The passage of the Safeguard Mechanism (Crediting) Amendment Bill on 30 March represents the most significant structural reform for the Australian carbon market since the enactment of the Carbon Price Mechanism (CPM) in 2011 – and its repeal in 2014 – once again establishing a robust emissions limit for large industrial facilities.
While facilities will initially become accountable for just a small portion of their emissions each year, the gradual and predictable signal to guide investment decisions represents the missing demand-side lever in Australia’s climate policy toolkit to support long-term emissions reductions and innovation from the industrial sector.
Negotiated amendments will be broadly supportive for the Australian carbon market, with tighter baseline settings for liquified natural gas (LNG) export and domestic gas projects increasing total demand for abatement, subject to the wide range of potential Scope 1 emissions for Beetaloo Basin developments, and uncertainty around the development of new LNG projects. The impact of tighter baseline settings, however, will be counterbalanced by more flexible TEBA eligibility for ‘manufacturing’ facilities.
We expect positive sentiment and improved policy certainty to drive uplift across the market, however, high Australian Carbon Credit Unit (ACCU) prices are likely to be tempered by the re-opening of
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