Australia’s oil and gas industry has pledged to work constructively with the federal government on its emissions safeguard mechanism as part of the sector’s commitment to achieve net zero by 2050.

The Australian Petroleum Production & Exploration Association (APPEA) on Thursday welcomed the release of the Safeguard Mechanism Reform:consultation paper.

APPEA chief executive Samantha McCulloch said: “The oil and gas industry is already spending billions of dollars on decarbonisation and renewable energy initiatives and is strongly committed to reducing greenhouse gas emissions economy-wide to net zero by 2050.

“Gas will be central to a cleaner energy future given its role stabilising renewables, replacing coal, supporting manufacturing, making everyday products and as a feedstock for hydrogen. The expertise of the industry will also be critical to deliver key decarbonisation technologies, such as carbon capture and storage.

“We’ve always worked with regulators and governments throughout Australia on emissions reduction policy and frameworks and will do so again to ensure both reduced emissions and ongoing international competitiveness.”

The federal government is consulting on options to reform the Safeguard Mechanism to help industry reduce emissions in line with Australia’s climate targets and in turn strengthen Australia’s competitiveness in a decarbonising global economy.

The safeguard mechanism requires Australia’s largest greenhouse gas emitters to keep their net emissions below an emissions limit (baseline).

Tailored treatment

The federal government is proposing to gradually reduce baselines to help Australia reach net-zero emissions by 2050 and introduce credits for facilities where emissions are lower than their baseline.

The federal government is also aiming to provide “tailored treatment” to emissions-intensive, trade-exposed (EITE) facilities so that businesses are not at a disadvantage compared with their international competitors and that they help cut back on carbon emissions worldwide.

APPEA noted that it is important to acknowledge the government’s commitment to provide tailored treatment for EITE industries based on the principle of comparative impact.

“Australia’s liquefied natural gas industry is one of the country’s most trade-exposed and operates in a highly competitive global market in which it’s one of the global leaders — with export earnings expected to hit another record of over $80 billion this financial year,” added McCulloch.

“The value of these exports to Australians was seen recently when the Queensland Budget forecast petroleum royalties to more than double, helping fund vital public services and infrastructure like hospitals and schools.

“The federal government’s commitment to provide tailored treatment to ensure that export-focused businesses are not competitively disadvantaged is important to help ensure the nation decarbonises while keeping our economy strong and resilient,” she said.