Latest Safeguard Mechanism data shows Australia’s centrepiece climate policy is primarily a clearinghouse for low-integrity offsets
The Australian Government’s Clean Energy Regulator (CER) has today published data on the operation of the Safeguard Mechanism over 2024-2025, which shows the nation's flagship climate policy is underperforming its own poor design.
The latest data published by the CER shows industrial emitters relying heavily on the use of offsets to meet emissions reductions under the Safeguard Mechanism, rather than investing in long-term, systemic reductions in onsite emissions.
Aggregate on-site emissions from the country’s biggest industrial emitters dropped by just 2.3%.
According to the government’s figures, net emissions (after the use of offsets) fell by 7 million tonnes in 2024-25. This will be entirely undone by the North-West Gas shelf expansion – approved during the same period - which will add 7.7 million tonnes to Australia’s Scope 1 emissions each year.
The number of facilities covered in this reporting period has dropped from 219 to 208. A facility may cease being covered by the Safeguard Mechanism when its emissions fall below the 100,000 tonne emissions threshold (but while still producing emissions). Therefore, when a like-for-like comparison is made over the two reporting periods, the true figure for on-site emissions reductions may be as little as half of the 2.3% claimed by the CER.
The use of offsets has also increased dramatically, up by 45% compared to 2023-24, as facilities preferred cheap offsets over meaningful emission reductions on-site. This poses considerable environmental integrity problems for the scheme in the long term as many of Australia’s most in-demand offset units are plagued by integrity issues. Over 80% of offsets surrendered in 2024-25 are from methods that have received well-founded criticism.
Large gas companies in particular are electing to buy offsets instead of investing in long-term, on-site abatement. In the most recent year, Woodside emitted a total of 8.2 million tonnes worth of greenhouse gases across its safeguard facilities and elected to surrender 1.1 million offset credits. This is a near doubling of its offset use between years while its aggregate on-site emissions fell by just 160,000 tonnes.
The Safeguard Mechanism is Australia’s primary policy for reducing the greenhouse gas emissions of our biggest industrial emitters. It was reformed in 2023, and is due for review in FY2026-27.
According to Claire Snyder, Executive Director of Climate Integrity:
“The data shows that the safeguard mechanism is primarily acting as a clearing house for low-integrity offsets, rather than driving investment in long-term reductions in industrial emissions.
“Australia’s heaviest greenhouse gas emitters are choosing to buy their way out of their obligations, and this poor policy is enabling them to do so.
“The current fuel crisis is showing us the high price that is paid by businesses and households when decarbonisation of the economy is delayed. We should not be repeating this mistake when it comes to much-needed reform of the safeguard mechanism.”
“Driving down emissions from Australia’s biggest emitters is crucial for the climate and for the long-term resilience of the economy, and to date the safeguard mechanism is not achieving that
“The upcoming review of the safeguard mechanism must happen on time and it must be robust. Incremental change - or worse, delay - is a high-risk action which the economy and the climate can ill-afford”
“Addressing the flagrant overuse of offsets at the expense of real on-site abatement is crucial”
According to Dr Kate Dooley, ARC DECRA Senior Research Fellow in the School of Geography, Earth and Atmospheric Sciences at Melbourne University:
“The growing reliance on land-based offsets to balance industrial emissions is not aligned with the science - the data released today confirms that offset use is delaying real decarbonisation. Australia’s climate targets will only be met by reducing emissions at source and scaling up renewable energy, not through temporary storage of carbon in land.”
Aggregate on-site emissions reductions
In 2023-24, the aggregate of on-site abatement delivered by the safeguard mechanism amounted to 136.0 million tonnes, across 219 facilities. Today’s data for 2024-25 shows 132.8 million tonnes of greenhouse gas emissions were emitted across 208 safeguard facilities. On its face, this amounts to a 2.3% reduction year-on-year.
However, 11 facilities fell out of the scheme between 2023-24 and 2024-25. Even if we assume that each of these facilities were small, emitting an average of 120,000 tonnes of greenhouse gas to the 2023-24 total (a figure that is very close to the threshold for participating in the scheme of 100,000 tonnes per year), this would amount to 1.3 million tonnes overall. Which means that more than half the inter-annual difference in aggregate emissions likely came from facilities falling out of the scheme.
(In a media release today, Minister Bowen highlights the change in net emissions i.e. emissions after accounting for offsets, which is 5.5%)
Increasing reliance on offsets
In 2023-24 a total of 7.6 million tonnes worth of ACCUs were surrendered to meet safeguard baselines. With aggregate emissions only falling slightly and baselines declining at a much faster rate, this has driven a very large increase in offset use, with 10.8 million tonnes worth used in 2024-25, an increase of just under 45%.
The federal government, through its annual emission projections, has indicated that it expects offset use to be the primary form of abatement for at least the next ten years.
Low integrity offsets the most popular
In 2024-25, the three most popular offset credits types surrendered under the safeguard mechanism were:
human-induced regeneration (34%)
landfill gas (29%)
avoided deforestation (19%).
All three of these methods have been subject to sustained criticism due to integrity issues, and not representing real, additional, or permanent emissions reductions.
Top ten emitting facilities in 2024-25
| Facility | Owner | Emissions |
|---|---|---|
| Gorgon LNG | Chevron | 9,021,856 |
| Ichthys LNG | Inpex | 6,255,335 |
| Port Kembla Steelworks | Bluescope | 6,061,526 |
| North West Shelf LNG | Woodside | 5,750,304 |
| Qantas | Qantas | 4,622,401 |
| Wheatstone LNG | Chevron | 4,020,667 |
| Worley Alumina Refinery | South 32 | 3,218,588 |
| Queensland Alumina Refinery | Queensland Alumina | 3,169,994 |
| Appin Coal Mine | Endeavour Coal | 2,359,680 |
| Prelude LNG | Shell | 2,253,798 |
Top ten users of ACCUs in 2024-25
| Facility | Owner | ACCUs surrendered |
|---|---|---|
| North West Shelf LNG | Woodside | 681,895 |
| Kestrel Coal Mine | Peabody | 504,711 |
| Ashton Coal Mine | Yancoal | 488,671 |
| Gorgon LNG | Chevron | 478,414 |
| Goonyella Broadmeadow Coal Mine | BHP Mitsubishi | 468,747 |
| Centurion Coal Mine | Peabody | 391,110 |
| Queensland Alumina Refinery | Queensland Alumina | 355,761 |
| Gippsland Basin Gas Facility | Esso | 305,272 |
| Warkworth Coal Mine | Yancoal | 301,673 |
| Olive Downs Coal Mine | Pembroke Resources | 292,766 |
