Australia adopts controversial climate safeguard rules

Published 07:55 on October 8, 2015  /  Last updated at 07:55 on October 8, 2015  /  Asia Pacific, Australia  /  No Comments

Australia on Thursday adopted the final version of its safeguard mechanism, aimed at controlling greenhouse gas emissions from the nation’s 140 biggest emitters, with the rules largely unchanged from previous versions despite expert claims that the weak mechanism will pave the way for ballooning emissions.

Australia on Thursday adopted the final version of its safeguard mechanism, aimed at controlling greenhouse gas emissions from the nation’s 140 biggest emitters, with the rules largely unchanged from previous versions despite expert claims that the weak mechanism will pave the way for ballooning emissions.

Environment Minister Greg Hunt gazetted a version of the mechanism that was near identical to the draft released last month, meaning it will take effect on July1 next year.

The mechanism aims to ensure that emission cuts achieved through the ERF is not offset by rising carbon output elsewhere in the economy. It sets baselines for emitters releasing more than 100,000 tonnes of CO2e into the atmosphere each year, and contains sanctions that can be imposed on companies failing to emit below those baselines.

But the safeguard rules set the baselines for each company at the year between 2009-2014 when their emissions were the highest, with similarly generous arrangements for new entrants or facilities that expand their activities.

Analysts Reputex have estimated the rules in reality will only impact 30 of the 140 companies targeted, and none of Australia’s 20 biggest-emitting facilities.

“Given that the Safeguard Mechanism is intended to ‘allow businesses to continue to operate at business-as-usual levels’ it is difficult to see how it will provide an effective policy tool to drive down emissions reductions in order to reach our 2030 target,” Elisa de Wit, head of climate change at lawfirm Norton Rose Fulbright Australia, told Carbon Pulse.

“In order to actually operate to reduce Australia’s existing emissions, the baselines will need to be lowered, either on an absolute basis or through some declining mechanism, such as an annual percentage reduction,” she said.

Some observers had expressed hope that new prime Minister Malcolm Turnbull, for years an advocate of putting in place policies to combat climate change, might step in and provide the mechanism with some teeth, but such a move never materialised.

But the safeguard mechanism will be on the list of policies up for debate in 2017, when the ruling Coalition will review its climate change policy portfolio, if it wins the 2016 election.

One issue that will be looked at is whether those failing to comply with the mechanism should be allowed to buy UN-issued offsets as a make good provision.

Currently, they have the option to buy Australian Carbon Credit Units (ACCUs) to compensate if they emit above their baseline. They can also apply for multi-year compliance periods and exemptions for natural disasters or criminal activity.

Failing all of those, companies missing their targets might be subject to a civil penalty of a maximum A$1.8 million fine or $18,000 per day.

By Stian Reklev – stian@carbon-pulse.com

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