Monday, 04 May 2015 18:16

Safeguard Mechanism with Teeth Post 2020?

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Political Editor of The Guardian Australia, Lenore Taylor, reported on Friday 1 May that the Minister for the Environment, the Hon Greg Hunt MP, is on record stating that Direct Action will require electricity generators and heavy industry to gradually reduce greenhouse gas emissions after 2020.

The minister is quoted as offering the following definition of Direct Action: “It is a two-part system. An emissions reduction fund (ERF)… [and] secondly, we have the safeguards mechanism which allows us to work with individual firms on a budget which can be adjusted and progressively tightened throughout the 2020s through to 2030 and 2040 and 2050.”

This is the first time (to our knowledge) that Minister Hunt has made any mention of ‘decreasing’ emissions via the Safeguard Mechanism. Until now it has always been described as ‘safeguarding emissions that are purchased under the ERF’, not as a tool to actually drive down economy wide business as usual (BAU) emissions. The practical implications of this is that in order to actually drive down BAU emissions post 2020, the Safeguard Mechanism will need to employ decreasing emissions baselines over time at a facility level, rather than the ‘flat’ baseline proposed between now and 2020.

 , industry has traditionally been unperturbed. The Australian Industry Group has stated that safeguards “[meet] the government’s objective that the mechanism will not be a driver of abatement towards the 2020 target” and the Business Council Of Australia is on record stating “[the] safeguard mechanism should not in effect impose an additional cost on new facilities that acts as a de facto carbon cost”.

Finally, Taylor reports that “In internal government discussions the prime minister, Tony Abbott, and his office have been very concerned the safeguards mechanism could never turn into a de facto carbon price or a burden on emitting industries.”

Read the full article here.

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