Address at the Carbon Market Institute 8th Australasian Emissions Reduction Summit
ANGUS TAYLOR: Thank you John for the opportunity to address this year’s summit.
While I unfortunately address you virtually today, it’s great that you’re able to host an event of this size in person again.
Last year, I said I was optimistic about the future of Australia’s efforts to reduce emissions.
And I remain optimistic because of the hard work, collaboration and innovation I see across our community.
At COP26, the Australian pavilion showcased the efforts of more than 20 Australian businesses – many of whom are CMI members.
One of them, Mineral Carbonation International, won the start-up pitch battle - the only Australian contender in a field of 2,700.
And of course, the Emissions Reduction Fund continues to go from strength to strength, with one-in-six projects registered in the last 9 months alone.
The ERF will deliver 17 million tonnes of abatement this year and with innovations like optional delivery contracts, the Commonwealth is increasingly playing the role of an enabler.
The truth is, it is the entrepreneurs and innovators who will ultimately solve the challenge of reducing emissions to net zero.
Not activists, bureaucrats or politicians.
Which is not to say there is no role for government.
To the contrary, there is a very important role for government – the role of an enabler, supporting the private sector’s initiative, innovation and drive.
It’s a role that’s consistent with the principles and values of good, centre-right governments around the world.
That’s the vision we’ve articulated in Australia’s Long Term Emissions Reduction Plan:
- It’s a plan to cut the cost of technologies that will reduce emissions not just in electricity, but transport, manufacturing and agriculture, too;
- A plan to lower the cost of clean energy, not raise the cost of the energy sources that dominate our economy today;
- A plan that rejects taxes and mandates, which would only raise the cost of traditional energy sources, offshoring jobs and industries;
- A plan to support consumer choice – not just here at home, but as the world’s fourth largest energy exporter, to provide cheap, reliable, clean energy to our customer countries across the Indo-Pacific;
- A plan to maintain our world-leading level of transparency and accountability for progress, and to boost the accountability of the private sector; and
- Most importantly, a plan to grow our economy and jobs, even as we reduce emissions.
This is an approach that is evolutionary, not revolutionary.
It’s a practical approach to reducing emissions that is equally relevant in the suburbs of Melbourne as it is in Mackay.
And while others prefer to talk about mechanisms and targets, these policies don’t support the growth of new industries.
Just ask a bank’s credit department whether they’d prefer the certainty of an optional delivery contract under the ERF, or an estimate of a future carbon price under declining Safeguard baselines.
That’s why the ERF is an essential part of our plan to encourage uptake of low emissions technologies as costs come down.
The beauty of the ERF is that it is highly efficient, only targeting those sectors where emissions are likely to be responsive.
The only alternative to a voluntary incentive like the ERF is a carbon tax – or a mechanism that is a carbon tax by another name – which means government imposing costs on business.
Eventually these costs have to be passed through – in the form of higher prices for energy and manufactured products, or job losses – to households and the broader economy.
That’s not acceptable to us as a government, and as history has shown, it’s not acceptable to the communities we are elected to represent.
Recognising the importance of the ERF, my focus since I became the responsible Minister in 2019 has been to push out the supply curve.
And we’re doing that through a range of initiatives, many of which were set in train following the excellent work of Grant King and his fellow panel members in their 2019 review.
Some of these are already bearing fruit, like:
- a five-fold acceleration of new method development to five per year;
- involving the CMI and its members in the prioritisation and development process; and
- offering optional delivery contracts, to give ERF participants greater flexibility without detracting from the certainty of a contract with the Commonwealth.
Others, like the development of the Australian Carbon Exchange, are longer term pieces of work, which will have big impacts in the years ahead.
Pushing that curve out means more demand, a growing voluntary market and lower emissions.
And we’re seeing that in the data.
Auction volumes have increased fourfold, with more than 20 million tonnes of abatement contracted across the last three auctions.
This compares to just five million tonnes for the three auctions before.
99 per cent of the abatement contracted this year is through optional delivery contracts.
So long as spot prices remain above the contract price, more than 13 million tonnes of abatement will be achieved through Commonwealth underwriting, at no cost to the taxpayer.
The voluntary market is also growing at a rapid rate, with the Clean Energy Regulator’s latest forecast for demand to exceed one million tonnes this year.
We also saw progress at the COP in Glasgow on Article 6, which will support the emergence of international markets.
It is clear that Australia’s framework and institutions are well placed to fit with that evolution, and we have already committed to a substantial investment in developing a high-integrity carbon offsets scheme in our region.
I welcome these developments – they are entirely consistent with the plan we’ve set out.
But as the private sector steps up and voluntary demand for carbon credits continues to grow, it is clear that government’s role as an enabler must continue to evolve.
So today I announce new initiatives designed to support the ERF’s continued growth:
Managing impacts on regional communities and agricultural production
My Department will consult on a change to the ERF rules to reduce the risk of native vegetation projects having an adverse impact on our regions.
HIR and NFMR projects covering more than one-third of a farm will no longer be able to go ahead if there is evidence that they will have an adverse impact on agricultural production or the local community.
This process will work in much the same way as the existing safeguards around plantation forestry.
My Department will also look at opportunities to enhance monitoring of pest and weed management in ERF projects.
These changes are about ensuring we strike the right balance between managing land, avoiding adverse impacts and storing carbon as the ERF matures.
The onus is on all of us, but particularly project developers, to maintain the ERF’s collective social licence.
Climate Change Authority offsets review
The Government will task the Climate Change Authority with conducting a review of eligible offsets for Commonwealth certifications like Climate Active.
It is important that claims made through programs like Climate Active are verifiable and robust.
There is no doubt that ACCUs, for example, come with a much higher standard of integrity than some international units.
Consumers must be able to trust these claims – and that trust can easily be eroded by businesses that take shortcuts to save a dollar.
I know that Grant King and his fellow authority members will bring a forensic and principled attention to detail in this review, which is especially timely as we embark on developing the Indo-Pacific Carbon Offsets Scheme.
The Government is investing more than $100 million to develop IPCOS – Fiji and PNG have already signed on, with other partners expected to be announced in the new year.
Modernising Climate Active
The Government is investing $10.4 million to modernise Climate Active and expand the range of certifications on offer.
There are now more than 400 Climate Active certifications across over 280 businesses – including the CMI.
These businesses are working within their sectors to drive genuine change and provide choice for consumers.
Today, consumers can choose to buy anything from Climate Active certified energy to Climate Active certified wine, beef and telecommunications.
But many of these businesses have a relatively small carbon footprint.
My vision is for Climate Active to be a useful tool for Australia’s largest energy using businesses – those covered by the Safeguard Mechanism and National Greenhouse and Energy Reporting scheme.
My Department is developing:
- New forms of recognition for businesses that buy 100 per cent ACCUs, or purchase 100 per cent renewable electricity. In time, this will be expanded to recognise other types of energy, like clean hydrogen and biomethane;
- A requirement for non-energy Climate Active certifications to use at least 20 per cent ACCUs, in recognition of their integrity – and I hope that, coupled with the development of the Australian Carbon Exchange, we see many more businesses opting for 100 per cent ACCUs;
- A new standard to recognise significant investments in low emissions technologies – after all, being ‘climate active’ encompasses much more than achieving net zero today; and
- Guidance to assist the property sector to reduce and offset the embodied carbon in construction and building materials.
Earlier this year, I invited ASX200 companies and NGER entities to engage with the government’s voluntary mechanisms for reducing emissions.
The Corporate Emissions Reduction Transparency, or CERT report, launched in pilot phase at the end of last month.
14 large Australian businesses have already opted-in – if you are c-suite executive and you have signed your company up to an emissions reduction target, you have until the 30 January to sign up.
At the national level, Australia is already a leader in accountability and transparency.
No country has a more timely or comprehensive emissions reporting program than Australia.
The CERT report will bring a new level of transparency and accountability to those large Australian businesses that have adopted their own emissions reduction targets.
And that’s important because accountability is essential to convert ambition into achievement.
I’d also like to note that the goal here is net zero, not zero.
There are no good or bad emissions reductions, and offsets have a very important role to play.
Our plan recognises that and that’s why we see the ERF as such a critical part of Australia’s journey to get to net zero.
I’m pleased to hear that CMI and its members are defending the integrity of the ERF against those who, for their own narrow political interests, seek to undermine it.
So John, I’d like to thank the CMI and its members for the individual contributions they are making to the development of new methods, the growth of the ERF, across so many areas and ultimately to meeting and beating our targets.
As we put the pandemic behind us, there are many causes for optimism.
I look forward to continuing to work with all of you to reduce emissions while growing our economy and jobs.