After a decade of climate inaction, we now have a national emissions reduction policy that cracks down on Australia’s biggest polluters and forces them to actually cut their emissions.

The Safeguard Mechanism was an Abbott Government-era policy from back in 2016 that was supposed to reduce how much Australia’s biggest polluters can pollute. Or at least that was the idea. In the Safeguard Mechanism’s first five years, emissions from gas and oil mining in Australia ballooned by 20%.

Today our Parliament strengthened the Safeguard Mechanism which is an important start in dealing with the downfalls of the previous policy. These include new caps on emissions, a new pollution trigger, new blocks on taxpayer funding for coal and gas and an offset threshold among other updates which will lead to genuine emissions reduction and greater accountability and transparency from Australia's biggest polluters.

But this is not a final word on real climate action. We still have a long way to go.

The Safeguard Mechanism falls short of what the science demands, and it doesn’t address Australia’s biggest source of climate pollution – our coal and gas exports.

To show real climate leadership, the government should now move to cut Australia’s exported pollution, phase out fossil fuel subsidies and stop approving new coal and gas projects.

This is what the changes to the Safeguard Mechanism look like in detail:

A cap on emissions that will go down over time means pollution must go down!

We now have a hard cap on total emissions under the Safeguard Mechanism! We know that emissions were going to continue to rise under this scheme without a hard cap. This hard cap is on the total number of ‘absolute’ emissions from facilities captured by the mechanism. It cannot be influenced by offsets. This means the Safeguard Mechanism will now deliver genuine emissions reduction.

This hard cap will reduce over time which will have an impact on the number of new coal and gas projects.

Basically, if the cap on emissions goes down, there’ll be less room for the big polluting facilities that already exist therefore less for new players that would bring their new emissions into the scheme.

There are also two other caps being introduced - one known as the carbon budget which will mean net emissions from all the facilities covered under the scheme must stay within 1233 mega tonnes from 2021 to 2030 and a ‘point-in-time’ cap that means all emissions under the Safeguard Mechanism must be under 100 mega tonnes in 2029/30.

smoke stack

There are three new caps in place under the strengthened Safeguard Mechanism.

No public funding for fossil fuels under new funds

The government has provided $1 billion in funding under what’s called the Powering the Regions Fund to assist industry with decarbonisation including for new technologies and hard to abate manufacturing industries. They have also created a $15 billion National Reconstruction Fund. Commitment has now been made that these important funds will not be available to new or expanding coal or gas facilities.

There’s also been a commitment to change the Industry Research and Development Act so it can no longer subsidise new coal and gas projects. This was used by the previous federal government to funnel public money into developing new fossil fuel projects.

Gas rig in the ocean.

Commitment has now been made that these important funds will not be available to new or expanding coal or gas facilities.

Annual Climate Change Statement

The Climate Change Authority (CCA) must report on progress against emissions reduction goals with specific reference to new and expanding projects in the years to come.

The CCA will also undertake a review in 2026/27 to look at the use of offsets and implement measures to restrict their use if on-site mitigation isn’t occurring to satisfactory levels.

This means greater accountability and transparency related to Australia’s big polluters including if they are using offsets when they have options available to directly reduce their emissions.

New Safeguard pollution trigger

For the first time, new coal and gas projects will need to be assessed for their pollution impact and can potentially be stopped or trigger additional government action if it is projected they will breach the Safeguard’s pollution cap.

All project approvals under the Environmental Protection and Biodiversity Conservation (EPBC) Act will need to report their emissions and projected emissions. If a project is approved that will also enter the Safeguard Mechanism because it produces emissions that will cross the safeguard threshold, then a new assessment will be triggered to check the project against the pollution caps mentioned above. If we get close to those caps or if it looks like it will breach those caps it will require the Minister. This would  mean options such as amendments to the Safeguard rules or stronger requirements for new projects will need to be made to make sure the caps won’t be breached.

Coal mining

For the first time, new coal and gas will need to be assessed for their pollution impact.

New fossil fuel facility baselines set at international best practice (this includes their methane output)

The Safeguard Mechanism includes limits on how much climate pollution can be emitted by a facility in a year. These limits are called ‘baselines’ and they apply to each facility. Under the reformed Safeguard Mechanism, they are being reset and will decline every year by almost 5%. For new facilities, baselines will now be set based on international best practice, adapted for the Australian context.

As part of this, new gas fields will be treated as new projects and cannot sneak in as part of an existing facility. It means they will need to follow new rules which means their CO2 emissions will have to be zero in line with best international practice.

Critical manufacturing facilities that support decarbonisation projects will have the ability to apply for a lower baseline under the Safeguard Mechanism.

Improved methane reporting

Gas is mainly made up of methane, which is a climate-heating gas way more potent than carbon dioxide. The United Nations says cutting methane emissions is the best way to slow climate change.

In Australia, methane emissions are likely under-reported and this has been noted internationally including by the International Energy Agency. We need to lift our game with regard to accurate monitoring and reporting of methane, which has huge global warming impacts.

Big polluters will now be required to publicly report their methane, carbon dioxide and nitrous oxide emissions. Methane and nitrous oxide are major contributors to global warming methane has around 84 times the impact of carbon dioxide over a 20-year time horizon and nitrous oxide impacts the Earth’s ozone layer which shields us from ultraviolet radiation from the sun.

In addition to requiring these climate pollutants to be reported separately, and publicly, the government has committed to have the Climate Change Authority review and propose new mandatory requirements  based on global standards  to vastly improve the accuracy of methane measurement and reporting.

Offset threshold introduced

An offset threshold has been introduced. This means if a facility meets 30% – or more – of its baseline through offsets instead of actual onsite emissions reduction, they must explain why they are not taking onsite action. This will be reported publicly and provide an opportunity to hold these facilities to account if they are avoiding real emissions reduction.

Offsets still available for big polluters

Offsets will still be available and despite the new transparency measures, inclusion of offset use in future reviews and the 30% threshold mentioned above, strict limits have not been placed on their use. This means corporations can continue using carbon credits to replace real emissions reduction and integrity around offsets will still be called into question.

New research shows that offsets do not work and are failing to deliver genuine emissions reduction. This means they do not tackle climate change and despite new transparency, review and threshold measures, the strengthened Safeguard Mechanism still makes offsets available to polluters.

Let’s keep up the momentum for stronger climate action

The Safeguard Mechanism falls short of what the science demands, and it doesn’t address Australia’s biggest source of climate pollution – coal and gas exports. But these changes are important steps towards getting to where we need to be.

ACF activities around the Safeguard Mechanism

ACF undertook a range of activities around the Safeguard Mechanism.

It’s taken a mammoth movement-wide effort over many years to get to this point. In the last few months, our contribution as the ACF community has involved thousands of us uniting to deliver a powerful campaign that shifted our government. Together we:

  • Held community-led meetings with elected representatives across the country
  • Volunteered at calling parties, and made over 400 calls to Cabinet Ministers and government Members of Parliament
  • Sent a total of 5,433 messages to the Prime Minister: 3,905 in the weeks leading up to the negotiations, and then 1,528 emails over the final days of negotiations
  • Wrote 1,129 unique comments as part of a formal submission to the Department of Climate and Energy
  • Joined our friends across the movement at actions and events calling out Australia’s biggest polluters.

And thanks to generous donations, ACF campaigners were able to lobby for policy improvements with the major parties and crossbench; we put up billboards, ran full-page newspaper ads and reached millions of people with digital advertising; and we commissioned three lots of independent research that made national headlines and made clear that the government’s planned reforms had serious shortcomings.

All that in under two months!

The climate crisis is urgent. The strengthened Safeguard Mechanism must start a wave of bold new climate action from our parliament. Let’s create the groundswell for:

  • A ban on public money for coal and gas
  • A ban on new coal and gas projects
  • And replacing coal and gas exports with clean exports.

Suzanne Harter

Climate Change Campaigner