Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Hansard source

I table a revised explanatory memorandum relating to the bill. I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

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 such large areas of South East Queensland, NSW and Victoria—has 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.

The Safeguard Mechanism (Crediting) Amendment Bill 2022 is another step to ensure Australia plays its part in global efforts and achieves our legislated targets.

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 80%—are owned by companies that have made net zero commitments. These voluntary commitments cover around 86% of emissions reported under the Safeguard Mechanism.

Our reforms will ensure a level-playing field between the majority who are on a path towards net zero, and the minority who have not yet begun this journey.

As the Australian electricity system becomes cleaner and cheaper through the deployment of renewable energy, it is vital that large industrial and resources sectors also reduce their direct emissions covered by the Safeguard Mechanism.

Australian businesses and their investors know the world is changing, and that they need the right signals in place to not just stay competitive, but to innovate and thrive.

This 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 efficient emissions reductions by enabling businesses who are overachieving to be issued tradeable 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, crediting and trading will help Safeguard facilities to contribute to Australia's climate targets in a cost-effective way, and enable increased ambition over time.

This Bill provides that facilities could use Safeguard Mechanism Credits for Safeguard compliance alongside Australian Carbon Credit units.

The Bill establishes the framework for creating Safeguard Mechanism Credits, covering how credits are issued, purchased, and included in Australia's National Registry of Emissions Units.

The idea of crediting safeguard facilities below their baseline is not new, it was a policy proposed and funded by the previous government.

Another policy announced, but not delivered.

Following the passage of this Bill, the Australian Government will make subordinate legislation setting out the detail of how crediting will work in practice. On 10 January 2023 we released drafts of these instruments for consultation.

This Bill updates the objects of the National Greenhouse and Energy Reporting Act 2007 to reflect these important reforms, and ensures that changes to the subordinate legislation can only be made where they are consistent with these objectives.

This subordinate legislation will implement the detail of reforms to the Safeguard Mechanism to predictably and gradually reduce baselines so that Australian industry contribute its share to meeting the 2030 target on a trajectory to net zero by 2050.

The Government will continue consultation to settle this subordinate legislation.

The Bill will also update and strengthen the compliance arrangements if emissions are more than permitted.

It includes provisions to prevent companies from structuring their facilities to avoid their emission reduction obligations.

The Bill provides a framework which addresses incentive overlaps from declining Safeguard Mechanism baselines, Safeguard crediting and opportunities to create Australian Carbon Credit Units.

To provide scheme settings which respond to stakeholder feedback, the Bill provides for the ability to sell Australian carbon credit units previously purchased by the Government.

The Bill takes important steps to increase transparency of information on offsets projects, a key initial step to implement the recommendations of the Chubb Review.

The Powering Australia plan sends a message that we are determined to harness the opportunities of the net zero revolution.

Australia can and should achieve its climate ambition in a way that minimises costs and shares the effort across the economy.

Reforms to the Safeguard Mechanism will provide strong investment signals, and provide a balanced scheme that is effective, equitable, efficient, and simple.

The Government knows the time for action is now, and action this decade is critical to addressing climate change. 2030 is now only 82 months away.

We must continue to act decisively to meet our climate targets.

The Government is committed to the Safeguard Mechanism reform starting on 1 July 2023. Any delay will just make the future task harder.

This is a tight timeframe, but businesses are well prepared for the change.

They have over a decade's experience measuring their emissions, and most are already charting their own path to net zero. This Bill, and the Safeguard Mechanism reforms it progresses, helps secure and ease that path, expanding options, reducing costs, and enhancing certainty.

The time for action is now; we don't have a second to waste.