Existing high-emitting industries that are difficult to decarbonise, like smelting and cement-making, will wear extra costs if the safeguard mechanism allows new coal and gas projects into the system, the Australian Conservation Foundation said today.
"In effect other industries will subsidise fossil fuels if the safeguard lays out a welcome mat for new coal and gas," said ACF's climate and energy program manager Gavan McFadzean.
"One of the biggest problems with the government's proposed design for the safeguard mechanism is that it does not make a distinction between high emitting industries that should stay in the economy and decarbonise, like smelting and cement, and high emitting industries that should be rapidly phased out, like coal and gas.
"There are clean alternatives to coal and gas. If the safeguard allows for new coal and gas entrants, other industries will face steeper baseline emissions reductions and higher costs.
"New entrants to the system should be made to purchase safeguard mechanism credits (SMCs) before Australian carbon credit units (ACCUs)/offsets, because SMCs represent equivalent emissions reduction."
ACF believes:
- the safeguard mechanism should have an emissions reduction hierarchy (from most to least effective ways to decarbonise) that requires facilities to 1. avoid 2. minimise 3. abate 4. access SMCs 5. purchase ACCUs/offsets as a last option.
- new facilities should enter the safeguard mechanism at net zero so as not to overwhelm the system.
- there should be no ACCUs for coal and gas.
- ACCUs need to be phased down and have more onerous limits over time.
- coal and gas facilities should not be able to access the $600m Powering the Regions fund for assistance to reduce emissions.
"ACF urges the government to revise its design so the safeguard mechanism can actually become an effective scheme to cut emissions from Australia's major polluters."
