The Australian Parliament has passed the Safeguard Mechanism (Crediting) Amendment Bill 2023 to establish the framework for key elements of the Safeguard Mechanism reforms.

The reforms will ensure Australia’s 215 largest emitters play their part in meeting the nation’s national climate targets of 43 per cent below 2005 levels by 2030 and net zero by 2050.

The covered facilities account for around 28 per cent of Australia’s emissions production across mining, oil and gas production, manufacturing, transport and waste facilities.

The Energy Efficiency Council (EEC) CEO Luke Menzel said the safeguard mechanism would play a crucial role in decarbonising Australian industry and preparing it for a net zero future.

“The reforms to the safeguard mechanism provide clarity and purpose to the decarbonisation journey before Australian industry. It is the certainty business has been crying out for,” Mr Menzel said.

“Now it’s time to get on with the job. Meeting our emissions reduction targets is a big task, but the earlier we start, the easier and cheaper the transition will be. And energy management is going to be one of the best ways for these businesses to meet their obligations.”

However, Mr Menzel noted more needed to be done for industry not covered by the mechanism.

“There are many smaller, energy intensive businesses that have big energy savings opportunities. Now these reforms are finalised, it’s important we find ways to support smaller manufacturers and food processors that need targeted support to cut costs and emissions through smarter energy management,” he said.

“In this new landscape, working with our most emissions-intensive industries to decarbonise as quickly as possible is the best way to secure their long-term competitiveness.”

Mr Menzel hailed the spirit of compromise that characterised the passage of the Bill.

“To get to net zero by 2050, we need everyone working together to build wins for the climate and our economy. By cooperating and delivering a solid framework for reducing emissions, Australia will be a better, cleaner economy in 10 years. And that’s a win for everyone.”

Meanwhile, Greenpeace Australia Pacific Head of Advocacy and Strategy Glenn Walker said the most important task at hand for the Australian Parliament is to rule out new fossil fuel mines in favour of clean, future-proof industries.

“While the improvements in the deal make the Safeguard Mechanism policy stronger, there will be a need for ongoing changes to close up remaining loopholes. In particular, despite some changes to how carbon offsets will be used, we remain concerned about coal and gas companies simply buying up carbon offsets rather than reducing emissions.

“Our political leaders must understand that Australia’s domestic emissions are dwarfed by the pollution from the coal and gas we ship overseas. Australia is one of the top three global dealers in these toxic fossil fuels.

“The next priority climate actions from the Australian Parliament needs to be closing up remaining loopholes in the new Safeguard Mechanism policy, rapidly scaling up clean industries, preventing new coal and gas projects like Woodside’s Burrup Hub expansion, and implementing policies that will electrify our country, including strong fuel efficiency standards.”

With the Bill passed, the Government will amend the Safeguard Rules and other subordinate legislation in April 2023, to provide further policy detail of the scheme.

The updated Safeguard Mechanism scheme will be in operation as of 1 July 2023.