Allegra Spender (Wentworth, Independent) Share this | Hansard source

By leave—I move amendments (1) and (2), circulated in my name, together:

(1) Schedule 1, page 6 (after line 30), after item 21, insert:

21A Before section 22XE

Insert:

22XDA Emissions target

(1) During the period beginning on 1 July 2020 and ending on 30 June 2030, the total net emissions from the operation of all facilities to which this Part applies must be no more than 1,233 million tonnes CO2-e.

(2) For the purposes of subsection (1), the net emissions from the operation of a facility during a period is the amount of covered emissions of greenhouse gases from the operation of the facility during the period reduced by the amount by which those emissions have been offset (by the surrender of prescribed carbon units) under this Part.

(2) Schedule 4, page 49 (after line 27), at the end of the Schedule, add:

6 Aft er section 150A

Insert:

150B Price of Australian carbon credit units not to be capped

Despite anything in this Act, or in any other law of the Commonwealth, there is no cap on the price at which Australian carbon credit units may be purchased by a person who is the operator of a facility to which Part 3H of the National Greenhouse and Energy Reporting Act 2007 applies.

Thank you to the minister for the very constructive conversation that we have had over a number of weeks and months around the safeguard mechanism, and for the reports that we have had in terms of the stronger amendments that are likely to be passed in the other place. However, if we want strong action on climate change, getting the safeguard mechanism reforms right is imperative. My job is to ensure that those changes necessary to the legislation are put forward.

This scheme covers only 215 facilities in a country of nearly 26 million people. But, combined, these polluters account for nearly a third of our carbon emissions, and around 40 per cent of this comes from just 12 fossil fuel companies. These facilities have been told they must do a proportional share of the national emissions reduction task. That is only fair. Our biggest polluters must pull their weight in helping us achieve a 43 per cent reduction in emissions by 2030. But the path to even this modest target is a narrow one. Modelling released by RepuTex earlier this month showed that even relatively small changes in the production of fossil fuels could blow out the proposed emissions budget for the safeguard. If the government's estimates of emissions from just 16 well-advanced new coal and gas projects are even slightly out, we could see the budget blown by 35 million tonnes. That's equivalent to the annual emissions of 1.6 million Australians. We cannot take this risk, and so we need a legislative guardrail. That's why I am moving my amendment No.1 to legislate the emissions budget at a maximum of 1,233 million tonnes over the next decade of net emissions. This will lock in at least 205 million tonnes of abatement in line with the government's target. My amendment will provide legislative certainty of our decarbonisation path, in the very same way that this House provided legislative certainty for our 2030 and 2050 targets when we passed the Climate Change Bill 2022. It is consistent with the intention of the scheme, it is consistent with the government's policy, and it is consistent with stronger action on climate. I urge the government to accept this amendment.

My second amendment also covers the government's current decision to allow safeguard facilities to have unlimited access to offsets and to cap the price of these offsets at $75 in the first year. Nobody is saying that offsets do not have a role to play in climate policy, but the science is clear: they are no substitute for genuine emissions reduction. So they must be used as a last resort at least to accommodate the small number of sectors where it's particularly hard to reduce emissions in the short term, as the price of offsets must reflect the true cost of carbon and not some discounted rate that has been agreed with the mining lobby. The government's $75 price cap is well below the carbon price in Europe, which is currently around $150. And it's well below estimates of the carbon price needed for a 1.5 degree world, which exceed $150. It's even below the carbon price that the New South Wales Treasury recommends be used for evaluating the costs and benefits of different projects in my home state. By capping the price at $75, the government may have significantly weakened incentives for decarbonisation when instead we need to encourage businesses to invest in the technologies of the future. They may have also created a future liability for the taxpayer, who will need to subsidise safeguard facilities, purchasers of offsets, if the market price in future exceeds the government cap.

I understand that both major parties have been resistant to putting a price on carbon, and that this has been the key reason for a decade of climate policy failure. The government has raised with me several justifications for a price cap, including the need to provide certainty to business and to ensure that ACCU markets are not subject to speculation. But on closer inspection, these explanations don't stack up. Over the past few months, I have spoken to people from across the business and investor communities, many of whom have internal carbon prices in place and all of whom have access to projections of its future trajectory. I have also spoken with many participants in the carbon market, none of whom have raised major concerns about speculation. The real risk is not speculation; it's that this price cap slows the pace of carbon emission reduction. And so we need to see change; my amendments remove the price caps on offsets so that the true cost of carbon is reflected in investment decision-making and so that our biggest emitters can't just continue to pollute on the cheap. We can't offset our way out of this climate crisis, and so I urge the government to adopt these amendments.

Finally, I would like to wrap up by thanking the government for its very constructive engagement on this. I hope very much that the reports of what will be passed in the other place about where the safeguard mechanism is going to go are accurate, because this is absolutely critical legislation and we have to get it right—both to reduce emissions and also to ensure that those facilities which are not coal or gas and which can't reduce their emissions in the same way are protected and able to build their businesses for the future.

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