The Minerals Council of Australia (MCA) has urged greater risk management measures be introduced in the Federal Government’s proposed Safeguard Mechanism reforms, seeking to incentivise commercial emissions reduction targets.
In its submission to the Securing Safeguard Mechanism Reforms Consultation Paper – published by the Department of Industry, Science and Resources (DISR) – the MCA claimed the addition of risk management measures would prevent excessive costs that could hinder Australia’s mining industry.
MCA Chief Executive Officer, Tania Constable, said the absence of a stronger measure threatens the industries Australia relies on for economic recovery and growth by undermining international competitiveness.
“The MCA and its members have a strong commitment to climate action, supporting the Paris Agreement and an industry ambition of net zero by 2050,” Ms Constable said.
“But this vital task will be undermined if a risk mechanism is not in place to ensure that any price generated by the scheme is sufficient to support emissions reductions but not so high that it impacts jobs and economic growth.
“The government must include an additional pathway, similar to the Renewable Energy Target (RET) shortfall charge or price cap in other international schemes, for facilities to satisfy compliance obligations and manage upside price risk by paying per tonne of CO2-e.
“This is in addition to including the proposed safeguard mechanism credits, and the existing carbon credit systems (Australian Carbon Credit Units), and international credits.”
Additionally, the MCA made several other recommendations, including:
- The scheme design minimises the risk of carbon leakage in the form of both production and investment leakage
- Existing SGM facilities should not be competitively disadvantaged against new entrants due to the baseline approach taken
- The government should allow flexibility for facilities to choose between using facility specific production-adjusted baselines, facility specific fixed baselines, or industry average production adjusted baselines
- The government should provide certainty that baselines will not be declined ahead of any supporting legislation needed to enact cost management measures contained in the consultation paper such as safeguard mechanism credits
- The need for reform of federal, state and territory emissions approaches to ensure a least cost approach to achieving the 2030 target. Safeguard mechanism-covered facilities should be exempted from additional state-based emissions reduction obligations
The MCA’s submission is available for download here. Further information and a link to the DISR’s Safeguard Mechanism reform: consultation paper is available here.
