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Safeguard Mechanism Amendment Bill

I rise today to represent my community of Mackellar on an issue that is of the utmost importance to them: reducing Australia's carbon emissions. Last year's election was an historic one for Mackellar, and it was clear that the people of Mackellar voted for strong action and leadership on climate change. However the safeguard mechanism as currently proposed by the government does not deliver that.

The UN's Intergovernmental Panel on Climate Change today released the latest report on the science of climate change. It has been described as a final warning. It states that the world is warming fast and that this is almost entirely caused by the burning of fossil fuels. It depicts how the climate crisis is rapidly altering the earth's atmosphere, oceans, land and frozen poles causing widespread extreme weather, including severe heatwaves and drought, catastrophic flooding and rising sea levels. It finds that human activities are definitely responsible for all global warming since 1850. The report also declares that the world is likely to hit 1.5 degrees of warming by 2040 and that the burning of fossil fuels is overwhelmingly to blame for the climate crisis. It warns we have a last-ditch chance to secure a liveable and sustainable future by acting to keep global temperature rise close to 1.5 degrees. But as the UN Secretary-General Antonio Guterres said, 'It will take a quantum leap in climate action,' and he calls this report a clarion call to massively fast-track climate efforts by every country and every sector on every time frame.

The safeguard mechanism as currently proposed does not do that. It is timid and merely tinkers at the edge of what needs to be done. Indeed, it seems to do more to safeguard the fossil fuel industry than it does to safeguard the future of our planet. It's no wonder that Woodside supports it wholeheartedly. There is a clear global consensus on the science of climate change. The International Energy Agency, the IPCC and the UN Framework Convention on Climate Change have all declared that, to avoid the worst harms of climate change, there must be no new fossil fuel projects opened. That means no new coal, no new oil and no new gas. The UN Secretary-General has also declared that our addiction to fossil fuels is mutually assured destruction. It was even reported in our papers just yesterday that the UN Secretary-General is calling on wealthy G20 countries to urgently bring forward their carbon neutral goals by a decade to 2040, to defuse the climate timebomb. Most importantly for this debate, Guterres has called for OECD governments to phase out coal by 2030 and has also called on developed nations to aim for 100 per cent renewable electricity by 2035—meaning, again, no new gas or coal-fired power plants and the halting of all new fossil fuel exploration. In the future, we will not be able to say that we did not know.

To understand the inadequacy of the safeguard mechanism, it's important to put its objectives into context. Firstly I will discuss the scope of this mechanism. The safeguard mechanism seeks to reduce carbon emissions from only 215 of our highest-emitting industrial facilities. These are the facilities that emit above an arbitrary threshold of 100,000 tonnes of carbon dioxide each year. Emissions from those 215 facilities account for 28 per cent of Australia's emissions. The European Union's emissions trading scheme, by contrast, has more than 11,000 participating facilities and covers 45 per cent of Europe's carbon emissions, compared to our 28 per cent. However, there is no plan in place to expand the number of facilities covered by the safeguard mechanism by slowly ratcheting down the threshold level for inclusion. A plan for the ratcheting down of the entrance threshold level should be explicitly outlined so that business and industry have certainty and can plan for the transition. Secondly, the safeguard mechanism only addresses scope 1 emissions. This means that the mechanism only covers those emissions that are created when a commodity is produced here in Australia. It does not account for scope 3 emissions. That is, what happens after its production—for example, when coal or gas is shipped overseas and burnt. This is of course when the vast majority of emissions from fossil fuel products, perhaps up to 90 per cent, are released. In simple terms, this means that the carbon emissions we export overseas are not limited by the safeguard mechanism at all. They are simply regarded as 'not our problem'.

As the world's largest exporter of metallurgical coal and the third largest exporter of fossil fuels overall, Australia exports roughly twice as much carbon emission as what we emit domestically. None of these exported emissions are accounted for under the safeguard mechanism.

The design of the mechanism itself is also flawed. It's widely acknowledged that in its current form the safeguard mechanism is not 1.5 degrees aligned. A much criticised aspect of the model is that it allows facilities to use an unlimited amount of carbon offsets to meet their emissions reduction obligations. As such, the safeguard mechanism is a paid-to-pollute model. Facilities can buy compliance with the scheme without making any real cuts to their own emissions, and the cost to continue polluting as usual will be pocket change for many of these hugely profitable multinational companies. As such, Australia, as we keep hearing, will join Kazakhstan as the only other country in the world which allows companies to completely offset their emissions reduction obligations—an inauspicious club of two. This unlimited use of offsets will delay real change and real cuts to emissions as investment in new carbon abatement technology and infrastructure can be postponed. Importantly, polling released today by the Australia Institute shows that only seven per cent of the people in my electorate of Mackellar think that 100 per cent offsetting should be permitted—only seven per cent!

The purchase of offsets should not be permitted as a first choice for heavy emitters who are required to reduce net emissions. It should be a last resort. There needs to be a hierarchy of emissions mitigation strategies explicitly mandated in the safeguard mechanism whereby real abatement of emissions must be fulfilled first, followed by the purchase of safeguard mechanism credits, which are granted when a facility emits less than their baseline, and then, as a last resort, the use of carbon credit offsets. This would drive a genuine reduction in industrial emissions.

Yet another flaw of the safeguard mechanism, as currently proposed, is that it allows for unrestricted new extended and expanded fossil fuel projects. You may ask: how can this be when the scheme is supposed to reduce carbon emissions? A simple analogy to understand this is, if you imagine a bus company, for example, that owns 10 buses. Each year the bus company will need to reduce or offset a certain amount of emissions for each bus. However, there is no restriction on the company increasing its fleet size to 100 or even 1,000 buses such that in total pollution increases significantly.

There is also a lack of transparency around how new entrants to the scheme will be treated. The government has recently committed that new entrants will be required to meet international best practice standards regarding emissions but has provided little information about what this might actually look like. Australia currently has at least 114 additional coal and gas projects in the pipeline. In fact, the government has factored into their calculations for the safeguard mechanism that at least three massive gas projects will go ahead. One of these is Woodside's gas project at Scarborough, which has been approved to commence in 2025. Scarborough is an enormous gas field off the coast of Western Australia. According to the research group Climate Analytics, the Scarborough project alone will emit over 40-million tonnes of carbon dioxide every single year it operates. The government has boasted that the safeguard mechanism will reduce emissions by 205 million tonnes of carbon by 2030. The Scarborough gas project alone will emit around the very same amount over the very same period. It makes a mockery of the safeguard mechanism.

Within the safeguard mechanism, the fossil fuel industry is treated the same as all other industries, despite the fact that fossil fuels are what are actually driving climate change and worsening the problem. For example, the fossil fuel industry is treated the same as cement, steel and aluminium. These other industries are critical to supporting Australia in its transition to a clean economy. With this in mind, my consideration-in-detail amendment calls for new or expanded fossil fuel projects to be net zero from their commencement and throughout their life.

I would also like to challenge the notion that we need to increase mining for gas in this country. Let's be clear about something: there is no shortage of gas produced in this country. It's just that multinational fossil fuel companies ship most of it overseas—70 to 80 per cent of it. Additionally, the international market demand for gas is set to decrease as the world strives to rapidly decarbonise and transition away from fossil fuels. Take Japan, for example. Australia is by far Japan's biggest supplier of gas, but even this great consumer of Australian gas has announced in its latest strategic energy plan that it will reduce reliance on gas for power generation from 38 per cent in 2022 to 20 per cent by 2030—an enormous reduction.

Along with the farmers on the Liverpool Plains, I am incensed that gas-extraction companies would strive to destroy some of our most precious natural assets, such as the black soil Liverpool Plains that have been described as 'God's gift to Australia' because it is so fertile. If you speak with the farmers you will understand just how destructive coal seam gas mining would be for their farming practices and for the underground aquifers. We should be focusing our attention and our efforts on the future, not on the fossil fuel past. We should be focusing on becoming a global renewable energy superpower and ensuring that we have profitable industries into the future.

At the last election the people of Australia voted in droves for strong action on climate change. Six new community Independents and three new members of the Greens were elected to this House. The mandate for strong action on climate change rang loud and clear, and polling data released just today by the Australia Institute backs this up. As an example, it found that 64 per cent of Sydneysiders agree that the government's new climate laws, the safeguard mechanism, should include a ban on new gas, coal and oil projects. The Minister for Climate Change has said that the reforms to the safeguard mechanism are a once-in-a-decade opportunity for the parliament to get emissions down from our biggest emitters. On this we can agree. We must not squander this opportunity, and I look forward to further constructive and positive discussions with the government to ensure that this safeguard mechanism delivers for our nation and for our planet.