Safeguard Mechanism reform: If not now, then when?

Feb 7, 2023

Why a 4.9% cut in carbon emissions is the uncomfortable nudge that’s needed.   

All the signs point to a July 1 start this year for the Federal Government’s proposed changes to the Safeguard Mechanism, putting more than 200 of Australia’s biggest industrial players under pressure to step up their decarbonisation efforts by 4.9% per year until 2030. 

For the country’s major mining companies, achieving the desired reduction – year in, year out, for the next seven years – is no mean feat, especially once big-ticket items such as renewables have been ticked off and are in play.   

Add in additional challenges such as the technology and innovation time lag, and difficulties marrying good intentions with a solid plan of action, not to mention the fallout from a global pandemic, and many companies will be scrambling to keep up. 

But not doing anything could mean penalties running into tens of millions of dollars.  

And if reform doesn’t come now, then when? 

Front of mind for many government and industry leaders today is helping Australia’s biggest carbon emitters remain competitive in a decarbonising global economy while smoothing the pathway to net zero by 2050. 

Their proposed changes are forecast to deliver 205 million tonnes of abatement to the end of the decade. 

For many of Australia’s mining companies, the proposed reforms to the Safeguard Mechanism are proving the catalyst for a more focused, coordinated approach to decarbonisation. 

This in turn is prompting their contractors and suppliers to re-think and reduce, mindful that they too will be under pressure to reduce carbon emissions. 

The trucking services company moving dirt from point A to B, for example, will need to demonstrate how they too can reduce emissions and help mining operators achieve their targets. 

If they stick to business as usual, they risk losing their contracts. 


Learning on the fly will be par for the course in the coming months and years, all while minimising the impact reduction-related expenditure has on our miners’ bottom line.  

Innovation, especially when it comes to hydrocarbon, solar and bio-diesel, is widely thought to be the answer.  

However, there’s a tangible disconnect between what’s being talked about in relation to a 4.9% decline in emissions baselines for Safeguard-covered facilities, and the timeframe in which companies will need to show results. 

Much of the technology that’s set to have the biggest impact, simply won’t be available until the back end of this decade, well after the anticipated start date for the Safeguard Mechanism reforms.  

R&D and on-site trials take time. Even the relatively familiar process of building a solar farm is being drawn out by pandemic-induced resourcing and supply issues. 

Uncovering the game-changers hiding in plain sight. 

The reality is, initiatives such as reducing fuel spend and optimising processes may not be as topical or newsworthy as solar, EVs, hydrocarbon and bio-diesel, but in the short term they have the potential to make a big difference in light of the proposed Safeguard Mechanism changes. 

The added bonus? Operational and process adjustments can also lead to a significant reduction in operating expenses. 

Our advice is to look at short-term reductions, while developing a mid-to-long-term plan that can remain fluid as new technology becomes available. 

For many mining companies, there’s no shortage of good intentions or ideas when it comes to decarbonisation. What’s often missing is the means to capture those good intentions and ideas into a cohesive, data-driven plan of action.  

Using renewables, hydrogen or electrification isn’t the only way to reduce emissions by 4.9%. If you’re interested in uncovering the game-changers hiding in plain sight in your business, please get in touch…