Australia’s economic security is under direct fire from the climate crisis and our dangerous reliance on volatile fossil fuels, yet the nation’s key law to future-proof industry is being hijacked by coal and gas giants.
New RepuTex modelling, commissioned by the Australian Conservation Foundation and the Climate Council, shows new highly polluting coal and gas projects are an escalating risk to the Safeguard Mechanism. Instead of driving pollution down and helping Australian industry stay competitive in a decarbonising global economy, coal and gas giants are exploiting loopholes to increase pollution and profits. This leaves Australia deeply exposed to global shocks, rising costs and escalating climate risks.
Climate Councillor, former energy adviser to Margaret Thatcher and BP executive Greg Bourne said: “Australia is paying a high price for our reliance on volatile fossil fuel markets. Every day we remain tethered to coal and gas, we are at risk of energy price pain caused by overseas conflicts and escalating climate costs in a warming world.
“Right now, coal and gas corporations are getting a free ride while future-focused industries like manufacturing are modernising their production and cutting climate pollution. The government cannot continue to allow big polluters to cook the books with dodgy offsets, undermining a system designed to protect Australia’s economic future.
“The Safeguard Mechanism is the government’s key policy to shift industry away from risky fossil fuels. Closing loopholes in the Safeguard Mechanism will support a more resilient economy and ensure Australia is not left behind in the global shift to clean energy. Getting these rules right will send a clear signal to investors to back the next generation of clean manufacturing and green exports.”
The Australian Conservation Foundation’s national climate policy adviser Annika Reynolds (they/them) said:
“Big coal and gas corporations are increasing climate pollution, using low-integrity offsets and making life harder for Australian households and industry.
“The modelling shows new coal and gas mines, like Woodside's ultra-polluting Browse project, will lift climate pollution and put Australia’s climate targets in doubt. If it ramps up to full production, Browse alone will increase total Safeguard Mechanism pollution by 6%.
“To give Australians energy independence and protect us from climate change, and to stop these gas giants hurting people and industry, the Safeguard Mechanism must be fixed and the Albanese government must stop approving new coal and gas mines.”
With the Safeguard Mechanism up for review in 2026-27, the modelling identifies a number of further risks and opportunities, finding:
- New, expanded and extended coal and gas projects are projected to represent up to one-fifth of covered emissions by 2035, before on-site cuts. This is partially driven by new mega-gas projects including Woodside’s Pluto 2 and Browse, and Santos’ Barossa gas fields.
- If higher-than-expected gas or coal production occurs, gross emissions could increase by a further 5% in 2035.
- The risk of carbon blowouts from coal and gas facilities is poorly managed and could lead to close to 50 million tonnes of additional pollution by 2035 if speculative technologies like carbon capture and storage fail to scale-up.
- Polluters will increasingly rely on offsets to comply with pollution rules, with the Mechanism failing to support enough real cuts to climate pollution. Relying on offsets is a risk to Australia’s climate targets, with no guarantee they actually reduce pollution.
- Improvement to Australia’s measurement of fossil fuel methane emissions, currently under-reported by approximately 60%, would have stark implications, lifting Safeguard emissions by 18% to 2035 and risking the achievement of the 2030 carbon budget.
- The scheme's settings for fossil fuels will determine how decarbonisation is split across industries. Implementing a stronger decline rate for coal and gas could more than halve the decarbonisation required from other long-term industries like manufacturing and minerals processing.
