The Clean Energy Regulator (CER) has released its 2024-25 Safeguard Mechanism data, indicating that Australia’s primary industrial emissions reduction policy is on course to meet its legislated targets. Published on April 15, 2026, the data shows a continued decline in covered emissions, prompting the Carbon Market Institute (CMI) to acknowledge the mechanism’s progress while also emphasising the critical importance of the upcoming 2026-27 review.

The Safeguard Mechanism, reformed in 2023, applies to Australia’s highest greenhouse gas emitting facilities, specifically those that release more than 100,000 tonnes of carbon dioxide equivalent (tCO2-e) annually. This encompasses approximately 220 large industrial sites across sectors such as mining, oil and gas production, manufacturing, transport, and waste. The scheme mandates that these facilities reduce their emissions in line with Australia’s national targets of a 43% cut below 2005 levels by 2030 and net zero by 2050. Facility baselines are set to decline at a flat rate of 4.9% per year from 2023-24 to 2029-30.

2024-25 Data Highlights Emissions Decline

For the 2024-25 reporting period, the CER data reveals a national total of 132.8 million tonnes of CO2-e in covered emissions, marking a 2.3% reduction from the previous year. Concurrently, total baselines for these facilities decreased by a more substantial 7.3% to 126.2 million tonnes of CO2-e.

Notably, 2024-25 was the first year in which total covered emissions marginally exceeded total baselines under the reformed mechanism. This outcome is significant as it establishes a key market driver, compelling facilities to actively pursue on-site emissions reductions or acquire offsets.

The government also reported that net emissions from facilities covered under the Safeguard Mechanism fell by 5.5% year-on-year, contributing to a total reduction of over 12% since the reforms were introduced. On-site emissions specifically decreased by 5.8 million tonnes over the past two years, equivalent to removing more than 2 million cars from the road.

To manage excess emissions, facilities collectively surrendered 13.4 million units, comprising 10.8 million Australian Carbon Credit Units (ACCUs) and 2.6 million Safeguard Mechanism Credit units (SMCs). The CER also issued 6.7 million SMCs to facilities that outperformed their baselines.

“In this second year of compliance, the data shows the mechanism is on track to deliver its legislated goals towards 2030, with continued modest net and gross emissions reductions,” stated Kurt Winter, Director of Corporate Transition at the Carbon Market Institute, on April 16, 2026.

Critical 2026-27 Review Approaches

While the current data indicates positive momentum, the upcoming Australian Government’s 2026-27 Review of the Safeguard Mechanism, scheduled to commence in July, is highlighted as a timely and crucial opportunity. The CMI sees this review as a chance to strengthen investment signals towards achieving Australia’s more ambitious 2035 emissions reduction targets.

The review is expected to focus on policy stability and certainty for investment, aiming to broaden and deepen the mechanism’s reach and better incentivise on-site emissions reduction. Industry stakeholders will be looking for clear guidance to support long-term decarbonisation strategies.

Facilities are employing various strategies to meet their obligations, including significant investments in clean technologies, electrification, and the adoption of renewable energy solutions. For industrial operations, particularly those with substantial vehicle fleets, strategic investments in electrification infrastructure are becoming increasingly vital to manage emissions. For insights into preparing such infrastructure, businesses can refer to guides like How to Prepare Your Australian Fleet Depot for Megawatt Electric Truck Charging in 2026: A Complete Guide.

Addressing Complexities and Future Focus

Despite the positive headline figures, some analysts have raised concerns regarding the underlying drivers of reported emissions reductions. Critics suggest that a portion of the decline might be attributable to factors such as facility closures, accidents, or natural production declines, rather than solely proactive at-source abatement. These perspectives argue that the 2026-27 review must ensure the mechanism genuinely drives new, tangible emissions reductions rather than merely accounting for incidental benefits.

As Australia progresses towards its 2030 and 2050 climate commitments, the Safeguard Mechanism remains a cornerstone of federal energy policy. The upcoming review will be instrumental in ensuring the scheme is robust, effective, and capable of fostering the sustained investment and innovation required for Australia’s industrial sector to achieve its ambitious decarbonisation goals.