EDO welcomes the opportunity to contribute to the consultation on the 2026-7 Review of the Safeguard Mechanism.

The Safeguard Mechanism is Australia’s primary policy to drive down domestic climate pollution from mining (including coal), manufacturing, transport, oil, gas and waste. However, as currently configured, the policy is failing to reduce emissions at the rate needed to help Australia fulfil its obligations to limit as far as possible the harmful impacts of climate change. Analysis of the most recent data shows that major polluters continuously covered under the Safeguard Mechanism have only reduced on-site emissions by 0.4% between the first and second years of the reformed scheme.

The scheme is failing to sufficiently reduce emissions due to a variety of factors, including:
• the availability of unlimited relatively low-cost carbon offsets;
• limited on-site abatement; and
• the failure to prevent or properly address continued fossil fuel expansion.

It is clear that the Safeguard Mechanism requires significant reform. The scheme must be improved to ensure that it materially and permanently reduces Australia’s greenhouse gas emissions, drives onsite abatement, limits reliance on carbon offsets and appropriately differentiates between industries. The 2026 Safeguard Mechanism Review is an important opportunity to improve the scheme’s broken structure and help move Australia closer to meeting our national emissions reduction goals.