The Federal Government has released a consultation paper which contains reform options for the Safeguard Mechanism, with the aim to help industry reduce emissions in line with Australia’s climate targets.
The Safeguard Mechanism has been in place since 2016 and requires Australia’s largest greenhouse gas emitters (around 215 large industrial facilities) to keep their net emissions below an emissions limit (a baseline).
Together, Safeguard Mechanism facilities contributed 28 per cent of national emissions in 2020-21.
The Government has increased the ambition of Australia’s climate goals, committing to reduce national emissions to 43 percent below 2005 levels by 2030, and reaffirming Australia’s commitment to achieve net zero emissions by 2050. The Powering Australia policy sets out the Government’s plan to meet these climate targets—including by building on the existing Safeguard Mechanism to reduce industrial sector emissions.
The Australian Government proposes:
- gradually reducing baselines to help Australia reach net zero emissions by 2050
- introducing credits for facilities that emit less than their baseline
- providing tailored treatment to emissions-intensive, trade-exposed (EITE) facilities so businesses are not disadvantaged compared to international competitors and emissions do not increase overseas.
The Government has announced a 1 July 2023 start date for the reforms.
The Minerals Council of Australia Chief Executive Officer Tania Constable said the mining industry recognises the need to reduce emissions globally, nationally and at the sites and facilities driving Australia’s resources industry.
“As Australia seeks to achieve the 2030 target and the 2050 net zero target, it is vital that Australia’s export industries continue to thrive and remain internationally competitive.
“Policy reform should not drive businesses to reduced production or closure due to an inability to compete with competitor countries who are not implementing strict emissions constraints on their export industries.”
Ms Constable said the objective must be to develop the policy reforms in a manner which keeps industries strong and sustainably reduces emissions reduction through the development and deployment of low emissions technologies and processes.
“We must manage this transition in a manner which reflects technology readiness and cost.”
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