The crucial climate test looming for the Greens

The Greens face a defining choice between outright opposition to fossil fuels and compromising to deliver a crucial element of the Albanese government’s upgraded climate targets when parliament votes in coming weeks on pollution limits for big industrial emitters.

Climate Change and Energy Minister Chris Bowen is rushing to pass new laws through federal parliament by the end of May to beef up pollution controls.

Greens leader Adam Bandt.

Alex Ellinghausen

Bowen has promised the caps delivered will apply to industry from July 1 and generate one third of the carbon cuts needed to deliver on the government’s legally binding target to cut national emissions 43 per cent by 2030.

Greens and independent David Pocock are set to cast the deciding votes in the Senate, given the opposition is expected to vote against the changes.

Under the government’s safeguard mechanism, the pollution caps apply to 215 industrial plants that generate more than 100,000 tonnes of carbon emissions a year – such as coal mines, gas processing, smelters, steelmakers and cement producers.

The government has stated the safeguard mechanism will accommodate new gas and coal projects that pass their environmental assessments and force them to meet world’s best standards on their carbon footprint.

It will also allow companies that opt not to cut their emissions to buy offsets under the safeguard mechanism crediting system, where companies that earn credits by exceeding their pollution caps can sell them to companies that have not reduced their emissions.

The Greens campaigned heavily to ban all new fossil fuel projects and party leader Adam Bandt is urging Bowen to ban any new coal and gas developments and to restrict access to carbon offsets to the industries where cleaner production processes are not commercially available – such as cement.

The Greens vetoed the Rudd government’s emissions trading scheme in 2009 because the party wanted a more ambitious policy. Bandt reversed that approach last year when, after criticising the government’s 2030 climate target for failing to ban new fossil fuel projects, the Greens backed the legislation in parliament.

Bandt said on Monday he is leaving the door “open to negotiating in good faith with the government” on the safeguard mechanism.

An act of parliament is not needed to establish the safeguard mechanism, which was created under former prime minister Malcolm Turnbull – but the Coalition government never opted to use it to force companies to reduce their carbon footprint.

But the Albanese government will rely on parliament to create new laws to establish safeguard mechanism crediting, which industry says is critical to making the scheme workable.

There are two pressing reasons why Bowen is highly unlikely to agree to either of the Greens demands.

Firstly, key energy agencies are warning that new gas fields are urgently needed to avert shortfalls to household and industry supplies in NSW and Victoria, which are forecast to bite as soon as this year despite state and federal initiatives to decarbonise the economy.

It would be politically disastrous for the government if Bowen banned new gas projects and a supply shortage drove household bills higher and companies out of business.

Secondly, peak business groups that once opposed binding pollution caps now back the safeguard mechanism reforms, including the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Business Council of Australia.

Ditching the cap and trade system under the safeguard mechanism crediting law would risk industry support for the government’s reforms and strengthen the opposition’s attack, which leader Peter Dutton is leading with claims the pollution caps are a new tax on Australian industry.

The coming months will once again force the Greens to choose between hardline opposition to fossil fuels and the climate action on offer from a major party.

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