Australia reached an important milestone on Friday, 31 March 2023 with the passing of reforms to the Safeguard Mechanism that will amend Australia’s national laws relating to greenhouse gases and energy reporting as well as the registry that tracks carbon emissions units.
As the 14th highest carbon emitter globally and one of the largest exporters of coal used for steel making and burning in power stations, Australia has its work cut out to reduce our facilitating role in greenhouse gas production and improve our global climate credentials. Now with agreed laws capping emissions for organisations and setting out the framework on how these will be tracked and managed, the important work of implementing efforts to reduce emissions can continue with greater certainty.
Under the newly passed Safeguard Mechanism (Crediting) Amendment Bill 2023 that will take effect on 1 July 2023, organisations responsible for emitting 100,000 or more tonnes of carbon dioxide into the atmosphere will need to report their emissions and keep them capped within a baseline level. It has been proposed that most facilities will be expected to reduce emissions by 4.9 per cent each year to help Australia reach our net zero target.
To manage excess emissions above their baseline, organisations can choose to purchase Australian carbon credit units (ACCUs) from other businesses or alternatively create their own ACCUs via an Emissions Reduction Fund project conducted at the facility.
In the 2021-2022 reporting period over 219 facilities with combined emissions of 137.5 million tonnes of CO2 were included as part of the Safeguard Mechanism. With so many organisations involved in managing ACCUs it is hoped that local projects designed to capture and drawdown carbon will attract more investment.
Capping large scale carbon emitting organisations in this way could also help to drive innovation in low-carbon technologies, level the playing field for smaller, low-carbon companies, create jobs in the low-carbon sector, and help in the transition to a circular economy to reduce the risk of stranded high-carbon assets like coal mines and oil fields.
Governments and organisations will need to continue to work together to cap carbon emissions and transition to a low-carbon economy to ensure a more sustainable future for all. This is an encouraging step to motivate positive change for the environment.
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