- Net emissions from Australian minerals sector down by 12 per cent in last two years
- Mechanism operating as intended to reduce emissions at least cost
- Keep Australian Carbon Credit Units for flexible compliance.
The Safeguard Mechanism is working as intended to reduce emissions and should continue to support least-cost carbon abatement from industries including Australia’s minerals sector.
Releasing its submission into the Federal Government’s Consultation on the 2026-27 Safeguard Mechanism Review, the Minerals Council of Australia noted that the Mechanism is operating as designed to reduce emissions while maintaining flexibility and economic growth.
Net emissions for mines and processing facilities covered by the Safeguard Mechanism are down in financial year (FY) 2025 since FY23 by 12 per cent.
The consultation paper’s own analysis demonstrates that the Safeguard Mechanism is meeting its objectives:
- Net emissions are declining
- Aggregate baselines are tracking toward legislated targets
- The scheme remains on track to exceed its 2030 target.
This early evidence indicates that the Mechanism is contributing to emissions reductions and should be assessed over time against its design objectives of avoiding carbon leakage and delivering least-cost abatement while maintaining policy stability.
The Mechanism should be maintained as a net emissions framework that enables facilities to comply through a combination of onsite abatement, Safeguard Mechanism Credits and Australian Carbon Credit Units (ACCUs).
Restrictions on the use of ACCUs would undermine the scheme’s design to efficiently deliver emissions reductions at lowest cost through flexible compliance.
The MCA does not support measures that restrict access to ACCUs or otherwise devalue their compliance use.
After 2030, the Mechanism’s decline rate – or the rate at which the Mechanism’s baseline declines predictably each year to help Australia meet its emission reduction targets – of 4.9 per cent should default to the legislated rate of 3.285 per cent.
This is consistent with achieving net zero by 2050 and will mean facility baselines emissions intensities will in FY35 be less than half of where they started.
In the context of global economic instability and uncertainty and on-going fuel insecurity, this is a prudent policy setting.
Where government considers further incentives for onsite abatement, priority should be given to enabling technologies, infrastructure investment, demonstration projects and regulatory reform over imposing additional compliance constraints.
