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Low Carbon Economy & The Safeguard Mechanism

November 2, 2022

The AWU has called on the Federal Government to protect Australian jobs in the transition to a low-carbon economy.

This call was made in the AWU’s submission to the Safeguard Mechanism review. The Safeguard Mechanism will encourage heavy emitters to reduce CO2 emissions in line with Australia’s climate targets.

The mechanism requires Australia’s largest greenhouse gas emitters to keep their net emissions below an emissions limit (a baseline).

The plan is to gradually reduce these baselines to help Australia reach net zero emissions by 2050; introduce credits for facilities that emit less than their baseline (allowing facilities to ‘trade’ their emissions reductions); and provide tailored treatment to emissions-intensive, trade-exposed (EITE) facilities so businesses are not disadvantaged compared to international competitors and emissions do not increase overseas.

The AWU has members at more than 140 facilities covered by the mechanism.

These facilities – predominantly manufacturing (including steel, aluminium, plastic, concrete, food processing, chemicals and glass), metalliferous mining, and oil and gas extraction and processing – are part of a diverse range of industries in the AWU’s membership.

AWU National Secretary Dan Walton says it will be impossible to apply a single approach to reducing emissions across these industries, and the design of the Safeguard Mechanism will have a significant impact on their operations.


“The mechanism will be the most substantial energy policy faced by heavy industry since the now-repealed Carbon Pollution Reduction Scheme,” Mr Walton says.

“The AWU supports the Government’s policy priority of acting on climate change, but it is essential to Australia’s sovereign capability that members’ industries are sustainable in a clean-energy future.

“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.”

The AWU worked closely with the Australian Council of Trade Unions (ACTU) to develop a union-wide position on the Safeguard Mechanism:

  • The Safeguard Mechanism must complement industry policy: the new Government has committed to growing our manufacturing sector, so climate and energy policy must work hand-in-hand with this goal.
  • Australia’s heavy industries must be given a fair share of emissions reduction, recognising differences between facilities.
  • Integrity is paramount to an effective crediting and trading system.
  • Oversight is required by a dynamic regulator with a tripartite board.
  • The Safeguard Mechanism only forms part of the climate policy framework.

The AWU submission outlines key issues for the industries employing the union’s members:

  • Safeguard facilities have uncertain technology pathways for reducing their carbon emissions; therefore their share of emissions reductions should reflect the options available to them.
  • Production-adjusted baselines provide capacity to allow the “onshoring” of manufacturing to reduce global emissions.
  • EITE businesses should get tailored treatment, and it is essential that their eligibility is settled soon to provide investment certainty.

While key details are still to be worked out, the AWU also made a number of suggestions to ensure that the mechanism’s legislative framework is robust.

For example the AWU supports the ability of safeguard facilities to use carbon offsets (Australian Carbon Credit Units) but only if those carbon offsets genuinely represent carbon abatement and storage.

The AWU does not support a cap on ACCUs prices, as a cap would reduce the incentive to invest and create new ACCUs, for example, ultimately discouraging landowners from farming carbon in soil or forests.

It also wants ACCUs to be available for fossil-fuel facilities. For example, Australian natural gas can help power the world’s transition to lower fossil fuels, with gas turbines producing roughly a third of CO2 equivalent compared to brown coal generation.

And the AWU supports domestic credits remaining the only abatement option for now, as it is vital that carbon offsets are trusted by the community, and options for carbon credits outside of Australia have been widely discredited as low-quality by many independent bodies.


Read the AWU’s Submission to the Safeguard Mechanism Review here.

Read The AWU’s Submission on the Safeguard Mechanism (Crediting) Amendment Bill 2022 here.


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