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Safeguard Mechanism Reform (2022-2023)

Policy Overview

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.

InfluenceMap Query

Alignment with IPCC on Climate Action; Emissions Trading; GHG Emission Regulation

Policy Status

Under development

Evidence Profile

3256394817

Key

◼ opposing ◼ not supporting ◼ mixed/unclear
◼ supporting ◼ strongly supporting

Policy Engagement Overview

InfluenceMap has detected that the overall engagement with the reforms across both consultations to date appears to be largely not supportive or oppositional. Entities holding these positions appeared to be industry associations representing the oil and gas and resource sector companies. Companies generally held more mixed positions in comparison, however there remains a greater number of unsupportive positions compared to supportive.

Policy Engagement Trends

  • Overall engagement with the Safeguard Mechanism consultation appeared to be negative. A total of 37 companies and industry associations in InfluenceMap's database submitted a response to both the Safeguard Mechanism consultation and the consultation on the draft legislation. Of these respondents, 20 entities (54%) appeared to advocate against ambitious elements of the reforms, while 7 entities (19%) appeared supportive. Among the 15 respondents that also responded to the consultation on the draft legislation, 8 (53%) continued to appear to advocate against ambitious reforms, while 3 (20%) entities appeared to be supportive.
  • The most oppositional positions appear to have been taken by resource sector associations such as the Australian Petroleum Production and Exploration Association (APPEA) as well as mining associations such as the Minerals Council of Australia (MCA) amongst four others. These associations appeared to oppose the unilateral removal of headroom from the policy (resetting baselines), expressed concern at baseline decline rates and advocated for tailored treatment for EITE’s to come within the policy through the direct provision of SMC’s and differentiated baselines. Companies Glencore, and Whitehaven also continued to hold unsupportive positions, additionally calling for a price cap on SMC’s to be introduced.
  • BP and AGL supported the reforms in their individual submissions along with a number of industry associations such as the Clean Energy Council (CEC), Carbon Market Institute (CMI) and the Energy Efficiency Council (EEC), which opposed the support of tailored treatment for EITE’s within the policy, instead advocating for direct funding for low emissions' technology.

Engagement on this policy is ongoing, lobbying details, and trends will be added here as they become available.

InfluenceMap Query

Alignment with IPCC on Climate Action; Emissions Trading; GHG Emission Regulation

Policy Status

Under development

Evidence Profile

3256394817

Key

◼ opposing ◼ not supporting ◼ mixed/unclear
◼ supporting ◼ strongly supporting

Live Lobbying Alerts

Australian industry associations offer mixed positions on Safeguard Mechanism reforms

26 August 2022

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.

Australian Chamber of Commerce and Industry mixed on the Safeguard Mechanism Reforms

30 September 2022

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.

Test

07 October 2022

Test

Carbon Market Institute welcomes the Albanese Government's draft Safeguard Mechanism Rules

20 January 2023

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.

Australian associations disagree on exemptions under Safeguard Mechanism Reforms

23 September 2022

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’.

SACOME appears to oppose the Safeguard Mechanism Reforms

30 September 2022

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.

Australian associations welcome Safeguard Mechanism Reforms with tailored treatment for emissions-intensive industries

13 January 2023

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.

Rio Tinto supports special assistance for heavy industry under Australia's Safeguard Mechanism Reforms

20 January 2023

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.

Entities Engaged on Policy

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 BandOrganizationEngagement Intensity
E+Australian Energy Producers (Formerly APPEA)44EnergyOceania
CAustralian Energy Council45EnergyOceania
E+Australian Chamber of Commerce & Industry20All SectorsOceania
D-Minerals Council of Australia (MCA)50Metals & MiningOceania
DSouth Australian Chamber of Mines and Energy21Metals & MiningOceania
CAustralian Industry Group (Ai Group)56All SectorsOceania
BCarbon Market Institute47All SectorsOceania
C-Business Council of Australia54All SectorsOceania
D-Glencore International33Metals & MiningEurope
A-Clean Energy Council39EnergyOceania
C+AGL Energy41UtilitiesOceania
D-Woodside Energy Group Ltd41EnergyOceania
C-Ampol Limited (formerly Caltex Australia)11EnergyOceania
C-BHP45Metals & MiningOceania
EWhitehaven Coal27Metals & MiningOceania
D+Anglo American25Metals & MiningEurope
D-Association of Mining and Exploration Companies23Metals & MiningOceania
D+Rio Tinto Group38Metals & MiningEurope
ENSW Minerals Council32Metals & MiningOceania
D+Virgin Australia17TransportationOceania
CBluescope Steel40Metals & MiningOceania
DChamber of Minerals and Energy of Western Australia (CME)29Metals & MiningOceania
D+South3221Metals & MiningOceania
C-Gas Energy Australia19EnergyOceania
DEnergy Users Association of Australia26EnergyOceania
E+Australian Institute of Petroleum10EnergyOceania
C-Origin Energy46EnergyOceania
CBP64EnergyEurope
D+Australian Pipelines and Gas Association22EnergyOceania
E+Alinta Energy21EnergyOceania
CEnergy Networks Australia18EnergyOceania
B+Energy Efficiency Council34EnergyOceania
C-Adbri (Adelaide Brighton)16Construction MaterialsOceania
E-Tamboran Resources12EnergyOceania
C+Fortescue Metals Group33Metals & MiningOceania
D-Santos22EnergyOceania
D+Orica20IndustrialsOceania
DAustralian Industry Greenhouse Network25EnergyOceania
DAlcoa16Metals & MiningNorth America
DBoral Limited12Construction MaterialsOceania
ECement Industry Federation15Construction MaterialsOceania
FSunset Power International (Delta Electricity)15UtilitiesOceania
DBeach Energy13EnergyOceania
C+Commonwealth Bank of Australia13FinancialsOceania
D+Incitec Pivot19ChemicalsOceania