What's wrong with the Safeguard Mechanism - and how can we fix it?

The Safeguard Mechanism is one of the central pillars of Australia’s climate policy, designed to reduce emissions from the country’s largest industrial facilities. But is it actually driving the emissions reductions Australia needs? While net emissions covered by the Safeguard Mechanism have fallen, gross emissions from covered facilities have barely declined. Instead, facilities are increasingly relying on Australian Carbon Credit Units (ACCUs) to meet their obligations – raising questions about whether the scheme is providing a strong enough incentive for businesses to invest in reducing emissions at the source. The Australian Government is currently reviewing the Safeguard Mechanism and its settings beyond 2030. The Superpower Institute has made a submission to that review, arguing that while the Safeguard Mechanism is not the best way to price carbon pollution, significant reforms could make it more effective. In this episode of The Opportunity, TSI CEO Baethan Mullen sits down with Economic Research Director Ingrid Burfurd to explain how the Safeguard Mechanism works, where it is falling short, and what should change. They discuss TSI’s preferred alternative – an economy-wide Polluter Pays Levy – before unpacking three major recommendations for improving the existing scheme: making heavy reliance on ACCUs progressively more expensive, providing greater certainty about future compliance costs, and tightening emissions baselines to drive greater industrial abatement. The conversation explores what these changes could mean in practice – and how stronger, more predictable incentives could encourage Australian businesses to invest in actually reducing their emissions. Read TSI’s submission to the Safeguard Mechanism Review: https://www.superpowerinstitute.com.a... Learn more about TSI’s proposal for a Polluter Pays Levy: https://www.superpowerinstitute.com.a...