The Albanese Government has introduced legislation to Parliament today to reward industrial facilities that stay below their emissions baselines, and give other facilities a new, low-cost way of reducing net emissions.
The Safeguard Mechanism (Crediting) Amendment Bill 2022 will enable large industrial facilities to earn credits when they reduce their emissions below their baselines.
Below the baseline crediting is not a new idea. These new credits were promised by the former Government but were never legislated.
Their introduction creates an incentive for facilities to make the changes needed to reach net zero emissions by 2050.
The Bill amends the National Greenhouse and Energy Reporting Act 2007 (NGER Act) and Australian National Registry of Emissions Units Act 2011 to establish Safeguard Mechanism Credits (SMCs), covering how credits are issued, purchased, and included in the Australian National Registry of Emissions Units.
It also addresses incentive overlaps from declining Safeguard Mechanism baselines, Safeguard crediting, and opportunities to create Australian Carbon Credit Units.
Minister for Climate Change and Energy Chris Bowen said an improved Safeguard Mechanism is a crucial building block for Australia’s clean energy transformation.
“The introduction of Safeguard crediting will provide a balanced scheme that is effective, equitable, efficient and simple,” Minister Bowen said.
“The reforms will support industry to reduce emissions efficiently, while maintaining competitiveness as the global economy decarbonises.”
“By lowering the cost of reducing emissions, crediting and trading will help Safeguard facilities meet Australia’s climate targets in a cost-effective way.”
Around 215 facilities that produce more than 100,000 tonnes of greenhouse gases a year are included in the Safeguard Mechanism, and accounted for 28% of Australia’s total emissions in 2020-21.
Many businesses that operate these facilities have made long-term climate commitments that match or surpass Australia’s climate targets, which is why the Business Council of Australia, and the Australian Industry Group have supported the Government’s reforms to the Safeguard Mechanism.
Consultation remains ongoing on the proposed design of the broader regulatory reforms for Safeguard facilities.
