Chris Bowen (McMahon, Australian Labor Party, Minister for Climate Change and Energy) Share this | Hansard source

I move:

That this bill be now read a second time.

The Climate Change Act that was passed by this parliament on 8 September lays a crucial foundation for climate action. We noted at the time that the Climate Change Act was just the beginning. Since then, continued extreme weather, such as the devastating flood events across large areas of South East Queensland, New South Wales and Victoria, have provided a constant reminder of the need for action, and the global community has restated its commitment to action at Sharm El-Sheikh.

The time for action is now. Today the government takes another step to ensure Australia plays its part in global efforts and achieving our legislated targets, with the introduction of the Safeguard Mechanism (Crediting) Amendment Bill 2022. An enhanced safeguard mechanism is a crucial building block for Australia's transition to net zero. It will require Australia's largest industrial facilities to reduce their emissions gradually and predictably in line with our national targets. This puts Australia's industry on a path to net zero and helps ensure Australian businesses remain competitive as the world decarbonises.

Most safeguard facilities, around 70 per cent, are owned by companies that have made net zero commitments. These voluntary commitments cover over 75 per cent of emissions reported under the safeguard mechanism. Our reforms will ensure a level playing field between the majority, who are on a path to net zero, and a minority who have yet to begin this journey.

As the Australian electricity system becomes cleaner and cheaper through the deployment of renewable energy, it's vital that large industrial and resource sectors also reduce their direct emissions covered by the safeguard mechanism. Australian businesses and investors know the world is changing and that they need the right signals in place not just to stay competitive but to innovate and thrive.

The bill aims to support and encourage large emitters to unlock emissions reductions where they are most efficient. Some businesses have low-cost abatement opportunities ready to go and could reduce their emissions faster than required by the safeguard mechanism.

This bill incentivises emissions reduction by enabling businesses who are overachieving to be issued tradable safeguard mechanism credits. Other businesses with more limited abatement options could buy these credits to help meet their required emissions reductions. The net emissions of safeguard facilities, when added together, will reduce each year. By lowering the cost of reducing emissions—

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