Safeguard Mechanism reforms ignore gas’ critical role in meeting Australia’s climate change goals: APPEA

Australia on Monday unveiled planned tightening of its so-called Safeguard Mechanism legislation — a move which the petroleum industry said ignores the role of gas in meeting the nation’s climate goals, as it could make new gas projects more difficult to be approved.

However, environmental groups hailed the historic agreement between the ruling Labor party and the Greens as putting the big emitters on notice.

Announcing the proposed legislative changes, Greens leader, Adam Bandt, took credit for “a big hit on coal and gas” that could effectively block half of 116 proposed new fossil fuel projects.

Bandt told reporters in Canberra the deal puts “significant hurdles” in the way of new developments including gas projects in the Beetaloo Basin in Australia’s Northern Territory, where costs of up to A$1 billion (US$665 million) annually to offset emissions would be onerous enough to “derail” the business case for such investments, reported The Guardian.

Australia needs to produce more gas

The Australian Petroleum Production & Exploration Association (APPEA) said the changes to the Safeguard Mechanism ignore the central role of natural gas in meeting the nation’s climate goals, adding the sector is committed to net zero by 2050 and to economy-wide policy to drive down emissions.

APPEA chief executive Samantha McCulloch said the deal would ultimately make Australia’s climate change targets harder and more costly to meet.

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“Australia’s natural gas is critical to reaching net zero in Australia and the region, supporting the transition away from coal and providing reliable backup for renewables while powering Australian manufacturing,” said McCulloch.

“Not only is new gas supply needed to support our climate change objectives, but it is also essential to avoid energy shortfalls and put downward pressure on prices. Australia needs to produce more gas to support decarbonisation across the economy and meet energy demand, as called for by the Australian Competition and Consumer Commission and Australian Energy Markey Operator.

“New gas supply investment needs policy and regulatory certainty but instead, the Labor-Greens deal creates additional barriers to investment, further diminishing the investment environment and adding to the growing list of regulatory challenges facing the sector,” she said.

Carbon capture and storage

APPEA added that the legislative changes announced on Monday strengthen the need for strong government direction on critical step change technologies such as carbon, capture and storage (CCS).

“If the government is serious about meeting net zero, it needs to lead on a national strategy for CCS development,” McCulloch said.

“Australian gas is also needed to help our international partners decarbonise. According to the Federal Government, our exports have the potential to lower emissions in LNG-importing countries by around 166 million tonnes of carbon dioxide annually replacing other higher emissions energy sources.

“Decisions that take emissions reductions options — such as natural gas — off the table make reaching net zero significantly harder and more costly.”

The Climate Council hailed Monday’s historic agreement between Labor and the Greens to deliver the first legislation in a decade that will regulate climate pollution, claiming a significantly strengthened Safeguard Mechanism would drive down emissions from Australia’s 215 biggest industrial polluters and make it more difficult for new gas and coal projects to be approved.

“This will be the Federal Parliament’s first reform to genuinely cut pollution in a decade,” said Climate Council chief executive Amanda McKenzie.

“Almost one year ago, Australians sent a clear message at the polls that they wanted our parliament to act on climate change. [Now], they are getting on with it. This will mean more clean, renewable power and less pollution. Finally, as a nation, Australia is starting to tackle the climate crisis.

“The agreement is a massive wake up call to any board or business executive who thinks they can keep stalling genuine climate action. The era of climate gridlock in Australia is over and the only viable path for any business is genuine, deep cuts to carbon pollution this decade,” added McKenzie.

Reform package

The proposed reform package includes:

* Capping total emissions under the Safeguard Mechanism

* Making new gas facilities fully accountable for their emissions from day one

* Subjecting any new project that would add significantly to emissions under the Safeguard Mechanism to a rigorous assessment

* Ensuring public funding through the Powering the Regions Fund is not directed to gas and coal projects and only supports future-focused industries.

Farmers for Climate Action also welcomed the amendments to the Safeguard Mechanism package, including the hard cap on the emissions, reduced use of and improved scrutiny of carbon offsets and a freeze on one specific method of creating carbon offsets.

“This agreement contains sensible measures and is a good start. The substance is in the execution, and we’ll be watching closely as this unfolds,” said Farmers for Climate Action chief executive Fiona Davis.

“The idea of having corporations justify their use of offsets for more than 30% of their baseline is a good one. A review of offsets in 2026-2027 by the Climate Change Authority is also welcome, and the key to both is in the implementation.”

Emissions reduction target

The Labor-led government believes the reformed Safeguard Mechanism deal puts it on track to achieve its emissions reduction target of 43% by 2030 however the proposed reforms are expected to be opposed by the Coalition. The strengthened legislation, which is due to come into effect from 1 July, needs to pass both houses of parliament.

“We can’t let politics and ideology get in the way of sensible, evidence-based climate and energy policy,” stressed McCulloch.