The Climate Solutions Fund – in essence a rebadged Emissions Reduction Fund (ERF), is only one part of an effective policy suite that Australia needs to meet its 2030 targets. Australia needs an effective market framework that can transition the Climate Solutions Fund (ERF) from the public funding to private sector funding of abatement. The Coalition’s existing Safeguard Mechanism could be used to potentially drive this transition, and incentivise Australian business to do its fair share of of the emissions reduction challenge that lays ahead.
The Role for Australia’s Domestic Offset Scheme
“Australia has built a strong foundation for emissions reductions through carbon farming projects across the country, initially as part of the Labor Government’s Carbon Farming Initiative, and now the Coalition Government’s Emissions Reduction Fund (ERF). ”, says Flynn.
“Australia’s domestic offset scheme is world class, has bipartisan support, and has created real abatement across the landscape. As per CMI’s Carbon Farming Industry Roadmap, the ERF has the potential to scale up to provide real abatement, jobs and revenue to regional and rural communities across the nation – and provide a robust and credible supply of Australian Carbon Credit Units (ACCUs) to meet market demand that will emerge as we move closer to our Paris targets”, says Flynn.
“Preservation of the domestic offset scheme is critical to our climate mitigation efforts, and so we would welcome funding of the ERF, however, further investment towards the Coalition’s announced Climate Solutions Fund without evolving the Safeguard Mechanism to incentivise emissions reduction across the rest of the economy is insufficient and won’t get us to our 2030 targets”, says Flynn.
“Decisive action is needed by whoever wins Government at the next election to tighten domestic emissions reduction policies. Evolving the Safeguard avoids the need to legislate a new market mechanism, and linking it with Australia’s domestic offset scheme ensures that industry has stable and enduring climate policy under which to make pragmatic, long-term investment decisions”, says Flynn.
The Role for the Safeguard
The Carbon Market Institute’s interim Chair, Megan Flynn, said on Tuesday that “with the right design features and modifications, the Safeguard, in conjunction with the ERF’s credit supply generation potential, could send a price signal to drive substantial emissions reductions across the economy.
Introduced by the Abbott government, the Safeguard Mechanism can become an effective market-based climate policy. Any current or future government could decline Safeguard baselines without major legislative change, therefore limiting emissions and more effectively linking the Safeguard to our domestic carbon market”, says Flynn.
“In the lead up to the election both major parties can give the market greater certainty by outlining the conditions and criteria for how the Safeguard’s emissions baselines will decline. Any future government should provide the carbon price signal necessary for business to manage carbon liability and inform strategy and investment decisions” says Flynn.
The Institute’s discussion paper, Transitioning the Safeguard Mechanism to a Baseline & Credit ETS outlines key design options for how emissions limits set for heavy carbon emitters by the Safeguard Mechanism could be lowered over time in line with Australia’s 2030 emissions reduction target trajectory, and create a ‘Baseline and Credit Scheme’; a form of emissions trading.
For more information on what the ever-changing climate policy landscape means to you in the lead up to, and following Australia’s federal election, we invite you to join us for the 6th Australasian Emissions Reduction Summit , on the 8th & 9th May 2019, at the MCG in Melbourne. View our list of 2019 Keynote Speakers here.
Earlybird registrations close this Thursday 11:00pm – don’t miss out!