The Australian government has begun soliciting public feedback for proposed Safeguard Mechanism reforms and drafted provisions for the $1.9 billion Powering the Regions Fund.
The reforms seek to help Australia’s biggest emitters to reduce their carbon footprint and remain competitive in a decarbonising global economy.
A number of heavy industry and big business entities like the Business Council of Australia and the Australian Industry Group have called on reforms to the Safeguard Mechanism, proposing an end to policy uncertainty and enabling a predictable emissions reduction pathway to net zero by 2050.
The proposed package is based on extensive feedback gathered over a six-month period from businesses, industry associations, climate and community groups, academics, and private individuals.
Among its provisions, the package proposes:
- Retaining the mechanism’s intensity baseline framework, which helps decouple emissions growth from economic growth by allowing baselines to grow and fall with production;
- Establishing a hybrid approach for the setting of baselines for existing facilities, heavily weighted towards site-specific levels at scheme management; and
- Creating tailored treatment for emissions-intensive, trade-exposed facilities based on the principle of comparative impact to ensure competitiveness and that emissions do not leak overseas.
The changes decrease overall emissions baselines of Safeguard-covered facilities by 4.9 per cent each year to 2030, according to a statement from Minister for Climate Change and Energy Chris Bowen.
Changes to the Safeguard Mechanism are expected to allow the generation of 205 million tonnes of abatement by the end of the decade, equivalent to cutting emissions from Australia’s cars by two-thirds over the same period.
Established by the previous Coalition government, the Safeguard Mechanism mandates facilities that produce over 100,000 tonnes of greenhouse gases annually to keep their net emissions below a baseline.
“Reforms to the Safeguard will help create an effective, equitable and efficient trajectory to net zero. We know that that 70% of facilities, representing over 80% of scheme emissions, already have corporate commitments to net zero by 2050 – this reform helps deliver the framework to get there,” Bowen said.
The proposed reforms also come with a detailed design and implementation proposal of the Powering the Regions Fund, which is designed to ensure the regions seize the benefits of Australia’s net zero transformation by supporting decarbonisation, new clean energy industries, workforce development and credit purchase by the Commonwealth.
