![ACT Independent Senator David Pocock is in the midst of negotiations over proposed safeguard mechanism reforms. Picture by Sitthixay Ditthavong ACT Independent Senator David Pocock is in the midst of negotiations over proposed safeguard mechanism reforms. Picture by Sitthixay Ditthavong](/images/transform/v1/resize/frm/202392341/588e1ac4-9483-443d-815f-186afc1c51ad.jpg/w1200_h678_fmax.jpg)
ACT Independent Senator David Pocock and the Greens are pushing hard in negotiations with Climate Change Minister Chris Bowen this week as a bill to revamp Australia's climate policy heads back to the House of Representatives.
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The safeguard mechanism carbon credits amendment bill is being debated this week in the lower house but the real showdown is expected to come in the Senate.
The political horsetrading comes as new Climate Council and Australian Conservation Foundation figures show that nearly double the emission cuts will be needed to keep within the legislation's proposed carbon budgets.
The legislation introduces new Safeguard Mechanism Credits which are designed to give big polluters an incentive to cut their emissions by 4.9 per cent a year by 2030.
The modelling undertaken for the Climate Council and ACF by RepuTex revealed that existing polluters would need to cut their emissions by 8.9 per cent a year to cover new coal and gas entrants to the mechanism.
The figures showed that emissions from 16 proposed projects would be equal to one-quarter of overall reductions that the legislation is aiming to achieve this decade.
There are 100 proposed new coal and gas projects in the pipeline which could add to the volume of emissions covered by the mechanism.
The Greens have stated they would support the Bill on the condition that the federal government puts the clamps on any new coal and gas projects.
Senator Pocock has been raising concerns around the unlimited use of offsets and the potential for the taxpayer to foot the bill if proposed price caps on carbon credits are exceeded.
He said the proposed changes were complex and could pose "huge risks" to the climate and decarbonising industries if the settings were not right.
Some issues were the potential for new fossil fuel projects to blow the carbon budget and leave no room for industries such as steel, aluminium and concrete to transition or for industries such as lithium to develop.
"This is crucial legislation that we need to get right, and the current proposed changes need further work. I've been having some really productive discussions with the government, which will continue next week," he said.
Climate Council advocacy head Jennifer Rayner said new coal and gas project would eat a large and growing share of the mechanism's emissions budget if the government got the settings wrong.
"Worse, if the production of coal and gas is even a little higher than the government has predicted, this risks blowing the carbon budget entirely," Dr Rayner said.
"That's before taking into account the more than 100 further fossil fuel projects still in the development pipeline.
"Either this would mean Australia fails to meet our 2030 emissions reduction target, or existing facilities would have to cut their emissions by far more to make up the gap - there's only two ways this can go."
The Climate Council and ACF are instead calling for the government to introduce a hard cap on emissions and for polluters to make on-site reductions instead of relying on offsets.
The government wants the Bill to pass before the end of the month, but it looks unlikely without support from the Greens and two crossbenchers.
However, the bulk of the mechanism could be signed off by Mr Bowen in April under subordinate legislation that sets out how these credits are traded and how emission cuts are reached.
This subordinate legislation could be disallowed by the Senate, which means ongoing negotiations will be essential if the government is to get it through.
A Senate committee is also handing down a report on Monday after the safeguard regulations were scrutinised in front of a parliamentary inquiry.
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