Australia’s Labor government proposed a plan to require the country’s largest polluters to cut their emissions intensity by at least 4.9% a year by 2030, starting from July 1, as reported by Reuters on January 10. Large polluters refer to the 215 oil, gas, mining and manufacturing facilities that annually emit more than 100,000 tons of carbon dioxide-equivalent (tCO2e). As these emitters account for about 28% of Australia’s total carbon emissions, the government expects the plan to abate 205m tons of emissions by 2030, equivalent to 40% of the country’s annual emissions. Notably, the plan allows polluters to rely on carbon credits to meet emission-reduction requirements rather than cutting emissions on site.
The plan is intended to reform Australia’s safeguard mechanism, a carbon pricing policy designed in 2011 to abate emissions from big polluters. However, the mechanism has in fact failed as the industrial greenhouse gas emissions in Australia rose 60% from 2005 to 2020. According to forecasts, the reformed safeguard mechanism could bring down the country’s industrial emissions by at least 30% between 2021 and 2030, from 143m tons a year to no more than 100m tons. Climate and environmental groups criticized the new plan for allowing the biggest polluters to keep increasing emissions with unlimited carbon offsets. To avoid the situation, the government will cap Australian Carbon Credit Units (ACCUs) at AUD75 (USD51.8) per ton for big polluters, more than doubling the spot price of about AUD34 (USD23.5), with a plan to raise the price year by year.