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Safeguard Mechanism is great … for big polluters and landowners, not so much for the planet

by Callum Foote | Mar 1, 2023 | Energy & Environment, Latest Posts

The Senate inquiry into the government’s key emissions policy, the Safeguard Mechanism, revealed broad support for the policy by industry bodies, yet independent experts exposed a myriad of inadequacies. It may even lead to higher emissions. Callum Foote reports.

The Safeguard Mechanism was originally designed in 2015 by Tony Abbott’s LNP Government. It was designed to capture any facility which produces more than 100,000 tons of carbon dioxide per year.

The Labor Government is now planning to introduce more stringent baselines to further reduce emissions, requiring each facility to either reduce onsite emissions by 4.9% per annum, or otherwise offset these emissions with carbon credits.

Notably, the Safeguard Mechanism only considered scope 1 and 2 emissions, which are emissions directly produced by a facility and those associated with the facility’s electricity consumption. It does not consider scope 3 emissions, which are the emissions produced by exported products.

This is a clear boon to fossil fuel companies, which need not consider the impact of exported coal or gas.

Roughly half of the facilities captured by the Safeguard Mechanism are in the fossil fuel industry.

The Australia Institute’s (TAI) executive director Richard Dennis says the Safeguard Mechanism is “needlessly industry-blind; I think that the design of the current scheme places enormous pressure on very hard to abate parts of the economy like cement.”

This is while the mechanism “places no obligation on anyone in the transport sector to reduce emissions, no obligation to reduce emissions in the electricity sector, no obligations in the energy sector, leaving low hanging emissions reduction opportunities on the vine and

doing nothing to encourage easy to abate sectors like renewable energy and doing nothing to discourage new coal and gas opening up.

Minerals Council of Australia’s (MCA) Tanya Constable tersely admitted to Greens Senator Hanson-Young that “the safeguard mechanism doesn’t preclude new projects coming online” in reference to fossil fuel facilities.

According to Polly Hemming, current director of Climate and Energy at the TAI, “by treating fossil fuel and manufacturing as the same under the mechanism, manufacturing will have to try to out-compete energy companies for offsets.”

“Over 50% of the projected use of offsets under the Safeguard is due to gas and coal facilities” she says which will increase demand for offsets raising prices for other facilities, like cement and steel, which do not have ready alternatives like increased renewables.

Industry bodies such as the Australian Chamber for Commerce and Industry (ACCI) and the Australian Industry Group (AI) are broadly in support of the policy, but argued for additional access to offsets, which would lower the price per tonne of carbon emitted.

AI Group’s Director, Climate Change and Energy, Tennant Reed, said his “members are quite nervous about [the quantity of offsets], because of the high likelihood that we would not get the numbers right.”

Constable from the MCA also called for higher numbers of credits to be available ““We did see that we did have concern that there could be a shortage and a lot depends on how much abatement you get on site.”

Dodgy carbon credits

The entire conversation, however, is overshadowed by revelations from UNSW professor Andrew Mactintosh who detailed that almost all the human-induced regeneration credits, which make up roughly 30% of all Australian Carbon Credit Units (ACCUs) available, are a sham.

New Report: coal and gas emissions “set to soar” under Safeguard Mechanism

The human induced regeneration (HIR) method awards carbon credits for managed forest regeneration.

These credits “accounts for about 30% of all credits issued today, and in the last financial year was 40%. Going forward, it’ll increase even more just simply because of the number of projects that are in the system. So our estimate is that either this year, or next, possibly the year after, it’ll hit 50% of issuances” according to Macintosh.

However, almost all of these credits do not represent actual abatement “But what we can say with 100% certainty is that 97% of the project areas of these projects are located in intact vegetation.”

These credits do not represent real carbon abatement because

they have been located in intact native vegetation; this is despite the fact they’re meant to be regenerating forests.

Ultimately, it seems as though the Safeguard Mechanism, as it currently stands, will do very little to limit actual emissions from rising as it places no pressures on new coal and gas from opening, will place needless pressure on hard to abate manufacturers and see millions, if not billions of dollars transferred into the hands of rural landholders claiming dodgy credits.

A progress report from the Senate Environment and Communications Committee is due on 6 March.

Grant King and the Big Gas Con – how fossil fuel giants are cheating Australia’s emissions system

Callum Foote was a reporter for Michael West Media for four years.

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