Greens Deal Paves Way to Legislate Climate Safeguard Mechanism

Greens leader Adam Bandt speaks at a party room meeting at Parliament House in Canberra, Australia, on Feb. 7, 2022. AAP Image/Mick Tsikas

The Australian Labor government is getting very close to legislating its climate safeguard mechanism after reaching an agreement with the Greens party.

On March 27, the Greens announced that it would support the safeguard mechanism after securing “significant changes” to the legislation, which Labor wanted to push through the parliament this week.

The mechanism is a policy that mandates Australia’s 215 businesses with the highest greenhouse gas emission levels to cut their carbon footprint by 4.9 percent each year as Australia aims to reach net zero emissions by 2050.

The legislation passed the lower house on March 27 after the government struck down proposed amendments from independent crossbenchers, displeasing the MPs who sought to change the mechanism.

For the bill to get through the upper house, Labor needs to get the support of the Greens and two other votes, either from independent Senators or minor parties.

Previously, Labor had been in a deadlock with the Greens as the latter wanted new coal and gas projects in Australia to be banned in exchange for its support.

While the Greens backed down from its earlier demand, the party said the new agreement with Labor would stop many new coal and gas projects in the development pipeline.

The Greens’ Amendments to the Legislation

Among the changes introduced by the Greens is a hard cap that limits Australia’s gross greenhouse gas emissions to 140 million tonnes a year. The ceiling is expected to decrease over time.

In addition, there will be a “pollution trigger” that requires the climate change minister to test the impact of a new or expanded project on the hard cap and net carbon budgets.

Suppose a project is assessed to cause greenhouse gas emissions to exceed the cap or the budget. In that case, the minister must consult and recalibrate the relevant laws or impose additional conditions on the project.

The bill will also dictate all new gas fields for export to achieve zero emissions from day one and require corporations to justify their use of carbon offsets if they offset over 30 percent of their base CO2 emissions.

LNG gas storage tanks are shown at the Woodside operated North West Shelf Gas Venture in the north of Western Australia, on June 17, 2008. Greg Wood/AFP via Getty Images

Other changes include increased methane monitoring and restrictions on using some government funds to subsidise coal and gas projects.

“Coal and gas have taken a huge hit. The Greens have stopped many of the 116 new coal and gas projects in the pipeline from going ahead.” Greens Leader Adam Bandt said in a statement.

“Pollution will actually go down, and we’ve derailed the Beetaloo and Barossa gas fields.”

While the Greens considered the agreement with Labor a victory, Bandt said the fight against all new coal and gas would continue.

“We will continue to push to strengthen the environmental laws that will come before the Parliament next year and to fight fossil fuel subsidies in the budget,” he said.

“We will back the fights of communities around the country who are fighting these coal and gas projects in the pipeline, including Scarborough and Narrabri.”

Response from the Government and Relevant Parties

Following the agreement, Prime Minister Anthony Albanese said the amended safeguard mechanism would bring about more action on climate change and steer Australia toward becoming a “superpower” for renewable energy.

“We can’t afford to continue to engage in conflict in this place in order to try to get the perfect outcome,” he told reporters.

“We have a responsibility ... to achieve real outcomes to protect our manufacturers, to grow our economy, while we’re dealing with emissions reduction.”

Australian Prime Minister Anthony Albanese speaks at Parliament House in Canberra, Australia, on July 28, 2022. Martin Ollman/Getty Images

Meanwhile, Climate Change and Energy Minister Chris Bowen said the country was a crucial milestone in achieving Australia’s 43 percent emissions reduction target by 2030.

“These reforms are crucial to our climate and our economy–supporting Australian industry and ensuring they will continue to be competitive in a decarbonising world,” he said in a statement.

Independent Senator David Pocock, who reached an agreement with the government on March 27, said that while the safeguard mechanism was imperfect, it represented a step towards a credible climate policy.

“These reforms need to be seen as a first step as there is much more work to do to ensure we speed up decarbonisation and take advantage of the huge opportunities this presents for Australia,” he said.

On the energy industry’s side, the Australian Petroleum Production and Exploration Association (APPEA) said the changes to the mechanism ignored the central role of natural gas in meeting Australia’s climate goals and would make those targets harder and more costly to achieve.

“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 Market Operator,” APPEA chief executive Samantha McCulloch said in a statement.

“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.”