Labor won’t block new fossil fuel developments. Here are some options for a climate deal | Adam Morton

The long-running fractures that define Australian climate politics can do weird things to people who have been involved in it too long.

One observer with more experience than most had a moment of reverie this week, joking about a fantasy universe in which Labor, the Coalition and the Greens all made substantial compromises to transform the landscape, literally and figuratively.

In his dream world, new fossil fuel developments were immediately banned, nuclear energy was legalised and supported, and the safeguard mechanism revamped with tri-partisan support. Everyone got what they wanted at the price of something they didn’t. Gigantic likenesses of the parties’ three celebrated Bobs – Hawke, Menzies and Brown – were carved side-by-side into a mountain to celebrate the shock outbreak of political harmony.

Back here in the real world, there is no Three Bob Mountain, divisions are deep and compromise, when it happens, is painstaking.

The safeguard mechanism – a failed Coalition policy that the Albanese government has promised to reboot into something meaningful – is being asked to carry the weight of Australia’s long-running failure to introduce meaningful and durable policies to cut greenhouse gas emissions.

That’s a problem, because the safeguard is highly complicated and has design issues that could stop it driving deep and genuine emissions cuts.

With the Coalition having opted out of an adult discussion about how industrial polluters should respond to the climate crisis, tough decisions lie ahead for Labor, the Greens and independents on what they are each willing to accept, and whether they will draw red lines that could lead to them walking away with nothing.

Quick Guide

What is the safeguard mechanism?


What is the safeguard mechanism?

The safeguard mechanism was introduced by the Coalition in 2016. It was promised to put a limit on greenhouse gas emissions from about 200 major industrial facilities. 

It applies to facilities that emit more than 100,000 tonnes of carbon dioxide equivalent a year. Each facility is set an emissions limit, known as a baseline.

The Coalition said companies that emitted above their baseline would have to buy carbon offsets or pay a penalty. In practice, facilities were allowed to change their baselines, few were penalised and industrial emissions continued to increase.

Labor plans to revamp the scheme.

It would set new baselines based on emissions intensity – how much a facility releases per unit of production. Baselines will be reduced by 4.9% a year. 

Companies could choose whether to make onsite emissions cuts or buy Australian carbon credit units.

New polluting facilities, including gas and coal mines, could open and would be set baselines at “international best practice”.

Companies that emit less pollution than their baseline allows would be awarded a new type of “safeguard credit”. These within-scheme credits could be sold to other polluting facilities that emit more than their baseline and need offsets.

Labor wants the changes to start on 1 July 2023.

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The point of this piece is not to say where those red lines should be drawn, or to predict what will happen. But it is worth considering what a deal might involve if one is reached.

The Greens’ leader, Adam Bandt, has offered to set aside other concerns about the safeguard if the government agrees to not approve any more new coal and gas mines. The minor party had been expected to present a more technical pitch, but instead kept its message simple: how about we just stop the expansion of the thing that causes the climate crisis?

There was an element of cheek in this. Bandt knew the government would not agree. The prime minister said so before the election and several times since. Asked on Sky News last week if she would say yes to some coal and gas developments, the environment minister, Tanya Plibersek, replied: “Yeah, of course.” The next day her department approved a 116-well expansion of a Santos coal seam gas development in Queensland’s Surat Basin.

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They have copped a wave of criticism, but there is evidence the Greens’ campaign to try to make all climate debates about new coal and gas developments is not only evidence-based, it has been tactically smart. It avoids a fight over putting people out of work – projects that haven’t begun don’t employ people – and the focus has thrust the issue of new fossil fuels – and their vast uncounted emissions when Australian coal and gas is burned overseas – to the centre of political debate. It points to where the climate battleground will be at the next federal election.

But a deal that blocks new coal and gas is not going to happen, whatever its merits. So what could be agreed?

One option could be a short-term pause on approving new developments until changes to national environmental law – the Environment Protection and Biodiversity Conservation (EPBC) Act – are dealt with over the next year.

This would sharpen the focus on whether the reformed EPBC Act should finally, belatedly, include a “climate trigger” – a requirement that CO2 emissions are considered when developments are assessed. It could be done in a number of ways, from requiring that the impact of big polluting projects be considered, to an outright ban on developments that emit above a certain level.

Senior figures from both major parties have supported a climate trigger in the past. They include Anthony Albanese, who unsuccessfully introduced a climate trigger bill while opposition environment spokesman in 2005. Labor would not be breaking a pledge if it supported one now – it made no promise either way before the election.

A second option is a concerted crackdown on fossil methane emissions, which are released during gas and coal extraction. Methane is a short-lived but highly potent greenhouse gas, responsible for about a third of global heating. Satellite evidence suggests Australian mines may leak substantially more of it than federal government accounts suggest. Technology is available that can significantly reduce it.

A more radical but admittedly less likely possibility could be to redesign the policy so that fossil fuels are treated differently to other industries under the safeguard, such as steelmaking, aluminium smelting and cement production, which all parties agree should have a future and will need help to clean up. There is a good case the two groups should not be shoehorned into the same scheme, given their vastly different future trajectories.

There is also the contentious issue of carbon offsets, which allow companies to pay for forest regeneration and other projects rather than cut their direct emissions.


What are carbon credits?


Carbon offsets are used by the government and polluting companies as an alternative to cutting carbon dioxide emissions.

Instead of reducing their own pollution, they can choose to buy offsets – known as Australian carbon credit units (ACCUs) – that are meant to represent a reduction in emissions elsewhere.

Each carbon credit represents one tonne of carbon dioxide that has either been stopped from going in the atmosphere, or sucked out of it.

Methods approved to generate carbon credits in Australia include regenerating native forest that has been cleared, protecting a forest that would otherwise have been cleared (known as “avoided deforestation”) and capturing and using emissions that leak from landfill sites to generate electricity.

Credits were bought by the government through the $4.5bn taxpayer-funded emissions reduction scheme or, increasingly, by polluters on the private market. 

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Credible criticisms of the integrity of the offset scheme have not been thoroughly addressed. The climate change minister, Chris Bowen, says he is confident there will be substantial cuts onsite at polluting facilities, but has also proposed allowing companies to buy an unlimited number of offsets. Independent senator David Pocock has flagged he wants some checks introduced and the Greens have also raised concerns.

None of these paths would address all concerns raised about the safeguard mechanism. Some of them are probably as likely as Three Bob Mountain suddenly appearing on the horizon.

But they are potential starting points, which is where we are at.

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