Beyond the Safeguard
The Safeguard will pass into law this week and come into effect in July. The improvements negotiated with the crossbench are significant and will make the policy more effective in reducing Australia’s emissions.
This is welcome news for CCL. The main reason is that Australia now has an official price on carbon. Due to the fallout from the climate wars it will seldom be called a carbon price. The original safeguard was designed as an alternative to Labor’s Clean Energy Act. In effect it wasn’t a carbon price because it’s settings did not require industry to reduce emissions. The reformed safeguard will adjust the ‘baselines’ steadily downwards, requiring real emissions reductions at a cost to producers, thus making it a price on carbon.
However, it remains a relatively weak price and leaves large sections of our economy without a price. It also must compete with subsidies and many other policies and government activities that encourage and support fossil fuel production and consumption. And finance is still flowing to fossil fuels at alarming rates. (In the six years since the Paris Agreement the world’s 60 largest private sector banks financed fossil fuels with USD 4.6 trillion).
These combine to ensure that the carbon price in Australia is a negative carbon price – negative for citizens who are paying for the enormous costs to health, environment and climate being caused by fossil fuels. The safeguard is welcome because it is a step towards moving the carbon price from negative to positive - positive for society and the planet.
For this reason, and because it has deficiencies identified by many analysts over recent months, the Safeguard will need to be complemented by other policies. Climate Council head of advocacy, Jennifer Rayner, gets it right in saying that,
“The Safeguard Mechanism is just one weapon in the war to drive down Australia’s emissions. We need to throw the whole arsenal at tackling harmful climate change…….strong environmental laws that properly consider climate impacts, an end to fossil fuel financing and public subsidies, much tighter limits on offsetting to ensure we are achieving genuine and steep emissions reductions.”
Climate Dividends is a powerful means to ending finance and subsidies to fossil fuels and will drive real emission reductions without the need for offsets. It will neatly complement the safeguard by pricing the carbon content of fossil fuels for all sectors of the economy and free up the safeguard to address non-fuel related emissions from cement, steel making and others. And the dividend will engage citizens in decarbonising our economy.
We can be pleased that our parliament has achieved this breakthrough in climate policy and now look forward to working with the parliament to fill out the policy framework needed to seriously address global warming. Our Policy Playbook has plenty of resources for this purpose.
