Keynote address to Carbon Market Institute Symposium

Introduction

This is the land of the Kulin Nation, and I celebrate their stewardship over millennia and pay my respects to their elders past, present and emerging.

I’ve just returned from the Torres Strait Islands where I met with representatives from Torres Strait Islander communities.

The Torres Strait is on the frontline of climate change impacts in the region.

I had an opportunity to listen to the concerns of those living in the Torres Strait and what they are facing with climate change. I saw the sea walls being built in an attempt to stop rising seas and eroding beaches from getting to houses.

It was another stark reminder of why climate action is vital for Australia, our region and the world – and why what we’re talking about today matters.

Thank you for the invitation to help you celebrate the 10th anniversary of the Australian carbon market at this symposium. 

Carbon trading has played an important role in those years – but it’s about to get a whole lot more important.

Because, unfortunately, the carbon market’s existence is matched very closely by almost 10 years of denial, delay and dysfunction in national climate policy.

But now, a new government with a strong mandate is charged with fixing this policy malaise - and finally providing the nation with a coherent and consistent policy framework when it comes to climate policy.

Stronger climate action

Today marks one month since I was sworn in as Minister.

It hasn’t exactly been a quiet start.

But while we’ve been dealing with an immediate energy crisis, we’ve also been getting on with the job of implementing our agenda in relation to the climate emergency.

The new government has already sent a strong signal to the world.

We’ve lodged Australia’s updated Nationally Determined Contribution under the Paris Agreement with the UN.

This formalises our pledge to cut emissions by 43% below 2005 levels by 2030.

It puts Australia on track to achieve net zero emissions by 2050.

It is a huge step up in Australia’s climate ambition.

In fact, by half as much again as the previous target.

And yes, it is ambitious. But it is also achievable.

The government’s Powering Australia plan shows how we will meet it.

The new NDC places Australia in the same league as our key trading partners in their 2030 ambitions.

Like South Korea at 40%, Canada at 40 to 45%, and Japan at 46%.

The next step is to legislate the updated NDC, as well as net zero by 2050.

I announced two days ago in Canberra that our Climate Change Bill would be introduced in the first week of Parliament in late July.

The Bill will have four key elements:

• It will seek to enshrine in law our Nationally Determined Contribution of 43% emissions reduction by 2030 and net zero emissions by 2050.
• It will task the Climate Change Authority to assess and publish progress against these targets and advise government on future targets.
• Thirdly, through this Bill we will legislate a requirement for the Minister for Climate Change to report annually to Parliament on progress in meeting our targets.
• And fourthly, as part of consequential legislation, we will insert the nation’s targets in the objectives and functions of a range of government agencies including ARENA, CEFC, Infrastructure Australia and the NAIF.

Enshrining these targets in law will give additional certainty to industry.

But while targets are vitally important, they are not enough. 

Policies to actually reduce emissions make targets a reality. 

Like our $20 billion investment to Rewire the Nation and actually deliver the Integrated System Plan released by AEMO this week. 

Or our plan to cut EV taxes, Drive the Nation with recharging and hydrogen refuelling stations, and develop Australia’s first National EV Strategy.

Of course, a well-functioning carbon market is more important with renewed climate ambition than under previous arrangements.

High integrity carbon markets

Carbon credits will play a vital role in our government’s climate action plan.

But we must do more to unlock the full potential of the carbon credit system.

Ensuring the success of the Australian Carbon Credit Unit framework is a high priority for me.

A strong crediting system will help us meet our emissions reduction targets.

It will also support regional Australia to make the necessary transition.

But continuing success depends on the scheme’s integrity.

I do want to make sure Australia’s carbon credit system has strong integrity.

I also want to ensure public confidence.

Confidence in the integrity of Australian carbon credit units. 

This is why we’ll make good on our commitment to conduct an independent review of the carbon crediting framework.

Earlier today, I announced that Professor Ian Chubb AC will lead the review.

Professor Chubb has a long and distinguished career providing independent expert advice to government, including previously as Chief Scientist of Australia.

He is the Secretary of Science Policy for the Australian Academy of Science. 

Climate policy presents us with one of our most complex challenges and opportunities.

I know that Professor Chubb will provide me with the highest calibre independent and authoritative advice available.

Professor Chubb will lead a panel of independent experts who have diverse experience and expertise. 

I will announce the other members of the review panel later this month. 

Professor Chubb and the expert panel will report their findings and recommendations to me by the end of December. 

I have released the terms of reference.

The review will be comprehensive.

It will examine integrity at the scheme level.

Including governance arrangements and legislative requirements.

Concerns have been raised about the integrity of some of the key methods used.

The review will consider these methods in detail.

How well the system contributes to the broader community is also important. 

I know many ACCU projects already deliver co-benefits.

For farming productivity.

For Indigenous communities.

And for the environment.

How can we maximise these benefits?

Particularly in regional Australia where many of the projects take place?

And how do we minimise any negative impacts?

Because as you know, there are concerns that ACCUs can have unintended impacts, particularly on agriculture.

The review will address these questions.

It will consider whether the system has the right processes and requirements to ensure that adverse impacts are avoided.

I know many of you have your own ideas about how to improve the framework.

You will have opportunity to share your thoughts through public consultation.

All stakeholders will have an opportunity to make their voices heard:

Academics. Industry participants. First Nations groups. States and territories.

Building demand for carbon credits

And that brings me to my second discussion topic: strengthening the Safeguard Mechanism.

I note CMI and some of the symposium partners have recently released discussion papers on the Safeguard Mechanism.

I welcome your views on this important matter.

The government will deliver on its election commitment to strengthen the Safeguard Mechanism following detailed consultation with industry, the carbon market and other interested stakeholders.

We will decline baselines over time, consistent with a broad trajectory to net zero by 2050.

This is in line with the recommendations of the Business Council of Australia, and recommendations made by the Carbon Market Institute. 

The reforms will back in the net zero commitments many Safeguard-covered facilities have already made. 

They will help ensure Australian businesses stay competitive in a decarbonising world.

Tradeable credits will form part of the strengthened scheme, so abatements occur wherever it is least cost.  

The government will create a new unit type, distinct from ACCUs.

We will consult to ensure interactions between the ACCU market and the reformed Safeguard Mechanism deliver good outcomes on both sides.

The reform will be supported by two streams of our Powering Australia plan –the National Reconstruction Fund and the Powering the Regions Fund.

These funds will support Australia’s decarbonisation pathway, including decarbonisation of the industrial sector.  

At the same time the Powering the Regions Fund will continue to underpin the market by purchasing ACCUs on the government’s behalf.

In reforming the Safeguard Mechanism, the government will carefully consider impacts on Australia’s emissions-intensive, trade-exposed industries. 

Global climate action means these industries will need to continue to decarbonise to remain competitive and retain access to markets. 

We will ensure the new scheme’s settings consider the unique position of these industries, and protect against the risk of carbon leakage.

Consultation will ensure the new settings are fair, efficient, and effective. 

My department will release an initial consultation paper in August seeking views on policy options for strengthening the mechanism.

 The reformed Safeguard Mechanism will commence on 1 July 2023.Voluntary climate action through the Climate Active program is also important in building demand for carbon credits.

Participation continues to grow strongly. 

I know CMI and symposium partners like Commonwealth Bank and KPMG are participants – the program now has over 500 certifications.

Conclusion

My message to you on this 10th anniversary is simple.

A policy reset on climate action and energy is underway.

A policy reset that is sensible and makes net zero achievable by 2050.

One in which your sector will be very important players. 

One that will enable business and industry to make the most of the opportunities that climate action will bring.

And one that recognises wealth from the sun and from the wind – just as it recognises wealth from the ground.

And we will achieve this together – government, CMI and all Australians.

Thank you.