Triggering the safeguard or safeguarding the trigger: Climate, large emitters and the EPBC Act

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By Peter Burnett

Last week’s debate in the Australian Parliament on the new government’s Climate Change Bill generated a surprising level of debate on a side issue, the possible inclusion of a ‘climate trigger’ in Australia’s most significant environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).

So much so that I made it the subject of my last blog, in which I argued that we mostly didn’t need a climate trigger, because it would double up on the ‘safeguard mechanism’ that sets individual baselines for major carbon-emitting facilities like steelworks, and then reduces that baseline over time.

The exception was for actions that would generate significant carbon emissions but weren’t ‘major facilities’, which mostly means major land-clearing.

I’ve changed my mind. In light of last week’s debate, I now think we should have both a climate trigger and a safeguard mechanism, on the proviso that they must dovetail with each other.

Let me explain. As the government is committed to the safeguard mechanism but somewhat skeptical about a climate trigger, I’ll start with the former.

Safeguard mechanism

We don’t yet have the full detail of what the government is proposing — it has promised to release a discussion paper towards the end of August. We do know, however, from statements by climate minister Chris Bowen and from Labour’s election policy, that the gist of the proposal is to keep the existing legal machinery while reducing facility emissions baselines progressively to net zero by 2050.

The safeguard mechanism will apply to the 215 existing major emitters, together with any new facilities emitting more than 100,000 tonnes CO2-e per annum.

Climate trigger

A climate trigger in the EPBC Act would prohibit developments likely to emit more than a certain volume of greenhouse gases per annum (lets say 100,000 tonnes), without first undertaking an environmental impact assessment (EIA) and obtaining a development approval from the environment minister. Such an approval might simply require the developer to use the best available emissions technology at the time of construction, with no follow-on requirements.

Alternatively, much like the safeguard mechanism, it could require reducing emissions from an initial baseline. It might even allow emissions credits to the traded with other such facilities, although this could be complicated in practice.

Dovetailing a safeguard with a trigger

If used together, these two mechanisms would be seeking to occupy much the same regulatory space. That’s why I argued that a climate trigger should be limited to actions that are not caught by the safeguard mechanism, such as land clearing.

However, there are some benefits that are better delivered by one or other of the two mechanisms.

For example, it seems that many projects underestimate their likely emissions by a significant amount. The rigour of the EIA process, including the opportunity for public scrutiny, will help ensure early and accurate estimates of emissions, before the final investment decision is made.

Another benefit of a climate trigger is that the environment minister would have the option of saying ‘no’ to a proposal for a high-emitting facility. Sometimes outright rejection is the right answer, even where the government has no objection to the activity itself, as with Tanya Plibersek’s proposed rejection of Clive Palmer’s latest Queensland coal mine shows.

On the other hand, the safeguard mechanism is designed to facilitate emissions trading, which is something not readily available under the more traditional regulatory mechanism of an EPBC approval.

This leads me to suggest that we can have the best of both, provided we ensure that the two mechanisms dovetail with each other and so avoid duplication.

It could work like this.

First, there would be a whole-of-government policy specifying that major emitters would be subject to a facility-specific emissions cap, set by reference to the lowest feasible emissions from existing technology. This cap would then decline to net zero by 2050.

Second, under the climate trigger, the environment minister would limit herself to assessing the likely emissions under best low-emission technology and setting that level as the initial cap. She would do so knowing that her approval of the project would, in turn, trigger the safeguard mechanism.

In the end, we would have the benefit of both mechanisms but no duplication — just a hand-off from one regulator to the other.

Objections anyone?

Some might object to this ‘dovetail’ approach on the basis that Professor Graeme Samuel recommended against a climate trigger in his review of the EPBC Act in 2020.

This objection lacks substance, for two reasons. First the review did not extend to policy matters such as a climate trigger, but was confined to the operation of the existing Act.

Second, while Professor Samuel did note that previous governments had chosen not to use a climate trigger, an outcome he said he agreed with, he left it at that, without making any arguments of substance against a climate trigger.

‘Both/and’, not ‘either/or’

This debate has quite some way to run —the government will not be responding to the Samuel review until late in 2022 and will not bring forward legislation to amend or replace the EPBC Act until 2023.

However, it is clear already that there will be a major episode of brinkmanship played out between the government and the Australian Greens over the climate trigger. The Greens are determined to push for ‘no new fossil fuel projects’ while the government are equally determined not to ban these projects unilaterally, on the ground that if we act alone, other countries will take up the slack as a suppliers of fossil fuels.

I hope my ‘both/and’ approach will prove useful as that debate plays out.

If we stick with the ‘either/or’ approach currently on the table, then we can expect high-stakes brinkmanship in the Senate next year, as the unstoppable force of the Greens’ passion for avoiding climate disaster collides with the immovable object of a government that knows that its future depends on occupying the centre lane on the political highway.

Banner image: Some want a ‘carbon trigger’ to stop the development of big emitting facilities. Others reckon a ‘safeguard mechanism’ is enough to constrain emissions. Maybe we can dovetail them and get the best of both. (Image by catazul from Pixabay)

Should we include a climate-change trigger in national environmental law?

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By Peter Burnett

In Australia this week, all eyes (well most of them) are on Canberra for the first sitting of Parliament since Labor came to power in May. The first order of business is the promised Climate Change Bill, to enshrine the government’s promised 43% target.

While public debate on the bill has focused on the target itself and the nature of a possible ‘ratcheting mechanism’ to raise the target over time, there’s also been quite a bit of attention given to something that definitely won’t be included: a ‘climate trigger’ for environmental approval of large projects such as mines and dams.

Let me explain.

Triggering the EPBC Act

For constitutional reasons, our main national environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), is based on a set of ‘triggers’. These are formally known as ‘matters of national environmental significance’. The triggers cover various things you’d expect to be of national significance, such as impacts to World Heritage places and threatened species, but not the most obvious candidate of all, climate change.

The EPBC Act was drafted by the conservative Howard Coalition government in the late 1990s as part of an overhaul of national environmental law. This bold reform was an unlikely project for a conservative government, but came about for two reasons.

First, Howard had courted the environment movement quite successfully in the 1996 election campaign, largely by promising a large pot of money (the National Heritage Trust) in exchange for privatising the national phone company, Telstra. There was a sentiment at the time that perhaps conservatives could care for the environment as well as progressives, by investing in it.

Second, Howard’s environment minister, Senator Robert Hill, was not just a skilled political operator, but a genuine environmental reformer (though perhaps a flawed one — see below).

In particular, Hill demonstrated an ability to navigate obstacles in government where others would have foundered on the political rocks.

Kyoto and the climate trigger

Despite Hill’s commitment to reforming environmental law he also led the Howard Government’s negotiating team at Kyoto, securing the notorious ‘Australia clause’, under which Australia was allowed to increase its emissions to 108% of 1990 levels, despite other rich countries being locked-into cuts.

Beyond this, also notoriously, Howard refused to ratify the Kyoto Protocol, despite Australia’s easy ride through with the Australia clause.

Howard had a real thing about action on climate change. Despite Australia’s easy ride, early on his major concern seemed to be that Australia might be taken for a ride, by being required to do more than its fair share of the ‘heavy lifting’. Later on, he seemed determined to hold out on ratification as a way of supporting the USA under George W Bush.

You can see why, despite being the most obvious candidate, climate was never going to be a trigger in the EPBC Act. Unfortunately for the government though, it had to do a deal with a minor party, the Australian Democrats, to get the EPBC Bill through the Senate.

Howard agreed to more than 400 Democrat amendments to secure passage, but wouldn’t include a climate trigger.

A climate trigger discussion paper

The government did however agree to consult about including a climate trigger by later amendment, and released a discussion paper on the topic at the end of 1999.

An obvious issue was the emissions threshold for the trigger. The lowest number discussed was 500,000 tonnes CO2-equivalent. This was said to capture 92% of emissions from new major facilities, such as power stations and aluminium smelters, then under construction.

Interestingly, today’s ‘safeguard mechanism’, enacted by the Abbott Government to support its Emissions Reduction Fund and requiring large emitters (currently 215 of them) to meet an individually-tailored emissions cap, has a threshold of 100,000 tonnes.

Even more interestingly, while the discussion paper canvassed some of the more technical issues associated with defining the trigger in some detail, such as whether emission estimates would be based on average or peak capacity, it completely avoided the significant issue of what kinds of requirements might be imposed on a new facility once the trigger was, well, triggered.

The discussion paper said this was because approval decisions had to be consistent with the principles of ecologically sustainable development and should take account of issues such as jobs and international competitiveness. (Had they addressed the issue, I think the most likely approach at the time would have been to require that the proponent use ‘best available low-emission technology at reasonable cost’.)

Then there was the issue of carbon emissions from land clearing. The discussion paper simply excluded this topic; the implication was that land clearing was not a ‘project’.

I think this explanation and exclusion are tendentious. I suspect that the government never intended to introduce a trigger, but simply to go through the motions. In that context, any content beyond the barest minimum could expose the government to enemy political fire, for no gain (to them).

Back to the future

So, there we have it. No climate trigger. But should we have one now?

Labor is promising to re-orient the safeguard mechanism, under which emissions from the major facilities are capped.

The previous government kept resetting the caps, giving emitters an easy ride in meeting them. Now, the government will lower the caps progressively, as the theory says such a scheme should, forcing facilities to lower emissions or buy emissions credits.

Under that scenario, it doesn’t make much sense to apply a climate trigger to major facilities — anyone building such a facility already knows that its emissions will be subject to a reducing cap.

Even if a climate trigger applied, what conditions could the environment minister impose that would achieve more than keeping emissions under a reducing cap? (In theory, a trigger would allow the minister to block a project entirely, this seems unlikely).

What about land-clearing?

Then there’s land clearing. Although the significance of land clearing is usually seen in terms of habitat loss, it is also significant for carbon emissions where the vegetation concerned is of high quality (low quality regrowth areas are marginal in terms of carbon emissions).

At present there is no land clearing trigger in the EPBC Act, even for biodiversity-related reasons. And, unlike industrial facilities, there are no climate-related laws applying to land clearing.

Thus, above a certain extent and quality, there is a case for a climate trigger relating to land clearing.

However, states and territories all regulate land clearing for other reasons. Due to the complexities of doubling-up on land regulation, it might be more effective to combine a trigger with a national standard for land clearing and to switch off the trigger in states where clearing laws meet the standard.

And in the end?

At the end of the day, given Labor’s plans for the safeguard mechanism, the case for a ‘climate trigger’ is particular rather than general. It would make sense for the clearing of significant areas of land containing old-growth and other high quality vegetation, but that’s about all.

In any event, a climate trigger is off the agenda as an amendment to the Climate Change Bill, given climate minister Chris Bowen’s statement that the government would rather pursue its climate target on a non-statutory basis, than have policy change forced on it by legislative amendment.

But there will be a second opportunity, when environment minister Tanya Plibersek delivers on her commitment to introduce major reforms to the EPBC Act in 2023.

Then, unlike now, the government won’t have the clean option of simply walking away, because so much of the non-climate environmental reform agenda hangs off that reform.

Banner image by Yazril Tri Mulyana from Pixabay