Moves by the federal government to broaden the remit of two climate change agencies have been cautiously welcomed by business leaders, with new rules to promote investment into carbon capture and storage following a review of the government’s emissions reduction fund.
Moves by the federal government to broaden the remit of two climate change agencies have been cautiously welcomed by business leaders, with new rules to promote investment into carbon capture and storage following a review of the government’s emissions reduction fund.
Energy Minister Angus Taylor said the government hoped to reduce emissions in manufacturing, agriculture, transport and manufacturing.
Mr Taylor said the three key recommendations of the review, led by former Origin Energy boss Grant King, were to encourage more participation in the government’s Emissions Reduction Fund, increase voluntary reductions, and unlock new technologies.
The Clean Energy Finance Corporation and the Australian Renewable Energy Agency will be given a broader, technology neutral remit for investing in emissions reduction.
EY APAC climate change and sustainability leader Matt Bell said changing the investment mandate was a welcome decision that would address emissions reduction opportunities across the economy.
“We support a move toward a decarbonised economy, and believe that post-COVID-19 we should be focused on rebuilding Australia in a way that creates jobs and economic prosperity over the long term,” he said.
“Addressing climate risk will do just that.
“In essence, allowing companies to monetise (carbon credits) the benefit of reducing emissions below their safeguard baseline creates a baseline and credit scheme, essentially a price on carbon.
“However, without reducing baselines over time (aligned to Paris commitments, for example) we’ll essentially be generating (carbon credit units) but not generating a demand for them.
“This wouldn’t incentivise the reduction in emissions much, and may devalue the current carbon market somewhat.
“In terms of carbon capture and storage, a tonne of emissions removed is a tonne of emissions, regardless of whether that’s from forestry or carbon capture and storage.
“Expanding the methods to allow CCS to generate carbon units may help with the economics of this technology, though ultimately the market will decide if that’s enough of a financial incentive to invest in new CCS activities.”
Minerals Council of Australia chief executive officer Tania Constable said the review and the government’s response would fast-track development and deployment of low cost abatement technologies including carbon capture and storage and electric vehicles.
“In particular, CCUS is a safe, proven and reliable technology already in use in Australia and many sites around the world which has significant potential to reduce emissions when used for hydrogen production, electricity generation and industrial processes such as cement manufacturing,” Ms Constable said.
“Building on the existing climate policy framework, the review encourages companies to reduce emissions in ways that work for them while creating incentives for all sectors to contribute to meeting Australia’s international climate change obligations.
“The future facilitation of co-investment programs by the CEFC and ARENA to accelerate technologies with high potential in ‘hard to abate’ sectors – including fugitive emissions – based on a technology-neutral approach is a welcome development.”
