Funding increase needed to protect Australia’s smelters

Getting the Federal Government’s overhauled Safeguard Mechanism right is essential to ensure Australian businesses are not disadvantaged compared to international competitors, and that emissions are not just sent overseas at the expense of local jobs.

Debate on the Safeguard Mechanism Bill resumes in Parliament this week, with support needed from the Crossbench to ensure the passage of important amendments to protect industries powered by fossil fuels.

The Government has set an overall 43 per cent greenhouse gas emissions reduction target below the 2005 level by 2030, and net-zero by 2050. The Safeguard Mechanism requires heavy emitters to reduce greenhouse-gas emissions in line with these targets. If they can’t, they need to buy carbon credits.

The dangers inherent it the process were highlight last week when Rio Tinto said the Government’s planned spending on decarbonisation was inadequate, and that a significant increase was needed, alongside special treatment for its aluminium smelters.

Labor has set aside $600 million for direct grants to help companies invest in technology to meet tougher emissions standards under the Safeguard Mechanism reforms.

AWU National Secretary Dan Walton said the updated Safeguard Mechanism, due to start in July, was the most significant energy policy imposed on heavy industry since the now-repealed carbon pricing mechanism. The AWU has previously called for many of the same changes to the Government’s reforms.

“The Safeguard Mechanism will have a significant impact on the nation’s industrial facilities and the people who work in them,” Mr Walton said.

“Australia’s heavy industries continue to provide good pay and conditions to thousands of people across the country, and our members are keen to play a role in supporting Australia through the energy transition.

“A successful transition of Australia’s industrial sector also has the opportunity to place Australia as a clean-energy superpower, creating new job opportunities for coal workers and across the broader economy.

“But a poor transition that fails to consider Australia’s international competitiveness could see our industries collapse and thousands of jobs destroyed.”

In a submission to the Government, Rio called for a slower, 2 per cent annual greenhouse gas reduction target for critical facilities that face offshore competition from nations without carbon schemes, particularly those producing goods needed for Australia’s broader decarbonisation and electrification ambitions.

‘‘It will be critical to the energy transition to have a strong domestic supply chain for aluminium, which is needed in the manufacture of equipment for renewable energy such as wind turbines , solar PVs and energy storage solutions,’’ Rio wrote.

‘‘Without a test such as this or recognition of the specific abatement challenges facing this industry, aluminium smelters will be subject to a heavy cost of purchasing credits … for process emissions, which they will have minimal ability to control or abate.

‘‘The Government should have policy that recognises the ongoing importance of manufacturing in Australia, especially for strategic commodities that are important in a low-carbon economy.’’