Emissions Reduction Fund not long-term plan for cutting greenhouse gas emissions, says Senator Nick Xenophon

Extract from ABC News

By national environment reporter Jake Sturmer

Posted 27 minutes ago

Photo: Independent Senator Nick Xenophon says the ERF is just a jumping off point for emissions reductions. (AAP: Lukas Coch, file photo)

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Independent senator Nick Xenophon says the Government will have to move away from its Emissions Reduction Fund (ERF) to a more sustainable way of cutting greenhouse gases.

The Government has allocated $2.55 billion to the ERF, which is being spent to pay polluters to reduce emissions and for farmers to better manage their land.
It is the Government's key policy to ensure Australia meets its 2020 commitment to reduce emissions by 5 per cent based on 2000 levels.
Last month, it got off to a strong start, purchasing 47 million tonnes of carbon abatement in its first auction.
Environment Minister Greg Hunt is confident the ERF will meet or beat Australia's 5 per cent target, describing the 47-million-tonne purchase as a "stunning" result.
So far the Government has spent $660 million — about a quarter of the budget.
Speaking at a Carbon Markets Institute function in Melbourne, Senator Xenophon said it was "plain to everyone that we needed to transition away from the ERF and towards a more sustainable form of promoting abatement activities".

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"The ERF is useful to jumpstart the process, but we cannot rely on this to achieve all our emissions reductions, particularly taking our future international commitments into account," he said.
To ensure the abatement purchased by the ERF was not offset by big jumps in emissions elsewhere in the economy, a 'safeguard' mechanism will be adopted.
Senator Xenophon, whose vote was crucial in getting the ERF through the Senate, played a significant role in legislating those safeguards.

Xenophon furious with safeguard baselines

A Government policy paper on those safeguards was released in March, but economists said, in their current form, they would not work because the baselines were not strict enough.
The paper classifies the nation's biggest polluters as those who emit over 100,000 tonnes of carbon a year, covering around 140 companies.
Senator Xenophon hinted at potentially blocking government legislation to try to achieve tighter safeguards.

To see such a weak, ineffective proposal put forward by the Government made me furious. It's not so much 'light touch' as 'hands off'.

Senator Nick Xenophon

"I have to deal with all sorts of pieces of legislation of government and I feel if they haven't acted in good faith on this piece of legislation, then I think they're aware there are consequences in respect to that," he said.
Experts are concerned these companies will stay well below their baselines.
Senator Xenophon told the conference he was furious when he saw the safeguards paper.
"To see such a weak, ineffective proposal put forward by the Government made me furious. It's not so much 'light touch' as 'hands off'," he said.
"We cannot shift the entire responsibility of achieving emissions reductions on to the budget with a budget deficit, which by the Government's own insistence needs urgent structural reform."
Department of Environment deputy secretary Steven Kennedy said the safeguards consultation paper presented a series of possible approaches.

"The Government's proposed approach will come with draft regulations in July and the Government's intentions [are to] put the regulations to Parliament by October," he said.