Australia's Safeguard Mechanism – the key law designed to cut industrial climate pollution – is up for review in 2026–27. The Safeguard Mechanism covers one-third of Australia’s total climate pollution. This new modelling shows the scheme is on track to fall well short of Australia’s 2035 climate target unless urgent reforms are made. The report finds that the scheme is being gamed by coal and gas corporations. Instead of driving emissions down, new and expanding fossil fuel projects are pushing them up. 

Key findings

• If higher-than-expected gas or coal production occurs, gross emissions could increase by a further 5% in 2035.
• The risk of carbon blowouts from coal and gas facilities is poorly managed and could lead to close to 50 million tonnes of additional pollution by 2035 if speculative technologies like carbon capture and storage fail to scale-up.
• Polluters will increasingly rely on offsets to comply with pollution rules, with the Mechanism failing to support enough real cuts to climate pollution.
• Improvement to Australia’s measurement of fossil fuel methane emissions, currently under-reported by approximately 60%, would have stark implications, lifting Safeguard emissions by 18% to 2035 and risking the achievement of the 2030 carbon budget.
• The scheme’s settings for fossil fuels will determine how decarbonisation is split across industries.