Dr HAINES (Indi) (18:03): The Safeguard Mechanism (Crediting) Amendment Bill 2022 presents an important opportunity for Australia to head in the right direction when it comes to reducing our emissions and acting on climate change, especially when we have not been heading in the right direction for such a long time. The bill aims to reduce the emissions of our top national polluters. These 215 or so emitters, called designated facilities, are responsible for almost a third of Australia’s emissions. For Australia to reach its national emissions target of 43 per cent by 2030 and to reach net zero emissions by 2050, these designated facilities must cut their total emissions by 43 million tonnes this year alone. Under the bill, companies can reach these targets by trading safeguard mechanism credits—or SMCs—which are generated by designated facilities for reducing their own emissions. SMCs are intended to incentivise companies to maximise low-cost abatement opportunities first. The bill also allows companies to offset their emissions through the purchase of Australian carbon credit units, or ACCUs.
The minister, in his second reading speech for the bill, said: ‘The time is now to address climate change by tackling the emissions of our biggest national emitters, and this bill gets it done.’ The minister is mostly right, because we must act now and we cannot wait any longer. I will support the passage of this bill, but I do so with caution.
I grew up on a farm. I live on a small farm now. Like millions of people in regional Australia, the climate has never been an abstract concept for me. During my first election campaign, in 2019, people across my electorate came to me, passionately wanting our parliament to address climate change. They knew then, as they know now, that, as long as greenhouse gas emissions continue, our temperatures will rise, our rainfall will fall, our bush will become drier and our fires will become bigger and hotter. In Indi, it’s not only our fear of more frequent and intense bushfires that drives our calls for climate action; it’s concern for our health, for our economy and for our connection to our magnificent natural environment both here at home and around the world.
The effects of climate change are already here, and as people are facing a higher cost of living I know that they are feeling the monetary cost of climate change—it’s hitting them. Record rainfall last October has damaged our roads, requiring more and more money to fix them. Businesses in the high country of my electorate are already finding it impossible to get insurance, putting their very viability at risk. As these concerns grow, so, too, does the number of people that are dedicating their time and energy to fight for meaningful climate action. In Indi, the community group Wodonga and Albury Towards Climate Health, or WATCH, has more than 1,000 members. The local branch of the Australian Conservation Foundation also has more than 1,000 members, and the young people’s group, School Strike 4 Climate, has over 2,000 members. These community groups based in my rural and regional electorate are non-partisan but are deeply concerned about human induced climate change.
In Indi we also have the most community renewable energy projects of any electorate in Australia. People are volunteering multiple hours a week to support their communities to be powered by 100 per cent renewables. They do this to improve energy reliability in times of emergency and build the local economy and also, importantly, to make a contribution towards emissions reductions. With these groups I co-designed the Local Power Plan and then introduced my Australian Local Power Agency Bill, which could achieve community energy scaled up right across the nation. My constituents’ calls for meaningful action on climate change are loud and clear. And this is why I successfully amended the government’s Climate Change Bill last year to ensure that regional Australia is at the forefront of climate change policy for decades to come. It’s also why, in the last parliament, I fought for more Commonwealth support for home electrification through my cheaper home batteries bill. These proposals are practical, effective solutions to invest in renewable energy as a pathway away from our reliance on fossil fuels.
I spent my last term in parliament advocating on solutions to the climate crisis and I continue to do so in this parliament, including under this bill. I support this bill because, like my constituents in Indi, I want to see action on climate change. However, I hold genuine concerns that this bill and the safeguard mechanism don’t go far enough towards genuinely reducing our national emissions. And I know I am not alone in those concerns. Under the bill, Australia’s top polluters will be required to reduce their emissions by 4.9 per cent each and every year. The government says that for them to do this the scheme must provide flexibility by allowing companies to offset emissions. When the offset scheme was first designed it was intended to be a last resort. Companies were supposed to avoid, minimise, and mitigate their emissions first through technological and operational changes, and only when nothing else could be done could they turn to offsets. Under this bill, however, there are no limits on offsets and that means, for a company to succeed in reducing their emissions by almost five per cent each year, it can offset them 100 per cent. Companies can effectively buy their emissions reductions. Allowing emitters to offset 100 per cent of their emissions is no substitute for genuine, lasting emissions reduction. We should not allow unlimited use of offsets, and the bill should incentivise companies to abate emissions first.
I will support the amendments of my crossbench colleagues that limit the amount of offsets that can be used; require the safeguard mechanism credits, or SMCs, to be used by designated facilities before they can purchase ACCUs; remove any price cap on the ACCUs; and ensure any new entrants into the scheme are at net zero from the start. These are sensible amendments, and I hope they succeed. I also support calls to prevent any new coal and gas entrants to the safeguard mechanism. If we allow new entrants, our emissions will only get higher, blowing the safeguard mechanism’s carbon budget and the burden to reduce emissions will fall on everyone. Instead of subsidising new fossil fuel projects, the government must continue to invest in renewable energy to facilitate a smooth transition towards a clean energy economy.
Scientists and researchers have also sounded the alarm about the integrity of the ACCUs in the current carbon market, and I take these concerns very seriously. Shortly after the election last year, the government commissioned a report by former Chief Scientist Ian Chubb to independently review the ACCUs. The review found that the ACCU scheme was fundamentally well designed, but Professor Chubb made 16 recommendations to enhance governance arrangements and transparency. This is just part of the story, though. Research by the Australian National University found that at least 70 per cent of ACCUs are not resulting in real emissions reductions. For example, credits can be claimed and sold for not clearing land that was never going to be cleared in the first place. There are clearly issues with the scheme’s design. If offsets are a key part of the path for emissions reductions and net zero, we must be able to hold the ACCUs up to the light, and we can’t do this if the companies that are in the business of ACCUs have ties to the fossil fuel industry while also advising the government on their climate change policies. There is a real risk that some companies may seek to exploit this system to increase their own profits while failing to deliver the environmental outcomes this bill is designed to achieve, and that our country so desperately needs.
For as long as I’ve been fighting in this place for action on climate change, I have also been fighting for integrity—integrity in parliament and in every decision and action of parliament. So, too, the ACCU market must have integrity. ACCUs must be based on scientifically backed and trusted methods. The regulator that approves ACCUs must be independent. If they’re not, Australians should not and will not have faith in this government’s safeguard mechanism as a cornerstone of its climate change policy. Professor Ian Chubb found that the government agency, the Clean Energy Regulator, should be stripped of some of its roles running and overseeing the system in order ‘to enhance confidence and transparency,’ and it should be replaced with a new body that would have increased responsibility and independence. I call on the government to fully implement the Chubb review recommendations as soon as possible. I also call on the government to heed the concerns of scientific experts about the integrity of the ACCU.
If this bill passes, it is likely that the demand for ACCUs will increase—in fact, it certainly will. The Minister for Climate Change and Energy admits that the agricultural sector will play an important role in meeting ACCU demand under the safeguard mechanism. Unfortunately, so far we’ve been given very little information about how the agricultural sector will meet these demands. Our farmers currently generate 16 per cent of Australian emissions, and right now countries all around the world, like the European Union, are considering tariffs on Australian agricultural imports because, in their minds, we have not done enough to tackle climate change. We know that farmers can earn credits through specific land management practices which increase and sustain carbon in soils, improve significant remnant native vegetation on their properties or reduce methane with herd management. They can sell these credits on the carbon market, potentially to our largest national emitters.
Many farmers I speak to across Indi tell me that they want to mitigate the impact of climate change and play a part in reducing national emissions, but not at the expense of their own livelihoods. They talk to me about the challenges in balancing these factors. The government has clearly fallen short of supporting our farmers in recent times, but we can change this. Farmers tell me that agricultural extension plays an important role in navigating farming enterprises’ farming practices in times of great change. The government’s $20 million Carbon Farming Outreach Program is a good start. The program intends to develop and deliver a training package for farmers and land managers on carbon market participation and low-emission technologies and practices. It’s a good start, but it’s not enough. I’m calling on the government to fully fund a network of 200 agricultural extension officers over four years around our nation. The Parliamentary Budget Office have costed this policy at $132 million over four years, and I really do say to the government you must significantly expand on your initial $20 million to support farmers. They’re calling for additional support, and this is a way you can do that.
These extension officers would advise farmers on the technology, products and farming practices that would help them lower emissions, access carbon credits—either for offsetting or, indeed, insetting—and achieve net zero. These agricultural extension officers would be trusted and independent, and would know the farm’s specific environment.
And it’s not just farmers calling for this. In fact, the Carbon Market Institute, an independent body focused on the transition to net zero emissions that includes a wide range of members like Qantas and Wesfarmers, recommended to the Chubb review the establishment of an extension program that supports carbon market literacy amongst farmers and landholders. They need support to make the right decisions.
I’ve spoken to the minister for agriculture about this policy, and to the Minister for Climate Change and Energy, and I know there is an appetite in government to take this on. If the government want the agricultural sector to play a part in the success of the safeguard mechanism they must support agriculture to make decisions that are good for their business and good for the environment.
We must get the safeguard mechanism right, and we must do it now. We must not wait for another review. I urge the government to tighten the framework that is before them by adopting amendments that aim to genuinely reduce emissions. If they don’t, the worst of climate change will be inescapable. The alternative—a healthy, safe, productive economy and society to leave behind for our future generations—is still within our reach, but only just. My constituents in Indi, like many other Australians around the nation, are watching this bill closely. This parliament was elected with a mandate to take meaningful and ambitious action on climate change—’meaningful and ambitious’. Let’s not miss the chance to deliver a bill that delivers on this mandate.