from time to time, mostly when I am looking at the menu of a burger shop—it is quite hard—but this is really quite ridiculous from the member for Hume. Does he support the safeguard mechanism that he first introduced or does he not? This is their own legislation that those opposite now are voting against. Sometimes I really wonder how those opposite manage to stand up without having a backbone. So if you are in my electorate in the Hunter and you hear someone from the opposition saying anything negative about this legislation, remember this one thing: don't listen to the hypocrites whose values change depending on what is most likely to win them votes.

To finish, I have to give special mention to the Minister for Climate Change and Energy, who has been a huge support for me and the Hunter electorate. The minister has been there for me to speak to whenever I have needed assistance with this legislation. Any time a stakeholder in the mining sector has come to me with a voice of concern or has had a question regarding this proposed change to the safeguard mechanism, the minister has been available for me to go to straightaway. He has listened to the concerns and views of me and the mining industry in the Hunter. I know that he is committed to ensuring that this legislation will not harm the workforce in the mining industry in the Hunter Valley. For this, I thank the minister. I commend the bill to the House.

1:21 pm

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

As it stands, the safeguard mechanism, which, by the way, is a reheated Tony Abbott and coalition policy, literally locks in a massive expansion of coal and gas. In fact, not only will it make the climate crisis worse but it will also guarantee that we fail to keep warming anywhere below 1.5 degrees. What would that look like? Not only would there be more bushfires, storms, floods and heatwaves but also collapses of food systems, increases in sea levels and a tideline that will capture in my city of Brisbane entire suburbs, especially if we hit above two degrees of warming.

The material consequences are already being felt. The recent floods and bushfires have devastated communities, taken lives and are the direct result of a warming planet. In 10 to 20 years' time, if this bill is enacted unchanged, we are going to continue to see more bushfires, more storms, more communities devastated by floods—hauling out furniture—and time and again being asked to pay for the consequences of a climate change crisis caused by big multinational corporations that often pay nothing in tax. That's what is at stake when the scientists and experts say we can't open new coal and gas projects. It is not the Greens, it is not some political line; it is the science and the basic facts of the matter.

The International Energy Agency, for instance, has been very clear. If we want a 50 per cent chance of reaching net zero by 2050 and limiting warming below two degrees then the world can't open a single new coal and gas project. Instead, this government has proposed a climate plan that could allow 117 new coal and gas projects. All they have to do is buy cheap offsets that would account for a fraction of their enormous—often tax-free—profits. Just last week, the environment minister approved 116 new Santos coal seam gas wells in Queensland, active until 2077, which makes a complete mockery of the net zero by 2050 target the government often touts. But it gets worse. Just one new giant gas project Labor is hoping will start in 2025, Woodside Scarborough Pluto climate bomb, will wipe out all the emissions reductions of the safeguard mechanism to 2030—just one project! There are still five more projects that the government forecasts to start before 2030, when the world is meant to have halved emissions and, hopefully, limited warming below 1½ degrees.

It's worth underlining this: just one of these gas projects will literally produce more emissions than the safeguard aims to save, and there are five of them. And when it comes to the offsets, there is now significant evidence that 75 per cent of Australian carbon credits are not actually resulting in real emissions reductions. For example, credits being claimed and sold for not clearing land that was never going to be cleared anyway are counted as emissions reductions.

We've heard the Prime Minister boast that the safeguard mechanism has been endorsed by Shell and Woodside as if it's a good thing. Of course they would support it. It allows them to make monster profits on oil and gas without changing a thing and buying a few fake accounting trick offsets in exchange.

What's driving this self-destructive behaviour? If you talk to the experts and scientists, you know that we can't open new coal and gas mines if we want to have any chance of limiting warming to below 1½ degrees. So why do that? We know that, in the most recent election, Labor received more donations from fossil fuel corporations than even the Liberals and Nationals—corporations like Woodside and Santos who benefit to the tune of billions of dollars as a result of decisions made by Labor in this place.

Photo of Josh BurnsJosh Burns (Macnamara, Australian Labor Party) Share this | | Hansard source

Are you going to vote for this? It sounds like you're not.

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

The member for McNamara might think this is a joke. If you're watching at home, the member for McNamara is laughing and joking about that, when the city of Melbourne—the one that he apparently lives in and cares about—was hit by a flood that was made worse by climate change. How dare he!

Sixty-eight per cent of the emissions covered under this safeguard mechanism came from corporations that donated nearly $1 million to the Labor Party's election campaign. Corporations with major projects on the line, like Santos, Woodside, Whitehaven Coal, Glencore and Tamboran Resources, as well as peak member bodies, like APPEA and the Minerals Council, donated generously to both major parties, including the Labor Party.

I've seen Labor MPs get upset when we point that out, but why else would large multinational corporations make large donations to the major political parties, including Labor, if not to exert influence? They get angry about it, but the people that should be angry are the Australians and future generations who are being sold out for a couple of million dollars in donations from fossil fuel corporations who make billions of dollars in profits and often don't pay a single cent in tax.

One of the other lies and myths that's perpetuated by both sides of politics is that Australia can't really make much of an impact tackling climate change anyway, when we know that Australia is actually the third-largest exporter of fossil fuels in the developed world. In fact, the only two countries that export more fossil fuels than us are Russia and Saudi Arabia. The biggest impact we can have on climate change is to stop opening new coal and gas mines and exporting that around the world to be burnt, driving terrible climate change.

The tragedy is that one of the lies that both sides of politics tell is that, if we stop new coal and gas projects and we make sure that we engage in a sensible transition out of existing coal and gas, somehow this will hurt livelihoods. The only livelihoods that would hurt are those of the CEOs and shareholders of these massive multinational corporations who are currently raking in massive profits and often not paying a single cent in tax. In the last reportable tax year, the top 20 fossil fuel corporations in Australia made $150 billion in revenue, and they paid $30 in tax.

An alternative to this is making those corporations pay their fair share in tax and using that revenue and wealth to fund a transition that includes investment in manufacturing, health and hospitals, and schools, making sure that we invest in housing—

Photo of Josh BurnsJosh Burns (Macnamara, Australian Labor Party) Share this | | Hansard source

What about social housing? Do you support social housing? Why didn't you vote for it?

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

and in public and affordable housing, and that the life of every Australian is improved over the next 10 years as we transition out of coal and gas. It would be great, by the way, as the member for McNamara continues to laugh and chuckle through this without thinking about the consequences to the members of his electorate, if, at the next election, he could explain to the members of his electorate why he supports the opening of new coal and gas mines, and why he supports the opening of new coal and gas mines by massive multinational corporations that have donated to the Labor Party.

I think the question that Australians need to start asking is: who are they represented by in this place? The decisions that both major parties make, time and again, on climate change benefit the bottom line of their major corporate donors and not the material lives of the millions of Australians who are crying out for a government that actually starts to represent their interests.

Photo of Sharon ClaydonSharon Claydon (Newcastle, Australian Labor Party) Share this | | Hansard source

Thank you. The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. If a member's speech is interrupted, they will be granted leave to continue when the debate is resumed.