Following the update of Australia’s greenhouse gas emissions targets as a reduction of 43% by 2030 and net-zero by 2050, the federal government announced that it is reforming the Safeguard Mechanism with the aim to bring the policy in line with these targets. The reformed Safeguard Mechanism will require the country's largest emitters to keep emissions below a baseline that will decline over time in line with Australia's updated climate targets. The reform also proposes to introduce credits for facilities that emit less than their baseline, while recognizing the need to provide tailored treatment to trade-exposed facilities.
The consultation on the Safeguard Mechanism Reforms, which was released in August 2022, proposed a range of reforms to raise the ambition of the policy, including resetting baselines, introducing declining baselines and the formation of new ‘cap-and-trade’ credits, called Safeguard Mechanism Credits (SMC’s), which would be accredited to facilities that emit below their baseline and sold to facilities that have exceeded theirs.
Following the consultation on the Safeguard Mechanism Reforms, the government released its consultation on the draft Safeguard Mechanism (Crediting) Amendment Bill 2022, which took place in October 2022. In this consultation, the government asked for feedback on the creation of Safeguard Mechanism Credits (SMCs) and use of Australian Carbon Credit’s (ACCU’s) for reducing direct emissions.
In January 2023, the government released its proposed design of the policy, which is under consultation until the 24th February. It includes ‘cost containment measures’ in the form of a price cap of $75 per ton on Australian Carbon Credit Units (ACCU’s) which can be used to meet Safeguard obligations, despite the original consultation paper stating that ‘there may not be a need at this stage for further price stability measures’. Various forms of price containment measures have been advocated for by industry across both consultations to date, therefore it appears the measure has now been included in the proposed design in response to the positions held by industry.
InfluenceMap will continue to track the development of the reforms in 2023 and will update this page to reflect any policy developments.
Alignment with IPCC on Climate Action; Emissions Trading; GHG Emission Regulation
Active
Alignment with IPCC on Climate Action; Emissions Trading; GHG Emission Regulation
Active
On April 17th the Chamber of Minerals and Energy of Western Australia (CME) published its 2023-24 Pre-Budget consultation submission to the Australian Federal Government. While CME communicated broad support for a number of regulatory measures to transition towards zero-carbon technologies, including the Powering the Regions Fund and the National Reconstruction Fund, it also advocated for a continued role for fossil gas in the energy mix, supporting new domestic fossil gas development in Australia. The association also appeared to advocate in favor of fossil fuel subsidies in its submission, calling for the Australian Government to retain the Fuel Tax Credit. CME likewise appeared unsupportive of ambitious reforms to Australia's Safeguard Mechanism, emphasizing the need for the reforms to maintain the international competitiveness of industry.
In a March 2023 LinkedIn post, World Coal Association (WCA) appeared to oppose reforms to the Australian Safeguard Mechanism. These included emphasizing concerns around decreasing baselines impacting energy-intensive industries, and stating that energy affordability, reliability, and security should be addressed rather than disincentivizing the responsible use of fossil fuels. In the same post, the association also supported policy and investment measures in India, China, and the US to increase the use of 'clean coal' in the energy mix, and contrasted these policies with European Union and Australian policies which WCA described as “restrictive”. WCA further stated that energy affordability, energy reliability, and energy security should be prioritized over disincentivizing the responsible use of fossil fuels, and called for a technology neutral approach to the energy transition.
In a 29th March press release, South Australian Chamber of Mines and Energy CEO, Rebecca Knol, appeared to oppose amendments to Australia’s Safeguard Mechanism Reforms that require new gas projects to have net-zero CO2 emissions from the first day of operation. Knol stated that “changes to rules for new gas projects are of particular concern”, whilst also advocating for further investments in fossil gas supply.
Cross sector associations appeared to react positively to news on the 27th March that the Labor party and the Greens reached an agreement on amendments that allows the reform of the Safeguard Mechanism to pass. Business Council of Australia CEO Jennifer Westacott stated that it was “tough but achievable” and added that Australia needs “a credible, durable framework to reach its climate targets”. Ai Group CEO Innes Willox also appeared to welcome the news, stating that “It’s not a deal for the ages, but it’s a good deal for today”. The Carbon Market Institute’s CEO, John Connor, also issued support for the agreed amendments, stating that they will provide much-needed enhancements to the current Bill.
As reported in a 22nd March Business News article, Fortescue Metals Group (FMG) Chairman, Andrew Forrest, appeared to question why companies would be allowed to buy unlimited carbon credits under the Australian Government’s proposed Safeguard Mechanism reforms. On behalf of FMG, Forrest stated “we’re not supporters of changes that enable companies to buy offsets, because this is just an easy means to cover obligations”.
In a 27th March press release, Minerals Council of Australia CEO, Tania Constable, appeared to emphasize the risks of facility closure and the threat of carbon leakage following the announcement of the agreed amendments to Australia’s Safeguard Mechanism Reforms between the Labor Party and the Greens. Constable stated that “if we are not careful, some facilities in Australia will close” which would “push the emissions reduction burden on to other nations”. Constable appeared to reiterate this position in a 27th March Australian Financial Review article.
In its 27th February consultation submission on the proposed design of Australia's Safeguard Mechanism Reform, the Association of Mining and Exploration Companies (AMEC) appeared to advocate for measures that risk undermining the climate ambition of the policy. AMEC advocated for a larger reserve to be built into the decline rate to meet 2030 targets, for the extension of deemed surrender provisions until 2030, and the extension of multi-year monitoring periods beyond 2030.
Orica provided a statement on the Safeguard Mechanism Reforms at the 27-28th February Senate Standing Committee Public Hearing on the Safeguard Mechanism (Crediting) Amendment Bill. Orica stated general support for the Safeguard Reforms, although it also advocated for the extension of deemed surrender provisions,
The Minerals Council of Australia (MCA) opposed calls for a ban on new fossil projects, in a statement on the Safeguard Mechanism Reforms at the 27-28th February Senate Standing Committee Public Hearing on the Safeguard Mechanism (Crediting) Amendment Bill. MCA also emphasized the need for the Safeguard Reforms to maintain industry competitiveness and avoid carbon leakage, and appeared to support a lower price cap on Australian Carbon Credit Units (ACCU).
A number of Australian companies and industry associations have provided statements on the Safeguard Mechanism Reforms at the 27-28th February Senate Standing Committee Public Hearing on the Safeguard Mechanism (Crediting) Amendment Bill. Both the Business Council of Australia (BCA) and the Ai Group urged the bill to be passed, while stating support for provisions for emissions intensive facilities. The BCA and the Ai Group also opposed demands from the green party to ban new fossil fuel projects.
The Carbon Market Institute actively supported the proposed reforms to the Safeguard Mechanism in its February 27th submission, advocating for the ratcheting of baseline decline rates from 2030 and the expansion of the scheme. Further, in a statement on the Safeguard Mechanism Reforms at the 27-28th February Senate Standing Committee Public Hearing on the Safeguard Mechanism (Crediting) Amendment Bill, CMI actively supported the policy, calling for broader coverage of the scheme. CEO John Connor also appeared to express support for a "budget approach" to limit future fossil fuel investment. CMI Director Kurt Winter went on to issue support for the implementation of a climate trigger in the Environment Protection and Biodiversity Conservation Act.
Australian associations adopt mixed positions on the proposed design of the Safeguard Mechanism Reforms. The South Australian Chamber of Mines and Energy (SACOME) appeared to oppose key components of the Australian Government’s reforms in its February 24 submission on the proposed design of the mechanism. SACOME called for a delayed implementation of the reforms and for “far greater” financial assistance to EITE facilities. Both the Australian Petroleum Production and Exploration Association (APPEA) and Woodside called for expanded support for emissions intensive facilities and supported the proposed price cap on Australian Carbon Credits, while APPEA also advocated for further cost containment measures.
A number of Australian companies and industry associations have provided statements on the Safeguard Mechanism Reforms at the 27-28th February Senate Standing Committee Public Hearing on the Safeguard Mechanism (Crediting) Amendment Bill, with varying positions. Both the Business Council of Australia (BCA) and the Ai Group urged the bill to be passed, while stating support for provisions for emissions intensive facilities. The BCA and the Ai Group also opposed demands from the green party to ban new fossil fuel projects, as did Carbon Market Institute (CMI) CEO John Connor, though Connor appeared to express support for a "budget approach" to limit future fossil fuel investment. The Minerals Council of Australia (MCA) likewise opposed calls for a ban on new fossil projects, whilst also emphasizing the need for the Safeguard Reforms to maintain industry competitiveness and avoid carbon leakage, and appeared to support a lower price cap on Australian Carbon Credit Units (ACCU). Orica stated general support for the Safeguard Reforms, though also advocated for the extension of deemed surrender provisions, while the CMI actively supported the policy, calling for broader coverage of the scheme. CMI Director Kurt Winter also went on to issue support for the implementation of a climate trigger in the Environment Protection and Biodiversity Conservation Act.
In a 15th February AFR article, the CEO’s of cross sector industry groups the Australian Industry Group and the Australian Chamber of Commerce and Industry both voiced opposition to the Green party’s demand to include a ban on new oil and gas projects in order for them to support the Safeguard Mechanism Reforms.
News that the main opposition party will oppose Labor’s proposed reform of the Safeguard Mechanism appears to have not been welcomed by industry groups. In an Australian Financial Review article posted on January 31st, the Business Council of Australia CEO Jennifer Westacott stated that it still supported the reforms, as did Ai Group CEO Innes Willox who stated that it was in everyone’s interest for the reforms to pass. The CEO of the Australian Chamber of Commerce and Industry also stated that the legislation must pass ‘for the sake of certainty and the achievement of our emissions' reduction goals’
In a January 11th Sydney Morning Herald article, Minerals Council of Australia CEO, Tania Constable, appeared to emphasize the need to keep trade-exposed export industries strong and competitive under reforms to Australia’s Safeguard Mechanism.
In a January 11th Australian Financial Review article, Rio Tinto Australia CEO Kellie Parker “applauded” announcements of support for heavy industry under the Australian government’s reform of the Safeguard Mechanism.
In a January 10th press release, Carbon Market Institute (CMI) CEO, John Connor, welcomed the release of the Albanese Government’s draft Safeguard Mechanism Rules. Connor stated that the draft Rules were an important step forward in guiding the decarbonization of Australian industry, whilst also emphasizing the need for baseline decline rates to be steepened over time.
Minerals Council of Australia CEO, Tania Constable, has welcomed the inclusion of a cost-containment measure in the Australian government’s proposed Safeguard Mechanism reforms, as reported on January 10th by the Australian Financial Review. Constable appeared to advocate for a lowering of the price cap on Australian Carbon Credit Units to $50, stating that the $75 figure was still relatively high.
On 10th January 2023, the Australian government released its proposed Safeguard Mechanism reforms for consultation. The Business Council of Australia, the Australian Chamber of Commerce and Industry (ACCI) and Ai Group appeared to welcome the reforms in January 10th press releases, but appeared to support tailored treatment to emissions-intensive-trade-exposed facilities (EITEs). Ai Group and the Business Council of Australia also appeared to support the potential for a carbon border adjustment mechanism (CBAM) for Australia, but this was opposed by ACCI, who stated that it would be a ‘punitive tax’ and would do little to incentivize low emissions technology.
Test
On the 20th September, AGL released its submission on the Safeguard Mechanism Reforms, in which it appeared to strongly support the policy. AGL appeared to be supportive of the reforms, including declining baselines and the removal of ‘headroom'. AGL also called for the new Safeguard Credit database (SMC’s) to be publicly available, and did not support tailored treatment to emissions intensive facilities within the policy.
On the 23rd September, the South Australian Chamber of Mines and Energy (SACOME) released its submission on the Safeguard Mechanism Reform, in which it appeared to oppose the policy reforms. In its submission, SACOME advocated for ‘headroom’ to be retained, and advocated for Safeguard Credits to be fungible with Australian Carbon Credits (ACCUs), while also advocating for Safeguard Mechanism facilities to continue generating ACCUs. SACOME also advocated for a delay in the Mechanism’s implementation, and expressed concerns around industry competitiveness.
On the 26th September, the Australian Chamber of Commerce and Industry (ACCI) released its submission on the Safeguard Mechanism Reform, in which it appeared to hold mixed positions overall. ACCI stated that it supported declining baselines and the removal of ‘headroom’, but also the ability for facilities to continue to register Emissions Reduction Fund projects, while stressing the need to not double count. ACCI also supported tailored treatment to emissions intensive trade exposed (EITE) facilities, but added that they should not be exempt from contributing to the national abatement task.
On the 27th September, Woodside released its submission on the Safeguard Mechanism Reform, in which it appeared to support the proposed reforms with major exceptions. While the company supported declining baselines and the removal of ‘headroom’, it also supported the ability for Safeguard facilities to generate Australian Carbon Credit Units (ACCU’s) without stressing the need to avoid double counting. Woodside also advocated for provisions for emissions intensive trade exposed (EITE) industries, but stated it should be through financial assistance rather than through direct provisions in the policy.
In a 20th September AFR article, cross-sector industry association, the Australian Chamber of Commerce and Industry (ACCI), stated that it opposed any exemptions for emission intensive trade exposed (EITE) industries in the Safeguard Mechanism Reforms. The association instead advocated for direct financial support for investments in ‘low carbon technologies’. However, oil and gas industry association, the Australian Petroleum Production and Exploration Association (APPEA) CEO, Samantha McCulloch, stated in a separate AFR article from the 19th September that she is looking to ‘ensure that the commitments already made by government around emissions-intensive trade exposed industries are maintained’.
The Australian government released its consultation paper on the proposed reforms to the Safeguard Mechanism on the 18th August. On the same day, three Australian industry associations released press releases on the issue.
The Australian Petroleum Production & Exploration Association (APPEA) emphasized the need to provide tailored treatment to emission intensive trade exposed industry, without indication if it supported the reforms.
The Australian Industry Group (Ai Group) CEO, Innes Willox, highlighted concerns around competitiveness but also that trade exposed industries should not place the burden on other sectors and appeared to support the transition of the mechanism to an emissions trading scheme.
Business Council of Australia CEO, Jennifer Westacott, stated support for an ‘enhanced’ Safeguard Mechanism but also emphasized that facilities will continue to produce emissions and a considered approach was required to international and domestic offsets.
The table below lists the entities found to be most engaged with the policy. InfluenceMap tracks over 400 companies and 200 industry associations globally. Each entity name links to its full InfluenceMap profile, where the evidence of its engagement can be found.
| Influencemap Performance Band | Organization | Policy Position | Policy Engagement Intensity |
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