Australia tightens industry limits in push for decarbonisation

Support package for foundational industries and orders a study into the use of a carbon border adjustment mechanism

AUSTRALIA has passed legal reforms that set a hard cap on industrial emissions and require new gas fields supplying LNG facilities to be net zero as it pushes heavy industry to decarbonise.

The so-called ‘safeguard mechanism’ requires Australia’s largest emitters – around 215 facilities that produce over 100,000 t/y of greenhouse gases – to keep their emissions below a baseline, but the scheme has proved ineffective with emissions increasing from around 130 m t in 2016/17 to more than 140m t in 2019/20. The mechanism covers facilities for oil and gas production, mining, power, manufacturing and waste that are responsible for around 28% of the country’s emissions. In support of its plans to reduce carbon emissions by 43% by 2030 and go net zero by 2050, the Labor government has now passed reforms that will reduce greenhouse gas emissions by major polluters by 205m t to 2030 and set a hard cap so that emissions cannot exceed 1.2bn t between 2020 and 2030.

Responding to the new law being passed, Chris Bowen, minister for climate change and energy, said it was a “historic day” for the country by ensuring the economy can take advantage of the opportunities for decarbonisation and meet its ambitious climate targets.

Squeeze on gas

The Labor government had to negotiate on amendments put forward by the Greens to secure the votes needed to pass the reforms. Among the key measures agreed are that any new gas fields supplying existing LNG facilities will be treated as new facilities and will have their baseline emissions set by international best practice. Using the existence of low-CO2 fields and the opportunities for carbon capture and storage (CCS) as the point of reference for best practice, the new rules require zero emissions from new fields. Likewise, new entrants wishing to produce gas from the onshore Beetaloo basin in the Northern Territory will have to be net zero for the scope one emissions produced directly from their operations.

Greens leader Adam Bandt has predicted that the reforms will prevent such projects from going ahead: “Coal and gas have taken a huge hit. The Greens have stopped many of the 116 new coal and gas projects in the pipeline from going ahead, pollution will actually go down, and we’ve derailed the Beetaloo and Barossa gas fields.”

However, Santos CEO Kevin Gallagher has told shareholders that the company remains committed to its offshore Barossa natural gas project despite the reforms. The project, which will feed gas to the Darwin LNG plant, will use CCS technology to capture emissions from the field but the capture is not scheduled to begin operations until 2027. The full details of the reforms, including how new baselines will be set, will be agreed in coming legislation. Gallagher said more details were needed as soon as possible to determine the full impact on the Barossa project, which has been described by environmentalists as a ‘carbon bomb’ due to the high volume (18%) of CO2 contained within the field.

Gallagher said: “The regulations that support the legislation are yet to be developed and so we’ll be working with the government over the weeks ahead to get clarity on that, and if that changes, and that has any impact on schedule, then we will have to take that into account at that point in time,” The Australian reports.

The Australian Petroleum Production & Exploration Association (APPEA) has criticised the rules saying they risk slowing the development of the gas projects that it argues are necessary for a cleaner future, and could leave the country reliant on dirtier coal. Samantha McCulloch, CEO of the trade group, said the changes strengthen the need for the federal government to develop a national plan for CCS.