We ended March with a reminder that Australian business is leading government action, strong international signals and further stark warnings of developing climate costs for Australia.
The Safeguard facility reported emissions 2019-20 showed a limp result from a mechanism that is high administration for our biggest emitters, but with meager emission reduction outcomes.
Some 88,325 Australian Carbon Credit Units (ACCUs) were sourced and surrendered in 2019-20, an increase on last year but this mechanism is dealing in tens of thousands of tonnes of greenhouse gases, when Australia is emitting over half a billion tonnes per year.
Voluntary private, state and territory government demand for ACCUs are dwarfing this. CER’s most recent Quarterly Carbon Market Report stated that such demand delivered 841 000 ACCU cancellations in 2020 – almost ten times the Safeguard outcome!
The Safeguard report does remind us of the quiet fact that Australia does have a carbon pricing mechanism, as well as a carbon market.
It shows active steady growth in “deemed surrenders” whereby companies with a facility covered by the Safeguard are also participating in the Emission Reduction Fund market. Nothing wrong with that of course, an emissions trading scheme with the Government as counter-party, and there are integrity rules to avoid double counting.
At the same time the OECD on effective carbon pricing report has Australia lagging well behind other nations, coming 8th last of 44 nations using 2018 data.
While little reform of the Safeguard Mechanism has happened, we are seeing China move to implement its national emissions trading scheme and even Indonesia piloting an emissions trading scheme for its electricity sector. Overnight President Biden put tackling climate change at the centre of a US$2 trillion infrastructure plan.
The Safeguard Mechanism remains rooted in Tony Abbott’s Direct Action Plan – its main role was to limit increases in emissions. It remains the best tool currently available in our policy suite to evolve and guide investments in a transition to net-zero emissions, but it needs to evolve.
Such evolution should be central to any revisiting of our 2030 NDC and development of a Long-Term Strategy due before COP26. With President Biden’s Summit coming up on April 22, now is the time!
The Australian Academy of Sciences yesterday reminded us of the urgency and importance of greater action with their “seriously ugly” look at Australia under 3oC warming – where we are heading without stronger 2030 NDCs and longer term targets from Australia and other major economies.
CMI ended March on the cusp of 100 members with significant growth in the last 12 months reflecting surging activity and interest in carbon markets here and overseas. Pleasingly the growth has been across the carbon value chain including primary producers, financial institutions and emissions intensive companies. If not with us already, your company can join the action and benefits outlined in our membership prospectus!
We have launched our 2021 8th Australasian Emission Reduction Summit, to be held in Sydney + hybrid live and virtual events backed by regional networking opportunities – Register now for Destination Zero and Beyond!
Carbon Market Institute