Monique Ryan (Kooyong, Independent) Share this | Hansard source

I rise to speak on the Safeguard Mechanism (Crediting) Amendment Bill 2022. Today's IPCC Synthesis report confirms that the climate crisis is pushing us to the brink of an irreversible catastrophe. We have already seen the devastation caused by extreme weather, intensifying heatwaves, catastrophic fires and floods, climate driven water and food insecurity and irreversible losses to vital ecosystems. Today's report told us that a child born today is likely to experience three to four times as many extreme climate events in their lifetimes as their parents have, and that the world will be as much as four degrees hotter than today by the time that child is 80 years old. But the report does sound a note of hope: there are still feasible and effective ways to reduce emissions to keep global warming to 1.5 degrees. This will require every country to fast-track its climate efforts in every sector and on every time frame.

The IPCC has also told us that if that policy effort was consistently applied across the world, in every sector of every country, we would see a halving of global emissions. We cannot make real progress on Australia's emissions reductions with a flawed safeguard mechanism. We cannot meet our 2030 reduction targets with the safeguard mechanism currently before this House. Urgent climate action requires an effective safeguard mechanism. It requires big polluters to cut their emissions.

We have already seen what legislative failure looks like in this space. Under the Abbott and Morrison governments, facilities subject to the safeguard mechanism actually increased their pollution. Baselines was set so high that they drifted happily above each facility's actual emissions levels, like a methane-filled Hindenburg, floating flatulently above the horizon of our climate hopes. Even when those baselines were breached, no facility was penalised by the Clean Energy Regulator.

The only effective way to decarbonise our economy is to stop generating new emissions. The next best way is to minimise and then to abate those emissions. The last and least effective option is the use of carbon offsets. The government's legislation will allow heavy polluters to purchase Australian carbon credit units and safeguard mechanism credits.

But we have to realise that a carbon offset program can never really neutralise the effect of emissions. Planting trees will never equate to preventing pollution. In Australia we're painfully aware of how millions of hectares of forest can be destroyed by fires, which are becoming more frequent and more catastrophic due to climate change. Meanwhile, pollution remains in the atmosphere for centuries after any forest stops absorbing carbon. Our current offsets program lacks integrity. The recent Chubb review revealed that carbon credit payments have gone to individuals who claim to restore vegetation that was never really threatened, to property owners who returned land to natural vegetation via natural causes and to people for burning landfill gas. Australia's offset system is laughable, yet this system continues to dominate the amelioration strategies that are critical to the safeguard mechanism, which we are debating today.

It is extraordinary and deeply disturbing that this government has set no limits on carbon offsetting under safeguard mechanism 2.0. Rather, it proposes that facilities can use any combination of ACCUs and SMCs to offset up to 100 per cent of their harmful emissions. This means that we have joined the Republic of Kazakhstan as one of a small but very select group of two wealthy countries that allow big polluters access to 100 per cent unlimited offsets. The government isn't even asking facilities to try to demonstrate genuine efforts to cut their emissions. While this remains the case, any real prospect of the scheme reducing emissions is gone. The Parliamentary Library found that the cost of using purchased carbon credits would be less than 0.1 per cent of the profits of the big fossil fuel companies. Can we realistically expect those companies to do anything else than go down the 100 per cent offset pathway? Unlimited offsets give these companies a cheap and an easy way to account for emissions, rather than making the genuine cuts we need by investing in process and technology changes.

It has been suggested that offsets might become so expensive that it won't be feasible for high emitters to rely on them. For that to happen, they would have to increase in price by several orders of magnitude for their costs to represent a real burden to industry. However, the government has chosen to cap the price of ACCUs. Should the market drive the price higher, the government proposes to supply them at the capped price with taxpayers forced to cover the difference. High emitters will be able to continue with their cheap greenwashing, subsidised by Australian taxpayers. Most ACCUs in Australia are derived from the land sector. If the safeguard mechanism triggers an explosion in supply of those offset, the land impacts of offset plantations will be severe.

Last week I met with Farmers for Climate Action who are concerned about the potential for cashed-up fossil fuel companies to buy up our farms and to use quality agricultural land purely for the purpose of greenwashing their expanding emissions footprint. Consistent with the findings of the International Energy Agency, we have to stop licensing and funding new fossil fuel projects. We know that 116 new coal and gas projects are in the development pipeline in Australia and their projected emissions are equivalent to those of 200 coal fired power stations. Many are export projects with no viable role in a clean future economy. Those likely to proceed this decade could generate enough emissions in 2030 for the coal and gas sector alone to exceed this safeguard mechanism's entire emissions budget. Every new highly polluting project our government approves adds to our overall emissions and the difficulty of achieving Australia's national emissions reduction target.

Like so much of our dodgy climate accounting, this safeguard mechanism fails to include the emissions produced by the fossil fuels that we export. Allowing 100 per cent offsets on the emissions from the extraction and export of fossil fuels is akin to the miracle of the disappearing carbon. The problem is there's no such thing as a miracle. Carbon from our coal and gas exports will be emitted overseas at the point of burning, and those emissions are not accounted for in our accounting. These new coal and gas projects will leave no room for non-fossil fuel facilities currently covered by the safeguard mechanism, such as those for iron ore, fertiliser, cement and aluminium. The new fossil fuel projects will consume the limited supply of high-integrity offsets, making them more expensive and less available for those hard-to-abate sectors of our economy. These industries could well become uncompetitive if they are forced to shoulder a bigger burden to allow for new fossil fuel developments.

In its current form, this legislation does not differentiate between projects important to our future economy and the fossil fuel projects which should be phased out. The only provision in this legislation dedicated to new entrants is the application of as-yet undefined international best-practice baselines. Baselining new facilities in line with global best practice should mean that they replace less emissions-effective facilities over time via market forces. But, under the new proposed settings, new entrants will be given the same emissions decline rates as existing facilities. They'll be allowed unlimited use of ACCUs and SMCs to cover their emissions obligations. Trade exposed industries will have access to government assistance and may even be allowed access to a more lenient baseline decline rate. It's perverse.

A further problem is the move to baselines assessing the intensity of emissions rather than absolute emissions. In practice, this could allow individual emitters to increase their overall emissions as long as they decrease the intensity of emissions per unit of production. In so doing, they could generate safeguard mechanism credits and then sell them to other companies which are above their baseline. Absurdly, under this scenario, the proposed reforms would actually incentivise facilities to increase their overall emissions, even as they're improving their emissions intensity.

In order for the safeguard mechanism to be effective, facilities have to demonstrate real progress in achieving emissions reductions before they can purchase offsets to meet their regulated baselines. We have to have a hierarchy of offsets. True abatement must come first, followed by abatement elsewhere in the sector via safeguard mechanism credits, with ACCUs to be used only in limited numbers for a limited period as a last resort. Over time, we must ensure that the use of offsets, in absolute numbers, is phased down. Those offsets have to be of greater integrity than those supplied in the flawed system review by Chubb.

Government funding provided to facilities must be used exclusively to support genuine process and technology changes. Public funds should not be spent on technologies which have already failed to demonstrate a clear benefit. We should be committing to investments analogous to those supported by the Inflation Reduction Act in the US, which will drive the rapid development of new net-zero carbon technologies at scale. We should not pursue short-term wealth by continuing to prop up fossil fuel infrastructure destined to become stranded assets.

New fossil fuel facilities must be required to account for all of their emissions without reliance on offsets outside the scheme. In practice, this would mean that new fossil fuel entrants have to achieve net-zero emissions from facility commencement. New coal and gas facilities should not have access to special deals or supports intended to help existing facilities cut their emissions. New gas projects disguised as expansions through use of existing processing facilities have to be seen and classified as new projects. New fossil fuel projects should not have access to more lenient baseline decline rates through trade exposed baseline adjustments. These special conditions should be reserved for those facilities in genuinely hard-to-abate sectors essential for Australia's ongoing development to a net-zero-emissions economy.

We should separate fossil fuel facilities from hard-to-abate sectors. We should cap their emissions separately, irrespective of expansion or new developments. Total emissions for gas and coal have to be progressively lowered, and intensity measures must not be allowed to overrule caps or baselines. The safeguard mechanism legislation should ensure that total emissions caps are protected, at every level of governance, against gaming by the coal and gas industries.

The previous government and this government have produced legislation allowing big polluters to increase their emissions as long as they buy offsets. As it has been presented, this legislation will not drive investment in renewables and it will not stop the opening of new coal and gas projects. The proposed safeguard mechanism 2.0 does not require a single company to even begin to decarbonise.

The Minister for Climate Change and Energy, Mr Bowen, has repeatedly told us that his 43 per cent target for emissions reduction by 2030 is a floor, not a ceiling. There is a flaw in the safeguard mechanism. The flaw in the safeguard mechanism is the lack of ceilings—ceilings on the emissions released by facilities under the mechanism, ceilings on the amount and number of offsets, and ceilings on the damage done to our climate and the carbon released into our atmosphere. Getting the safeguard mechanism right will deliver enormous benefits: continued prosperity in a zero emissions economy, new job and industry creation through innovation, and a livable environment for Australians in the decades to come. If this government is serious about climate change, the safeguard mechanism has to have an explicit plan for diminishing emissions over time. It must address the question of new entrants to the scheme and it must cap the use of offsets.

We need all sides of this House to work together to improve this complex, vital piece of legislation. In its current form, it's very far from perfect. It's hard even to call it 'good'. Kooyong elected me to support urgent and meaningful climate change. This bill falls far short of that, but I support it in the hope that this government will allow amendments to its third reading and that, with time, we can effect the change that we all need to see.

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