How do you design a climate policy that the largest polluters will back? The Albanese government could write a book on the subject.
Last month it released details of its climate legislation, a set of reforms to the “safeguard mechanism” brought in by the Coalition in 2016. It claims the proposed changes to the mechanism will take us most of the way towards its target of reducing greenhouse gas emissions by 43 percent by 2030, and it has been backed by the Business Council of Australia, the Minerals Council and two of the world’s largest mining companies, Rio Tinto and BHP.
Chapter one in the government’s book could be titled “Take a cue from the Liberals”. Labor’s proposal is merely to adjust the dial, rather than significantly alter the safeguard mechanism as it operated under the previous, Coalition government.
Australia’s 215 most polluting facilities—those emitting more than 100,000 tonnes of carbon a year—have since 2016 been required to limit their emissions to a facility-specific “baseline”. The Liberals set it up to be more or less completely toothless. The baselines didn’t reduce and were too high to make any difference. With Labor’s reforms, facilities will now be fined $275 for every tonne of carbon over their baseline, and the baselines will decline by 4.9 percent each year—supposedly compelling emissions reductions of the same amount.
This might sound good in theory, but when you look at the fine print, you see Labor’s proposed reforms keep in place all the features that have allowed emissions at facilities covered by the safeguard mechanism to increase by 7 percent since it launched.
Chapter 2 could be headed “Cooking the books”. There are two aspects to this. First, facilities covered by the mechanism under Labor’s proposal will continue to be able to meet their emissions reductions obligations by purchasing carbon offsets in the form of Australian Carbon Credit Units (ACCUs). The credits are meant to be generated by things that remove carbon from the air. So a business or NGO that plants enough trees to remove a thousand tonnes of carbon will be assigned 1,000 ACCUs, which can then be sold to polluters wishing to strike 1,000 tonnes of emissions from their balance sheets.
If such offsets were genuine, it would be one thing. But, as Professor Andrew Macintosh—a whistleblower who formerly was head of the Emissions Reduction Assurance Committee under the Coalition—revealed last year, the market for carbon offsets is “largely a sham”. In one example, the federal government had paid $300 million for ACCUs they’d assigned to farmers in western NSW to not clear forest they claimed they would have otherwise cleared. This is like declaring you are going to kill someone, getting paid not to and instead selling someone else the right to commit a murder, thereby bringing everyone’s “net murders” to zero.
After coming to government, Labor commissioned an independent review of the offsets market—attempting to restore faith in the system that Macintosh’s revelations had tainted. A final report from the review was released in December. It found the Liberals’ system to have been “fundamentally well designed”. It recommended that the offset category of “avoided deforestations” (as in the example above) be dropped, but that the bulk of the dodgy offsets could continue.
Second, the reformed safeguard mechanism will still be concerned only with facilities’ scope 1 emissions—emissions that facilities are directly responsible for, such as from factories or mines burning fuel. The glaring omission here is scope 3 or “downstream” emissions—those created when a facility’s products are used. This amounts, as I wrote in a previous Red Flag article, to “measuring the emissions created to keep [a mine’s] shafts lit and the machines on, while turning a blind eye to the trains departing with the coal it produces”.
Considering that Australia exports 74 percent of its gas as LNG and 85 percent of its coal, scope 3 emissions make up the vast bulk of its carbon footprint.
Chapter 3 could be “Break it by design”. This is where we learn the safeguard mechanism as proposed by Labor does not require absolute reductions in emissions. Because Labor has retained the “production-adjusted” baseline framework, baselines are set and adjusted to match a facility’s production, which means that if a facility increases its output, its limit on emissions rises by the same amount. So, for instance, a company could double its production and double its emissions, as long as it reduced its new total emissions by 4.9 percent compared to what they would have been if production had increased on the old basis.
Finally, in addition to these major problems, there is the more straightforward one of cost, or more accurately, the lack of it. The federal parliamentary library found that buying credits to comply with Labor’s reformed mechanism could cost Australia’s large mining and gas corporations less than 0.1 percent of their profits.
It’s hardly surprising, then, that businesses and major emitters have shown such enthusiasm for Labor’s plan. In fact it has received support even from companies like BHP (owner of thirteen safeguard facilities), Rio Tinto (six) and Woodside (three), that will be most impacted by the changes.
It’s likely Labor will require support from the Greens to get its safeguard mechanism through the Senate. In January Greens leader Adam Bandt threatened to vote it down if Labor doesn’t concede to amendments such as a climate trigger aimed at stopping new fossil fuel developments or a limit to the use of offsets. Bandt has also, however, highlighted the Greens’ willingness to “compromise and pass laws that help us take even the smallest step on the road to tackling the climate emergency”. How it plays out will be seen in coming weeks.
There is no amendment, though, that could make Labor’s reformed safeguard mechanism anything but a greenwash over the expansion of fossil fuels. If the mechanism gets the support it needs to become law, it won’t be a step forward for climate action, but another mark on the road of the Australian government’s bipartisan policy of delaying, denying and (literally and metaphorically) gaslighting while fossil fuel industry profits pile up and the planet burns.