Gov to give out carbon credits to lower pollution

Next month, lawmakers will be presented with legislation to support ambitious national goals by rewarding Australia’s largest greenhouse gas emitters for lowering pollution.

Across the economy, more than 200 industrial facilities each producing more than 100,000 tonnes of emissions a year must comply with the current safeguard mechanism scheme, which is set to be tweaked.

Energy Minister Chris Bowen has used a business summit to begin three weeks of consultation on giving extra credits to industrial plants that make cuts that are deeper than “baseline” requirements.

“This creates a key financial incentive for safeguard facilities to make the step changes needed to reach net zero emissions by 2050,” he told the AFR Energy and Climate Summit on Monday.

With 86 months to cut national emissions by 43 per cent, Mr Bowen plans swift passage for the Safeguard Mechanism Credits Bill so the changes can take effect from July 1 next year.

“It’s a tight time frame and there’s a lot to do, but it’s also necessary to act urgently because we have no time to waste in our emissions reduction goals,” he said.

Bowen hasn’t ruled out allowing big emitters to use international carbon credits to cancel out emissions, but said this aspect won’t be covered in the new laws.

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Carbon Market Institute CEO John Connor told AAP the bill should include a framework for international carbon trading, because Australia should be aspiring to be an exporter of high-quality carbon credits.

“It’s all about accelerating climate action and using markets to drive investment,” he said.

And lurking behind the new bill is a review of the integrity of existing credits, known as Australian carbon credit units (ACCUs).

“It’s a bit like policy whack-a-mole, you hit one thing and it pops up elsewhere, because we don’t know how much the safeguard mechanism will be a driver of new ACCUs if you have a bunch of exemptions,” he said.

Energy executives and regulators warned the summit that retail power prices could rise by another third next year as the higher costs wash through the system.

The global energy shock has increased the running costs of Australia’s gas and coal-fired power plants, increasing bills and adding cost pressures as the grid makes a more rapid change to renewable energy.

“Next year, using the current market prices, tariffs are going up a minimum 35 per cent,” Alinta Energy CEO Jeff Dimery said.

Already, most households have had to cut spending on food and heating over winter as the cost of living skyrockets, according to a new survey by Australian Parents for Climate Action.

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Another tool being developed is a so-called capacity mechanism that would pay electricity generators to have stand-by power available.

Energy regulator Daniel Westerman warned “extreme events” were becoming more frequent and extra measures were needed.

Although Australia was unlikely to see a repeat of the same circumstances that saw wholesale energy prices triple and the market suspended, many of the underlying issues persisted, he said.

A capacity tool prepared for the former federal government was tagged “CoalKeeper” by some and rejected as going too far in extending ageing coal-fired plants.

Some argue only new sources of energy should be eligible. Ministers are yet to finalise a rejigged plan.

Green hydrogen-fuelled power plants could become commercially viable under new tax credits in the United States, rating agency Standard & Poors says.

Ex-central banker Guy Debelle, who works for Fortescue Future Industries, called for the federal government to consider matching the tax breaks to support Australia’s hydrogen industry.

With AAP. (Content has been tweaked for length and style.)