Most heavy emitters blow their carbon budgets, but Bowen sees “clear sign” Safeguard Mechanism is working

New data from the federal government’s Safeguard Mechanism have shown a reduction in emissions across heavy industry of 5.5 per cent over the 2024-25 financial year – and a 12 per cent reduction since the introduction of reforms by the Albanese government in 2022-23.

But the new data, published by the Clean Energy Regulator on Wednesday, also shows that of the 208 facilities currently covered by the Safeguard Mechanism, 141 facilities’ net emissions exceeded their allocated baselines and resorted to offsets.

The Safeguard Mechanism is Australia’s key policy for cutting industrial greenhouse gas emissions, using a baseline-and-credit scheme that requires entities generating more than 100,000 tonnes of CO2-e a year to progressively reduce their emissions in line with national targets.

Each new project is allocated a “baseline” level of emissions by the Clean Energy Regulator that is supposed to reduce over time, forcing the owner to bring down emissions either directly or by offsetting.

The real-life effectiveness of the mechanism, which has its roots in the Abbott-era of the climate-denying Coalition government, is the subject of much debate – and of a series of policy reviews also are currently underway.

Last year, an analysis of the 2023-24 Safeguards data by The Queensland Conservation Council (QCC) found new fossil fuel projects in that state had increased their greenhouse gas emissions by 830,000 tonnes under the scheme.

And recent report from Tim Baxter at Naru Research described the reformed mechanism as “simply not up to the task of driving emissions reduction at the scale that the climate crisis requires… whichever way you look at it.”

Nevertheless, federal energy and climate minister Chris Bowen has taken the latest data – which is not yet covered in the Naru report – as a win, describing it as “a clear sign that the Albanese Government’s Safeguard Mechanism is working and on track to meet targets.”

“Onsite emissions are now 5.8 million tonnes lower than they were when our reforms were made two years ago, equivalent to taking over 2 million cars off the road or around 60% of domestic aviation emissions,” Bowen said on Wednesday.

“Industrial facilities are electrifying and relying more on sovereign renewable energy, as well as upgrading their facilities with technologies that trap harmful gases at the source.”

The CER report says that 208 facilities were covered by the Safeguard Mechanism in 2024-25, 11 fewer than in the 2023–24 reporting period. Total covered emissions were 132.8 Mt CO2-e – a 2.3 per cent reduction from 136.0 Mt CO2-e in 2023–24.

Total net emissions were 120.3 Mt CO2-e following the surrender of Australian carbon credit units (ACCUs) and Safeguard Mechanism credit units (SMCs) – a 5.5% reduction from 127.3 Mt CO2-e in 2023–24. Total baselines were 126.2 Mt CO2-e – a 7.3 per cent reduction from 136.1 Mt CO2-e in 2023–24.

“Once flexibility measures for the 2024–25 reporting period were finalised, 141 facilities’ net emissions exceeded their baselines, with a total excess of 13.7 Mt CO2-e,” the report adds.

This is an increase of 4.5 Mt CO2-e, from the 9.2 Mt CO2-e total excess in 2023–24, the CER says. To manage excess emissions, entities surrendered 2.6 million SMCs.

“This is good policy working well, providing that investment certainty for industry, to make the investments they need, to make sure that their operations are viable on an ongoing basis but also reducing emissions as they go,” Bowen said at a press conference on Wednesday.

“I note that … the only climate policy the opposition has so far released is to abolish the Safeguard Mechanism. Based on my reading of Mr Tehan’s comments, not only abolish our reforms, but abolish the entire mechanism, which was introduced by Greg Hunt under Tony Abbott.

“Which just shows how far the Liberal Party has fallen when it comes to climate policy, that they’re now abolishing policies that Tony Abbott put into place and policies that are working, that industry has welcomed very solemnly, and that are seeing emissions come down.

“So that’s good progress, a lot more work to do – and of course, we’ll conduct the Safeguard review later this year, as I previously said – but good and encouraging signs.”

Bowen says the federal government has also released Australia’s National Inventory Report for the 2023-24 financial year, which he says reflects new climate data and improvements in emissions calculation methodologies which has augmented land sector emissions.

Renew Economy had not seen the inventory report by the time of publication.

Bowen says that outside of land sector emissions, which are “subject to ongoing variability,” the new data confirms that emissions are down 7.2 million tonnes since 2022-23 across the economy, and 35.5 million tonnes less than 2018-19, before Covid wiped out transport emissions

“Non-land emissions have been reducing at triple the rate achieved under the previous Coalition government,” Bowen says.

“Today’s data reflects updated measurements for previous years as data becomes more precise but also confirms the downwards trend in emissions overall.”

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