Australian businesses know that good climate policy is good economic policy.

After almost a decade of Coalition division and inaction on energy, Australian industry has been advocating for a robust policy framework to maximise future competitiveness, invest in the regions and ensure Australia has the future workforce we need to seize this opportunity.

The Albanese Labor Government is working with industry to create jobs and reduce emissions, as recommended by Australia’s biggest businesses.

Our largest exporters know that global markets are moving to a low-carbon future, with more than 80% of Australian trade now covered by other countries’ net zero commitments.

Major Australian companies are committed to net zero by 2050, and many have made ambitious 2030 pledges.

Australian business now have an active partner in government.

Industry is rightly demanding certainty from government, a policy framework that encourages and rewards their efforts, and a level playing field with their competitors.

Powering Australia delivers the certainty and policy framework that industry has been rightly demanding.

In industry, agriculture and carbon farming:

• For facilities already covered by the Government’s own Safeguard Mechanism, Powering Australia has adopted the Business Council of Australia’s recommendation that “emission baselines [be] reduced predictably and gradually over time” to “support international competitiveness and economic growth.” These changes provide a supportive policy framework for industry’s own commitment to net zero by 2050.
• Labor’s Powering the Regions Fund supports innovation by existing industry and the creation of new industries in regional areas to ensure Australia is at the front of the pack in a changing global economy.
• Investment of up to $3 billion from Labor’s National Reconstruction Fund supports renewables manufacturing and the deployment of low-emissions technologies, broadening Australia’s industrial base and boosting regional economic development.
• These policy levers also support private investment in abatement – with Labor committing to ensuring integrity and cobenefits from carbon credits.
• In agriculture, Powering Australia supports the development and commercialisation of emissions-reducing livestock feed, and improve carbon farming opportunities.
• 10,000 New Energy Apprentices will be trained in the jobs of the future, and a $10 million New Energy Skills Program will work with industry, unions and the states and territories to ensure training pathways are fit-for-purpose.

Safeguard Mechanism

The Safeguard Mechanism was created by then Prime Minister Tony Abbott, and introduced by the Turnbull Coalition Government on 1 July 2016, with support from Scott Morrison as Treasurer.

The then Environment Minister, Greg Hunt declared the intent was to ‘ensure that emissions reduction paid for by the Government [through the ERF] are not displaced by a significant rise in emissions elsewhere in the economy.’

It applies to ‘designated large facilities’ – those whose annual Scope 1 greenhouse gas emissions are more than 100, 000 tonnes of carbon dioxide equivalent.

There are currently 215 facilities covered by the Safeguard.

The Business Council of Australia has been urging the Government to reform the Safeguard Mechanism – to send an ‘investment signal to achieve national emissions targets and budgets out to 2050.’

Big business and industry, as well as their investors know the world is changing, and that they need the right signals in place not just to stay competitive but to innovate and thrive.

Staying competitive and on track for 2050 will also be critical to avoid penalties from carbon border tariffs imposed by other nations and trading partners in the future.

Labor is ambitious for Australia’s future in a changing global economy, and backs Australian industry in the decarbonisation opportunity.

Improving the mechanism

For facilities already covered by the Government’s own Safeguard Mechanism, Powering Australia has adopted the Business Council of Australia’s recommendation that “emission baselines [be] reduced predictably and gradually over time” to “support international competitiveness and economic growth.” These changes will provide a supportive policy framework for industry’s own commitment to net zero by 2050. No additional facilities will be covered.

RepuTex models that these improvements to the Safeguard Mechanism, that support innovation in industry and private demand for carbon credits, will create thousands of jobs by 2030.

An estimated 5 in 6 of these jobs will be in regional Australia.

The BCA’s recommendation is also supported by the Australian Industry Group and experts such as the Grattan Institute and Carbon Market Institute.

It makes sense that Australian businesses and industry groups are pushing for this supportive policy framework. More than 2 in 3 facilities covered by the mechanism have emissions goals in line with, if not more ambitious than, net zero by 2050.

Within a broad trajectory towards net zero by 2050, Labor has asked the Department of Industry and the Clean Energy Regulator (which already administers the scheme) to determine revised baselines for each facility in close consultation with industry. They will carefully consider the available and emerging technologies in each sector.

Labor will provide tailored treatment for emissions-intensive, trade-exposed industries. This will be based on the principle of comparative impact – ensuring that exporters remain competitive, and that emissions do not ‘leak’ overseas.

Labor’s policy will include tradeable credits for companies that stay below their baselines – a promise that the Government has so far failed to deliver.

Credits and revised baselines will encourage investment in low-emissions technology, not raise revenue for government.

Every dollar invested in emissions reduction and offsets will grow our economy and create jobs.

Labor’s Powering the Regions Fund and National Reconstruction Fund will assist covered facilities in meeting their new baselines, and the deployment of low emissions technology across industry more broadly.

The legislation passed both houses of Parliament in May 2023 and included a number of amendments including a hard cap on total emissions covered by the safeguard mechanism and the need for emissions to gradually decline.