The preliminary data for the 2024-25 Safeguard Mechanism period is in, and it reveals a fascinating contradiction in Australia’s industrial climate policy.
On the surface, the mechanism is doing exactly what it was designed to do: total emissions are down. However, scratch the surface, and the data shows a system under immense strain, with more facilities than ever struggling to keep up with their shrinking carbon budgets.
Here is the breakdown of the 2024-25 preliminary insights.
The Good News: Emissions Are Dropping
The headline figure is a clear win for the policy. Total emissions from covered facilities fell by 2.4% (a reduction of 3.2 MtCO2-e). This continues a positive trend from the previous year, suggesting that the policy is successfully bending the curve on Australia’s largest polluters.
The Paradox: The Compliance Gap is Widening
If emissions are down, why are more companies in trouble? While total emissions fell, the number of facilities exceeding their baselines surged.
- Total excess emissions (pollution above the limit) jumped by 48.9%.
- 143 facilities are now exceeding their specific targets.
The reason is simple: The squeeze is on. While emissions dropped by 2.4%, the cumulative baselines (the "allowable" limits) were cut by 7.3%. The government is lowering the ceiling faster than industry is lowering the floor, creating a growing liability gap.
The Reality Check: Operational Flux vs. Real Action
It is crucial to note that the 2.4% drop isn't entirely due to green technology. The report highlights that while some abatement (like CCS and equipment upgrades) is happening, a significant portion of the reduction was driven by operational realities—facility closures, maintenance shutdowns, and economic shifts.
As the report states, "significant decarbonisation initiatives are yet to be adopted at a large scale."
The Bottom Line
The Safeguard Mechanism is no longer a paper tiger; it has teeth. With baselines set to decline by roughly 4.9% annually, the pressure will only intensify.
For Australia’s industrial giants, the "grace period" is over. The choice is now stark: accelerate genuine technological transformation or face a growing bill for carbon credits to cover the gap.
Note: This data is preliminary. Finalized figures for the 2024–25 compliance period will be published in April 2026.
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