The federal government’s climate statement and the Climate Change Authority’s (CCA) progress report provide first indications that emissions from industrial facilities covered by Australia’s Safeguard Mechanism are coming down and highlight the value of carbon crediting for regional Australia, Carbon Market Institute chief executive John Connor said today.
“Data in the two reports provide the early insights into how large emitters have responded to the Safeguard reforms, as well as into the emissions reductions that these businesses are expected to deliver,” he said.
Government projections estimate net greenhouse gas emissions from facilities covered by the scheme will be 88 million tonnes in 2030, which is below the required outcome of 100 million tonnes. The CCA reported preliminary data showing Safeguard facilities’ emissions declining 2.9% in the first year compared with a 0.7% decline nationally.
“There are early signs that the Safeguard Mechanism is beginning to make an impact on investment and emissions. However, fuller data will be released early next year enabling further review of actual drivers.”
“It is important to remember the impact of this policy grows over time, requiring an additional almost 5% reduction each year in net terms, so its guidance for investment decisions will only just be starting.”
Meanwhile, the CCA provided data showing that Australian Carbon Credit Units (ACCUs) and a new type of credits known as Safeguard Mechanism Credits (SMCs) will play an important role in helping businesses to meet their Safeguard obligations.
Preliminary data shows that between 147 million and 165 million ACCUs are expected to be issued from 2025 to 2030, as well as 40 million SMCs, the Authority’s report says.
Importantly, the two reports acknowledge there are measures that could further improve the Safeguard, Connor said.
The CCA proposed an adjustment that would provide more transparency about how Safeguard-covered facilities compliance strategies including credit use, and the government has agreed in principle, he noted.
“The CMI looks forward to making a positive contribution to discussions on this potential change,” Connor said.
“We will also continue to advocate for the broadening and deepening of Australia’s climate policy suite, including the expansion of the Safeguard so that it covers more facilities that are significant emitters, also recommended by the CCA in earlier reports.”
The government’s report also highlights the important role that the ACCU Scheme plays in making it possible for rural and regional areas to benefit from the opportunities associated with the transition to net zero, Connor added.
There are now more than 2,000 registered ACCU projects across Australia.
“Over 1,700 of these ACCU projects, which cover a total area of 77.2 million hectares, earn ACCUs through abatement action in agriculture, savanna fire management, or vegetation,” Connor noted.
The statement points out that these projects have a market value of about $750 million, representing a crucial investment in rural and regional Australia, he added.
Connor welcomed the government’s reiteration that several reviews have found that the ACCU Scheme is operating well and with robust governance.
“The positive findings of these reviews are sometimes overlooked or downplayed in media reporting on the ACCU Scheme,” he said.
“While the government’s acknowledgement of the scheme’s strengths is important, implementation of ACCU Scheme method development and integrity reforms has slipped albeit with some welcome recent momentum,” he said.
“Overall, the statement and progress report demonstrate that Australia has begun progress towards decarbonisation, although it must do significantly more,” Connor said.
“These reports show our 2030 target of 43% reductions on 2005 levels is within reach, but we need to accelerate policy and investment to achieve at least 70% by 2035. This is important not just for Australia, to properly help global efforts to limit the spiralling costs of climate change, but to maximise our economic opportunities in the unstoppable global decarbonisation transition underway,” he said.
