Albanese government’s climate plans face hurdle as experts criticise carbon market reforms
The Albanese government’s climate plans face fresh scrutiny after it released draft legislation aimed at cutting industry emissions without providing the rules on how the scheme will work and prior to completing a review of the carbon credits scheme.
The climate change and energy minister, Chris Bowen, on Monday released the draft reforms that provide a new framework for carbon credits generated by the so-called safeguard mechanism, which was inherited from the Coalition government.
The mechanism was designed to cap and reduce carbon emissions from industrial plants but instead pollution rose 20% over five years because limits were too lax.
But under the new laws the mechanism would reward facilities that achieved low-cost emissions cuts with credits that they could trade with firms that found reduction too expensive.
“It’s vital the reforms under way are efficient for Australian industry, and this draft legislation helps to do just that,” Bowen said in a statement.
“Feedback on the consultation paper we released in August highlighted the importance of these credits to help facilities meet their obligations, and of appropriate compliance and implementation arrangements for the credits.”
While the government has stressed consultation is ongoing, critics such as the Australia Institute have queried why the government didn’t also release the rules that would implement the new legislation.
The government’s own independent review of the existing carbon credits system also isn’t due for completion until 31 December, with no date set for a response.
“It’s hard to really assess this legislation,” said Alia Armistead, a climate researcher at the Australia Institute.
“They’re changing the high-level architecture that governs all of these things, such as the carbon farming act and the clean energy regulator act.
“We don’t know how this new architecture is actually going to be used. It’s a trust issue.”
Richie Merzian, director of the Australia Institute’s climate and energy program, said there was concern the new credits could produce a “perverse incentive” by favouring projects that pollute high levels of greenhouse gases, such as new gas fields, as they could make bigger cuts.
“You’re incentivising new facilities that are high-emissions intensive, so that you can then make serious and significant cuts,” Merzian said. Those reductions would then generate credits, fostering new emissions sources.
The framework would also create a new class of credits “at a time when our target market lacks integrity,” Merzian said.
Merzian said “the most egregious part” was that it solidified the role of the Clean Energy Regulator to manage the carbon credits before Prof Ian Chubb had finished his review.
Prof Andrew Macintosh, an environmental law expert at the Australian National University and the former head of the government’s Emissions Reduction Assurance Committee, in March described the carbon market overseen by the government and the regulator as “largely a sham”. Most of the carbon credits approved did not represent real or new cuts in greenhouse gas emissions, he said.
Hugh Grossman, executive director of carbon market consultancy RepuTex, said the new safeguard mechanism credits were “an important market to get right”.
Grossman, whose firm provided the modelling for Labor’s pre-election climate policy, said the legislation made public so far was “largely an administrative tool” and not surprising in itself.
He predicted that the federal opposition would probably oppose the reforms as they had the recently passed climate bill to enshrine an emissions reduction target of 43% by 2030. This would leave the crossbench – the Greens and independent senator David Pocock – to seek assurances on the integrity of the new carbon credits scheme.
Grossman said those assurances would probably include how new plants are treated compared with existing ones, the integrity of the baselines being used, and how the safeguard mechanism aligned with the nation’s carbon-cutting goal.
“It’s almost the only legislation package the Senate crossbench will have access to in relation to the safeguard mechanism reform,” he said.
Guardian Australia sought additional comment about the timing of the legislation and the accompanying rules from Bowen’s office, and from the opposition’s climate spokesperson Ted O’Brien.