'Fault-lines' over safeguard suggest new carbon buffers
The carbon market industry has acknowledged "key fault-lines" over contentious emissions safeguard laws needed to re-shape the economy.
The proposed laws will require deeper cuts to greenhouse gas emissions than before, of 4.9 per cent overall every year this decade for the 215 heavy industrial plants covered by the regime.
Carbon Market Institute CEO John Connor said on Tuesday it is clear there needs to be greater transparency on key government, corporate and carbon credit data as well as greater confidence that the mechanism will drive decarbonisation at industrial sites.
David Scaysbrook, co-founder and managing partner of infrastructure investment group Quinbrook, said the safeguard mechanism sends a "critical signal" to investors after a decade of high risk over climate policy.
"We shouldn't make it easy to comply, and we shouldn't make it overly punitive," he said.
With the right mix of renewable energy, as close to 100 per cent as possible, new green industries can set up in Australia without the safeguard mechanism being a liability, he said.
Critics are wary of heavy industries relying too much on carbon credits to get to net zero, and continue to question the integrity of many offsets.
Others are concerned allowing the continued expansion of coal and gas under the scheme will force decarbonising industries to do the heavy lifting.
Emissions from oil, coal and gas production make up half of emissions covered under the mechanism, and there are concerns the full extent of more toxic methane emissions is not being measured accurately.
Big polluters - steelmakers, chemical refineries and agriculture - say genuine offsets will be crucial in the early years until cleaner technology becomes commercially viable.
A federal parliamentary inquiry report has recommended passing the bill with additional measures to make it work.
The Clean Energy Regulator has been told to act on the findings of the Chubb Review into carbon credits, which followed claims some were a "fraud" on the environment, taxpayers and consumers.
Amendments are suggested to publish data about offsets to allow more scrutiny of what currently hides behind commercial-in-confidence and government secrecy.
Monitoring the impact of new gas fields is also recommended, with data reported to parliament through the Annual Climate Change Statement.
But that falls well short of testimony from environmental groups that there must be an end to new coal and gas to get Australia to net zero.
"The committee report summarises both key fault-lines and opportunities for potential support for the safeguard legislation," Mr Connor said.
It also reinforced the need for measures beyond the safeguard mechanism to address the broader structural economic transition that will be required to get to net zero, he said.
These additional measures could include a new transition authority, requiring transition plans as part of mandatory climate reporting and more rigorous checks on new industrial projects.
Leading companies including steelmakers are concerned about jobs being lost offshore to countries with less onerous regimes.
Australia is also at risk of losing out as other regions move to put tariffs on dirty imports.
The committee recommends a review examine how an Australian carbon border adjustment mechanism, to price the carbon content of goods, could add an extra buffer to the safeguard.