A loophole in the government’s new Safeguard Mechanism to cut back on carbon emissions continues to let companies tick boxes on paper while avoiding actually reducing pollution, experts have warned.

The Albanese government’s reforms to the policy came into effect at the start of this week and promise to ensure Australia’s largest emitters are contributing towards the country’s emissions reduction.

However, Suzanne Harter, a climate change campaigner at the Australian Conservation Foundation, said companies were still able to bypass concrete reductions of emissions by purchasing unlimited carbon credits, either Australian Carbon Credit Units (ACCUs) or Safeguard Mechanism Credits (SMCs) to meet their obligations under the policy.

“[There is] ongoing concern that instead of on-site emissions reduction and investing in new technologies these facilities still have the option to instead purchase offsets,” Ms Harter told Central News.

Emissions from facilities covered by the mechanism have lasting impact, with 40 per cent of a tonne of carbon estimated to remain in the atmosphere after 100 years, and 20-25 per cent after 1,000 years. Up to 20 per cent of carbon will persist longer than 10,000 years.

The Safeguard Mechanism requires Australia’s largest greenhouse gas emitters to keep their net emissions below a ‘baseline’ or emissions limit.

Facilities under the Safeguard Mechanism produce over 100,000 tonnes of carbon dioxide per year, however, since its implementation in 2016 by the Coalition, the policy has not required emissions from facilities to be reduced.


Dr James Goodman, a professor in the social and political science program at University of Technology Sydney, said changes to the Safeguard Mechanism may succeed on paper but have no impact on emissions reduction.

“I’m very sceptical of offsets,” he said. “I don’t think they have any meaningful benefit, because the emissions that are going into the atmosphere, go into the atmosphere now and contribute to climate instability right now.”

He described offsets as a “sham”, and said that in reality emissions will still rise, adding exported emissions, or scope three emissions, are not included in the Safeguard Mechanism facilities emissions data.

Australia’s exported fossil emissions represent around 3.6 per cent of global emissions, primarily coming from coal exports.

“It’s a huge problem for a country to claim that it’s being efficient in reducing emissions while supporting massive emissions elsewhere,” Dr Goodman said.

Dr Julia Scott-Stevenson, a chancellor’s research fellow from UTS, said projects need to be verified, trusted, and there needs to be overall greater transparency.

“You need to rely on the system, that the credits that you’re purchasing are real reductions that have taken place, you need to be sure that those reductions weren’t already happening anyway, in absence of the system, and you need to be sure that there’s no double handling,” she said.

“In general, there’s not enough reductions going on to allow continual emissions from the heavy industry. An over reliance on credits is a real problem.”


There’s debate on either limiting or completely scrapping carbon credits to maximise facilities’ abatement opportunities.

“[The Safeguard Mechanism] never required baselines to decline,” Ms Harter said. “Facilities could ride along with a set baseline and could alter them if needed through various loopholes.”

Historically, the baselines for these industries were set extremely high and they could exceed their baselines by purchasing carbon credits.

According to the Carbon Market Institute, due to the flexibility of the previous Safeguard Mechanism, emissions from facilities increased by 4.3 per cent between 2016-17 and 2020-21.

The reforms to the Safeguard Mechanism is in line with Labor’s plan to cut national emissions by 43 per cent by 2030 and reach net-zero by 2050.

A budget of 1,233 million tonnes of carbon dioxide, equivalent between 2020 and 2030 from facilities under the Safeguard Mechanism, has been written into legislation.

Ms Harter said a key change has been that facilities will have to invest in onsite emissions reduction technologies because baselines will be reset to a production-adjusted baseline, at international best practice.

These will be reduced by 4.9 per cent every year to 2030, which will further decline based on five-year rolling averages from July 1, 2025, toward net-zero by 2050.

“Facilities that try to deal with more than 30 per cent of their baseline through offsets, have to provide an explanation as to why they couldn’t invest more on site and that will be reviewed over time,” Ms Harter said.


She added she anticipates these purchases will increase and so will the price of carbon credits once facilities need to offset their emissions to meet baselines.

According to a report from Climate Analytics, facilities under the Safeguard Mechanism are the most acute threat to exacerbating climate change, and say it is unlikely their emissions can be addressed through offsets.

Offsets have been criticised as lacking integrity as they cannot guarantee permanent and long-term carbon capture due to Australia’s fluctuating climate.

“We know that carbon emissions and methane emissions are in the atmosphere for a very long time and they’re impacting global warming,” Ms Harter said. “Whereas an offset that might be purchased to offset a tonne of emissions may not exist for the same amount of time.

“It’s been shown that not all projects have full integrity and are definitely equivalent to a tonne of carbon abatement. We’ve got issues with offsets integrity and we’ve got issues with one offset not being exactly the same as genuine emissions reduction.”


Ms Harter said there need to be limits or restrictions on offsets so facilities invest in emissions reduction technologies, while Dr Scott-Stevenson added that the existing policy needs strengthening as well as the government implementing alternative policies.

Dr Goodman agreed, adding: “[The Safeguard Mechanism] has to be accompanied with a whole range of much bigger social spending and investment measures to create infrastructure for renewable energy.

“A whole series of measures need to be implemented to make it easier for facilities to decarbonise.”

Main image Canva.