Reforming the safeguard mechanism will ensure Australia's largest emitters play their part in meeting our national targets, ultimately reducing emissions by 43 per cent by 2030 and achieving net zero by 2050. I know the importance of this because every day I receive emails and phone calls from my local community in Torquay, in Ocean Grove, in Waurn Ponds, in Bannockburn demanding stronger climate action, and every day my region sees the impacts of climate change. We face coastal erosion that is causing damage to beaches and infrastructure from the Bellarine to the Surf Coast. We face the prospect of more flooding, like we saw this summer in Inverleigh, Mount Duneed and Drysdale; we face the prospect of more bushfires and more extreme weather events; and we see the increasing stress on already endangered flora and fauna and on rivers like the Barwon and the Moorabool.
This is why the Albanese government has taken action with the Safeguard Mechanism (Crediting) Amendment Bill, and, it should be noted, there has been wide consultation with the Australian business community, which is behind us. The framework set out in the bill will limit emissions from large industrial facilities and encourage them to reduce their emissions and disincentivise non-sustainable new facilities from being opened. The mechanism will apply to facilities that emit more than 100,000 tonnes of CO2 emissions each year. One of the key proposals is the allocation of a proportional share of the national emissions reduction target to the top emitters. This will ensure they reduce their net emissions at the same rate as the rest of the economy between now and 2030 to meet the 43 per cent emissions reduction target. This will require aggregate safeguard emissions to fall from an estimated 143 million tonnes this financial year to no more than 100 million tonnes in 2030. All up, these emitters are estimated to deliver around 205 million tonnes of abatement by 2030.
Another component of this bill is to retain the existing reduction adjusted intensity baseline framework, ensuring safeguard baselines grow and fall with production. This approach has been strongly supported, as I said earlier, by the business sector and demonstrates that this new framework will not penalise growth. Rather, jobs will flow from this policy and from climate change policies. The government proposes a hybrid approach where baselines start close to facility site-specific values and transitions to industry average benchmarks by 2030. The hybrid approach will deliver the same emissions reduction, ensuring safeguard facilities contribute their share of the national emissions target.
The government also proposes to set baselines for new facilities at international best practice, adapted for the Australian context. This recognises that new facilities will have the opportunity to use the latest technology to build best-practice emissions performance into their design. With that, I hope the National Reconstruction Fund can endeavour to push our local regional industries to take up these opportunities, and I will be making sure those in my region have that opportunity. We want to reduce competitive distortion between new and existing facilities, and international practice will also apply at existing facilities if they begin producing new products. Additionally, flexible compliance arrangements will be available from day one. These arrangements reduce compliance costs without any change to the overall environmental outcome. Safeguard mechanism credits will be automatically issued to facilities with emissions below their baseline. Facilities can sell these credits to other facilities, surrender them to meet compliance obligations or bank them for future use. The government proposes facilities be allowed to bank credits until 2030, to give facilities flexibility around the timing of their abatement activities. This will help reduce costs. The bill also allows for facilities to borrow up to 10 per cent of their baseline for the following year to provide further flexibility.
Access to domestic offsets for compliance will continue unchanged. This will allow facilities to access cost-effective abatement outside the scheme—for example, in agriculture or land management. Further, the government has accepted in principle all recommendations of the Chubb review and will work with stakeholders to implement these changes. Extended multiyear monitoring periods will be made available on a facility-by-facility basis to give businesses flexibility while they invest in new technologies that reduce their emissions.
This government wants to work with industry and with business, but we want the outcomes. Together we can get there, but we need to work together to ensure that we support industry—that it's not affected—but that we reduce our emissions to zero by 2050. While many safeguard facilities support their use in the future, they understand the rules for international units relating to credits under the Paris Agreement are not yet settled. The government may consider including international offsets in the future, so long as they are of high integrity and contribute to Australia's Paris Agreement commitments.
Given the urgent and unprecedented challenges we face, it is absolutely essential that the government's proposed reforms commence from 1 July this year. The need for these reforms is both ambitious and necessary, and it is critical that we act now. The risks of delaying progress on climate action are simply too great, and the consequences of inaction will be felt for generations to come. On that, I know my community would not be the same without the incredible natural environment around us. It sustains the jobs in our region. It brings people to our region to work, to visit and to live.
The former government failed in its duty to protect the environment, for too long. In doing so, it failed to look after our communities. We called on the former government to introduce strong national environmental standards. We called on them to establish a genuinely independent cop on the beat for the Australian environment and to fix the environmental failures caused by their massive funding cuts. The EPBC Act is one of those policies we aim to change. All our calls have fallen on deaf ears. It's no surprise, then, that those opposite in the coalition have been critical of this bill—a bill that was represented by the member for Hume himself. Although the former government's plan was far from perfect, baselines were set above emissions and facilities were given permission to increase their baseline to boost their emissions. The result? Industrial emissions increased over time. We will not make the same mistake. We will prioritise results, not political points, with this bill. Why? We simply cannot afford to delay action any longer. The climate challenge demands a response equal to its scale and urgency.
The proposed design of the safeguard mechanism amendment, guided by the principle of effectiveness, equity, efficiency and simplicity, strikes an appropriate balance between a range of stakeholder views. It will provide a clear framework for businesses to operate—one that is sustainable, responsible and forward thinking. It is not a threat to economic growth or job creation but, rather, a vital tool for driving and supporting the transition to a net zero future—one that we all want. Australian businesses recognise this. They recognise the importance of having a clear policy framework to drive and support the transition to net zero—one that will help them remain competitive in a world that is rapidly decarbonising. These reforms ensure accountability that will see businesses keep previously made commitments. The vast majority of businesses are already committed to reducing their emissions and transitioning to a net zero future. Our reforms will simply ensure that all are held to the same standard, creating a level playing field that rewards innovation and investment in clean energy.
The proposed amendments to the safeguard mechanism have received support from stakeholders across all sectors including industry, business and environmental groups. The Business Council of Australia, the Australian Industry Group and the Australian Chamber of Commerce and Industry have all welcomed the reforms. They recognise that this amendment will help advance jobs and that this bill is a necessary step on the path to a more sustainable and prosperous future for our nation. They recognise that we need to take action on this real climate challenge, and they know that this amendment is a vital part of that effort.
By taking decisive action now, we will provide our economy with the confidence and certainty to plan and prepare for the future—a future where our economy thrives and our position as a global leader in sustainability flourishes. For this reason, the Albanese government is serious about meeting our 2030 targets. Therefore we must also acknowledge that we cannot achieve our emissions reduction targets alone; we must collaborate with our partners abroad to address the global climate crisis. The proposed reforms will help to limit our exposure to carbon border adjustment mechanisms that many countries are implementing and ensure that we remain competitive in a rapidly changing global economy. Let us take this opportunity to demonstrate our leadership, our commitment and our determination to rise to the challenges of our time for the sake of our beaches, our native animals, our world heritage sites, our coastline and the ancient sacred sites of our First Nations people, for the benefit of everybody who wants to see a future where there are not the disasters and the impacts that we currently see. It is time for us to take action and lead the way towards a more sustainable future.
I'd like to thank my local environmental groups who have advocated for positive action on climate change. Some, like Australian Parents for Climate Action, have their concerns. They've come to see me; I'm catching up with them next week. I want to assure this group—and all those groups that feel passionately about climate change and reducing our emissions rapidly—that this government is listening. We're absolutely committed to 43 per cent emissions reduction by 2030 and net zero emissions by 2050. Credits will enable the 250 industry emitters to have a direct pathway to helping us achieve our goal of zero emissions.
I urge all in this House to support this bill. Let us not let the perfect get in the way of the good. We must end the climate wars and give Australians hope for a future where we can reach zero emissions and create thousands of new clean energy jobs. I commend this bill to the House.
