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A Senate committee reviewing the government's key climate policy has split along predictable lines, with Labor MPs supporting the legislation and Greens and crossbenchers arguing it is not ambitious enough.
Key points:
- The safeguard mechanism would cap the emissions of the 215 heaviest-polluting companies
- The committee recommended the bill be passed with some amendments
- The Greens are adamant that new coal and gas projects should be banned
Last month, the government introduced its "safeguard mechanism" bill, which is the core of its plan to reduce emissions by 43 per cent by the end of the decade.
The bill would tighten the existing safeguard mechanism and require the nation's 215 biggest polluters to reduce their emissions by 4.9 per cent each year to 2030 or face penalties.
The Greens, who the government need in the Senate to pass the legislation, have said they will not support the bill unless the government agrees to their sole condition to not approve any new coal or gas projects.
The bill was being considered by the Senate's Labor-chaired environment committee, which made five recommendations, including that the legislation be passed.
It also recommended that the government monitors and reports publicly on the impact on emissions of new companies joining the mechanism, that recommendations from a separate review into its carbon credit scheme be implemented and consideration be made of how to "level the playing field" for Australian businesses.
It said a "carbon border adjustment", like the one in the European Union commonly known as a carbon border tax, could sit alongside the safeguard mechanism.
Plan 'mediocre at best'
In their dissenting report, the Greens were adamant that no new coal, oil or gas project should be allowed to go ahead, and recommended the bill be amended to stipulate that.
"That the government should design a scheme that makes pollution from coal and gas go down, not up," their first recommendation said.
The Greens did agree that other than passing the bill, the committee's other recommendations should also be implemented.
Independent senator David Pocock was also on the committee and noted the concerns raised with the mechanism's credit scheme.
The use of carbon credits is not limited by the scheme, so companies can theoretically operate as normal and buy credits to cover their emissions over the cap.
"The design of the mechanism is complex and poses significant risks," he said.
"Few economists believe that a baseline and credit scheme is the best tool for addressing the immense challenge of industry decarbonisation.
"Most agree that it would be far better to develop a cap and trade mechanism and build on the lessons learned in other jurisdictions."
Senator Pocock also accused the government of lacking ambition on climate policy and that the plan was "mediocre at best".
In its dissenting report, the Coalition said it could not support the legislation when, it said, it was not clear if businesses would be negatively impacted by it.
"The Coalition is concerned with the disproportionate economic impacts the bill will have on regional Australia," it said.
"Coalition Senators believe the bill will result in further price increases for Australians as the additional costs of delivering the required emissions reduction will be passed on to households."
Bandt says Greens' deal on safeguards mechanism there for the taking
Greens leader Adam Bandt has declared his party open to a compromise deal to pass the federal government's latest climate legislation.
The Greens have previously said their support depends on rules being put in place to prevent new coal or gas projects.
Mr Bandt told 7.30 on Monday evening his party would negotiate in "good faith" on any proposal that saw coal and gas pollution "come down".
The Greens leader referenced a proposal to change environmental approval laws so the minister would be required to directly consider a new mine's impact on global warming before giving it the green light.
This idea, often called a "climate trigger", has previously been dismissed by the government.
"We will put aside our concerns with the government's legislation, pass it, give the scheme a chance to get running — but we have to deal with this question of coal and gas because you can't put the fire out while you are pouring petrol on it," Mr Bandt said.
He said his negotiating position was not a "red line".
"I don't know if that is a fair summation of it," he said.
"We are in good-faith negotiations and will continue them."
The bill will need the support of the Greens to pass the Senate, as the Coalition has vowed to vote against it.