30th Mar 2023, 1:13 PM – Senate Safeguard Mechanism (Crediting) Amendment Bill 2023 - in Committee - Unit surrender, judicial review, max. offset percentage + price

The majority voted against amendments introduced by ACT Senator David Pocock (Independent), which means they failed.

What do the amendments do?

The amendments related to the surrender of units, judicial review, a maximum offset percentage and the price of offsets.

In his speech, Senator Pocock explained that:

Amendments (1) and (2) on sheet 1903 revised circulated in my name improve the way that offsets are used under the reform. Offsets are a very necessary part of this but should be reserved for hard-to-abate industries. They should only be used as a last resort, and this amendment will make sure that is the case.

Amendment (3) on sheet 1903 removes the price cap on ACCUs and limits the risk to taxpayers should the cap be breached. If we're going to have a market mechanism, I don't see a reason to put a ceiling on the price. If you're going to use the market to try and fix this, then it really doesn't make sense to cap it and, in doing so, potentially expose the Commonwealth and taxpayers to a liability should the Commonwealth run out of ACCUs.

The amendments on sheet 1915 discount the value of offsets if more than 50 per cent of compliance with baseline is achieved through offsetting. This will drive onsite abatement and bring forward investment in decarbonisation. If we're not going to have a hard cap on ACCUs there is provision in the regulation-making powers for the minister to discount ACCUs, referred to as the four-fifths rule, and I really believe this would be a valuable tool in imposing a carbon mitigation hierarchy which is well-established and acknowledged around the world. It makes sense for Australia to have one of them embedded in this legislation.

The amendments on sheet 1907 extend standing to allow third parties to challenge issues in the carbon market. This is simply an accountability measure that will improve the integrity of the carbon market. There has been much conjecture about certain methodologies. This whole reform hinges on integrity in offsets. It makes sense to me that people should be able to go through the process of challenging projects should they think that there are issues.

Amendment text

SHEET 1903 REVISED

(1) Schedule 1, item 31, page 8 (after line 29), after paragraph 22XN(1)(a), insert:

(aa) if the surrender includes one or more Australian carbon credit units—the surrender meets the requirement in subsection (1AA); and

(2) Schedule 1, item 31, page 8 (after line 33), after subsection 22XN(1), insert:

(1AA) For the purposes of paragraph (1)(aa), the requirement is that the number of Australian carbon credit units included in the surrender does not exceed:

(a) in the first year of operation of Division 4A of Part 3H—more than 90% of the abatement amount; and

(b) in each subsequent year of operation of that Division—more than the greater of:

(i) 90% of the abatement amount minus 10% of the abatement amount per year of operation; and

(ii) 20% of the abatement amount.

(1AB) For the purposes of subsection (1AA), the abatement amount is the difference between:

(a) the net emissions number for the facility for the period (assuming no reductions have been applied under section 22XK); and

(b) the baseline emissions number for the facility for the period.

(3) Schedule 4, page 50 (after line 16), after item 7, insert:

7A After section 150A

Insert:

150B Price of Australian carbon credit units not to be capped

Despite anything in this Act, or in any other law of the Commonwealth, there is no cap on the price at which Australian carbon credit units may be purchased by a person who is the operator of a facility to which Part 3H of the National Greenhouse and Energy Reporting Act 2007 applies.

SHEET 1907

(1) Schedule 4, page 51 (after line 15), after item 12, insert:

12A After Part 23

Insert:

Part 23A — Judicial review

238A Extended standing for judicial review

(1) This section extends (and does not limit) the meaning of the term person aggrieved in the Administrative Decisions (Judicial Review) Act 1977 for the purposes of the application of that Act in relation to:

(a) a decision made under this Act or a legislative instrument under this Act; or

(b) a failure to make a decision under this Act or a legislative instrument under this Act; or

(c) conduct engaged in for the purpose of making a decision under this Act or a legislative instrument under this Act.

(2) An individual is taken to be a person aggrieved by the decision, failure or conduct if the individual is an Australian citizen or ordinarily resident in Australia or an external Territory.

(3) An organisation or association (whether incorporated or not) is taken to be a person aggrieved by the decision, failure or conduct if the organisation or association is incorporated, or was otherwise established, in Australia or an external Territory.

(4) A term (except person aggrieved) used in this section and in the Administrative Decisions (Judicial Review) Act 1977 has the same meaning in this section as it has in that Act.

SHEET 1915

(1) Schedule 1, item 28, page 7 (line 26), omit "Safeguard rules made for the purposes of paragraph (2)(c) may", substitute "For the purposes of paragraph (2)(c), the safeguard rules must".

(2) Schedule 1, item 28, page 8 (after line 12), after subsection 22XK(2A), insert:

(2AA) In making safeguard rules for the purposes of subsection (2A), the Minister must ensure that they are consistent with the principle that, to the extent that the number of Australian carbon credit units surrendered exceeds 50% of the abatement amount for a facility for a period, the value of those units in reducing the net emissions number for the facility for the period should be discounted by 20%.

(2AB) For the purposes of subsection (2AA), the abatement amount for a facility for a period is the difference between:

(a) the net emissions number for the facility for the period (assuming no reductions have been applied under this section); and

(b) the baseline emissions number for the facility for the period.