Interview with Hamish Macdonald, ABC Radio National

HAMISH MACDONALD: The Federal Government is capping the price of carbon at $75 a tonne for big industrial emitters as part of changes to the so called “Safeguard Mechanism”. It's a critical component of Australia's plan to reduce emissions by 43 per cent by 2030 and then move to net zero by 2050. This mechanism includes coal mines, aluminium smelters, cement plants, gas fields - some 215 in total, and from mid year they would be committed to reducing their emissions by just under 5 per cent each year until 2030. If they don't, they'd then need to offset that by paying for carbon credits.

The Climate Change and Energy Minister, Chris Bowen, joins us now. Welcome back to Breakfast and Happy New Year.

CHRIS BOWEN: Same to you, Hamish, and good morning everyone.

HAMISH MACDONALD: For a very large business that makes a lot of money out of what they make and what they emit, is there enough incentive here to actually reduce emissions rather than just buy some offsets? 

CHRIS BOWEN: Absolutely, Hamish, and I think it would be useful just to take a step back and look at the size of what we're doing here. This is a very ambitious package that we announced yesterday; 5 per cent, or 4.9 per cent reductions each year is an ambitious step forward, and between now and 2030, it will take 205 million tonnes of carbon emissions out of our atmosphere.

Now, that's equivalent to two thirds of the emissions from all of Australia's cars over that period. So, this is a big deal.  Now, because it's a big deal, and because we're covering 215 of our largest emitters, it's absolutely vital in my view, in the judgment we reached, having gone through all the submissions, to provide some flexibility going forward about how emitters will meet these targets and these obligations on them. Different facilities will have different technologies available to them at different times. This is covering everything from coal mines to gas facilities to the two airlines, and for some, they have ways of abating now, which are relatively cheap. Others, like aluminium or cement, have different challenges, and we will work very closely with them, but we're very clear about our expectations and the obligations on these emitters as well.

HAMISH MACDONALD: 70 per cent of these companies which represent, as I understand it, 80 per cent of emissions as part of this bracket of emitters, already have corporate commitments ultimately to net zero. Does this change to the mechanism push them to go harder or faster than what they were already planning to do? 

CHRIS BOWEN: Well, I think it holds them to their commitments, Hamish. I mean I think it's easy to make a commitment to net zero, with all due respect, achieving it is a lot harder. I think this regime that we've announced as a big next step forward is designed to provide that certainty and stability, frankly for the Australian management to be able to show their international boards in some instances that they are now legally obliged to achieve this, so to give more power to their arm when they're seeking investments on decarbonisation, for example, and to provide that stability and certainty, which in everything I've seen in my time in this portfolio is the absolute key to getting businesses to invest in decarbonisation, invest in renewables. The businesses will get there in different ways, but the key for us as a Federal Government is to provide that stability, that certainty of policy, and a very detailed paper I put out yesterday, and I welcome the feedback from the various business groups to say, "Yes, obviously we'll engage; there's a lot of detail here, but we can work with this framework".

HAMISH MACDONALD: And from what I understand many of them have endorsed this cap of $75 that you put per tonne on what they might end up paying as the market moves. Is that overly generous?  It's more than double what the current cost would be.

CHRIS BOWEN: Well, again, this was based on the feedback of many of the 400 submissions we got to the safeguards proposal going forward.

HAMISH MACDONALD: Business seems pretty happy with that cap.

CHRIS BOWEN: Well, because it provides stability and certainty for their planning. Now, ACCUs are trading at the moment for around $34. I think it's fair and reasonable that when they're thinking about how they're going to decarbonise, we provide a framework for them to say, “Well, here's a ceiling over and above which the cost won't go”, so when you're considering your ways of abatement, whether it is direct investment in your facility, better fuel switching to new and emerging and greener forms of energy or investing in carbon offsets. And in most cases, it will be all the above, right. In most cases, facilities will have to do all the above to meet these objectives of effectively a 5 per cent reduction a year to meet our 43 per cent by 2030 target, which is ambitious.

HAMISH MACDONALD: Many of these businesses are trade exposed. They're going to be working up against businesses doing like for like or similar overseas. There will be an impact on their capacity to operate because of these obligations, and you're making grants available to them from a $600 million fund to help cover the cost of decarbonising. These are big businesses, they are enormous polluters. Why should taxpayers be subsidising these businesses' transition programs? 

CHRIS BOWEN: Because this is a national endeavour, Hamish, because it is vital for these companies to make this transition, but it's also vital for our country.

HAMISH MACDONALD: But as you point out, many of them are multinationals, which have international obligations as well. Why are we paying these huge companies.

CHRIS BOWEN: Hamish, if I could just finish.

HAMISH MACDONALD: To do that work? 

CHRIS BOWEN: If I could just finish my point, please. This is a national endeavour, and we need to be all in, and these companies need to be all in, and they are in many instances making many hundreds of millions, in some cases billions of dollars of investment, including big traditional fossil fuel industries, and they know they need to do that.

Just as the CEFC and ARENA have played a vital role in what we have achieved previously, and we're very proud of them being Labor creations, we would not have achieved anywhere near as much without the investments, co investments of CEFC and ARENA helping businesses make this transition.

Now, this is the next quiver, if you like, in the arrow, to say, well, where we are putting an obligation on businesses to decarbonise at quite an ambitious rate, we will make the $600 out of the $1.9 billion Powering the Regions Fund available to help you. If you can, you know, satisfy us that it is real investment in real abatement and real reductions in emissions, then this is a national endeavour.

Now, we can't afford not to be all in. We need all businesses doing it, all levels of government doing it, all society doing it, and so this is a real partnership, and yes, of course, we are requiring businesses to make big investments, but where we can provide that extra bit of support, to provide that extra certainty, and again, as I said, to enable in some cases management to convince their boards that this is a good instance, I think this is very much in the national interest.

HAMISH MACDONALD: So to those in one of these regions, in an electorate where these funds are being made available to compensate these large businesses for decarbonising, what do you say to that voter, "This is what you're getting out of the money we're giving to them?"

CHRIS BOWEN: Well, what I say to the person in regional Australia is that your region has powered Australia for many, many decades, and it will power Australia into the future, but that power will be renewable. And we will work with your community, with your council, and with your big employers to make sure that's the case. The world's climate emergency is regional Australia's jobs opportunity.

I mean I went back to Gladstone yesterday, Hamish, on purpose, because I want to go right to the heart of these communities, which are right at the heart of this transition, and say, "You know that the world is changing, you know we need to change, and we are here with you on this journey and we will partner with you and your community and your council." The Deputy Mayor of Gladstone was there with me and my senior colleagues yesterday making this announcement, and I think that's perfectly appropriate, because these communities have been at the heart of powering Australia for so long, we value and respect that, but we also owe them honesty to say "The world is changing, but we are going to be here. Yes, we are putting obligations on your big employers and your big industries, and we're also providing a hand at partnership."

HAMISH MACDONALD: Central to delivering on all of this is carbon credits. The Chubb Review findings are now out. We spoke to Ian Chubb yesterday about the integrity of the scheme. Can Australians have full faith in the integrity of the carbon credit scheme and that money's not being wasted, that these are not low integrity carbon credits that are being purchased? 

CHRIS BOWEN: And that's what this review was all about, and I know people have different views about the review, but when you engage four very eminent Australians and ask them to give a thoroughly independent evidence-based report, that means inevitably some people are going to look at it and say: "That's not what I would have found." But that's not the point.

In this government, and in fact in this Parliament, to be honest, there's a real focus on independence and evidence base. And so I asked Professor Ian Chubb AC, together with the Honourable Dr Annabelle Bennett AC SC, and Dr Steve Hatfield Dodds and Ariadne Gorring to really provide a thorough analysis of carbon credits, and they have made significant changes.

I mean, I see even one of the critics. I see, Hamish, even one of the critics of the report acknowledged that their changes proposed were, in his words, "sweeping", and I think they are very significant. They'll provide a lot more rigour, a lot more independence, a lot more analysis. Their recommendation, which I've accepted - that all carbon service providers should be accredited and regulated - is important going forward for that transparency.

They've asked for more data, they've made the point that they had access to data which provided them with reassurance, which the Australian public doesn't have access to, and it should be made available wherever possible; we've accepted that. There will be a lot more transparency, a new independent committee set up separate from the Clean Energy Regulator to provide that separation and that independence. I think they're very important going forward, and we will do that.

HAMISH MACDONALD: One of those that has made some criticism is the academic who initially raised the concerns about the scheme. He called the review findings, "bewildering". Here's some of what Andrew McIntosh had to say on RN Breakfast.

ANDREW MACINTOSH: The panel has not presented any analysis or evidence to support its conclusions that there's nothing essentially wrong with the scheme. We and others have presented a veritable mountain of evidence that there's significant problems.

HAMISH MACDONALD: That was the interview yesterday. I think Ian Chubb acknowledged that there was only an additional five pages provided about the reasons for the findings. Given the value of this scheme and the importance of it to our climate targets, should more be done to satisfy the critics about the reasons why we've landed here in saying that the scheme is integrous?

CHRIS BOWEN: Well, again, Hamish, when you commission an independent report and you tell the panellists that you want them to come up with recommendations thoroughly independent of government, and that we would accept their recommendations. If you believe in independence and rigour and evidence based processes, then you provide support to that process, and that's exactly what I've done. 

Now, Andrew MacIntosh has raised concerns in the past. Even he has acknowledged that the recommendations from Professor Chubb's panel are "sweeping"; his words, not mine, I think they are very significant. I understand he has a different view. He has in the past defended some of the methods that he's now criticising. That's fine, I'm not trying to be critical of him, but I am saying people will come to this with different perspectives.

I mean this panel took many, many submissions, held many stakeholder groups, went out and saw these projects, I mean went out to places like Cobar and saw the controversial methods being implemented and saw, you know, regeneration on one side of the fence and sparse environments on the other side of the fence and saw the real world impacts of this.

Now, carbon credits are important, they are a complement to emissions reduction at the facility level, at the coal face, if you will, they will not ever replace that, but they are an important part of the journey, and I'm absolutely determined that there will be rigour. We will take legislation through to implement the Chubb recommendations. When I come to appoint the members of this new committee, and nobody will be in any doubt when I appoint the new members of their rigour, their independence, their credentials, their scientific background, nobody will be in any doubt about that, Hamish, and there will be, I think, an opportunity for great confidence in the system going forward.

HAMISH MACDONALD: On the question of protecting Australian businesses from what they might be up against globally, are you now looking at introducing carbon tariffs in the way that the EU has talked about doing so that Australian businesses now facing these obligations might remain competitive internationally? 

CHRIS BOWEN: So I did announce three things yesterday really effective, very briefly, Hamish, on this. As you mentioned, the trade exposed, trade intensive support where a business would have higher cost there is a separate level of support, which will be hard to get and much rarer, but is appropriate to have. And then separately going forward, a number of the submissions suggested that Australia should be looking at a carbon tariff or a CBAM, I found that interesting, on a number of those submissions. And safeguards reforms I've introduced are designed in many ways to avoid.

HAMISH MACDONALD: Minister, we're running out of time, so I just am keen do get a direct answer on this.

CHRIS BOWEN: Yes.

HAMISH MACDONALD: Are you considering that? 

CHRIS BOWEN: We will consider that along with other options, we will consider that alongside. That won't be in place by 1 July this year obviously, it's a big change, but we've taken on board that feedback and said, yes, this is something we should look at alongside all the other options available to government to ensure that now that Australia has a decent climate policy Australian industry is guided on that, and just as Europe has gone down this road Australia will consider its options alongside other options.

HAMISH MACDONALD: Chris Bowen, great to have you back on the show. Thanks very much.

CHRIS BOWEN: Good to be back Hamish, good on you.