Australia's main political opposition has suggested changes could come to the country's reformed safeguard mechanism if it moves back to power next year, although its climate change and energy spokesman has fallen short of announcing any planned policies during a carbon event in Melbourne.
The reformed mechanism, one of the Labor government's key measures to cut Australia's greenhouse gas (GHG) emissions by 43pc by 2030 from 2005 levels, is not "working as the government had intended," the Liberal-National coalition spokesman for climate change and energy Ted O'Brien told delegates at the Carbon Market Institute (CMI)'s Australasian Emissions Reduction Summit in Melbourne on 29 October.
"My views and the views of the coalition were very clear at the time that Labor introduced the [reform of the] safeguard mechanism — that they hadn't done the work on how it was going to impact the companies," O'Brien said.
Several companies are now "very reliant" on Australian Carbon Credit Unit (ACCU) offsets, "but we are not seeing a sufficiently effective ACCU market," O'Brien noted.
"That is the problem statement. As for the solution, unfortunately, I won't be announcing our policy today," he added.
The coalition has been capitalising on the cost-of-living crisis and discontent over large-scale renewables and transmission projects across regional and rural communities ahead of the 2025 national elections. It said in June that it would not pursue Labor's 43pc emissions reduction target, promising instead to focus on a nuclear energy plan to bring state-owned reactors on line as early as 2035-37, though the plan lacks details.
‘Bipartisanship' needed on safeguard mechanism
The lack of policy details from the coalition around the safeguard mechanism came just as speakers had urged more political certainty to drive further investments in decarbonisation.
"Bipartisanship" on the safeguard mechanism and more clarity on the future trajectory of the scheme is needed, otherwise companies could be making decisions based on the risk of a "potentially watered down" mechanism coming from a changing government, Australian waste specialist firm LMS Energy's chief commercial officer Patrick Lim told delegates at an earlier session.
"The success of the safeguard mechanism relies really heavily on the success of the ACCU scheme, and the success of the ACCU scheme relies on the success of the safeguard mechanism," consultancy firm Aurecon's associate director Taira Vora said during the same session.
Under the reformed mechanism, facilities that emit more than 100,000t of CO2 equivalent (CO2e) in a fiscal year face declining baselines and need to surrender ACCUs or the forthcoming safeguard mechanism credits if their onsite abatement activities were not enough to keep their emissions below thresholds.
ACCU demand has been on the rise, driven by safeguard surrenders, with spot prices recently surpassing A$38 ($25), the highest in 2024, as companies step up purchases ahead of the 31 March 2025 surrender deadline.
