CMI’s Safeguard Mechanism Symposium, held in Sydney on 4 August 2026, brought together senior leaders from industry, finance, government and policy to consider one of the most important questions facing Australia’s emissions reduction framework: how can the Safeguard Mechanism continue to drive emissions reductions while providing the policy certainty and investment conditions industry needs to decarbonise?
The Symposium came at an important time as the Australian Government’s 2026–27 Safeguard Mechanism Review is now underway, placing the operation and future direction of the mechanism firmly in the spotlight. At the same time, the Climate Change Authority is considering progress towards Australia’s 2030 and 2035 emissions reduction targets.
The discussion made clear that the scale of the task ahead is significant. Meeting Australia’s targets will require sustained investment in onsite decarbonisation, a functioning ACCU Scheme and carbon markets that can efficiently connect capital with abatement opportunities.
The Symposium provided an opportunity to take stock of where the market is today, identify the barriers to further progress and consider where policy settings need to evolve.
Four key messages emerged from the discussion
1. Policy stability is essential for investment
There was strong recognition that long-term investment decisions require confidence in the direction of government policy. Industrial decarbonisation projects can take years to develop, finance and deliver, meaning uncertainty around future compliance settings can directly affect investment decisions being made today. Rather than pursuing wholesale changes to the Safeguard Mechanism, the discussion pointed towards the value of targeted recalibration of existing settings.
Importantly, policy stability should not be interpreted as policy stagnation. The Safeguard Mechanism will need to evolve as circumstances change, and lessons emerge from its implementation. However, changes should be well communicated, evidence-based, and delivered at a pace that allows industry to respond.
The objective should be a mechanism that steadily tightens over time while giving facilities sufficient confidence to make long-lived capital investments.
2. The next wave of industrial decarbonisation will be harder and more expensive
For many Safeguard facilities, the next tranche of on-site decarbonisation opportunities is materially more complex and costly, requiring adjustment to the Safeguard Mechanism settings as well as complementary policies to level the playing field internationally and domestically.
Mechanisms such as multi-year monitoring periods and borrowing have the potential to better align compliance requirements with the realities of industrial investment and project delivery and encourage onsite decarbonisation.
Well-designed flexibility can provide facilities with greater certainty while still maintaining a clear downward trajectory for emissions.
This reinforces the importance of maintaining flexibility within the compliance framework and ensuring the Safeguard Mechanism works alongside complementary policies that address barriers beyond the mechanism itself.
3. ACCUs and onsite abatement are both necessary to meet climate targets
Both will be required to meet the scale of Australia’s emissions reduction task.
Onsite abatement should be encouraged wherever technically and economically feasible. However, ACCUs provide an important source of flexibility where onsite options are unavailable, technically constrained or prohibitively expensive.
The supply of both onsite abatement and ACCUs is ultimately finite. Restricting access to ACCUs without sufficient alternative abatement options could increase the risk of non-compliance and create unintended consequences for market liquidity and investment.
A durable Safeguard Mechanism therefore needs to support both onsite emissions reduction and a credible, functioning ACCU market.
4. Time, information and demand will determine whether policy translates into investment
Perhaps the strongest message from the Symposium was the importance of time.
Industry needs time to identify projects, undertake feasibility work, secure capital, obtain approvals, and deliver infrastructure. Government needs time to assess the effectiveness of reforms. Markets need time to respond to signals and develop sufficient liquidity.
This suggests that the policy conversation should focus not simply on the date by which emissions reductions need to occur, but on when investment decisions must be made to deliver those reductions.
The period between 2030 and 2035 is likely to be particularly important. Decisions made now will determine the projects and technologies that are available to deliver emissions reductions in that period.
Better data and market transparency will also be critical. More consistent, accurate and timely information on facility performance, emissions trajectories, abatement activity and market conditions would improve decision-making for government, industry and investors alike.
Finally, creating demand for lower-emissions products was identified as an important enabler of industrial decarbonisation. Stronger demand-side signals can help create the commercial conditions required to support investment in higher-cost abatement.
What does this mean for the Safeguard Mechanism Review?
The Symposium reinforced CMI’s view that the 2026–27 Safeguard Mechanism Review should be an opportunity for calibration rather than wholesale redesign.
The reformed Safeguard Mechanism has now been operating for two years. While early signs are encouraging, this remains a relatively short period from which to draw definitive conclusions about its long-term impact.
CMI therefore supports a measured approach that builds on the existing framework, strengthens its effectiveness and provides industry with a clear and predictable pathway towards deeper emissions reductions.
Key priorities emerging from the Symposium include:
- Strengthening incentives for onsite abatement through improvements to existing flexibility mechanisms, including multi-year monitoring periods and borrowing.
- Providing clear and predictable long-term compliance settings to support investment decisions.
- Addressing barriers to industrial decarbonisation through complementary policies, particularly where remaining abatement opportunities are technically complex or costly.
- Maintaining the competitiveness of Australian industry, including consideration of international competitive pressures.
- Improving data transparency and market information to support investment, policy development, and market confidence.
- Supporting demand for lower-emissions products, helping create the commercial conditions for industrial decarbonisation.
- Allowing sufficient time for investment and project delivery, recognising that the decisions required to meet 2030 and 2035 targets need to be made well in advance.
From discussion to action
The insights from the Safeguard Symposium and work of the Safeguard Mechanism Taskforce are reflected in CMI’s submission to the Climate Change Authority’s 2026 Annual Progress Advice.
CMI’s submission reinforces the importance of policy stability in supporting investment in both onsite decarbonisation and the ACCU Scheme. It also argues that ACCUs and onsite abatement are necessary and complementary components of Australia’s emissions reduction architecture.
The message emerging from the Symposium is not that the Safeguard Mechanism should remain unchanged. Rather, it is that the mechanism should evolve deliberately, predictably and with a clear focus on investment and emissions outcomes.
Australia has a significant emissions reduction task ahead. Delivering it will require government, industry and markets to work together, with policy settings that provide a clear direction while retaining sufficient flexibility to manage the practical realities of industrial decarbonisation.
As the 2026–27 Review progresses, CMI will continue to engage with government, industry, investors and other market participants to advocate for a Safeguard Mechanism that is credible, durable and capable of mobilising the investment required to deliver Australia’s 2030 and 2035 emissions reduction targets.
The Safeguard Mechanism needs to tighten, but it also needs to give industry confidence, flexibility, information, and time to invest.
The next phase of Australia’s decarbonisation will be harder than the last. Getting the policy settings right now will be critical to ensuring the investment required for 2030 and beyond can be delivered.
