What the Greens + Labor government deal means for climate change

Credit: en.wikipedia.org; Julian Meehan/Flickr.com; Malcolm Lightbody and Oren Elbaz on Unsplash

The deal struck between the Albanese government, the Greens and the Teals to get the Safeguard Mechanism (SGM) legislation through parliament is a significant step forward on the nation’s decarbonisation pathway.

Due to come into effect from 1 July 2023, the partnership enhances the ambition, public accountability, integrity and impact of the mechanism legislation initially proposed by the government, and while still far from perfect, it is a major advance on the current state of play.

What is the Safeguard Mechanism?

The Safeguard Mechanism requires Australia's largest greenhouse gas emitters to keep their net emissions below an emissions limit (a baseline).

“The Safeguard Mechanism provides a framework for Australia's largest emitters to measure, report and manage their emissions. It does this by requiring large facilities, whose net emissions exceed the Safeguard threshold, to keep their emissions at or below emissions baselines. The threshold applies to facilities with scope 1 emissions of more than 100,000 tonnes of carbon dioxide equivalent (CO2-e) per year.” (Clean Energy Regulator)

Why is the SGM important?

Australia has continually fallen back in its commitments to the Paris Agreement. Pollution is actually set to rise due to two things:

1. Unlimited new coal and gas projects in the pipeline; and

2. Large emitters relying on unregulated ‘carbon offsets’ to bring their pollution count down.

The Greens Deal means…

that there is now a hard ‘cap’ on pollution. And the ‘cap’ is in the legislation now. 

Effectively it creates a budget whereas previously there was no limit to emissions. Real pollution will start to fall and new projects can be stopped. The Minister for Climate Change and Energy has the power to restrict or halt new projects in the pipeline, if they will increase pollution. 

Currently there are 116 new coal and gas projects waiting for approval and the hard ‘cap’ will stop the equivalent of half of these projects.

This deal marks a shift towards a more progressive and comprehensive approach to addressing the climate crisis.

What else was in the negotiations?

• The SGM will now ensure no new subsidies for the fossil fuel sector.

• The Greens were pushing for an outright ban on new fossil fuel project approvals, which the government has declined to accede to. 

• The new ‘climate trigger’ in the SGM bill, means scope 1 and 2 over the project life must now be formally considered in the context of the EPBC Act.

• Australia will also add its voice to the global movement toward trade decarbonisation with the Global momentum slowly building on pricing of carbon emissions.

• Unlimited offsets are still technically allowed, but any facility using more than 30% offsets now needs to explain its position.

The SGM is not perfect

For instance, the SGM only covers 28% of Australia's total emissions and the SGM doesn’t cover emissions from the transport, building and agriculture sectors.

However the deal represents a breakthrough in the context of climate action by a sitting government – the policy chaos that for a decade relegated Australia to a shameful position at the back of the international pack on decarbonisation is no longer.

Overall, the partnership between the Greens and the ALP (and the Teals) represents a significant step forward in the fight against climate change in Australia. It signals a willingness to take bold action to reduce greenhouse gas emissions and transition to a more sustainable and equitable economy.

While there will undoubtedly be challenges along the way, this partnership provides hope that Australia can meet the urgent challenge of climate change and secure a brighter future for generations to come.

Next steps

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References in this post

Clean Energy Regulator

Climate Energy Finance “Safeguard Mechanism Enhancements’ 27 March 2023

The Australia Institute ‘The Safeguard Mechanism: What you need to know’ 4 April 2023

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