Safeguard mechanism at risk of blowing out, models show

Andrew Brown | March 6, 2023

New modelling has revealed the emissions budget as part of the government’s safeguard mechanism is at risk of blowing out unless further reductions are made.

The modelling carried out by the firm RepuTex for the Climate Council and Australian Conservation Foundation showed emissions from 16 new coal and gas projects would be about 25 per cent of what the mechanism would aim to reduce.

The government’s proposed mechanism would see the emissions of the biggest 215 polluters capped.

Companies that breach the limit would be forced to buy carbon offset credits or trade their emissions with other firms.

While companies would be required to reduce emissions by 4.9 per cent each year until 2030 under the mechanism, modelling has shown declines of 8.9 per cent may be needed by the end of the decade to keep within the emissions budget.

The Climate Council’s head of advocacy Jennifer Rayner said the modelling showed further work was needed to be done to fine tune the mechanism.

“If we don’t get the settings right, new coal and gas will eat a large and growing share of the safeguard mechanism’s emissions budget in the years ahead,” Dr Rayner said.

“Worse, if the production of coal and gas is even a little higher than the government has predicted, this risks blowing the carbon budget entirely.”

Dr Rayner said the projections were carried out before a possible 100 further fossil fuel projects under development were taken into account.

“Either this would mean Australia fails to meet out 2030 emissions reduction target, or existing facilities would have to cut their emissions by far more to make up the gap. There’s only two ways this can go.”

The modelling coincides with a Senate inquiry examining the safeguard mechanism set to hand down its report into the scheme to parliament on Monday.

The federal government is currently carrying out consultation with stakeholders on how the safeguard mechanism scheme would work.

The Climate Council and Australian Conservation Foundation have called for the government to ensure the scheme prioritises genuine attempts to reduce emissions, rather than offsets.

The groups have also said the scheme should ensure new fossil fuel projects should be treated with full accountability for their emissions.

The foundation’s climate change manager Gavan McFadzean said the government should prioritise decarbonising future-focused industries.

“A huge flaw in the proposed safeguard mechanism is that it doesn’t distinguish between essential industries that Australia needs to decarbonise – like steel, cement and aluminium – and big polluting industries that should be rapidly phased out,” he said.

“Industries like cement and steel shouldn’t have to do more to compensate for Australia’s biggest fossil fuel polluters.”