With Tony Abbott out of the way, Australia could be willing to let big emitters to use UN-issued offsets to meet government-defined carbon baselines from mid-2016, the Australian Financial Review reported on Wednesday, without saying where it got the information.
Under former PM Abbott, who was staunchly against international carbon credits, saying it would be sending money to “dodgy carbon farms in Equatorial Guinea and Kazakhstan”, Australia was adamant any emission reductions should take place domestically.
But under pressure from business as well as the opposition, the government last month agreed to reconsider its stance in 2017-2018, when a climate policy review is due.
However, according to the AFR the government is now considering fast-tracking the issue and might get the policy change in place by mid-2016, when the safeguard mechanism kicks in.
The paper did not quote any sources, but said both Environment Minister Greg Hunt and senior National MPs – the Liberal party’s coalition partner – are strongly in favour.
The question is whether opening up for using UN offsets would mean much unless the safeguard mechanism is considerably tightened up.
Analysts Reputex have estimated that under current settings, only 30 of the 150 targeted emitters would be affected, and that the proposed rules are so soft that not a single one of Australia’s 20 biggest-emitting facilities would need to reduce their carbon output.
If Reputex and most other analysts that have commented on the safeguard mechanism are right, allowing UN offsets would bring with it very little demand from Australia.
There has been speculation that new Prime Minister Malcolm Turnbull might initiate a tougher set of safeguard rules before the scheme is approved by parliament, but Hunt has repeatedly claimed that no changes to climate policy have been discussed.
However, some offset demand might emerge from Australia in any case, as a recent compromise between government and the landfill industry means landfill owners could enter the market to buy up to A$100 million ($70m) worth of offsets to compensate for carbon tax costs they have passed on to customers.