Emissions loophole

Electricity generators will be able to increase emissions without penalty in a loophole built into the Abbott Government’s Emissions Reduction Fund.

The analysis of a ‘safeguard mechanism’ by Environment Victoria has found Latrobe Valley power stations and generators across Australia could increase 110 million tonnes of greenhouse gases from current rates, unpunished under the Direct Action Plan.

EV safe climate campaign manager Nicholas Aberle said the government was proposing to initially set a sector-wide baseline for electricity generation, switching to baselines for individual generators if the sector-wide limit was exceeded.

In detail, he said the mechanism effectively set an “upper limit” only for brown coal generators and some of Queensland’s black coal power stations.

“But even within that limit, those generators could legally increase their emissions up to their highest level in the past five years, which is a total of 21 million tonnes,” Dr Aberle said.

His analysis showed that Loy Yang A Power Station at some time in the past five years emitted 20 million tonnes per year of carbon dioxide, up from a 2013/14 rate of 18 million.

He said Hazelwood and Yallourn stations would also have a lot of “head space”, to emit more without penalty.

“If the ERF is to buy abatement, that’s the carrot. The safeguard mechanism is the stick, and it’s not a stick at all for the most part. There is enormous potential to increase emissions from where they’re at,” Dr Aberle said.

Energy Supply Association of Australia policy general manager Kieran Donoghue said the sector-wide approach of the safeguard mechanism created more flexibility for electricity generators in a dynamic market.

Mr Donoghue said the basis of the safeguard mechanism was not to reduce emissions, but to stop ‘rogue emitters’, or parties engaging in creating unnecessary emissions.

An EnergyAustralia spokesperson said the government was proposing to treat the electricity sector differently to other industries under the safeguard mechanism.

“But we support electricity being treated like every other sector of the economy under the government’s safeguard mechanism,” the spokesperson said.

AGL Energy Limited made a submission to the proposed scheme.

“Given declining demand, it is unlikely that emissions will increase. As such it is unlikely that the sectoral baseline will be breached in the near term,” an AGL spokesperson said.

In a statement Federal Environment Minister Greg Hunt said the government would consider feedback in making final policy decisions on the safeguard design and release draft legislate rules for further comment.