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.

Tour our EnergyIQ platform

RepuTex research insights and market data is published via our EnergyIQ platform.

Click below to learn more about our services.

Sign up for regular insights

LATEST UPDATES

  • Carbon Markets

    MARKET MONTHLY: Spot and derivatives volumes fall to seasonal lows in June, market turns to options over H1

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

    Total traded volumes of over 2.1 million ACCUs were reported via our daily Survey Panel […]

    Research Insights | July 7th, 2025
  • Carbon Markets

    UPDATE: FY26 opens with a surge of activity on release of latest Carbon Market Outlook, bearish price forecast

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

    Total volumes across the Australian exchange-traded and over the counter (OTC) carbon markets surged to […]

    Research Insights | July 7th, 2025
  • Carbon Markets

    RECORDING: ACCU prices to remain under $100/t to 2035, landfill gas extension to materially flatten uplift

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

    In May, DCCEEW published a new draft landfill gas method outlining updated rules for crediting […]

    Research Insights, Webinars | July 1st, 2025
  • Carbon Markets Outlook

    OUTLOOK: Australian carbon price, supply & demand outlook (ACCUs/SMCs) June 2025

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

    Our latest Carbon Market Outlook (CMO) for the Australian carbon market has now been published. […]

    Market Outlooks, Research Insights | June 30th, 2025
  • Carbon Markets

    UPDATE: ACCU prices remain tightly rangebound, Default Prescribed Unit Price set for FY25 compliance costs

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

    ACCU spot prices remained tightly rangebound last week, with our Generic ACCU (Market Close) assessment […]

    Research Insights | June 30th, 2025
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone
  • Quick Navigation

  • Carbon Market

    Learn more about our Australian carbon price and market analysis
  • Electricity

    Learn more about our modelling and price outlooks for the NEM
  • EnergyIQ platform

    Access the latest market data with our EnergyIQ platform
  • Latest Insights

    View our latest articles, white papers, reports and publications