BRIEFING: Senate may add (baby) teeth to safeguard scheme

The leniency of the newly released ERF Safeguard Mechanism draft rules has increased the prospect of a disallowance motion being brought forward in the Senate to quash, or strengthen, the government’s new compliance scheme. To succeed, such a motion would require the support of the ALP, the Greens, and four of eight crossbench senators – a slightly lower threshold than required for the government to pass legislation in the upper house (six of eight).

In the event of a successful disallowance motion – or the threat of one – the government will be required to make amendments to satisfy the crossbench, notably independent Senator Nick Xenophon, with any negotiation to be buttressed by the government’s reliance on the crossbench to pass its future legislative agenda.

Subsequently, while last week’s draft rules would impose a more lenient baseline scheme on high emitting companies, the ineffectiveness of the policy to adequately “safeguard” ERF investment, or work towards Australia’s new 2030 emissions reduction target, may lead to the rules being strengthened following consultation with Senate crossbench stakeholders.

A number of amendments are currently being scrutinised by the crossbench in order to tighten the operation of the new Safeguard Mechanism. In this Policy Update, we examine these proposals and detail our expectations.

Notably, an opportunity is expected to present for the crossbench to broaden the government’s 2017-18 policy review in order to consider descending baselines from 2020, in line with Australia’s new 2030 emissions reduction target.

Coupled with a “default baseline” – which would come into operation should the baselines review not be resolved in 2017/18 – the prospect of such a review could trigger immediate ‘voluntary’ abatement activity by high emitting companies as firms seek to avoid a future liability, even should there be no ‘stick’ to penalise inaction before the review takes place.

Restricted Access

This is a subscriber report. Please login to access this content.

Not a subscriber?

To learn more about our research services for the Australian energy and emissions markets, click the button below, or email our subscriptions team.

Sign up for regular insights

LATEST UPDATES

  • What impact will a net-zero emissions target have on forecast ACCU prices?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Australian carbon market is undergoing a “fundamental repricing” on the prospect of a national […]

    Research Insights | April 7th, 2021
  • OUTLOOK: Long-term Australian carbon price, supply and demand outlook

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian Carbon Credit Units (ACCUs) has risen 11 per cent calendar year-to-date, […]

    Research Insights | April 7th, 2021
  • ALERT: Australian CO2 spot price hits record high of $18.50/t, up 12% YTD

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian carbon credit units (ACCUs) reached $18.50/t on Monday, a record high, […]

    Research Insights | February 16th, 2021
  • EU levy could impose carbon price of A$65-140 on Australian exports, with more climate tariffs to come

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The European Parliament’s environment committee last week endorsed the proposed Carbon Border Adjustment Mechanism (CBAM), […]

    Research Insights | February 10th, 2021
  • Australian carbon offset price climbs past $17/t, a 12-month high: Here’s why

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The price of Australian carbon offsets broke through $17 a tonne on Wednesday, reaching a […]

    Research Insights | February 4th, 2021
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone
  • Quick Navigation

  • Electricity

    Learn more about our modelling and price outlooks for the NEM
  • Renewable Energy

    Learn more about our services for wind and solar developers
  • Carbon Market

    Learn more about our Australian carbon price and market analysis
  • Latest Insights

    View our latest articles, white papers, reports and publications