The Safeguard Mechanism requires our 219 biggest polluters to actually reduce their emissions, cutting 200 million tonnes of carbon pollution by 2030 through mandatory yearly declining emissions limits.

Prior to the 2023 reforms, Australia's largest facilities had no requirement to reduce emissions, with industrial emissions actually increasing by 7% since the mechanism's inception in 2016.

The reformed Safeguard Mechanism applies to industrial facilities emitting more than 100,000 tonnes of CO2 equivalent per year across mining, oil and gas production, manufacturing, transport and waste sectors. Each facility has a baseline (emissions limit) that will decline by 4.9% each year to 2030. Facilities can meet their obligations by reducing emissions, earning credits by beating their baseline, or purchasing carbon credits. The reforms include special provisions for trade-exposed industries to prevent carbon leakage, with $600 million allocated to help these facilities transition. New facilities must meet international best practice standards, while existing facilities will transition to industry average emissions standards by 2030.

Key Statistics:

• Covers 219 industrial facilities producing 30% of Australia's emissions

• Baseline reduction of 4.9% per year to 2030

• Targets reduction of over 200 million tonnes of emissions by 2030

• Projects $95 cost containment measure per tonne in 2023-24

• $600 million support fund for trade-exposed facilities

• Zero emissions requirement for new shale gas projects

• Commenced July 1, 2023

  
  

[1] https://www.dcceew.gov.au/sites/default/files/documents/safeguard-mechanism-reforms-factsheet.pdf

[2]https://www.aph.gov.au/About_Parliament/Parliamentary_departments/Parliamentary_Library/Research/Research_Papers/2024-25/Reforming_Australia_Safeguard_Mechanism

[3] https://www.pwc.com.au/energy-transition/safeguard-mechanism.html