Crossbench MPs have responded to the Federal Government publishing its consultation paper into the Safeguard Mechanism, as part of the statutory 2026-27 review.
In the most recent year of data, the Safeguard Mechanism drove a 2.4% reduction in emissions at the covered facilities. This represents progress – but emissions are not reducing fast enough. All additional emissions cuts were through the use of offsets.
There are a number of significant limitations of the Safeguard Mechanism, including an over-reliance on offsets, insufficient constraints on fossil fuel expansion and ongoing conflict with the Fuel Tax Credit scheme, which completely undermines any policy signal for large miners to decarbonise.
The 2026-27 review period provides an important opportunity to identify and fix the limitations in the Safeguard Mechanism. The review must be broad and ambitious if Australia is going to achieve its emissions targets and develop thriving green export industries.
The Safeguard Mechanism is the central climate policy in the Federal Government’s toolkit, governing emissions at Australia’s largest-emitting facilities. It covers nearly a third of Australia’s total emissions.
In a joint submission to the Climate Change Authority’s review of the Safeguard Mechanism and Australia’s broader climate progress, crossbench MPs will make the following recommendations:
- Recommendation 1: Align Safeguard Mechanism decline rates with the upper bound of Australia’s 2035 emissions reduction target.
- Recommendation 2: Support industries of the future by applying steeper decline rates to coal and gas.
- Recommendation 3: Consider how Safeguard Mechanism reforms can support and drive a transition to a Border Carbon Adjustment to support our industrial competitiveness.
- Recommendation 4: Strengthen the mitigation hierarchy to drive greater on-site abatement and less reliance on offsets.
- Recommendation 5: Strengthen the rules around new entrants to the Safeguard Mechanism.
- Recommendation 6: Reform the Fuel Tax Credit Scheme which continues to undermine the Safeguard Mechanism.
- Recommendation 7: Consider how Safeguard Mechanism reforms can support accelerated rollout of renewable energy and storage.
- Recommendation 8: Improve measurement of methane emissions.
Comments attributable to Kate Chaney MP, Member for Curtin
“The Safeguard Mechanism is such an important policy in our country’s mission to contribute to a safe climate and grow a thriving, sustainable economy. This review is a significant opportunity to improve this crucial policy; the Government must be willing to consider the whole range of issues and implement ambitious solutions.
“The Safeguard Mechanism is being completely undermined and undercut by the Fuel Tax Credit Scheme. The Fuel Tax Credit Scheme incentivises miners to continue to burn diesel and overwhelms the Safeguard Mechanism’s policy signal to decarbonise. We can’t meet our emissions targets with our foot on the accelerator and brake at the same time. There are sensible reform policies that would only impact about 18 of the largest, highly profitable companies – without touching the credits provided to farmers and small users of diesel.
“The role of the Safeguard Mechanism is not just to drive emissions reductions, it’s also to support the growth of the green export industries of the future. This review must consider how the Safeguard Mechanism can support and drive a transition to a border carbon adjustment – to support our vital industries like steel and aluminium.”
Comments attributable to Nicolette Boele MP, Member for Bradfield
“Right now, the Fuel Tax Credit Scheme gives mining companies a bigger reason to burn diesel than the Safeguard Mechanism gives them to cut emissions. The Safeguard Mechanism prices carbon at around $38 a tonne. The Fuel Tax Credit works like a carbon price of -$199. We are in an absurd situation where mining companies have five times more reason to keep burning diesel than to cut their emissions.
"The Safeguard Mechanism currently lumps all industries together into one scheme. Whilst we want an internationally competitive resources sector, the Safeguard Mechanism must recognise that pure play fossil fuel production is a sunset industry in Australia and reflect that by requiring fossil fuel industries to reduce emissions faster than the industries we want to keep."
Comments attributable to Zali Steggall MP, Member for Warringah
“The Safeguard Mechanism only works if we can trust the data behind it. As it stands, methane emissions from coal, oil and gas facilities are too often under-estimated, creating a real risk that reported reductions aren't genuine.
"The Albanese government must strengthen the integrity of the Safeguard Mechanism by requiring better methane measurement from big polluters. Better data means better policy, genuine emissions reductions and more confidence that Australia's climate targets are being met."
Comments attributable to Sophie Scamps MP, Member for Mackellar
“Australia cannot offset its way out of the climate crisis. The Safeguard Mechanism was designed to cut pollution from our biggest emitters, yet emissions are not falling fast enough and too much of the progress is coming from offsets rather than real reductions. If we are serious about a safe climate and a strong clean economy, big polluters must cut emissions at the source.”
Comments attributable to Allegra Spender MP, Member for Wentworth
“The reformed Safeguard Mechanism was a big step forward, but the job isn't finished. Right now, too much of the emissions reduction we're seeing isn't coming from companies actually cleaning up their operations. If we're serious about hitting our 2035 target, the Safeguard needs to require real, on-site abatement — not just cheap offsets.
“The Safeguard only covers around 30% of Australia's emissions, so however well we tune it, it can't get us to our 2035 target alone. Much more is needed, particularly across transport and agriculture. An economy-wide carbon price remains the cheapest way to get us to the top of our 2035 target.”
"The Safeguard Mechanism is being asked to do the lion's share of the climate lifting. The Government told us we didn't need a climate trigger in our national environment law because the Safeguard already had it covered. And yet, over the last three years, we've seen coal mine after coal mine expanded or extended. The scheme simply isn't adequately constraining fossil fuel expansion while only measuring scope 1 emissions. Meanwhile the far bigger climate cost of burning coal and gas goes unaccounted for."
[ENDS]
Media enquiries: Cade Smith | 0408 997 003 | [email protected]