What is the Safeguard Mechanism?

The Safeguard Mechanism is intended to be Australia’s signature climate change policy, reducing climate pollution from Australia’s biggest industrial polluters (including industries like electricity generation, gas, coal mining, and steel and alumina manufacturing).

One of the election commitments of the Albanese Government was to reduce Australia’s climate pollution by 43% by 2030 and to achieve net zero emissions by 2050.  The Safeguard Mechanism was enlisted to play a big role in achieving those targets by reducing pollution from industries that make up almost 30% of Australia’s annual climate pollution.

But the Safeguard Mechanism has a history as a ‘do nothing’ policy and while it has some useful features, it was never used by the Coalition government that set it up to actually reduce climate pollution from industry. That means it need some serious reform to do the job it’s meant to do. 

Why does the Safeguard Mechanism need to be reformed?

Australia can’t meet our legislated pollution reduction targets and make real progress on tackling harmful climate change if we don’t get the Safeguard Mechanism right. 

Since the mechanism was set up in 2016, rather than reduce emissions it has been used by the Coalition government to maintain ‘business as usual’ pollution levels.  That means it provided a free pass to Australia’s largest polluters for years.

There are a range of reasons the mechanism hasn’t worked to lower climate pollution. The pollution limits applied to facilities were set too high to have an impact, they were never lowered, and a range of loopholes were added so that facilities could avoid penalty even if their emissions went above their limit. 

In fact, since the Safeguard Mechanism commenced, climate pollution has increased by more than 7% – an extra 9 million tonnes.

For perspective, to sequester that amount of carbon, you would have to grow 149 million seedlings for a decade! Pollution from gas and oil extraction has ballooned by 20%.  

For years, Australia had such unambitious climate commitments that the Safeguard Mechanism could skate along as a broken tool. But with higher targets committed, it’s now urgently needed - not just to meet current targets, but to enable stronger targets consistent with what’s required to avoid the worst impacts of climate change.  If reformed well, it will also generate investment in new technology solutions and make Australia’s industries cleaner and more competitive in the rapidly approaching global zero pollution economy.

What do the recent announcements mean?

There are some positive changes proposed for the Safeguard Mechanism, including that it will finally have a ceiling placed on the total pollution allowed from all its covered facilities, and the pollution limits placed on each facility will be reduced each year.  But there are also proposals that could prove costly and even undermine the integrity of the scheme.

A top concern is the proposal to allow facilities unlimited use of ‘offsets’ to meet their emissions reduction limits—meaning they can buy Australian carbon credits generated through activities like tree planting rather than reduce their actual emissions. Offsets are intended as a last resort for a small percentage of pollution after efforts to avoid, minimise and mitigate pollution have been exhausted, not as an excuse for polluting as usual. This is a big flaw that allows way too much reliance on paper carbon accounting, risks the use of low integrity offsets that don’t represent the reduction claimed, and dampens investment in new technology.  

Another top concern is that Australia’s big pipeline of new coal and gas projects could bring enormous amounts of pollution into the Safeguard Mechanism - and either blow out the pollution ceiling that’s being set (and our targets) or make all the other facilities - and Australian consumers - pay the cost to pick up the slack with a bigger pollution reduction workload. New facilities will be given a different limit on their pollution - in line with international best practice - but no other restrictions and they can simply buy offsets to deal with their pollution limits.

With your urging, the Prime Minister can be pushed to make the Safeguard Mechanism stronger. Send him the pre-written message now.


What does this mean for Australia’s climate?

If concerns related to the unlimited use of offsets and new coal and gas emissions aren’t addressed, the actual pollution from Australia’s biggest polluters could keep going up under the Safeguard Mechanism. They will be much less likely to make the investments needed to genuinely - and permanently - reduce their emissions. Any new coal or gas developments that proceed under the Safeguard Mechanism will add more dangerous pollution to Australia’s climate footprint for years to come and no amount of offsetting will remove the risks they will pose.

What we need from the government’s reforms is a strong Safeguard Mechanism, with limits on offsets and further restrictions on new fossil fuel developments. With effective policy in play Australia will be well set-up to not only achieve, but exceed, our climate targets; drive investment in new pollution reduction technology; and be in better global standing for having taken real action on climate change.


Suzanne Harter

Climate Change Campaigner