Australian Greens' Additional Comments

1.1While these bills are pursuing a valid public purpose of certifying the emissions intensity of products sold domestically and internationally, there are still risks that can be easily fixed in the legislation in order to limit the scope of greenwashing by companies.

1.2It is impossible to gauge the degree to which greenwashing by companies will be enabled or not, because the rules and methods will be delegated to the Minister and written later. However, some very plausible scenarios that could occur under this GO scheme are:

an LNG terminal which, as an emissions intensive trade exposed (EITE) facility will be eligible for the cheaper ‘below baseline’ Renewable Electricity Guarantee of Origin (REGO) certificates.[1] It would be able to purchase credits from a hydro generator built in 1974 and then sell its product on international markets as ‘renewable gas’ or ‘green gas’ to an unsuspecting public that assumes that emissions have been reduced, when they have not; and

an ammonia producer could continue to use gas instead of hydrogen as its feedstock, but purchases REGO certificates for its electricity. The producer would then be in a position to advertise its product as ‘green fertiliser’ or ‘renewable-powered explosives’ when these products are in fact still made using fossil fuels.

1.3The gas industry has already shown how desperately it is trying to manipulate public opinion with their ‘renewable gas’ ad campaigns[2] and their misleading but well-researched talking points (repeated by MPs and Ministers alike[3]) that ‘more gas is needed to reduce global emissions’ and ‘gas is necessary to support renewables’.

1.4The slightest crack cannot be allowed to open for the potential of this industry to greenwash its product. If not guarded against, the proposed GO scheme will embolden the gas industry to brandish official government certification for its planet-destroying product as being ‘clean and green’.

1.5The bill or associated legislative rules must prevent products from being advertised as ‘green’ or ‘renewable’ if fossil fuel inputs are still used in the scope 1 production process, even where Renewable Electricity Guarantee of Origin (REGO) certification is used to reduce scope 2 emissions of a product.

1.6While the Greens recognise that flexibility is required and legislative power needs to be delegated to ministers so that the law can adapt to the addition of new products or improved scientific understanding or market dynamics, there are guardrails that can and should be put into primary legislation to prevent the worst excesses of rent-seekers successfully manipulating the rules. Similarly, a minister hostile to climate science can change the rules to suit their worldview or favour a particular sector over another.

1.7These possibilities are foreseeable and such a change to the legislation is reasonable. It would not impede the department or minister’s flexibility to create the framework in the way that they have intended to do.

1.8To ensure the proposed wide ministerial powers are not manipulated, the bill should be amended to require that production methods created under legislative instruments are based on the latest available scientific evidence, and that production methods must be set using gross-emissions so that offsets cannot be used to reduce the emissions value of the production process.

1.9There were legitimate concerns raised by witnesses that the scheme will deliver a financial windfall to state-owned hydro generators that are currently excluded from the Renewable Energy Target (RET) because they did not add to renewable energy supply after the introduction of the Renewable Energy (Electricity) Act 2000 (REE Act).

1.10The same circumstances still exist now, however there are also many operating solar and wind generators who will also receive a windfall as those investment decisions were made under the RET with no knowledge of a certificate scheme being created post-2030.

1.11The Greens recognise a compromise was struck by the Australian Government which has largely satisfied renewable energy stakeholders, whereby REGO certificates from hydro generators that existed before the RET ‘baseline’ was established will only be available to be sold to emissions intensive trade-exposed entities (EITEs) (as defined by the REE Act) until 2030.

1.12However, the position articulated to the sector is not contained within the legislation. It is an important commitment for renewable investors because the inclusion of large hydro generators would dramatically lower the value of REGO certificates and would be a disincentive for future renewable energy investment under the Capacity Investment Scheme if this commitment is at risk of not being honoured or being unpicked by a future government.

1.13Unlike the flexibility required for legislative rules to adapt with changing circumstances, no such justification exists to place this policy commitment in subordinate legislation. To ensure the investor confidence needed to replace coal generation with renewables over the next six years, the government’s policy undertaking to the sector should be set in the primary legislation with a sunset clause.

1.14In order to secure investor certainty for new renewable projects, the Australian Government’s policy on below baseline generators creating Renewable Electricity Guarantee of Origin certificates for emissions intensive trade exposed facilities should be placed in primary legislation.

Senator Sarah Hanson-Young

Deputy Chair

Footnotes

[1]Department of Climate Change, Energy, the Environment and Water (DCCEEW), answers to question on notice, 16 October 2024 (received 23 October 2024).

[2]Australian Gas Networks, The future of Australian gas is renewable.

[3]Jacob Greber, ‘Korea Inc in $1b domestic gas play as Labor’s King backs LNG’, Financial Review, 11August 2024; Amy Remeikis, ‘Labor to back new fossil fuel projects that ‘stack up’ economically and environmentally’, The Guardian, 11 August 2024.