Climate Safeguard Mechanism Will ‘Stifle’ Gas Industry, Warned Shadow Foreign Affairs Minister

A general view of The Yallourn Power Station in Yallourn, Australia, on Aug. 16, 2022. (Asanka Ratnayake/Getty Images)

Australian businesses, and especially the gas industry, will suffer under the climate safeguard mechanism, Shadow Foreign Affairs Minister Simon Birmingham has warned.

The safeguard mechanism, which was initiated by the centre-right Coalition but is being overhauled by the centre-left Labor, requires the 215 facilities that annually produce over 100,000 tonnes of greenhouse gases to limit their net emissions below a baseline limit.

It’s highly likely the plan will pass through parliament after the left-wing Australian Greens announced it has successfully struck a deal with the Labor government on Monday.

Birmingham said if that were indeed the case, the economic ripple will be felt over months or years to come.

“What is going to occur if, as the Greens claim, it is going to stifle gas industry investment, in particular, because that has flow-on consequences and impacts for Australian businesses, Australian households, in terms of the availability of gas and therefore the price and reliability of gas for production purposes in industry, as well as what it means for electricity markets, too,” he told Sky News on Tuesday.

“I think there are still serious issues for particular business sectors, such as the cement industry sector, to really understand whether there is any compromise from the government.”

Birmingham said the implications need to be fully understood before the parliament passes the bill, but he suspected that the government will “seek to rush this through from here.”

“I hope, though, that given this deal has been stitched up behind closed doors between Labour and the Greens, they do allow a proper process for a full exploration of the consequences of what they’re doing.”

Birmingham also said it is crucial that the Liberal party could ensure they have a “compelling set of policies for the next federal election.”

“Including effective policies to achieve Australia’s emission reduction targets,” he said.

“Along with, of course, demonstrating that we also have the types of policies to actually deal with the cost of living pressures that Australians are facing at present.”

Greens Struck Deal With Labor To Pass Climate Safeguard Mechanism

On Monday, Greens leader Adam Bandt said a deal had been made to put a ceiling on gross greenhouse gas emissions, which won’t be able to exceed current pollution levels of 140 million tonnes a year, and there will be a decreasing cap over time.

The bill will include a “pollution trigger” that will require the climate change minister to test a new or expanded project’s impact on the hard cap and net carbon budgets.

If the assessment finds that the project would contribute to exceeding the cap or budget, the minister must consult and recalibrate the rules or impose conditions on new entrants.

As well, all new gas fields for export will need to be carbon-neutral from day one.

ACT independent senator David Pocock reached an agreement with the government on Monday night.

“Reforms to the safeguard mechanism are imperfect but represent a step towards a credible climate policy,” Senator Pocock said in a statement on Tuesday.

Previously, Pocock argued that “the science is very clear that we can’t open new fossil fuel projects and potentially be on the path to a livable future.”

In addition, Pocock disagreed with the idea that Australia needed new coal and gas projects during the transition to renewable energy, saying the country already had plenty of existing gas and coal.

“We export three-quarters of it. And we’ve charged international prices for our own gas. That is a political failure,” he said.

“I’d argue that the solution is not more gas. It’s electrification and helping households get off a really expensive energy source.”

The government agreed to a hard cap on safeguard mechanism emissions, which Senator Pocock said would give Australians certainty of pollution reduction under the policy.

The government also agreed to accept, or partially accept, 16 recommendations as additional comments to the committee report on the legislation.

‘Biggest Carbon Tax’

But Ted O’Brien, the Shadow Minister for Energy, on March 15 warned that electricity prices would “continue to spiral out of control under Labor, with further increases to whack small businesses by an additional $1151 and families by $463.”

“Labor cannot be trusted to reduce energy prices,” he said.

O’Brien also called the climate safeguard mechanism “the biggest carbon tax Labor has introduced” and is three times more expensive than the carbon tax under former Labor Prime Minister Julia Gillard.

In 2014, the Gillard government priced carbon at A$23 (US $15.31) a tonne, compared to $75 a tonne under the Albanese government.

“And it’ll be up to $100 by 2034 times the price,” he told Sydney’s radio 2GB on Jan. 11.

“Economic insanity is a tax on individual families and consumers. I mean, there is no chance that we are going to have all the companies under this scheme that are able to reduce their emissions, by the way.”

“You can grow the economy and do the right thing on the climate change side. But you don’t watch the economy and hurt Australians in the process. That’s what Labor’s doing,” he said.