Zoe Daniel (Goldstein, Independent) Share this | Hansard source

Concern about climate change is central to the make-up of the House of Representatives today. It's one of the reasons we have the crossbench we do. We were elected to tell the truth, to tell it like it is. So I'll be direct. I am concerned that under this legislation actual carbon emissions will not go down.

I want this legislation to pass and to work. I really do. The IPCC's AR6 synthesis report released today builds on the already large pile of evidence that current climate policy around the world is inadequate. The report found that current nationally determined contributions, including Australia's, make it likely that warming will exceed 1.5 degrees and make it harder to limit warming to two degrees. The consequences of this are dire. True action matters for the environment, our health and our future prosperity. After extensive discussions, I supported the government's Climate Change Bill, putting into law a 43 per cent emissions reductions target. It's not enough, as I said at the time, but it was a big step forward, and the Goldstein community welcomed my amendment to make it clear that 43 per cent was a floor, not a ceiling.

The government states that the legislation now before this House is a crucial building block for Australia's transition to net zero. I agree wholeheartedly that it could be. With the legislation promising to tighten the limits on safeguard facilities year on year, this could theoretically work to reduce Australia's emissions. The legislation is designed to force Australia's 215 biggest polluting facilities, those admitting 100,000 tons or more of CO2 equivalent annually, to cut emissions by almost five per cent a year through to 2030. They're so big and so polluting that between them they contribute a full 28 per cent of our total carbon emissions. But this legislation raises a big question. That is whether it's really about incentivising polluters to reduce their emissions or fostering creative accounting that allows them to offset their way out of doing so. This is a particular concern when it comes to sunset industries in the fossil fuel sector. Gas and coal companies may be incentivised to go for broke to profit while they can, buying unlimited carbon credits to offset their pollution until they phase out—carbon credits that may not even reduce emissions as they claim to.

Experts have long raised concerns about the integrity of Australia's carbon credits. Some of these concerns have to do with additionality—that is, carbon credits are being issued for projects where the emissions reduction activities would have happened anyway, without the incentive of carbon credits. This means that companies purchasing carbon credits can claim they're reducing their emissions when in fact there's no net reduction taking place. This is particularly dangerous under the safeguard mechanism, where Australia's biggest polluters will be allowed to purchase unlimited offsets for their millions of tonnes of emissions—offsets that don't really offset anything.

The recently completed government-commissioned Chubb review into the integrity of Australia's carbon credits recommended that projects issued with credits meet requirements that, if adopted, would go a long way to addressing their present lack of integrity. The minister has declared that the government supports all 16 Chubb recommendations in principle. Therefore I will later be proposing amendments to the legislation concerning two of the methods by which Australian carbon credit units, or ACCUs, are issued: human induced regeneration and the landfill gas method. The amendments relating to human induced regeneration and landfill gas are consistent with the recommendations made by the Chubb review—as I said, recommendations this government has agreed to in principle.

The human induced regeneration method is about issuing carbon credits to projects that allow cleared native forests to regenerate. Research by experts at the ANU has found that carbon credits have been issued in instances where land was never cleared in the first place. The legislation should exclude carbon credits issued to projects under the human induced regeneration method except where they meet four criteria: one—that the land area must previously have sustained forest, which was lost at some point from clearing or another event; two—regeneration on the land must have been stopped by grazing pressure or another suppressor during the 10 years prior to the project's registration; three—the proposed reduction in grazing pressure is necessary to regenerate the area; and four—the area must not contain any mature trees and shrubs at the project commencement. These conditions, in fact, are already required of projects under the human induced regeneration method, but they're not currently being enforced by the Clean Energy Regulator. Projects are being issued with ACCUs in circumstances that are contrary to the law. Unless they meet these conditions, carbon credits issued under the human induced regeneration method should not be available to safeguard facilities.

The second method my amendments deal with is landfill gas. In this case, projects that capture and destroy methane, a greenhouse gas from landfill, are issued with carbon credits. Most carbon credits issued under this method come from a handful of projects. Seventy per cent of credits for landfill gas projects are issued to just 20 sites. These projects are old, large sites using the landfill gas capture to generate electricity, also known as generation based projects. At present, regulation around baselines for the landfill gas method is inadequate. Baselines are supposed to represent the portion of methane that would be captured if the site did not receive any carbon credits. For example, if a project has a 30 per cent baseline, it means that only 70 per cent of the methane captured and destroyed at the site is taken because of the incentive provided by the carbon credits. Under the method, only the 70 per cent is credited; the baseline 30 per cent is deemed to be non-additional because it would have happened anyway. For a significant number of landfill gas projects, the baselines are too low. They do not reflect the amount of methane that would be captured if the project didn't receive carbon credits.

There are two reasons landfill gas projects would still capture and destroy methane even if they stopped receiving carbon credits: (1) because landfills are required to control biogas and methane emissions under state and territory environmental laws and (2) because, at generation sites, they profit from the sale of electricity and renewable energy certificates. When the landfill gas method was originally established, the industry agreed that the minimum baseline that should apply to new projects was 30 per cent. But the oldest, largest, most heavily regulated and most profitable sites were given a sweetheart deal that allowed them to have lower baselines. Ten or so sites have zero per cent baselines. This is the equivalent of saying that some of the largest landfills in the country are allowed, under state environment laws, to emit as much biogas as they like. The effect of these concessional arrangements is that sites are getting free money for activities that would happen anyway because of regulations and the incentives associated with the electricity and renewable energy certificate markets. In effect, this is double dipping.

Therefore I propose that carbon credits issued to large generation-based projects under the landfill gas method be excluded from the legislation, except where the baselines are no less than 50 per cent. For smaller projects under this method, the baseline minimum would be 40 per cent. These baselines should also be upward sloping—that is, the larger the landfill, the higher the baseline—and the baselines should increase over the life of the projects. Emissions reductions under these methods are not necessarily additional, a criterion essential to ensuring Australia's overall emissions decrease, and especially so among our largest polluters. My amendments would ensure that carbon credits from these projects cannot be issued to safeguard facilities, whose emissions are so large that we cannot afford any room for questionable offsets. These amendments are about integrity.

Meanwhile, the price of these carbon offsets is capped at $75, likely lower than a free market would dictate. On several fronts the government argues that the market will execute the energy transition. Indeed, market-driven demand for offsets and resulting higher prices may be a natural incentive. Yet, with this price cap, the government seeks to artificially manage the market. This is inconsistent. I know that some of my crossbench colleagues have similar concerns and plan to move amendments designed to address this apparent anomaly. I support these amendments.

Speaking of inconsistency, there is a deep disconnect between this legislation and approving new coal and gas developments. I do understand the argument that for several years gas will be needed as we ramp up renewable energy, fix the grid and enable extraction of critical minerals essential for the development of cleaner technologies. But this must not be a smokescreen for projects which are not going to aid in a transition to renewable energy but instead serve to maintain the dominance of the fossil fuel industry. It's important to mention, too, that there is a burden introduced here for other industries. Aluminium, for example, would have to overperform on carbon emissions reduction to compensate for unlimited new gas and coal. The government, it appears to me, is creating a problem while trying to solve one.

To that end, I'm also proposing to bring forward the time line for review of the safeguard mechanism's policy settings. The government has said a review will take place in 2026-27. This is too late. The review should be conducted in calendar year 2025 so that necessary adjustments to the safeguard mechanism can be made sooner to ensure we're on track to reach our 2030 emissions reduction target. There may well be arguments that this shorter time frame makes it harder to present reliable data, but my proposed time line will give us up to a year and a half's worth of information. Given the urgency of the challenge, the sheer quantity of carbon emissions the safeguard facilities emit, we must have some evidence as early as we can to make sure the scheme is working and, if it's not, modify it so it does and the legislated 43 per cent cut does not disappear in a cloud of smoke.

The answer to climate change cannot be found in low-integrity offsets. The IPCC calls for deep, rapid and sustained reductions in greenhouse gas emissions. It is essential, therefore, that the legislation represents the urgent, robust and effective reduction in emissions committed to by this government and that it creates true emissions reduction.

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