Albanese government climate policy doesn’t kill gas
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Australia’s largest oil and gas producer, Woodside, issued a tame and measured response to Monday’s legislation.
“The safeguard mechanism amendments acknowledge the role for gas and carbon capture, utilisation and storage in maintaining Australia’s competitiveness in a decarbonising economy, while reducing emissions at the largest industrial facilities.
This rhetoric, particularly from the Greens, conveniently ignores the fact that many of these 116 projects were never going to get to final investment approval.
“We look forward to engaging with government on the implementation of the safeguard mechanism package in a manner that supports the development of needed new energy supplies, and ensures a continuation of Australia’s reputation for investment certainty.”
Woodside’s Scarborough project, which is already under construction and will generate low levels of carbon, will be minimally impacted by the legislation that passed through the lower house this week, according to analysts.
Meanwhile, two developers at the centre of the Beetaloo project in the Northern Territory say claims by the Greens that this will hinder development are unfounded.
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This rhetoric, particularly from the Greens, conveniently ignores the fact that many of these 116 projects were never going to get to final investment approval.
While the legislation won’t welcome new developments, the emissions parameters that will be placed on them will make some more expensive – but this is a long way from a hard no.
This does not mark the exclusion of gas in the transition to sustainable energy. But it does mean that affected companies will need to increase investment in carbon capture and storage and carbon credits.
Meanwhile, despite the price cap, the mandatory code of conduct and safeguard mechanism, it doesn’t seem to have affected the generously priced $18.7 billion acquisition of Origin, which includes the company’s stake in the Australia Pacific LNG venture in Queensland.
None of this has deterred Labor branding this legislation a victory, and in a general sense it certainly is positive for the environment.
The Greens who scored some modifications to toughen up the regulations have been particularly ebullient, despite the concessions it needed to make to its objective of blackballing any new fossil fuel projects.
The main point of the safeguard mechanism is the reduction in emissions from industrial facilities by 30 per cent by 2030, from 140 million tonnes in 2022 to 100 million tonnes.
The key changes include a hard cap on any increases to current pollution levels, which will decrease over time. A pollution trigger in the bill requires Climate Change Minister Chris Bowen to test the impact of new or expanded projects on the hard cap and net carbon budget.
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That allows the government a bit of wriggle room if the needs of the energy market consumers clash with the objectives of the legislation.
“If the advice to me is that [the emissions target] would be exceeded, then I must consult on my policy options and, as the minister of the day, either amend the rules or take any other policy action available to the government at that time,” Mr Bowen said.
The positive aspect to this legislation is that it provides a legislative framework and additional certainty for corporations that they have been crying out for.
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