Media Releases | 5th May, 2015

Direct Action Safeguard Mechanism provides no safeguard at all


5 May 2015

Analysis by Environment Victoria has revealed that Australia’s greenhouse gas emissions could rise by up to 20% without breaching the proposed “Safeguard Mechanism” in the Abbott Government’s Emissions Reduction Fund because of the government’s proposed ‘special treatment’ of coal generators in the electricity sector.

The design of the proposed safeguard mechanism means only nine active power stations could have legal limits on how much they can emit, with the majority of black coal generators in NSW and Queensland limited only by how much electricity then can generate.

Environment Victoria Safe Climate Campaign Manager Dr Nicholas Aberle said today:

“While there have been many concerns raised about Direct Action as a policy, our calculations show just how appalling this policy could be if the Safeguard Mechanism isn’t rectified to prevent increases in pollution from the electricity sector. Recent trends suggest we are already seeing the power sector increase its emissions, further highlighting the need for an effective safeguard mechanism.

“The safeguard mechanism desperately needs reforming if it is going to provide any sort of safeguard against our dirtiest power stations increasing their pollution over the next decade.

The Government is proposing to initially set a “sector-wide baseline” for electricity generation, switching to baselines for individual generators if the sector-wide limit is exceeded.

If electricity sector emissions rise much further than they already have since the repeal of the carbon price, it will trigger baseline limits for individual generators, but only for those that are above the average intensity of the sector.

“While we hope emissions do not rise above the sector-wide baseline, if they do, it means our electricity sector would be legally allowed to emit up to 110 million tonnes per year more than we currently do – an increase of about 20% to Australia’s total emissions.

“The proposed safeguard mechanism effectively sets an upper limit only for brown coal generators and some of Queensland’s black coal power stations. But even within that limit, those generators could legally increase their emissions up to their highest level in the past five years, which is a total of 21 million tonnes.

“The remaining generators in the National Electricity Market have no legal limit, and so their emissions are limited only by how much they can generate. If demand rises for whatever reason, we could see a 30 million tonne per year increase in carbon pollution from just a handful of NSW power stations.

“This could likely mean an overall increase in emissions in the order of 50 million tonnes per year, which more than negates the carbon abatement purchased by the Emissions Reduction Fund. It is equivalent to building four new large coal-fired power stations.

“The proposed Safeguard Mechanism proposes a long list of conditions that allows facilities to increase their emissions, with only a vague risk of financial penalty at the end.”

“There are serious questions about the Emissions Reduction Fund not providing much of a carrot, and our calculations show that at the moment the Safeguard Mechanism isn’t doing anything as a stick.

“The only thing that this proposed mechanism safeguards is a continued free ride for polluting coal-fired power stations.

A summary of the analysis can be found here.

For comment:
Nicholas Aberle, Environment Victoria Safe Climate Campaign Manager, 0402 512 121