Safeguard Mechanism It’s time for workable agreement

“It is time for the Parliament to come to a workable agreement on the current package of Safeguard Mechanism reforms so that the private and public sectors can get on with the transition to a net zero emissions economy,” Innes Willox, Chief Executive of national employer association Ai Group, said today.

“There’s not a lot of time to get this stage of the Safeguard done. Parliament won’t sit in April and the Budget will dominate in May. Hundreds of facilities need clarity as soon as possible on the new rules that will apply to them from 1 July.

“The Parliament can help deliver that clarity this week. The net zero emissions marathon has much further to run, but we won’t get to the finish line by staying in the changing rooms.

“The Safeguard reforms proposed by the Government in January were not the last word on this element of climate policy. There was room for immediate improvement in response to issues raised by industry and in the Parliament. There is also going to need to be longer-term evolution of the Safeguard and supporting policies to ensure industry can achieve its net zero emissions future right here in Australia. But none of that would be brought closer by the Parliament failing to pass the Safeguard reform legislation.

“Industries like alumina, cement and steel raised the challenge of competitiveness under rapidly falling baselines. We are hopeful that improvements to the Trade Exposed Baseline Adjusted (TEBA) arrangements will alleviate most of these issues for the medium term. However, it will be important to replace TEBA with a more durable answer to carbon leakage as soon as possible. The review this year of longer term options, including an Australian Carbon Border Adjustment Mechanism, will be vital.

“Agreement should also be able to be struck around the new facility and offset issues that have dominated the Parliamentary discussion.

“Robust international best practice baselines for new facilities would substantially remove the potential for entitled emissions to breach the carbon budget.

“Simple maths makes it clear that emissions offsets can complement and ease the costs of industry decarbonisation but not replace the need for it. Multiple options exist to further bolster confidence that maths will prevail and offsets will not be relied on for more than they can actually deliver,” Mr Willox said.

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