Australia’s most important climate policy (you’ve probably never heard of)

20.09.22 By

The Safeguard Mechanism is the most important climate policy you’ve probably never heard of. It covers Australia’s 215 biggest polluters, including a who’s who of fossil fuel companies and big miners – like Santos, BHP, Anglo Coal, Woodside, Chevron and Rio Tinto.  

The Safeguard Mechanism’s yawn-inducing name is at odds with its massive importance for cutting harmful emissions. So let’s give it a re-brand and call it what it really is: a Pollution Speed Limit on Australia’s biggest emitters. 

speedy tesla

What’s the Pollution Speed Limit all about?

Since being introduced by the Abbott Government in 2016, the Pollution Speed Limit has been horribly ineffective. Instead of following the signs to slow down, companies have been speeding down a German autobahn because those covered by it can pretty much pollute as much as they like without any fear of copping a fine. The former government set notional pollution ‘limits’ that were way higher than the amount that companies were polluting. That’s kind of like setting a speed ‘limit’ of 200 kilometres an hour – much higher than your car will ever go. If these companies did happen to exceed the very high ‘limits’ that were set, the government of the day would often just let them set new ones anyway, without any penalty. 

Now the new Australian Government says it wants to use the Pollution Speed Limit to actually reduce emissions. They plan to set genuine limits (baselines) on the amount that our biggest companies can pollute, and then progressively lower these baselines over time until Australia gets to net zero. That means getting big polluters off the autobahn, and onto a properly policed road that leads to a cleaner future.

To get technical for a minute, the Government is proposing to establish new emissions baselines for all 215 companies covered by the policy, and then reduce these baselines by a set percentage each year. Companies that don’t meet their baseline will have to buy offsets – credits for carbon abatement delivered elsewhere – to account for the amount of emissions over their agreed limit. Companies that reduce emissions below their baseline will receive credits, which they can sell to those higher emitting companies. This will drive companies to invest in technologies or cleaner production processes to come under their baseline, and avoid paying for credits.    

industry pollution

Why is the Pollution Speed Limit so important?

This policy is a key part of the new Labor Government’s plans to cut the harmful greenhouse emissions that are driving the climate crisis. Australia’s biggest polluters have got to pull their weight in this effort, and getting a proper Pollution Speed Limit in place will ensure they do.

Together, the 215 polluters covered by this policy account for almost 30% of Australia’s total emissions. Australian households, small businesses and other parts of our local economy are stepping up to get us towards net zero, so these big polluters must pull their weight as well.

The Australian Centre for Corporate Responsibility has noted industry lobbyists will be in a ‘feeding frenzy’ to try and get a favourable deal out of the government’s reforms. 

Together, the 12 biggest polluters have pumped out over 275 million tonnes of harmful pollution since the policy started in 2016 – that’s equivalent to more than half of Australia’s total emissions for a year. 

Every one of these companies has made net zero pledges to their shareholders, markets and the Australian community. For these pledges to be anything other than greenwashing, Australia’s biggest polluters now need to back them up with actual emissions reductions – year on year.  

forested road

What would a good Pollution Speed Limit do?

The ultimate outcome we need to see here is for emissions to genuinely go down – known as absolute emissions reduction. Major polluters shouldn’t be allowed to simply write a cheque to buy some offsets and keep on pumping harmful emissions into our atmosphere. 

The Pollution Speed Limit needs to be designed so that these companies actually reduce the amount of pollution they produce. This amount should keep getting smaller each year, and eventually get as close as possible to zero. 

To achieve that, it needs to:

Importantly, the scheme should also place an overall cap on pollution so it never exceeds what these companies are emitting today. Without an overall cap, massive new polluting coal and gas projects could still go ahead and become a huge roadblock to Australia cutting our emissions. 

The proposed Northern Territory Beetaloo and Western Australia Scarborough gas projects would create almost as many emissions as the Safeguard Mechanism is intended to cut in 2030, putting us right back at square one. 

A Pollution Speed Limit that doesn’t put the brakes on new coal and gas won’t drive the rapid investment in clean and green technologies Australia needs now.     

The Climate Council is calling for Australia’s 10 biggest corporate polluters to publicly pledge to cut their emissions in absolute terms by 2030 under a reformed Safeguard Mechanism. We have a narrow window this decade to tackle the climate crisis, so the time for pollution-as-usual is over.