Emissions cuts made through the fund are achieved by actions such as revegetating land and energy efficiency. The government has pledged to spend another $2 billion on the Abbott-era policy, which it has renamed the Climate Solutions Fund.
The analysts say this is because the safeguard mechanism allowed companies to set their baselines high enough to allow for emissions increases, and companies can also increase their emissions under some circumstances, such as if their business is expanding.
The Reputex analysis shows that industry emissions covered by the safeguard mechanism have increased by 12 per cent since it began in 2015, and projects they will grow a further 19 per cent by 2030. This equates to 280 million tonnes of emissions increases.
About 193 million tonnes of carbon abatement has been purchased under the Emissions Reduction Fund so far. Reputex estimates that the government’s additional $2 billion investment will abate between 25 million and 100 million tonnes of carbon by 2030. Even if the maximum reduction was achieved, the extra emissions from industry would mean a net reduction of just 13 million tonnes, despite taxpayers copping a $4.55 billion bill.
The report said some of the biggest increases to emissions had been granted to coal mines. Large liquified natural gas projects were driving forecast increases, such as Chevron’s controversial Gorgon operation off Western Australia.
Reputex executive director Hugh Grossman said while the Emissions Reduction Fund has contracted large volumes of abatement, “industrial emissions increases will … fully erode these gains”.
“Given the flexibility for industry to increase their baselines, we are seeing emissions continue to grow under the safeguard mechanism, outpacing abatement contracted by the Emissions Reduction Fund”, he said.
However Environment Minister Melissa Price said any suggestion that the government will spend $4.55 billion to deliver 13 million tonnes of abatement “is the result of selective modelling and simply wrong”.
She said the Climate Solutions Fund and its predecessor will deliver almost 300 million tonnes of abatement by 2030, and additional emissions reduction would come from measures such as Snowy 2.0 and the development of a national electric vehicle strategy.
“The Coalition’s safeguard mechanism isn’t designed to restrict production and employment as Labor’s plans would do. Instead, it provides a legislated obligation for Australia’s big emitters to measure, report and manage their emissions, while giving them the flexibility to grow,” she said.
Ms Price said increased emissions identified in the report were largely due to new entrants since the safeguard mechanism was first put in place, including new LNG investments that are helping to reduce global emissions by displacing traditional fossil fuels.
Labor has pledged to strengthen and expand the safeguard mechanism if it wins government. Under their more stringent policy, the amount of pollution companies can emit would be reduced over time, and the measure would apply to firms that emit more than 25,000 tonnes of carbon dioxide a year, rather than 100,000 tonnes under the Coalition. Trade-exposed businesses would be exempt from the policy, which would be phased in after consultation with industry.
Nicole Hasham is environment and energy correspondent for The Sydney Morning Herald and The Age.