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 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.
If emissions are down, why are more companies in trouble? While total emissions fell, the number of facilities exceeding their baselines surged.
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.
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 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.
For information about ClearBlue's Oceania carbon markets coverage, please contact us today.