- by Anna Pha
- The Guardian
- Issue #2037
Photo: John Englart – flickr.com (CC BY-SA 2.0)
Earlier this month Climate Change and Energy Minister Chris Bowen released a consultation paper proposing a carbon credit scheme for Australia’s largest greenhouse gas emitters to reduce their emissions in the coming years.
It is central to achieving Labor’s legislated 43 per cent reduction by 2030. It is likely to affect the top 215 emitters which account for almost 30 per cent of Australia’s emissions.
The days of fossil fuels are numbered, and the big oil, gas and coal corporations are rushing to maximise returns on existing resources before it is too late. With global prices at record highs due to European sanctions on Russia and the conflict in Ukraine, the last thing they want is for their operations to be curtailed.
It would appear from Labor’s plans they have nothing to fear. Labor’s latest proposal makes provisions for the expansion of fossil fuel projects such as coal, oil and gas, and are largely based on the “safeguard mechanism scheme” introduced by the Abbott government in 2016.
The Coalition’s safeguard mechanism scheme sets a limit (baseline) on emissions for individual facilities or companies per annum. It applies to operations that emit 100,000 tons or more of greenhouse gases per annum such as Chevron’s Gorgon gas project, Woodside’s Northwest Shelf gas project, Qantas, Port Kembla steel works, and AngloAmerican coal mines in central Queensland.
Annual emission thresholds (known as baselines) are set based on the big polluters’ own forecasts and assessments of their emissions. It is a market-based system with trading in carbon credits – one unit known as an Australian Carbon Credit Unit (ACCU) represents one ton of carbon dioxide equivalent greenhouse gas emissions avoided or stored. The price of credit units is determined by the market. At present it is around $30 a ton.
The government’s Emissions Reduction Fund (ERF) manages the scheme. Credits may be traded on private markets or with the ERF.
Credits may be acquired when emissions are below the baseline. The ERF buys carbon credits when emission reduction activities such as the replenishment of carbon contents of soil; land is not cleared if approval to clear it had previously been given; methane from landfill is burnt; or for revegetation activities that remove carbon dioxide from the atmosphere. This is the case even though no emission reductions may be involved!
The ERF was allocated $4.5 billion to spend on carbon credits and has already spent or has contracts to spend $2.6 billion.
If a baseline is exceeded, carbon credits may be purchased from the ERF or private market to offset excess emissions at the market price. There is no limit to excess emissions. In other words, companies face a financial penalty but are not prevented from increasing their emissions.
If companies increase production or expand their operations their baselines are correspondingly increased – i.e. they can emit more.
Put simply, it is a market-based scheme which permits the big polluters to increase emissions.
Professor Andrew Macintosh, an expert on environmental markets and former chair of the ERF’s Integrity Committee, described the ERF as an “environmental and taxpayer fraud,” lacking environmental integrity.
“People getting ACCUs for not clearing forests that were never going to be cleared; they are getting credits for growing trees that are already there; they’re getting credits for growing forests in places that will never sustain permanent forests; and they are getting credits for operating electricity generators at large landfills that would have operated anyway.”
The scheme lacks teeth and relies on the integrity of the big polluters which is decidedly lacking. Analysis by the Australian Conservation Foundation (September 2022) found that emissions from gas and oil mining in Australia increased by a whopping 20 per cent in the first five years the safeguard mechanism operated. Credits are generated without emission reductions.
The “safeguard mechanism scheme” safeguards the growth of emissions, not humanity or the planet!
Labor’s scheme modifies the Coalition’s by removing the heavily rorted land clearing provisions and land fill provisions. It also sets limits on excess emissions with financial penalties where these are exceeded.
The buying and selling of ACCUs by the ERF will be phased out and companies will be able to trade with each other.
But under Labor’s scheme the baseline remains variable. It is based on output. If production increases, an existing project is expanded or a new project commences, there is a corresponding increase in the quantity of emissions permitted.
This leaves it wide open for the expansion of projects and for new ones – for emissions to continue to rise.
Baselines and outcomes would still be based on company assessments without rigorous independent auditing. They would be “gently” reduced in the years to 2030 and beyond Bowen says.
Judging by Labor’s Resources Minister Madeleine King’s recent speech to a national conference of the Minerals Council King intends approving many more, new or expanded projects. She is fast becoming the enabler for the fossil fuel sector. And there will be no shortage of subsidies where emitters face international competition.
King sees the sector as integral to the growth of Australia’s economy. She quietly approved exploration at ten new gas and oil offshore sites in August 2022 and gave the go-ahead for the development of two new carbon capture and storage (CCS) areas off Western Australia and the Northern Territory. Many more approvals can be expected.
The government is heavily relying on this flawed system of carbon credits to reach its recently legislated target of a 43 per cent reduction in greenhouse gas emissions by 2030.
Labor will be able to make changes through regulatory means, but it will also require legislation. The Greens are opposed to it. Their position is clear – no new coal or gas projects. The independent teals are unlikely to support the scheme as it stands.
Demands of science
Both the Coalition’s and Labor’s schemes are little more than a smokescreen to give the impression they are doing something to tackle climate change.
Climate change is here, NOW. The urgency to phase out fossil fuels cannot be overstated. Witness the extreme weather events and devastation around the world including in Australia. We cannot and must not think that it can be tackled by opening new fossil fuel projects or by carbon offsets.
The process of phasing out fossil fuels must commence now, with full support for coal, oil and gas workers and their communities. It must include funding to assist local communities to create new jobs and diversify local industries.
At the same time, the $11.6 billion in fossil fuel subsidies should end and be redirected to the development of publicly owned and run renewable energy sources and storage.