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Carbon cuts to remain voluntary as minister rules out permit scheme

Companies will be encouraged to slash their greenhouse gas emissions below a crucial benchmark in the Morrison government’s $2 billion climate fund without any pressure for mandatory cuts that could put a price on carbon.

Energy Minister Angus Taylor has insisted the carbon cuts must remain voluntary to avoid any shift in the “safety net” to turn it into a carbon tax, just as 15 industry and community groups call for more ambition on tackling climate change.

Mr Taylor rejected the idea of using the “safeguard mechanism” to set reduction targets for companies so they could trade credits with a carbon price.

“It’s a safety net – that’s what it is now,” he said in an interview.

“If you want to force companies to make much deeper cuts, it becomes a carbon tax. We’re not proposing to do that.

“What we’re proposing are voluntary emission reductions below the baseline, below the safeguard or safety net, and incentives to do them.

“We’re not going to use the safeguard to create a carbon tax.”

The push to expand the safeguard mechanism gathered ground last week after Mr Taylor released a review of the $2 billion climate solutions fund by former Origin Energy chief Grant King and others.

The fund offers money to companies that come forward with projects to reduce emissions.

The King review recommended a “below-baseline crediting arrangement” to offer bigger rewards for those who cut emissions below the safeguard mechanism in the existing fund.

Mr Taylor accepted this recommendation and said the government would consult on how to put it into place, but his latest remarks limit future options after days of speculation about how the mechanism might work.

Labor went to the last election with a plan to use the safeguard mechanism to force deeper cuts to emissions, while supporters of a price on carbon have considered it a prototype for a trading scheme.

Carbon Market Institute chief executive John Connor said there was already an active secondary market for carbon credits under the existing safeguard mechanism and the government should use this to achieve deeper cuts.

“We already do have a carbon trading mechanism, and if you look at the fine print of government policy they acknowledge that,” he said.

“We should use the climate solutions fund to move to a business-driven model and the safeguard mechanism can help do that.”

Industry and community groups including the Property Council of Australia, the Australian Energy Council, the Business Council of Australia, the Australian Industry Group, the Australian Council of Trade Unions and the Carbon Market Institute will issue a joint statement on Monday calling for action on energy and climate.

The groups say governments should use the recovery from the coronavirus to invest in energy programs that would help the environment.

“Our organisations encourage governments to bolster their jobs and recovery strategies with measures to reduce emissions and accelerate successful energy transitions across all Australia’s regions and economic sectors,” they say in the statement.

They nominate investments in energy efficiency in households, commercial buildings and industrial projects, as well as spending on distributed energy generation and storage.

Source: Sydney Morning Herald