On 30 March 2023, the Parliament passed the Safeguard Mechanism (Crediting) Amendment Bill 2023.
The Safeguard Mechanism reforms will deliver 205 million tonnes of emissions reduction by 2030. That’s equivalent to taking two thirds of Australia’s cars off the road.
After many months and three rounds of extensive consultation with industry and facilities, the broader public and the Parliament, these reforms get the balance right. They deliver investment certainty for included businesses, and the final changes strengthened the scheme for strategic industries and the climate. They included providing improved flexibility and support for strategic industries and strengthening accountability, transparency and integrity.
The Safeguard Mechanism was put in place ty the previous Coalition Government, supposedly to keep a lid on emissions from Australia’s biggest emitters but, under them, emissions were increasing.
The reforms put in place by the Albanese Government have been widely supported by industry (including the BCA, ACCI and AIG) as they deliver the policy certainty needed to help them invest in future competitiveness and meet the corporate net zero and greater commitments that most facilities already have.
Around 80% of safeguard facilities, accounting for over 85% of safeguard emissions, are covered by corporate commitments to net zero.
These reforms help limit the exposure for Australian industry to carbon border tariffs (or CBAMS) that many countries around the world are implementing.
The Labor Government was of the view that it was past time, after 10 years of chaos, that we get on with the job and deliver the certainty industry needs to invest in Australia’s decarbonisation – and ensure our industry thrives in a net zero world.
The Safeguard Mechanism (with the reforms we enacted) both protect the economy and the climate. The reformed Mechanism recognises that protecting strategic industries and manufacturing is critical to seizing the economic opportunities of the global transformation to next zero by 2050.
The Government is already obligated to report on progress against climate reforms as part of the Annual Climate Change statement but will add to this through transparency measures for big projects as recommended by the Samuel Review.
We will ensure emissions reduction under the scheme is real by continuing with implementation of the Chubb Review to ensure integrity in the carbon market. And, consistent with recommendation 8, ensure that HIR method projects can only create new credits when they comply with the entirety of recommendation 8.