The Times Australia
The Times World News

.
The Times Real Estate

.

Labor's scheme to cut industrial emissions is worryingly flexible

  • Written by Rebecca Pearse, Lecturer, Australian National University

The federal government today proposed[1] new rules to regulate greenhouse gas emissions from Australia’s polluting industrial sector. The rule changes apply to a measure known as the “safeguard mechanism”, and are supposed to stop Australia’s top 215 emitters, such as new coal, oil and gas projects[2], from emitting over certain thresholds, or “baselines”.

The safeguard mechanism was established by the Abbott Coalition government in 2016. It’s been widely criticised[3] for lacking teeth – indeed, industrial emissions have actually increased[4] since the mechanism began.

The safeguard mechanism was reviewed[5] last year and Labor had promised a revamp. The fine detail of the changes is crucial, because it will determine how well Australia brings down its emissions on the path to net zero.

So would Labor’s proposed reforms, if implemented, be effective and equitable? Unfortunately, it appears no. They involve only very modest changes to a very flexible regime, and many issues plaguing the safeguard mechanism under the previous government continue.

What has Labor proposed?

The safeguard mechanism is the main lever the government can pull to ensure emissions from industry do not keep expanding. Industrial facilities regulated under the mechanism together account for almost 30% of Australia’s overall greenhouse gas emissions.

In its announcement today, Labor government proposed three key measures:

  1. emission baselines will remain flexible for industrial facilities planning to grow

  2. any tightening of baselines to industry standards will occur gently, giving facilities time to transition

  3. “trade exposed” industries (such as exporters relying on international markets) will be compensated in the form of grants.

Overall, the government says these changes will bring emissions baselines down by 4.9% each year to 2030.

Read more: Nearly 30% of Australia’s emissions come from industry. Tougher rules for big polluters is a no-brainer[6]

The biggest problem: flexibility

Industry lobby groups have argued[7] against standardised rules for all facilities, saying it could damage their international trade competitiveness. Such “trade exposed” industries – such as steel producers and mining companies – have called for the safeguard mechanism to be more flexible[8].

But too much flexibility[9] is generally the reason the scheme was ineffective under the previous Coalition government. Flexibility was built into the rules governing where, when, and how much industrial producers are required to reduce emissions.

The main sources of flexibility for industry under the current safeguard mechanism rules are:

  • loose baseline emissions, allowing facilities to expand their production

  • unlimited carbon credit purchases (where companies buy “credits” to represent emissions cuts made elsewhere, instead of cutting their own emissions outright).

Further flexibility will come from future proposed[10] carbon credit trading rules that allow banking and borrowing credits for companies to use at a later time.

Ultimately, such flexibility[11] means facilities can delay cutting their emissions to a later date. But as climate change accelerates, we have no time to waste.

Qantas plane flying
Qantas is one of the companies regulated by the safeguard mechanism. AAP Image/Dave Hunt

Loose baselines

Industries aiming to grow their commodity output will be allowed to continue using flexible emissions baselines. In other words, as their production rises, so too will the amount of greenhouse gases they’re allowed to emit.

The government initially considered[12] returning to “absolute baselines”, which fix carbon limits on existing facilities even when those facilities produce more goods.

Scientists[13] and climate campaigners often argue for measures that make sure industry production baselines are adjusted intermittently to avoid exceeding the overall, absolute carbon target. But industry groups prefer a more flexible approach.

The government’s proposal to continue with individually tailored “production-adjusted” emissions intensity baselines mean industries can expand without facing increased costs.

For example, let’s say a new liquefied natural gas plant expands its output to meet international demand. Then, the overall emissions baseline for the plant will also increase, because the baseline is measured as emissions per tonne of gas produced. If enough producers do the same, the overall carbon budget will be broken.

Read more: Clearer rules on reporting companies' climate risks could soon put us on a path to decarbonising corporate Australia[14]

New carbon credits to fill headroom

Some facilities have emitted considerably less greenhouse gases than their baseline allocations allowed, leaving a lot of headroom for these facilities to emit more greenhouse gases in future.

The Albanese government has signalled[15] it wants to address this issue of having too much headroom by making aggregate adjustments to all baselines, plus creating a new kind of carbon credit: Safeguard Mechanism Credits (SMCs).

SMCs will be issued to facilities with baselines set above their actual emissions. These lower-emitting facilities can then sell credits to higher-emitting companies that struggle to reduce emissions. Or, these lower-emitting facilities can store the credits to use in future.

This means they’ll be able to plan to expand their emissions over reporting periods.

A person smelting steel Industrial emissions have increased since the mechanism began. AAP Image/Julian Smith

Weak limits on ‘old’ carbon credits

Labor’s proposed safeguard mechanism will not recognise international carbon credits (where an Australian company can buy credits from an overseas company). But the government seems open to this[16] at a later date.

When it comes to carbon credits generated in Australia, the new rules continue with a laissez faire approach. There are no limits to how many carbon credits companies can use to compensate for excess emissions over their baselines, which means companies can avoid direct emissions cuts.

Until now, the only carbon credits recognised in the safeguard mechanism have been “Australian Carbon Credit Units”. Because of their well-documented integrity issues, these units have this week been subject to an independent review[17].

Controversially, the review found this carbon credit system is largely sound, and made 16 recommendations to improve it. Others, however, do not share this view[18], and say the system doesn’t lead to genuine emissions cuts.

Read more: Chubb review of Australia's carbon credit scheme falls short – and problems will continue to fester[19]

Flexible compensation for exporters

The planned rule changes add up to a lot of continued flexibility for industry – mostly justified as keeping costs low for the companies.

But meaningful emissions reductions in Australia will inevitably lead to reduced production (and employment) in some industries. The challenge is to make sure it happens in ways that are fair for communities and workers.

Following the practice of Labor and Coalitions before it, export-focused industries will be compensated for some losses. These industries argue they must be allowed to compete on a level footing with rivals in other countries who are not forced to bear the cost of reducing their emissions.

Industry compensation should only be applied[20] where the cost of carbon reductions is shown to cause the industry or company in question to move offshore and lead to an increase in global emissions.

About A$600 million from Labor’s $1.9 billion “Powering the Regions Fund[21]” will be allocated to trade-exposed businesses. Climate action campaigners have criticised this compensation[22], particularly if it goes to fossil fuel companies.

More tension is likely to play out in coming weeks as the government consults on the proposed changes.

At some point, however, if Labor is serious about tackling climate change, the flexibility must give way to tougher rules for polluters, and a greater government commitment to an equitable industrial transition.

References

  1. ^ proposed (minister.dcceew.gov.au)
  2. ^ coal, oil and gas projects (theconversation.com)
  3. ^ widely criticised (www.accr.org.au)
  4. ^ actually increased (www.energycouncil.com.au)
  5. ^ reviewed (consult.dcceew.gov.au)
  6. ^ Nearly 30% of Australia’s emissions come from industry. Tougher rules for big polluters is a no-brainer (theconversation.com)
  7. ^ argued (www.aigroup.com.au)
  8. ^ more flexible (www.minerals.org.au)
  9. ^ too much flexibility (theconversation.com)
  10. ^ proposed (consult.dcceew.gov.au)
  11. ^ flexibility (www.sciencedirect.com)
  12. ^ initially considered (www.sciencedirect.com)
  13. ^ Scientists (www.climatecouncil.org.au)
  14. ^ Clearer rules on reporting companies' climate risks could soon put us on a path to decarbonising corporate Australia (theconversation.com)
  15. ^ signalled (consult.dcceew.gov.au)
  16. ^ open to this (www.afr.com)
  17. ^ independent review (www.dcceew.gov.au)
  18. ^ do not share this view (theconversation.com)
  19. ^ Chubb review of Australia's carbon credit scheme falls short – and problems will continue to fester (theconversation.com)
  20. ^ should only be applied (grattan.edu.au)
  21. ^ Powering the Regions Fund (www.dcceew.gov.au)
  22. ^ criticised this compensation (www.pv-magazine-australia.com)

Read more https://theconversation.com/labors-scheme-to-cut-industrial-emissions-is-worryingly-flexible-197525

The Times Features

From Classic to Contemporary: 5 Timeless Costumes for Any Party

When it comes to dressing up for a costume party, you want to choose something that is not only fun but also memorable. Whether you're attending a Halloween event, a themed gathe...

Action Figures as Art: The Growing Trend of Custom Figures and Modding

Action figures have long been regarded as collectible items, valued by enthusiasts and fans for their connection to popular culture. However, in recent years, a growing trend has...

The Ultimate Guide to Securing Grants for Your Small Business in Australia

Running a small business in Australia comes with both opportunities and challenges. While it can be rewarding, funding your business through the early stages or periods of growth...

Men’s Guide to Styling Suits with Sweaters for the Ultimate Winter Look

Winter brings a unique set of challenges when it comes to maintaining a sharp and stylish wardrobe. While suits are a staple of a well-dressed man’s closet, staying warm during t...

Discover the Charm of a Girl's White Dress

Key Highlights Timeless elegance: White dresses feel pure and have classic charm. They are perfect for many types of events. Versatile styles: You can pick from lace, embroid...

Top Medical Grade Red Light Therapy Devices in Australia

Key Highlights Lumitter™ has advanced red light therapy devices that combine new ideas with wellness. Red light therapy helps lower pain and swelling and boosts skin health. ...

Times Magazine

The Essential Guide to Transforming Office Spaces for Maximum Efficiency

Why Office Fitouts MatterA well-designed office can make all the difference in productivity, employee satisfaction, and client impressions. Businesses of all sizes are investing in updated office spaces to create environments that foster collaborat...

The A/B Testing Revolution: How AI Optimized Landing Pages Without Human Input

A/B testing was always integral to the web-based marketing world. Was there a button that converted better? Marketing could pit one against the other and see which option worked better. This was always through human observation, and over time, as d...

Using Countdown Timers in Email: Do They Really Increase Conversions?

In a world that's always on, where marketers are attempting to entice a subscriber and get them to convert on the same screen with one email, the power of urgency is sometimes the essential element needed. One of the most popular ways to create urg...

Types of Software Consultants

In today's technology-driven world, businesses often seek the expertise of software consultants to navigate complex software needs. There are several types of software consultants, including solution architects, project managers, and user experienc...

CWU Assistive Tech Hub is Changing Lives: Win a Free Rollator Walker This Easter!

🌟 Mobility. Independence. Community. All in One. This Easter, the CWU Assistive Tech Hub is pleased to support the Banyule community by giving away a rollator walker. The giveaway will take place during the Macleod Village Easter Egg Hunt & Ma...

"Eternal Nurture" by Cara Barilla: A Timeless Collection of Wisdom and Healing

Renowned Sydney-born author and educator Cara Barilla has released her latest book, Eternal Nurture, a profound collection of inspirational quotes designed to support mindfulness, emotional healing, and personal growth. With a deep commitment to ...

LayBy Shopping