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2022-2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SAFEGUARD MECHANISM (CREDITING) AMENDMENT BILL 2023
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be Moved on Behalf of the Government
(Circulated by authority of the Minister for Climate Change and Energy,
the Hon. Chris Bowen MP)
ADDITIONAL AMENDMENTS TO THE SAFEGUARD MECHANISM
(CREDITING) AMENDMENT BILL 2023
GENERAL OUTLINE
These proposed amendments to the Safeguard Mechanism (Crediting) Amendment Bill 2022
(the Bill) would amend the National Greenhouse and Energy Reporting Act 2007 (NGER
Act) and the Climate Change Act 2022.
The amendments take into account consultation on the Government's draft reforms to the
Safeguard Mechanism rules released on 10 January 2023 and are intended to provide
additional investment certainty for impacted businesses and the Australian community that
the reforms will be environmentally effective and economically responsible. It is essential
that facilities covered by the Safeguard Mechanism contribute a proportional share of
Australia's legislated 2030 emissions reduction target under the Climate Change Act 2022
and are on a pathway to net zero by 2050. Policy stability and strong incentives for
investment in these hard-to-abate and strategically important sectors is critical to our national
competitiveness.
The amendments to the Bill would update the second object of the NGER Act. This object is
to contribute to the achievement of Australia's greenhouse gas emissions reduction targets by
ensuring that net covered emissions of greenhouse gases from the operation of a designated
large facility do not exceed the baseline applicable to the facility (as specified in section
22XL of the NGER Act). In the NGER Act, designated large facilities are facilities covered
by the Safeguard Mechanism, as defined in section 22XJ.
The Bill currently amends the second object of the NGER Act to add that it would also
contribute to the achievement of Australia's greenhouse gas emissions reduction targets by
ensuring that net Safeguard emissions decline.
These amendments will further clarify the Government's existing policy intent and the
second object of the NGER Act by specifying that:
• total net Safeguard emissions between 1 July 2020 and 30 June 2030 do not exceed a
total of 1,233 million tonnes CO2-e;
• net Safeguard emissions decline to no more than 100 million tonnes CO2-e in the
financial year 2029-30, and zero for any financial year to begin after 30 June 2049;
• the 5-year rolling average Safeguard emissions for each financial year that begins
after 30 June 2024 are lower than the past 5-year rolling average Safeguard emissions
for that financial year, where the past 5-year rolling average Safeguard emissions is
defined as one fifth of the total amount of Safeguard emissions for the 5 financial
years previous to the financial year that began 3 years before the start of the current
financial year (for financial years that begin before 1 July 2027), and from the
2027-28 financial year onwards, for the 5 financial years that ended 2 years before the
start of the current financial year;
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• the responsible emitter for each designated large facility has a material incentive to
invest in reducing covered emissions from the operation of the facility; and
• the competitiveness of trade-exposed industries is appropriately supported as
Australia and its regions seize the opportunities of the move to a global net zero
economy.
The focus on net emissions reflects that the Safeguard Mechanism imposes an obligation on
each facility to keep net emissions below a baseline. Reducing net emissions is consistent
with the achievement of Australia's legislated targets under the Climate Change Act 2022 and
to meet Australia's Nationally Determined Contribution under the Paris Agreement. The
Government is implementing the recommendations of the Independent Review of Australian
Carbon Credit Units to provide further ongoing assurance of the integrity of Australia's
carbon offset system.
The reforms will also reduce the gross covered emissions of all designated large facilities
over time (Safeguard emissions). This is provided by the new outcome in the second object of
the NGER Act for the 5-year rolling average Safeguard emissions for each financial year that
begins after 30 June 2024 to be lower than the past 5-year rolling average Safeguard
emissions.
In these hard to abate sectors, ongoing commercialisation of step change technologies and
fluctuations in production and cyclical variations mean these reductions will not be linear and
year to year variations will remain. However, emissions will lower over the period to 2030
and go down further after then as technology innovation makes step change abatement
possible in these sectors. The work of the Australian Industry Energy Transitions Initiative is
important to demonstrate how these industrial decarbonisation pathways can play out with the
investment certainty provided by the Safeguard Mechanism reforms.
The material incentive to invest in onsite abatement is central to ensuring net emissions
between 1 July 2020 and 30 June 2030 do not exceed a total of 1,233 million tonnes CO2-e,
and reducing Safeguard emissions over time. The creation of Safeguard Mechanism credit
units (SMCs) is essential to providing a clear financial incentive for facilities to beat their
baselines. The proposed intensity approach provides the strongest investment signal for
facilities to reduce emissions per unit of output, on a pathway to net zero emissions by 2050.
The competitiveness of trade-exposed industries, such as steel, cement and aluminium, is
particularly important as the world moves to a net zero global economy. The Government is
taking measures both within and outside of the proposed design of the scheme to address the
issue of carbon leakage and support the step changes in emissions-intensity that are essential
for our industries to remain competitive into the future. This includes a carbon leakage
review to consider the merits of a carbon border adjustment mechanism, with particular
consideration of options for steel, cement clinker and lime production. By this inclusion in
the objects, competitiveness issues will be appropriately considered each time the rule is
amended.
The Bill requires that when the Minister makes or amends the Safeguard Rules, they must be
satisfied that those rules are consistent with each outcome in paragraph 3(2)(b), (c), and (d)
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and take into account the safeguard outcomes in paragraph 3(2)(e) and (f) of the NGER Act.
These amendments will require the Minister to publish their reasons for being satisfied.
These amendments include a requirement that if the Minister has received advice from the
Climate Change Authority that greenhouse gas emissions are not declining consistently with
an outcome in paragraph 3(2), (b), (c) or (d) of the NGER Act (which are outcomes in the
second object of the NGER Act) and the Safeguard Rules need to be amended to be
consistent, they must undertake public consultation and amend the Safeguard Rules if they
are satisfied that the rules need to be amended to achieve the second object (e.g. if the
trajectory is not due to temporary factors). The Minister can also take other policy actions
(outside the Safeguard Rules) to achieve the object.
The amendments also include a requirement that if Safeguard Rules are in force and the
responsible Secretary is satisfied that the Safeguard Rules need to be amended in order to
achieve an outcome in paragraph 3(2), (b), (c) or (d) of the NGER Act, based on advice from
the Climate Change Authority, information published under s 24(3B) of the NGER Act as
amended, or other information about the likely covered emissions of a designated large
facility provided to the Secretary by another agency or authority of the Commonwealth, a
State or Territory, the Secretary must advise the Minister and the Minister must undertake
public consultation and amend the Safeguard Rules if they are satisfied that the rules need to
be amended to achieve the second object. It is intended that the Secretary implement
appropriate processes and procedures for carrying out this important function.
These amendments add transparency to the operation of the Safeguard Mechanism by
requiring the Clean Energy Regulator (the Regulator) to publish more information. They
require the Regulator to publish, by 15 April after each financial year, the following
information for each facility covered by the Safeguard Mechanism in that financial year:
• the total amount of covered emissions for that facility;
• the amount of covered emissions that were carbon dioxide, methane, or nitrous oxide;
• the facility's Safeguard baseline; and
• the amount of SMCs issued to the facility in relation to the financial year.
The period for which a designated large facility has an obligation to avoid its net emissions
from exceeding its baseline is known as a monitoring period. If the facility has a monitoring
period that ends in that financial year (including facilities whose monitoring period is the
financial year), the Regulator will also publish:
• the net emissions for the facility for that period, that is, the covered emissions netting
off any prescribed carbon units surrendered by the facility for that period;
• the number and type of prescribed carbon units (if any) surrendered for the purpose of
reducing the net emissions number for the facility for that period - prescribed carbon
units include Australian carbon credit units (ACCUs) and SMCs; and
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• the methodology determination (within the meaning of the Carbon Credits (Carbon
Farming Initiative) Act 2011) corresponding to any ACCUs surrendered for that
period.
For financial years from 2023-24 to 2029-30, the Regulator will also publish net Safeguard
emissions for the period between 1 July 2020 and the end of that financial year. That is, how
much of the 1,233 million tonne CO2-e budget has been used.
This Bill will ensure that the Minister responsible for the NGER Act, and the Secretary of
their Department, have visibility over approvals under the Environment Protection and
Biodiversity Conservation Act 1999 (EPBC Act) that may result in increased emissions.
After the Environment Minister approves an action under the EPBC Act (as defined in that
Act), if they are satisfied the action is likely to enter the Safeguard Mechanism (i.e. is
estimated to produce more than 100,000 tonnes of scope 1 emissions per year), or that the
action will increase the scope 1 emissions of a facility that is already covered by the
Safeguard Mechanism, and the Environment Minister has received an estimate of the scope 1
emissions from the action, the Environment Minister must provide that estimate to the
Minister responsible for the Climate Change Act 2022, the Secretary of the Department
responsible for the administration of the NGER Act, and the Climate Change Authority.
To further add transparency to the operation of the Safeguard Mechanism and the second
object of the NGER Act, these amendments will amend the Climate Change Act 2022 so that
the Minister's annual climate change statement must include whether aggregate net covered
emissions from the operation of designated large facilities are declining consistently with the
second object of the NGER Act.
The Climate Change Act 2022 requires the Climate Change Authority to give the Minister
advice related to the preparation of annual climate change statements, which must also be
published. These amendments will require this advice to indicate whether net Safeguard
emissions and gross Safeguard emissions are declining consistently with the second object on
the NGER Act, and if they are not so declining, advice on whether amendments to the rules
are necessary to address this.
The Climate Change Authority would look to the necessity of rule amendments if there was a
risk to the achievement of the carbon budget and amending the rules was necessary for the
achievement of the second object (e.g. the risk was not due to temporary factors or better
addressed outside of the Safeguard Rules). In giving such advice, the Authority would have
regard to the legislated principles in the Climate Change Authority Act 2011 and can consider
other policy changes to achieve the budget without amending the rules. The Government is
very conscious that the Safeguard Reforms must provide investment certainty to reduce
emissions and support the competitiveness of trade-exposed sectors, including into relation to
risks of carbon leakage.
These amendments bolster the transparency, accountability and integrity of the Safeguard
Mechanism by legislating objects requiring designated large facilities to reduce their
aggregate covered emissions and net covered emissions, and deliver a proportionate
contribution to the achievement of Australia's greenhouse gas emissions reduction targets;
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enhancing transparency of progress toward those goals; and providing assurance that the
Safeguard Mechanism is delivering a proportionate contribution to the achievement of
Australia's greenhouse gas emissions reduction targets.
FINANCIAL IMPACT STATEMENT
These amendments have no financial impact on the Australian Government Budget.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Amendments to the Safeguard Mechanism (Crediting) Amendment Bill 2023
The proposed amendments to the Bill are compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the amendments
The proposed amendments to the Safeguard Mechanism (Crediting) Amendment Bill 2022
(the Bill) would amend the National Greenhouse and Energy Reporting Act 2007 (NGER
Act) by:
• Incorporating into the second object of the NGER Act that total net safeguard
emissions for all the financial years between 1 July 2020 and 30 June 2030 do not
exceed a total of 1,233 million tonnes CO2-e; net safeguard emissions decline to no
more than 100 million tonnes CO2-e in the financial year 2029-30, and zero for any
financial year to begin after 30 June 2049; the 5-year rolling average emissions for
each financial year that begins after 30 June 2024 are lower than the past 5-year
rolling average emissions for that financial year, where the past 5-year rolling average
Safeguard emissions is defined as one fifth of the total amount of Safeguard emissions
for the 5 financial years previous to the financial year that began 3 years (if the
financial year is a year that starts before 1 July 2027) or 2 years (if the financial year
is a year that starts after 30 June 2027) before the start of the current financial year;
the responsible emitter for each designated large facility has a material incentive to
invest in reducing covered emissions from the operation of the facility; and the
competitiveness of trade-exposed industries is appropriately supported as Australia
and its regions seize the opportunities of the move to a global net zero economy.
• Requiring the Minister to publish their reasons for being satisfied that the Safeguard
Rules are consistent with the safeguard outcomes in paragraph 3(2)(b), (c), and (d)
and take into account the safeguard outcomes in paragraph 3(2)(e) and (f) of the
NGER Act.
• Requiring the Minister to consult if they receive advice from the Climate Change
Authority or the responsible Secretary that they need to amend the Safeguard Rules to
achieve the second object of the NGER Act, and amend the rules if they are satisfied
that the rules need to be amended to achieve that object (e.g. if the risks to the object
are not due to temporary factors).
• Requiring the Regulator to publish information relating to designated large facilities.
These amendments would amend the Climate Change Act 2022 to require that annual climate
change statements must address whether Safeguard emissions and net Safeguard emissions
are declining consistently with the second object of the NGER Act, and requiring the Climate
Change Authority to provide advice on this matter.
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For projects that receive EPBC approvals and are likely to enter the Safeguard Mechanism or
to result in an increase of direct emissions from a facility within the Safeguard Mechanism,
the amendments would also require the Minister responsible for the EPBC Act to provide an
emissions estimate to the Minister responsible for the Climate Change Act 2022, the Climate
Change Secretary and Climate Change Authority.
Human Rights implications
The proposed amendments to the Bill engage the right to privacy in Article 17 of the
International Covenant on Civil and Political Rights (ICCPR).
Article 17 of the ICCPR prohibits arbitrary or unlawful interferences with an individual's
privacy, family, home or correspondence. The right to privacy can be limited to achieve a
legitimate objective where the limitations are lawful and not arbitrary. In order for an
interference with the right to privacy to be permissible, the interference must be authorised by
law, be for a reason consistent with the ICCPR and be reasonable in the circumstances.
Amendment 4 would require the Regulator to publish information about the covered
emissions and net emissions of each facility, including amounts of covered emissions that
were carbon dioxide, methane, or nitrous oxide; the facility's Safeguard baseline; the amount
of Safeguard Mechanism credit units (SMCs) issued to the facility; the net emissions for the
facility for that period, that is, the covered emissions netting off any prescribed carbon units
surrendered by the facility for that period; the number and type of prescribed carbon units
surrendered by the facility; and methodologies associated with Australian carbon credit units
surrendered by the facility.
The amendment will affect 'responsible emitters', as defined in 22XH of the NGER Act, for
facilities covered by the Safeguard Mechanism. These entities are listed on the Clean Energy
Regulator's website at https://www.cleanenergyregulator.gov.au/NGER/The-safeguard-
mechanism, and it is understood that each so listed is a constitutional corporation. As such,
this amendment is unlikely to regulate and consequently limit the human rights of
individuals.
It is not expected that information that would be published would include personal
information. The information that would be published relates to greenhouse gas emissions
and the operation of covered facilities. The amendment also provides for protections against
the disclosure of commercially sensitive information.
To the extent (if any) that the amendment limits the right to privacy, this limitation is
reasonable, necessary and proportionate to achieve legitimate objectives. This is because the
amendment promotes the transparency of the Safeguard Mechanism and thereby provides
assurance that it will deliver a proportionate contribution to Australia's greenhouse gas
emissions reduction targets.
For these reasons, this limitation to the right to privacy is reasonable, necessary and
proportionate to achieve legitimate objectives and is consistent with the right to privacy in
Article 17 of the ICCPR.
The effects of climate change can exacerbate extreme weather events such as bushfires,
flooding, heatwaves, and dangerous storms that threaten the life and health. This could
engage the right to life in Article 6 of the ICCPR. This Bill, by helping to deliver Australia's
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greenhouse gas emissions reduction targets, could promote human rights by mitigating the
effects of climate change.
Conclusion
The proposed amendments to the Bill are compatible with human rights as, to the extent that
they engage and limit the right to privacy under Article 17 of the ICCPR, those limitations
are reasonable, necessary and proportionate to achieve the legitimate aims of the Bill.
The Hon. Chris Bowen MP
Minister for Climate Change and Energy
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NOTES ON AMENDMENTS
Amendment 1 - Schedule 1, item 1, page 3 (lines 8 and 9) and Amendment 2 - Schedule
1, item 1, page 3 (line 12)
1. These amendments update the second object of the NGER Act by replacing "by ensuring
that" with "by ensuring that the following outcomes are achieved". This makes it easier to
refer to different outcomes in the second object of the NGER Act. The reference to "the
following" reflects that all paragraphs of the second object need to be satisfied
cumulatively in decision making.
Amendment 3 - Schedule 1, item 1, page 3 (lines 13 and 14)
2. Amendment 3 updates the objects clause of the NGER Act by omitting paragraph 3(2)(b)
and inserting new paragraphs 3(2)(b)-(f) to provide that the second object of the Act
would also be to contribute to the achievement of Australia's greenhouse gas emissions
reduction targets by ensuring that:
(b) total net safeguard emissions for all of the financial years between 1 July 2020
and 30 June 2030 do not exceed a total of 1,233 million tonnes of carbon dioxide
equivalence;
(c) net safeguard emissions decline to:
(i) no more than 100 million tonnes of carbon dioxide equivalence in the
financial year beginning on 1 July 2029; and
(ii) and zero for any financial year to begin after 30 June 2049;
(d) the 5-year rolling average safeguard emissions for each financial year that
begins after 30 June 2024 are lower than the past 5-year rolling average safeguard
emissions for that financial year;
(e) the responsible emitter for each designated large facility has a material
incentive to invest in reducing covered emissions from the operation of the facility;
(f) the competitiveness of trade-exposed industries is appropriately supported as
Australia and its regions seize the opportunities of the move to a global net zero
economy.
3. The intent of the updated second object of the NGER Act is to ensure that covered
facilities reduce their net emissions to contribute to the achievement of Australia's
greenhouse gas emissions reduction targets. As such, measures that would artificially
reduce aggregate net covered emissions or aggregate covered emissions by, for example,
making rules under section 22XJ of the NGER Act in order reduce the aggregate net
covered emissions of designated large facilities by reducing the number of designated
large facilities, would not be consistent with the intent of these provisions.
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4. New paragraph 3(2)(b) expresses the 1,233 million tonne limit on aggregate net covered
emissions from the operation of designated large facilities in terms of carbon dioxide
equivalence (CO2-e). Carbon dioxide equivalence is way of expressing the impact on
climate change of different greenhouse gases in equivalent terms, so that emissions from
1 tonne of carbon dioxide would have a similar impact on climate change over the next
100 years as 1 tonne 'carbon dioxide equivalent' of a different greenhouse gas. This
reflects that different greenhouse gases have a different impact on radiative forcing and
different lifetimes in the atmosphere. Quantities of different greenhouse gases are
converted into tonnes of carbon dioxide equivalence using Global Warming Potentials
that are specified in Regulation 2.02 of the National Greenhouse and Energy Reporting
Regulations 2008 and were last updated to reflect the findings published by the
Intergovernmental Panel on Climate Change in its Fifth Assessment Report. The intent of
this provision is that the 1,233 million tonne limit reflects the Global Warming Potentials
in force at the time of commencement.
Amendment 4 - Schedule 1, item 4, page 3 (before line 25); Amendment 5 - Schedule 1,
item 4, page 4 (after line 10); Amendment 6 - Schedule 1, item 9, page 4 (before line 23);
; Amendment 7 - Schedule 1, page 4 (after line 24); and Amendment 8 - Schedule 1,
page 4 (after line 28), after item 10
5. These amendments insert new definitions into the NGER Act for 'safeguard emissions',
'net safeguard emissions, '5-year rolling average emissions', 'past 5-year rolling average
emissions', and 'secretary'.
6. The amendments define 'safeguard emissions', for a financial year, to be the total
amount, in tonnes of carbon dioxide equivalence, of covered emissions from the
operation, during the financial year, of all designated large facilities for the financial year.
7. The amendments define 'net safeguard emissions', for a financial year, to be the total
amount, in tonnes of carbon dioxide equivalence, of net covered emissions from the
operation, during the financial year, of all designated large facilities for the financial year.
8. The definitions '5-year rolling average emissions' and 'past 5-year rolling average
emissions' are relevant to paragraph 3(2)(d) of the NGER Act. The '5-year rolling
average emissions' for a financial year is defined to be one-fifth of the sum of the
safeguard emissions for the 5 previous financial years. That is, the average annual amount
of aggregate covered emissions from the operation of designated large facilities over the 5
previous financial years.
9. The 'past 5-year rolling average emissions' for a financial year (the current financial
year) is defined to be one fifth of the total amount of safeguard emissions for the
5 financial years previous to the financial year that ended 3 years before the start of the
current financial year, if the current financial year ends before 1 July 2027; or otherwise,
one fifth of the total amount of safeguard emissions for the 5 financial years previous to
the financial year that began 2 years before the start of the current financial year. The
differential treatment reflects the impact of the COVID Pandemic on safeguard emissions
during the relevant periods.
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10. These definitions mean that new paragraph 3(2)(d) requires that for the financial years
2024-25, 2025-26 and 2026-27, the average amount of aggregate covered emissions over
the previous 5 financial years is lower than the average amount of aggregate covered
emissions over the 5-year period that starts 3 years earlier. And for any financial years
that begin after 30 June 2027, the average amount of aggregate covered emissions over
the previous 5 financial years is lower than the average amount of aggregate covered
emissions over the 5-year period that starts 2 years earlier. This means that Safeguard
emissions will have to decline over time.
11. The amendments define 'safeguard outcome' to have the meaning given by subsection
3(2).
12. 'Secretary' is defined to be the Secretary of the Department that administers the NGER
Act.
Amendment 9 - Schedule 1, item 37, page 21 (lines 11 and 12) ; Amendment 10 -
Schedule 1, item 37, page 21 (after line 12), after subsection 22XS(1A)
13. Item 37 amends subsection 22XS(1A) to clarify the rule making test for the Safeguard
Rules such that the Minister must be satisfied that the rules are consistent with the
safeguard outcomes related to emissions reduction, while also being satisfied that the
rules have appropriately taken into account the important outcomes of providing a
material incentive for onsite abatement and supporting the competitiveness of trade-
exposed industries. The Government considers emissions reduction and competitiveness
as intrinsically linked, such that both must be achieved when revising the approach in the
Safeguard Rules.
14. Item 37 also inserts a new subsection 22XS(1B) into the NGER Act to require the
Minister to publish, on the Department's website, the Minister's reasons for being
satisfied that the Safeguard Rules are consistent with the relevant safeguard outcomes in
the second object of the NGER Act and have appropriately taken into account the
incentive and competitiveness issues, when they make or amend the Safeguard Rules.
15. Item 37 also inserts a new subsection 22XS(1C) into the NGER Act that provides a
requirement for the Minister, that applies if Safeguard Rules are in force and they receive
advice under subsection 14(1) of the Climate Change Act 2022 that safeguard emissions,
or net safeguard emissions, for a financial year are not declining consistently with an
outcome in paragraph 3(2)(b), (c) or (d); and the Safeguard Rules need to be amended to
achieve those outcomes. The requirement is for the Minister to undertake public
consultation as to whether the Safeguard Rules should be amended to ensure that they
achieve the second object of the NGER Act and the content of any such amendment; and
if they are satisfied that the Safeguard Rules need to be amended to achieve that object
(e.g. the risks to the object are not due to temporary factors or better addressed by policy
changes outside the Rules), amend the Safeguard Rules.
16. Item 37 also inserts a new subsection 22XS(1D) into the NGER Act that provides a
requirement for the Secretary that applies if the Safeguard Rules are in force and the
Secretary is satisfied that an amendment to the Safeguard Rules is necessary to achieve an
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outcome in paragraph 3(2)(b), (c) or (d) in the second object of the NGER Act due to an
estimate given to the Secretary under section 15A of the Climate Change Act 2022,
information published by the Clean Energy Regulator under section 24 of the NGER Act,
or other information relating to the likely covered emissions of designated large facilities
given to the Secretary by another agency or authority of the Commonwealth, a State or a
Territory.
17. If the requirement applies, the Secretary would be required to advise the Minister that
they are so satisfied, and the Minister would be required to undertake public consultation
as to whether the Safeguard Rules should be amended to ensure that they achieve that
object and the content of any such amendments; and if they are satisfied that the
Safeguard Rules need to be amended to achieve the second object of the NGER Act,
amend the Safeguard Rules. The need to amend the rules will include consideration of
what has driven the exceedance, relevant policy options (within and outside of the
mechanism) and the impact of any temporary factors in the exceedance.
Amendment 11 - Schedule 1, page 21 (after line 28), after item 38
18. Items 38A and 38B insert new transparency of reporting obligations into the Bill to
require the Regulator to undertake certain publication activities related to the Safeguard
Mechanism.
Item 38A After subsection 24(3)
19. Item 38A adds a new subsection 24(3A) to the NGER Act so that the Regulator must
publish, by 15 April after each financial year, the following information for each
designated large facility:
a. the facility's total covered emissions for that facility for that financial year;
b. the amount of covered emissions that were carbon dioxide, methane, or nitrous oxide;
c. the facility's baseline emissions number; and
d. if SMCs were issued to the facility in relation to that financial year, the number of
SMCs issued.
20. If a monitoring period for the facility ended during, or at the end of, the financial year, the
Regulator would also be required to publish, by 15 April after the financial year:
• the facility's net emissions number for that period;
• the number and type of prescribed carbon units (if any) surrendered under section
22XN of the NGER Act for the facility and that period; and
• if any ACCUs were surrendered under section 22XN of the NGER Act for the facility
and that period, the methodology determination (within the meaning of the Carbon
Credits (Carbon Farming Initiative) Act 2011) for any projects that were used to
generate those ACCUs. Methodology determinations are legislative instruments that
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apply to specified offsets projects; set out requirements that must be met for a project
to be eligible; and set out a method of calculating the abatement for the project.
21. Item 38A inserts a new subsection 24(3B) to the NGER Act to provide that for the
financial years from 2023-24 to 2029-30, the Regulator will also publish, by 15 April
after that financial year, the safeguard emissions for the financial year; the net safeguard
emissions for the financial year; the 5-year rolling average safeguard emissions for the
financial year; and the total safeguard emissions for all of the financial years between
1 July 2020 and the end of the financial year. If this information indicates that the scheme
emissions requirements are not being met, the intention is for the new provisions in
subsection 22XS(1C) and (1D) to result in the issues being addressed.
22. Item 38A also inserts a new subsection 24(4) to the NGER Act to provide that the
publication requirements added by item 38A do not limit the requirements that may be
prescribed by the Safeguard Rules in relation to the publication of information. The
Safeguard Rules may require information to be published, because paragraph 22XS(1)(b)
of the NGER Act enables the Safeguard Rules to prescribe matters necessary or
convenient for carrying out or giving effect to the Safeguard provisions in the NGER Act.
Item - 38B Subsection 25(5)
23. Item 38B amends the transparency of reporting requirements in subsection 25(5) by
omitting the reference to subsection 24(1AF) of the NGER Act, and inserting a reference
to subsections 24(1AF), (3A) or (3B) to refer to new provisions inserted by the Bill.
24. Section 25 of the NGER Act enables an NGER reporter to apply to the Regulator and
request that information is not published if it reveals or could be capable of revealing
trade secrets or any other matter having a commercial value that would or could
reasonably be expected to be destroyed or diminished if the information were disclosed
about a specific facility, technology or corporate initiative relating to the reporter.
25. Item 38B amends subsection 25(5) so that section 25 also applies to the information that
the Regulator must publish in accordance with new transparency of reporting obligations
imposed by item 38A.
Amendment 12 - Schedule 1, page 29 (after line 13), after Part 2
26. Amendment 12 inserts amendments to the Climate Change Act 2022 to the Bill. These
amendments are in items 66A, 66B and 66C.
Item 66A Section 5
27. Item 66A inserts definitions of 'designated large facility', 'facility', 'net safeguard
emissions', 'safeguard emissions', 'safeguard rules' and 'scope 1 emission' into the
Climate Change Act 2022. The definitions state that these terms have the same meaning
as they have in the NGER Act.
28. Item 66A also inserts definitions of 'Climate Change Secretary', 'Environment Minister',
'expanded designated large facility' and 'new designated large facility'.
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29. The 'Climate Change Secretary' is defined to be the Secretary of the Department
responsible for the administration of the NGER Act.
30. The 'Environment Minister' is defined to be the Minister who administers the
Environment Protection and Biodiversity Conservation Act 1999.
31. 'Expanded designated large facilities' are designated large facilities that have carried out
activities to a greater extent than in earlier financial years; or have undertaken new
activities for the first time. 'New designated large facilities' are designated large facilities
that were not designated large facilities in an earlier financial year. These definitions are
relevant to advice that the Climate Change Authority would provide under item 66C.
Item 66B Paragraph 12(1)(d)
32. Item 66B amends section 12 of the Climate Change Act 2022, which requires the Minister
to prepare an annual climate change statement within six months after the end of a
financial year. It amends paragraph 12(1)(d), which requires the statement to relate to the
effectiveness of the Commonwealth's policies in contributing to the achievement of
Australia's greenhouse gas emissions reduction targets and reducing emissions in the
sectors covered by those policies.
33. Item 66B amends paragraph 12(1)(d) to require the statement to address whether
aggregate net covered emissions, and aggregate covered emissions from the operation of
designated large facilities are declining consistently with the second object of the NGER
Act.
Item 66C Part 4 (heading)
34. Item 66C amends the Part heading to reflect new content.
Item 66D At the end of section 13
35. Item 66D updates the outline to reflect the new obligation in section 15A.
Item 66E After subsection 14(1)
36. Section 14 of the Climate Change Act 2022 requires the Climate Change Authority to
give the Minister advice that relates to the preparation of each annual climate change
statement. Item 66C inserts a new subsection 14(1A) so that the advice must include
advice about whether safeguard emissions and net safeguard emissions are declining
consistently with the safeguard outcomes (b), (c) and (d) in second object of the NGER
Act, taking into account the impact of any expanded designated large facilities, or new
designated large facilities for the financial year - as well as expected expanded or new
designated large facilities for future financial years, and any emissions estimates provided
under the new section 15A. .
37. Under the Safeguard proposed reforms, baselines will reflect production. There would be
one or more production variables for each covered facility. For each production variable a
component of the facility's baseline would be calculated by multiplying the facility's
15
output of that production variable by a pre-determined emissions intensity, and an
'emissions reduction contribution' that implements the baseline decline by declining over
time. This encourages facilities to decrease their emissions intensity, because doing so
will reduce the facility's emissions compared to its baseline. The details of these
arrangements will be specified in the Safeguard Rules.
38. The emissions reduction contributions will be calibrated so that aggregate net covered
emissions from the operation of designated large facilities between 1 July 2020 and 30
June 2030 do not exceed 1,233 million tonnes CO2-e; and aggregate net covered
emissions from the operation of designated large facilities decline to no more than 100
million tonnes CO2-e in the financial year 2029-30. This is consistent with the second
object of the NGER Act.
39. These impacts are relevant because assumptions about new facilities and additional
production affect the aggregate net covered emissions from the operation of designated
large facilities. The Climate Change Authority's advice would take into account the
impact of new or expanded designated large facilities for the financial year to which the
annual climate change statement relates, and the expected impact of new or expanded
designated large facilities in future financial years. It would also take into account any
information about the estimated emissions of designated large facilities that is provided
for projects approved under the EPBC Act. The advice would also take into account other
public data sources of information on future projects and the Authority is required to
consult in the preparation of its advice each year.
40. If those aggregate net covered emissions, or aggregate covered emissions, from the
operation of designated large facilities are not declining consistently with the second
object of the NGER Act, the advice would include a recommendation about whether the
Authority considers any amendments to the Safeguard rules are needed to achieve the
object.
41. The Government has committed to undertake a review in 2026-27 to ensure Safeguard
Mechanism reforms are effectively delivering emissions reductions and that scheme
settings are operating as intended. The annual climate change statement and the advice
provided to the Minister by the Climate Change Authority will be relevant to this review,
and will provide additional assurance that the Safeguard Mechanism reforms are
consistent with the objects of the NGER Act.
Item 66F At the end of Part 4
42. Item 66F will add a new section 15A at the end of Part 4. The intent is to ensure the
Minister, the Climate Change Secretary, and the Climate Change Authority have
necessary information about designated large facilities that may increase their scope 1
emissions or new facilities that may become designated large facilities and can
appropriately monitor the impact on the achievement of the revised object of the NGER
Act throughout the year and in the annual climate change statement.
43. Once the Environment Minister approves an action under the EPBC Act that is relevant to
the Safeguard Mechanism (by reason of the action being likely to result in increased
scope 1 emissions from the operation of a designated large facility, or the existence of a
new designated large facility), the Environment Minister must provide any relevant
16
estimates of emissions to the Minister, the Climate Change Secretary, and the Climate
Change Authority. The greater collection of emissions information was committed to by
the Government in its response to the Samuel Review. The provision of information to
the Minister ensures the Minister is aware of emerging issues and can take appropriate
action.
Amendment 13 - Schedule 1, item 67, page 30 (after line 16), after subitem (3)
44. This amendment inserts an application provision to the Bill. It specifies that the
publication requirements in new subsection 24(3A) of the NGER Act that are added by
Amendment 9 apply to the financial year beginning on 1 July 2023 and later financial
years.
Amendment 14 - item 67, page 31 (after line 22), at the end of the item
45. This amendment inserts an application provision to the Bill. It specifies that amendments
to the Climate Change Act 2022 made by Amendment 10 apply to the financial year
beginning on 1 July 2023 and later financial years.
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