The Safeguard Mechanism is the lynchpin that will determine the success of the Emissions Reduction Fund as a climate policy. Without appropriate safeguards against emissions rising across the economy, the Emissions Reduction Fund risks being an expensive way of failing to take Australia towards meeting its international obligations on emissions reductions.
The sector-wide approach proposed for the electricity sector is inappropriate. Each generator needs to be responsible for their own emissions. The safeguard mechanism should use a facility level baseline, and it should apply immediately.