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The Australian resources sector has welcomed a consultation paper from the federal government on the safeguard mechanism as part of providing certainty for Australia’s biggest emitters on their pathway to net-zero emissions by 2050.

Minister for Climate Change and Energy Chris Bowen this week released the consultation paper on the safeguard mechanism, pointing out that the majority of companies controlling or operating Safeguard facilities have medium and long-term climate targets, including net-zero goals, and are factoring Australian and global decarbonisation into their decisions.

“Australian heavy industry and our largest exporters know that global markets are moving to a low-carbon future, with more than 80% of Australian trade now covered by other countries’ net-zero commitments.

“That’s why Australian industry, including the Business Council of Australia, the Australian Industry Group and the Australian Chamber of Commerce and Industry have all been advocating for a robust policy framework to maximise future competitiveness, invest in the regions and ensure a sustainable future for heavy industry,” Bowen said.

He added that the government encouraged industry and all stakeholders to have their say on options for changes to the safeguard mechanism which would deliver emissions reductions and strengthen Australia’s competitiveness in a decarbonising global economy. 

As is currently the case, the safeguard mechanism applies to ‘designated large facilities’ – those that produce more than 100 000 t/y of greenhouse gases a year. However, Bowen noted that under previous implementation, emissions under the mechanism weren’t ‘safeguarded’, but were going up.  

“Emissions from around 215 facilities that are currently covered by the safeguard mechanism were 28% of the nation’s total emissions in 2020/21. The role of Australian industry will be crucial in ensuring the nation reduces emissions by 43% by 2030, based on 2005 levels, and to reach net-zero emissions by 2050,” Bowen said.

He added that genuine consultation would deliver a mechanism that was fit for purpose and delivered both economic growth and emission reduction targets.

“We went to the election saying we would reform the safeguard mechanism by working in partnership with industry and key stakeholders and that is exactly what we are doing,” he said.

“We are building on the existing architecture of the safeguard mechanism but getting the settings right to get emissions heading downwards while supporting industry competitiveness.

“I have often said that the world’s climate emergency is Australia’s jobs opportunity, and a revamped safeguard mechanism will help Australian industry cut emissions and remain competitive in a decarbonising global economy.”

The Minerals Council of Australia (MCA) this week said that the mining industry recognised the need to reduce emissions globally, nationally and at the sites and facilities driving Australia’s resources industry.

“As Australia seeks to achieve the 2030 target and the 2050 net-zero target, it is vital that Australia’s export industries continue to thrive and remain internationally competitive. Policy reform should not drive businesses to reduced production or closure due to an inability to compete with competitor countries who are not implementing strict emissions constraints on their export industries,” said MCA CEO Tania Constable.

“This would just shift emissions overseas to jurisdictions without strict emissions requirements. It would be neither sustainable nor real emissions reduction. The objective must be to develop the policy reforms in a manner which keeps our industries strong and sustainably puts us on a course of emissions reduction through the development and deployment of low emissions technologies and processes.”

“We must manage this transition in a manner which reflects technology readiness and cost.

The pathway will not be linear for all industries but great progress is being made across mining,” Constable said.

The Australian Petroleum Production & Exploration Association (Appea) said it would work constructively with the government on the safeguard mechanism, with CEO Samantha McCulloch saying the oil and gas industry was already spending billions of dollars on decarbonisation and renewable energy initiatives and was strongly committed to reducing greenhouse-gas emissions economy-wide to net zero by 2050.

“Gas will be central to a cleaner energy future given its role in stabilising renewables, replacing coal, supporting manufacturing, making everyday products and as a feedstock for hydrogen. The expertise of the industry will also be critical to deliver key decarbonisation technologies such as carbon capture and storage.

“We’ve always worked with regulators and governments throughout Australia on emissions reduction policy and frameworks and will do so again to ensure both reduced emissions and ongoing international competitiveness.”

McCulloch said Australia’s liquefied natural gas industry was one of the country’s most trade-exposed and operated in a highly competitive global market in which it was one of the global leaders, with export earnings expected to hit another record of over A$80-billion this financial year.

“The value of these exports to Australians was seen recently when the Queensland Budget forecast petroleum royalties to more than double, helping fund vital public services and infrastructure like hospitals and schools.

“The federal government’s commitment to provide tailored treatment to ensure that export-focused businesses are not competitively disadvantaged is important to help ensure the nation decarbonises while keeping our economy strong and resilient.”