Join Allegra and Tim at an important point in Australia’s climate policy development for a closer look at the government’s Safeguard Mechanism legislation.
Tim has 30 years of global finance experience analysing leading corporations, including as Head of Research at Citigroup. For the last decade, Tim has led a public interest research team covering Asian decarbonisation trends and the role of global finance. As Director of Climate Energy Finance, Tim looks at the growing investment, employment and export opportunities for Australia.
We want to hear your questions! Please send us your questions in advance via email to [email protected] and we will address as many of them as we can in the session. All questions submitted will receive a full written response from Allegra.
The Safeguard Mechanism is a central component of Australia’s climate change policy, aiming to reduce the emissions of Australia’s largest greenhouse gas emitters. The SGM has been in place since 2016 and is well-overdue for reform. Emissions have increased among firms covered by the mechanism; it is overly complicated; there are too many carve-outs for fossil fuel companies; and there has been almost no action taken when large emitters break the rules.
The government has set out a series of reforms to the SGM which will require a mix of legislation and regulation to implement. The proposals follow a period of consultation, during which Allegra wrote to Minister for Climate Change and Energy, Chris Bowen, setting out in detail Wentworth’s priorities.
Allegra believes the proposed reforms are reasonably well-balanced overall. They provide the policy certainty that businesses need to invest in the future and it is therefore important they pass the parliament. The proposed legislative changes will move the SGM closer to the kind of ‘cap and trade’ scheme that has worked effectively in other jurisdictions and the reforms reflect an accelerated path for emissions reduction. There are also tougher penalties for non-compliance and a commitment to a future consultation on a carbon border adjustment mechanism.
However, the reforms are not perfect and Allegra has urged the government to adopt sensible amendments put forward by the crossbench. As currently proposed, the scheme will allow unlimited access to carbon offsets for our Australia’s biggest polluters. The government has also capped the cost of these offsets at $75 per tonne, which will allow firms to keep polluting on the cheap. Allegra is concerned that easy access to cheap offsets will limit incentives for real (gross) emissions reduction, and may expose the taxpayer to a financial liability in future if the market price of offsets exceeds the government’s cap. When parliament returns, Allegra will therefore be moving an amendment to remove the $75 price cap and ensure the true cost of carbon is reflected in investment decisions.
Allegra will also continue to lobby the government for introduction of science-based emissions reduction targets and policies to reflect these. She recently addressed the Smart Energy Council’s Industry Climate Action Summit and called for a 75% reduction in emissions by 2035, in line with a 1.5 degrees pathway.
The SGM reforms are due to be legislated shortly to take effect from July 2023. Allegra will continue to update constituents on this important issue and welcomes any further feedback you may have on this issue.