Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

The committee is considering the Carbon Credits (Carbon Farming Initiative) Bill 2011 and govern­ment amendment (1) on sheet BR247.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

It is good to be back here again on the Carbon Credits (Carbon Farming Initiative) Bill 2011 and back on this amendment. The debate on this amendment was hopefully drawing to a close before we concluded our time for govern­ment business yesterday. I indicated at that time that the coalition think that this is a very important amendment and we are extremely concerned that the comments of the govern­ment senators suggest that they do not take this amendment as seriously as they should. While it is an amendment being moved by the government, it was an issue championed by the coalition. It was an amendment initially put on the list of amendments by the coalition and we welcome the fact that the government chose to embrace it, that it accepted there are genuine stakeholders interested in this amendment. The farming community and the National Farmers Federation in particular have been advo­cating for it. But what concerns us is that the government appears to treat the substance of this amendment with disregard. The minister came in here on Tuesday and tabled draft regulations that flow from clause 56 of the bill that this amendment is seeking to add an extra paragraph to. He tabled those regula­tions, which create what is known in the carbon farming bill, colloquially at least, as the 'negative list'—the list of the kinds of projects that are not allowed. And those projects are not allowed for fear of there being adverse consequences as a result of those projects going ahead. There are four different criteria in the existing bill for those adverse consequences as a result of those projects going ahead. Those criteria deal with matters such as access to water, biodiversity considerations, employment considerations and the impact on the local community. And those four criteria are very valid considerations indeed.

We sought, because stakeholders had a concern, to add a fifth criterion—that fifth criterion being this amendment to add the consideration of any adverse impacts on land access for agricultural production. We sought to do that to ensure that there was some certainty of the matter with regard to how this bill would operate and to make sure that it would not see a loss of prime agri­cultural land in Australia from agricultural production. We think that, as a major food producing nation, that is absolutely critical. We think that, as a country that has both an opportunity and a responsibility to grow our food production in the future, that is absolutely critical. And we think that, in terms of the original four criteria for potential adverse consequences, this fifth criterion is equal to if not more important than the other four. So I was concerned when the minister indicated that he could not point to anything in the draft regulations—

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I've heard this before!

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

Minister, I was graciously giving you time to get to the chamber!

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

This is the third time you have made this speech!

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

And I did note that I was hoping this was concluding the debate on this amendment.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I will be quiet then.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

Thank you very much, Minister. We do note that the minister has indicated that he believes the regulations do not require changing to reflect this amendment, do not need anything extra. We do not think that is good enough. We think that there is good cause to make sure that the regulations creating the negative list in this carbon farming bill reflect this paragraph (e) just as much as they reflect the other paragraphs, (a), (b), (c) and (d).

I did only want to make some remarks today on this, Minister, to ensure that in the continuity of debate our position on this was clear: we enthusiastically support this particular amendment. We hope that, as the process of finalising the regulations occurs, the government will ensure that it heeds any calls of stakeholders to make changes based on this new paragraph (e) and ensure that those changes reflect both the spirit and the intent of this new paragraph (e).

In closing, I thank the government for their support and for their moving of this amendment which the opposition had called for, but I just hope that they take it seriously from hereon in.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I only want to be brief. As I indicated last time—I think a number of times—in response to the same speech, the amendments are there to both add an additional paragraph to and to clarify the legislation. But, in addition to that, the regulations are out for comment. If there are comments which go to these provisions, and people do want to provide additional material on the basis of those regulations, then comments are always well received and will be considered in due course. But we are talking about amendments at this point, and not the regulations.

Secondly, I want to highlight that we have now been spending three hours or therea­bouts in furious agreement on an amendment that we all agree with. At this rate I would hate to meet an amendment that we do not agree on and see how that affects the time it takes to pass this legislation. The amount of time-wasting by the opposition in relation to the carbon farming initiative bill is now going from the sublime to the ridiculous. We are spending an inordinate amount of time on matters other than the CFI legislation. It is disappointing to see the opposition dragging their heels in relation to a bill such as this. I am not trying to be provocative to those opposite. I am simply pointing out that this bill does need to pass. It is preventing farmers and the community from enjoying the benefits of this bill and being able to access the significant advantages under it.

I understand legislation does take some time to progress in the parliament, and I think I am known as a patient man when it comes to the passage of legislation and the ability to ensure that everyone can have an opportunity to have their particular matters heard. Having sat through yesterday, I am sure most who were in the chamber or watched the chamber would agree that much of it was not about this bill; much of it was not about the amendment that was before us. On that basis, if the opposition are going to continue to take that approach, it will be disappointing to the government that the opposition have gone this far. But I would like a flag as to whether or not the opposition will continue to take this approach for the remaining amendments. I do think the opposition does need the required time to be able to consider each individual amendment in a thoughtful and considered way—I do not quibble with that. However, I do want to flag that at some point we will need to finalise this bill. If the opposition can point to additional time or hours we might be able to consider, that would be helpful, because we do not want to be sitting here at Christmas time still on the carbon farming initiative bill—and at the rate we are going we could very well be.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I was not intending to speak again on government amendment (1), but Minister Ludwig did invite my contribution, so I will make one. Let me be very clear. Some days this place proceeds through things faster than other days, some days the focus is very specific to the detail of the question before the chair and some days—due to issues and events of the day—debate is a bit more wide ranging. That occurs on all sides, from all parties and at all times, and it is well accepted and tolerated right around the chamber. We have no particular desire to delay the debate on this measure. Each time it has come up, we have come in here and made constructive contributions. The opposition seeks to work through each of these amendments system­atically as best as we possibly can.

We will happily work with you. I will leave it to Senator Ludwig, who is not only the minister at the table but also the Manager of Government Business in the Senate, to negotiate with his equivalents from the other parties in this place as to hours and how this legislation is treated—that is, when we debate it. However, how we debate it and how long we debate it will of course be determined, ultimately, by the chamber. We will seek to move through as systematically and cooperatively as we can whilst giving everything appropriate airing.

I say to the government that when we went through the Senate committee process on this bill there was a lot of criticism about the way the drafting occurred and about the way consultation and engagement with stakeholders occurred. There was a lot of criticism of the time line. As we then finalised that, there was a lot of criticism that the substantial draft regulations underpinning how this bill works—in particular, the negative list to which this amendment pertains—had not been finalised and were not publicly available to be considered in tandem with this legislation. If anything has slowed down the debate this week, it is the reality that it was only on Tuesday that the government came into this place and presented those draft regulations, for which the opposition and many others had been calling for some time. That is what slowed down debate this week.

Yes, some questions and some contribu­tions have gone more to the draft regulations than to the specific amendments we are considering. That is because we have been consistent from day one that those regula­tions are critically important to the way this bill works and that they should have been considered in tandem with this bill. That point has been made by many coalition speakers and was made in the dissenting report of the committee inquiry into this bill and, in fact, when this bill was first released.

So we have been crystal clear. We are pleased to finally see those draft regulations. They do of course aid us in the debate. But if those draft regulations had been released back when they should have been released—so that the full measure of the complexity and the impact of this legislation could have been considered as one—then the debate to date might well have proceeded far more smoothly. But, as I said, I think we have given extensive consideration to this amendment. I note that my colleague Senator Nash, who has a strong interest in this bill, is with us but was not with us yesterday, so I do not know whether or not she is intending to say anything on this amendment. I have said enough on it—I agree with the minister on that—and I trust that we will be able to proceed on the matter shortly.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

The question is that government amendment (1) on sheet BR247 be agreed to.

Question agreed to.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I propose to withdraw opposition amendment (1) on sheet 7117, noting in doing so—as we did in the previous debate—that this amendment was moved by the opposition on the encourage­ment of stakeholders, in particular the National Farmers Federation and other farm­ing groups. We are pleased that the govern­ment chose to adopt the amendment in a slightly modified form. Having just passed that amendment through the chamber, we now withdraw our very, very similar amend­ment.

The TEMPORARY CHAIRMAN: Opposition amendment (1) on sheet 7117 is withdrawn. Senator Colbeck, do you wish to address opposition amendment (3) on sheet 7120?

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

I did, but I do not intend to proceed with that amendment.

The TEMPORARY CHAIRMAN: The opposition is not proceeding with opposition amendment (3) on sheet 7120 and, accordingly, consequential amendments (4) to (6) on sheet 7120. Since Senator Xenophon is not here, we might now proceed down to opposition amendment (2) on sheet 7117.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I move opposition amendment (2) on sheet 7117:

(2)   Clause 122, page 154 (after line 30), after subclause (3), insert:(3A)   In the case of a project which was accredited under the Greenhouse Friendly program at the time that program was terminated—if a methodology determination is made on or before 30 June 2012, the determination may be expressed to have come into force at the start of 1 January 2008.

This is an example of how the clerks always do such a good job in presenting an order for these amendments. It will probably have been useful to have examined some of the other amendments that are proposed by Senator Xenophon and the opposition as we work through some of the factors as to how this scheme interacts with previous schemes in existence, either the Commonwealth's Greenhouse Friendly scheme and the way that it operated or the New South Wales government's GGAS. There have been a number of concerns about the interaction between those programs and ensuring that we have a smooth transition that avoids, as the committee report highlighted, any per­verse outcomes or consequences, especially perverse outcomes or consequences where we may see a pre-existing program that operated as a carbon abatement measure come to an end because it will not be covered or adequately captured by this new Carbon Farming Initiative.

Certainly some of the issues which we will explore in amendments that we will be moving with Senator Xenophon pertain to issues of, in particular, landfill gas. Those issues will look very closely at how we preserve in place such schemes that were developed under Greenhouse Friendly or under the GGAS in New South Wales that capture the off-put from landfill gas and in capturing that off-put—methane, in particu­lar—burn it, generate their own electricity and stop emissions escaping from those landfill sites. There are concerns that, due to the way that this has been structured as legislation, some of those projects will not be able to proceed. They are certainly some of the issues that we plan to address in the joint amendments that have been developed with Senator Xenophon.

This amendment to clause 122 seeks to insert a new clause 3(A) that:

In the case of a project which was accredited under the Greenhouse Friendly program at the time that program was terminated—if a methodology determination is made on or before 30 June 2012, the determination may be expressed to have come into force at the start of 1 January 2008.

My understanding is that this seeks to provide a more certain period of continuity for those Greenhouse Friendly programs or activities. Greenhouse Friendly was a program initiated by the Howard govern­ment. It was one of many different programs in the climate change space initiated by the Howard government that we are proud to have started, that we are proud to have seen commence and that provide a very sound footing for Australia in meeting our inter­national obligations when it comes to dealing with matters of climate change.

The Howard government set up the first infrastructure in the government to deal with climate change matters, to deal with reducing greenhouse gas emissions and to set Australia on a trajectory where we will proudly be one of the few countries in the world to meet the obligations we agreed to under the Kyoto framework. Greenhouse Friendly has played and will play a key part in making sure that Australia meets those Kyoto framework obligations.

It is worth noting that Australia will be one of the few countries to do that and has done so without the imposition of a carbon tax. Whilst that debate is one that I know Minister Ludwig does not wish to have at length here, I think it is important when we are highlighting some of these previous programs to note that we have achieved or are well on track to achieving the 2012 commitments set down under that Kyoto framework without such an imposition but through other clever policy measures, including Greenhouse Friendly, which sparked a lot of voluntary action by many parts of the Australian industry who wanted to do their bit, who saw a good opportunity available and who have made great contri­butions towards that target.

Instead, we are now going to enter an era where the government proposes to penalise everybody to try to achieve a target without any international agreement in place beyond 2012. There is a strange contrast between the styles of the two governments. Under the Howard government, we incentivised volun­tary action to meet an agreed global target. Under the Labor government, through penal­ties, they are going to force action to meet a global target that does not exist. That is a very interesting and stark contrast between the approaches of the two governments.

However, to return to this amendment, we think that in providing continuity, certainty and hopefully making sure that projects that operate under Greenhouse Friendly can continue to operate under this new scheme it is appropriate to give consideration to the amendment that is before the chair.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I understand the amend­ment. The government does not support it. This amendment would effectively allow Greenhouse Friendly companies to receive CFI credits for abatement right back to 2008. The CFI does allow some backdating which goes back to 1 July 2010. This is a new piece of legislation designed to assist the farming community. Further backdating to 2008 could literally undermine the environmental integrity and value of the CFI credits. This legislation is designed to ensure that we do have integrity within this system. In looking at this issue though, the government will consider options for including some or all Greenhouse Friendly credits under the National Carbon Offset Standard for a transitional period. So it is not all bad news. This would increase the value of Greenhouse Friendly credits.

In this area, the government's view is that you are in the wrong place. I understand what you are trying to do, but it is about the Carbon Farming Initiative and it is about ensuring that we have a system that allows backdating to 1 July 2010 and that we use the methodologies under this to assist the co-benefits, which I described earlier, in the agricultural areas. But in dealing with Greenhouse Friendly companies, who have those types of things out there, the place to deal with the Greenhouse Friendly credits is under the National Carbon Offset Standard. That legislation is coming before this parlia­ment, so it is not something that we are putting off. A much better opportunity to use that type of action again—in other words, this type of amendment—would be in the guidelines or in the next piece of legislation. That is by way of suggestion. I am trying to gabble with your amendment. We oppose it.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I thank the minister for his response. He highlighted that there is scope for a backdating, as such, of credits to the start of 1 July 2010, and I note him doing that. The EM states that that is to allow backdating of existing projects such as projects under the Australian government's Greenhouse Friendly program. My under­standing is that for the alternative waste treatment sector the bulk of the Greenhouse Friendly scheme credits they possess were generated during the period between 1 January 2008 and 1 July 2010; thereby meaning that they will, in the main, miss out on that backdating start date of 1 July 2010. Could the minister explain on what basis 1 July 2010 was set as the date and is it the government's understanding that the alternative waste treatment sector will largely miss out as a result of that date having been set?

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I thought you might have recalled that it is the original start date of the CPRS; but it may have slipped your mind. We think that was an appropriate place to backdate it to given we have been saying that for some time. It seemed a logical place given it was the original start date and people may have made decisions around that start date.

Question put:

That the amendment (Senator Birmingham's) be agreed to.

The committee divided. [13:38]

(The Chairman—Senator Parry)

Question negatived.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

by leave—I, and also on behalf of Senator Birmingham, move amendments (1) to (4) on sheet 7129 revised together:

(1)   Clause 5, page 12 (after line 9), after the definition of general law land, insert:

Greenhouse Friendly Initiative means the Greenhouse Friendly Initiative for the reduction of greenhouse gases established by the Commonwealth and administered by the Department administered by the Minister administering this Act.

(2)   Clause 5, page 17 (after line 9), after the definition of net total number, insert:

New South Wales Greenhouse Gas Scheme means the greenhouse gas reduction scheme established by Part 8A of the Electricity Supply Act 1995 (NSW).

(3)   Clause 5, page 18 (lines 23 and 24), omit the definition of prescribed non-CFI offsets scheme, substitute:

prescribed non-CFI offsets scheme means:   (a)   the New South Wales Greenhouse Gas Scheme; or   (b)   the Greenhouse Friendly Initiative; or   (c)   a scheme prescribed by the regulations for the purposes of this paragraph.

(4)   Clause 95, page 124 (lines 11 to 19), omit subclause (2), substitute:(2)    As soon as practicable after making the declaration, the Administrator must consider the request and may, by written notice given to the person who made the request, determine that this Act has effect, in relation to the project, as if:   (a)   if the project is a sequestration project:      (i)   paragraphs 89(1)(b), 90(1)(b) and 91(1)(b) had not been enacted; and      (ii)   the net total number of Australian carbon credit units mentioned in subsections 89(3), 90(3) and 91(3) were increased by the number specified in the determination; and   (b)   if the project is a landfill legacy emissions avoidance offsets project that was accredited under the New South Wales Greenhouse Gas Scheme—the baseline for the purpose of making a methodology determination under section 106 is 20%; and   (c)   if the project is a landfill legacy emissions avoidance offsets project that was accredited under the Greenhouse Friendly Initiative—the baseline for the purpose of making a methodology determination under section 106 is 0%.

This set of amendments ensures that early adopters of carbon sequestration projects will not be disadvantaged under the Carbon Farming Initiative. The collection and use of landfill gas for electricity generation is one of the most effective means of reducing greenhouse gas emissions. Australia's landfill gas power generation sector currently reduces carbon emissions by over four million tonnes of carbon dioxide equivalent each year. However, under the bill currently before the Senate, there is no certainty for these businesses—which currently operate under the New South Wales GGAS scheme or the Greenhouse Friendly scheme—that they will be considered under the prescribed non-CFI offsets scheme, nor what baseline would be applied. These amendments insert a provision that, for existing projects wanting to transition into the CFI scheme, a baseline of 20 per cent be applied to projects currently under the New South Wales GGAS scheme and a baseline of zero per cent be applied to projects currently under the Greenhouse Friendly scheme. These amend­ments also insert the New South Wales GGAS scheme and Greenhouse Friendly scheme into the definition of the prescribed non-CFI offsets scheme.

Currently it will be up to a determination to specify what baseline will be applied to existing projects, and this simply does not provide early movers with any certainty about the viability of existing projects. It should be noted that 20 per cent is a conservative figure that has been determined based on the national greenhouse gas inventory data. Inserting a 20 per cent baseline into the legislation for existing projects under the GGAS scheme and zero per cent for existing projects under the Greenhouse Friendly scheme will give this industry certainty for its projects.

LMS is a renewable electricity generator that was established in 1982. It is a South Australian based company employing some 100 people across the country. It was an early adopter—in fact, one of the first adopters of carbon abatement projects. The Prime Minister visited LMS's Rochedale plant, in Brisbane, on 13 July 2011. This is what the Prime Minister said at that time:

And I’m here today at LMS, and I thank them for having me here, looking at how they are generating electricity from landfill. Landfill, as it decomposes, creates the kind of carbon pollution we’re worried about, it particularly creates methane gas. Here at this facility today, instead of that gas simply going into the atmosphere as pollution, it is being captured and it’s being used to generate electricity …

And that electricity is powering more than 4500 homes. This kind of clean energy future is probably a bit unexpected, people have heard about solar and they’ve heard about wind, they may have heard about geothermal, but here is another innovative way that we will see a clean energy future using the gas from the landfill to generate electricity.

It’s this kind of clean energy future that will be turbo-charged by putting a price on carbon, as we create the circumstances where new clean energy ventures can prosper. I’ve been very pleased to learn about this clean energy venture today and it’s why I’m so determined, because I know these things are possible, that we as a nation seize a clean energy future by putting a price on carbon.

Interestingly, unless we significantly amend the legislation, then the legislation in its current form could well lead to a closure of the very plant that the Prime Minister visited, because there will be no investment certainty. But, more than that, this plant will not be viable. That is a very serious concern. If a standardised baseline of 20 per cent is not provided and does not give certainty to LMS, projects such as the Rochedale project that the Prime Minister visited will, most likely, close down. Indeed, LMS's 15 separate projects under the GGAS scheme could all be threatened if this amendment is not passed. In Queensland, projects include Rochedale, Swanbank, Whitwood Road and Birkdale. New South Wales projects include Tweed Shire; Summer Hill, Newcastle; Awaba, Newcastle; Eastern Creek; and Wyong. In Victoria, LMS has projects in Hallam Road, Wollert, Bendigo, Ballarat and Shepparton. In Tasmania, it has a project in Remount, in Launceston. These projects combined create an estimated 1.33 million tonnes of CO2 abatements annually. LMS also has four Greenhouse Friendly projects which could be put at risk. LMS is but one example.

Altogether, the landfill gas industry delivers around four million tonnes of CO2abatement each year. Failure to provide certainty that existing projects will be able to transition into the CFI, with a fixed 20 per cent baseline for GGAS existing projects and zero per cent baseline for existing Green­house Friendly projects, could see the closure of these projects.

These amendments will provide that certainty and will ensure that the Carbon Farming Initiative supports all carbon abate­ment schemes, including existing projects which have been initiated by early movers.

As I understand it, there have been many negotiations in the last 24 hours in relation to this matter. I hope Senator Milne does not mind my saying this, but I am particularly grateful for her longstanding interest—long­er standing I think, than that of most of us in this chamber—and her particular awareness of this issue. I know we can debate issues of additionality, but it would not make sense to me unless there is a proper transitional mechanism for these sorts of projects.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The capture of gas from landfill is certainly a critically important component of dealing with greenhouse gas emissions. Turning it into energy generation is very good for society and greenhouse gas emissions. Whilst we will always aim to reduce landfill, it will be a while before we get to the point where we have zero waste, so we need to support companies that are actually out there doing this. A number of them actually got in and started to do it early before there was any compulsion to do so. However, in recent years, particularly in metro management of waste there have, increasingly, been local and state government regulations requiring the capture of gas from landfill. In terms of this bill, the question then becomes: how can you measure that which is additional, recognising that there is already regulation in metro Australia and that, in most of rural and regional Australia, there is no regulation?

However, I am very concerned that the companies concerned had not engaged in this debate in terms of the parliament working out how we might deal with this under the Carbon Farming Initiative. In talking to LMS they said, in particular, that they had been engaged in discussions with the government over a long period and had hoped it would resolve the matter and that is why they had not brought it into a political context. As it has been brought into a political context, I want to thank the minister and the depart­ment for facilitating a meeting for me yesterday with both the company and the technical experts from the department so that we could sit down and work out how we can move this forward. I am sure that no-one in this parliament would want to see companies that are actively engaged in reducing carbon emissions, employing people and doing the right thing actually go broke as a result of this program. No-one in this parliament would think that was a sensible thing.

Yesterday we had a meeting. It came down to a discussion about the technicalities of what the baseline should be for measuring this as the entitlements would occur under the legislation. I have been told that those discussions were fruitful and that there has been some resolution. So, before I make a decision about what we are doing on this matter, I want to hear what actually happen­ed overnight in those technical discussions. It would be good to see this matter resolved in a positive way with regard to the environ­mental impacts, the jobs in those industries and to actually get advancement for this whole issue of management of the land waste sector in Australia.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I thank Senator Xenophon for co-sponsoring this amendment with the opposition and for his work on this topic with us and with the industry affected. I also thank Senator Milne for her comments just then and for her indication that this is an area of genuine need for consideration when looking at the bill and, in particular, for reserving her position on these amendments, depending upon where discussions have gone between the government, the affected industry sector and companies and upon what solution the government has for this matter. I will not make a lengthy contri­bution now, noting that the debate will conclude at two o'clock, and I am eager to hear from the minister as to whether there has been some progress. I would just highlight that in the committee report of the inquiry into this the No. 1 recommendation was:

... the government consider options to ensure there are no perverse incentives to cease existing abatement projects, and encourage first movers to undertake further abatement or sequestration activities under the Carbon Farming Initiative.

In the response to that Senate committee inquiry tabled the other day by the govern­ment, they did indicate support for that recommendation. They did indicate that they thought there should not be perverse incen­tives to cease existing abatement projects.

As Senator Xenophon has highlighted, there are a number of projects that could be at risk were the bill to pass without amend­ment and without addressing this issue. We think that would be totally unacceptable. These are companies that have invested in good faith. These are companies that have done the right thing by the environment by capturing the gases from landfill projects and ensuring that they are used to generate electricity, and it would be an utter waste if those systems were not encouraged into the future. There are many localities—regional centres such as Bendigo, Ballarat, Tweed Shire, Launceston and Newcastle—that would potentially be most vulnerable in this regard. Some of those regional centres would be the ones most likely to see the perverse outcome where, if we pass this, in fact we will end up with less rather than more abate­ment, and that obviously is not an outcome that would be at all acceptable under this scheme.

There are some other points that I would like to and probably will highlight when we return to this debate but, to make sure that the minister can at least update Senator Milne and the chamber on discussions with proponents to now, I will leave enough time for him.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

Than you for that, Senator Birmingham. The government understands the issue faced by LMS Generation, issues which are added to by the coalition—but I will leave that aside. However, these amendments seek to bypass the independent process that the government has established for assessing methodologies, which is the Domestic Offsets Integrity Committee. The rules for setting baselines are set out in the methodologies. These need to be supported by credible evidence and assessed by the Domestic Offsets Integrity Committee; that is the gateway in.

The government is working with the landfill industry on approaches for setting baselines for existing landfill projects under GGAS and Greenhouse Friendly in the government's landfill methodology. The gateway is through DOIC—establish the methodology, set the baselines for existing projects under GGAS and Greenhouse Friendly. The government recognises the value of a standardised approach to baseline setting for existing landfill projects that have been operating under GGAS and Greenhouse Friendly. It is something we recognise. The government will consult on appropriate baselines, with a view to having the matters resolved within the next month. Standardised baselines would be included in the landfill methodologies and assessed by the Domestic Offsets Integrity Committee before being approved by the minister and laid before parliament as disallowable instruments.

In saying all of that, we do not support the amendments. We do not see the need for the amendments. We can deal with it within the existing framework. Ostensibly we will all land at the same place. I think we are all in screaming agreement that we need to do something in this area. I cannot make any stronger commitment than the words that I have used. They are as strong as we can give. I will say them again: the government will consult on appropriate baselines, with a view to having the matters resolved within the next month. It is clearly within our intention. I cannot put any stronger words than those, and I am sure that you will be able to draw your conclusions from that. On that basis, we do not support the amendments. We do understand where the amendments are going. It is also pleasing that those opposite under­stand that it is imperative to pass the bill.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I appreciate the minister's answer. I appreciate the minister says that it is not the intention of the government to disadvantage plants such as these, which have made a tremendous contribution in CO2 abatement by being early adopters. We know what the Prime Minister has previously said about early adopters generally on the whole issue of greenhouse gases, and I agree with the Prime Minister: if you are an early adopter, you ought to be rewarded. But what we have with this legislation is a situation where early adopters are in fact being punished, to the extent that their businesses might not be viable. To say that this is going to be resolved by regulation is, I believe, completely unsatisfactory. There needs to be a solution to this. It needs to be a solution that is enshrined in legislation rather than left to regulation. If it is left to regulation, it will just compound the uncertainty. We have the whole issue of disallowable instruments, which is quite a proper process, but dealing with this in the absence of a specific legislative framework, a specific legislative baseline, is completely unsatisfactory.

It is important to acknowledge the work of LMS and others who have done this. LMS has previously acknowledged in its material that five per cent is not a realistic baseline. Some of the abatement stems from GGAS projects which could have occurred to control odour and for occupational health and safety reasons. A 10 per cent standard­ised baseline for GGAS landfill gas projects would be realistic, as it would account for common practice legislatively required abatement activities. However, there is a need to be conservative when estimating standardised baselines; therefore, a 20 per cent national baseline for all GGAS landfill gas projects to transition into the CFI is fair and justifiable. It is a conservative approach. It is an appropriate approach. There is no windfall at all. In fact, they are 'taking a haircut', to use a colloquialism, in relation to this. This 20 per cent baseline would only apply to existing GGAS landfill projects. As mentioned previously, GHF projects already have a proven baseline of zero. Any new CFI landfill gas projects should need to satisfy a new standardised baseline. This will ensure the integrity of both the GGAS baseline and the new projects baseline. That is why it is important that the negotiations continue.

I would like to acknowledge again the work of Senator Milne in facilitating that very crucial meeting between the department and LMS, where I think there was some real progress made. Let that progress continue, let it continue quickly and let us ensure that there is a satisfactory outcome, where the outcome can be dealt with in the context of this bill. Do not leave it to chance and uncertainty with regulations. It is simply too important for this early adopter of these measures.

Progress reported.