Labor Refuses Greens’ Proposal to Ban Coal and Gas Projects in Climate Safeguard Mechanism

Chris Bowen, Australian Minister for Climate Change and Energy, speaks at the Sydney Energy Forum in Sydney, Australia, on July 12, 2022. (Brook Mitchell/Getty Images)

Climate Change and Energy Minister Chris Bowen has brushed off the Greens’ proposal to ban coal and gas developments as the centre-left government seeks to pass the climate safeguard mechanism in the upper house.

Labor’s safeguard mechanism, which would deal the resource sector a heavy blow, would mandate Australia’s 215 businesses that emit the highest levels of greenhouse gas cut their emissions by 4.9 percent each year.

Facilities that breach the limit must purchase or trade their carbon credits with other firms, which Labor argued would bring the total emissions across the sector down by the same amount.

The left-wing Australian Greens have threatened to oppose the policy unless Labor takes a step further to prohibit new fossil fuel developments. The Greens repeated the warning in a Senate committee inquiry released on March 6 that said new coal and gas projects pose a “danger” to a “stable climate and safe society.”

Bowen said on March 7 that putting a “blanket ban” on coal and gas projects would be “irresponsible” as the government is “undertaking this massive transition.”

“That’s their view, but it’s an offer, not an ultimatum. [Adam Bandt] is happy to have good-faith talks. We’ve had those, and we'll continue to have them,” he told ABC’s RN Breakfast program.

“In relation to the Greens, obviously, we’ve had ongoing discussions, and we’ll have ongoing discussions, but our position is the same in private as it is in public … our position is we [have a] mandate to implement these reforms.

He said the parliament could either “seize the opportunity to reduce emissions by 205 million tonnes or to squander it.”

“The choice for the parliament is: Do you want business as usual—which is seeing emissions from these facilities go up, existing and new—or do you want a constraint in place [that] will see emissions go down?”

The sentiment was echoed by Prime Minister Anthony Albanese, who said on Tuesday that gas plays a “key role” in the energy transition, providing “peaking power” today as well as firming and backup power.

“The work of transition will require massive investment in building new physical assets and modifying existing ones,” he told the Australian Financial Review Business Summit.

In order for the mechanism legislation to pass the upper house, the government will need the support of the Greens plus two crossbenchers.

Greens Senator David Pocock said in the Greens’ Senate inquiry report that Labor should introduce an “absolute” cap on emissions and place harsher conditions on fossil fuel projects, such as being net zero since the beginning of their operation.

Liberals Warned Factories Would Move Elsewhere

Shadow Climate Change Minister Ted O'Brien opposed the climate safeguard mechanism, saying it would force manufacturers to move their facilities to China and India, which have loose environmental regulations.

Such a move would be even more damaging to the environment, he said, as Australian manufacturers are “three to four times more emissions efficient than those in China and India.”

“Steelmakers and smelters tell me they’re already considering relocating to China or India due to Labor’s energy prices,” he argued in a commentary in the Australian Financial Review.

“So if a manufacturer that generates one million tonnes of emissions annually relocates to India, an additional three million tonnes of emissions will be released into the atmosphere every year.”

O'Brien added that while Australian industry must keep reducing emissions, the policy should “incentivise technology, engineering and enterprise—not taxes.”

“Other nations have looked to carbon taxes, but despite grand visions of a globally coordinated solution, one has never eventuated.”

A Costly Energy Transition

According to a report (pdf) launched by Bowen in February, the ambitious plan to decarbonise Australia’s heavy industries in the next 30 years will cost the country $625 billion (US$432 billion) in both government and private investments.

The report outlines a roadmap to reduce Australia’s industry emissions by 92 percent as the country seeks to limit global warming to 1.5 degrees Celsius.

It stated that the federal government and local businesses had to invest $20.8 billion per year on average to decarbonise the industry sector by 2050.

This cost is approximately $1,925 per year per Australian household.

The global energy crisis and the changing geopolitical climate—a result of the Russia-Ukraine war—have driven coal prices to historical highs, with Australia’s thermal coal exports expected to exceed $75 billion this financial year.

Coal has been a lifeblood of Australia’s economy, supplying 69 percent of electricity to the National Electricity Market in 2019. Meanwhile, gas supplied 9 percent, hydro 7 percent and other renewable energy (wind, solar farms and solar PV) 16 per cent.

“Supplier reliability, proximity to key markets and good infrastructure availability put Australia in a strong position to take advantage of growing demand from customers in Japan, China, India, Taiwan, South Korea and Europe, as well as newer buyers in Vietnam, Malaysia, the Philippines and Thailand,” said the Mineral Council of Australia.

Alfred Bui contributed to this report.