This is the fourth piece of seven in an ongoing series examining the remarkable flaws of the Safeguard Mechanism, updating our previous analyses with new data, facts and figures as a review of the scheme kicks into gear.
Fri 13 Nov 2026 01.00 AEDT
Photo: AAP Image/Tom White
Despite the promise of the Albanese government to put a lid on fossil fuels and ‘end the climate wars’, Australia’s fossil fuel extraction, export and use seems to keep ratcheting up. The latest report from the Department of Industry, Science, Energy and Resources shows that both domestic and exported climate pollution have persisted, with cuts in the power sector from domestic renewable energy completely overshadowed by recent surges in coal exports:
The surge in coal exports you can see above has been fuelled by a permissive and expansionist worldview in the Albanese government. Just recently, the NSW planning commission granted a massive expansion to the HVO coal mine (which includes a clause for including ‘additional carbon offset purchases’ beyond the Safeguard Mechanism (SGM)), and it’s likely the federal government will wave it through.
The Safeguard Mechanism is a major factor behind why massive carbon bomb mega-projects like the HVO expansion are waltzing through planning processes without breaking a sweat. As Bill Hare, CEO of Climate Analytics, highlighted:
The Federal government’s main instrument for regulating high emissions projects like this coal mine is the Safeguard Mechanism, but it’s abundantly clear it’s not working and is not fit for purpose. All these companies need to do is simply buy cheap offsets to enable them to continue emitting, and even increase emissions.
Climate Analytics’ data shows that for the 63 coal mines in the scheme, actual emissions rose 4.3%. But that looked like a 5.9% decrease in emissions, thanks to the inclusion of offsets. The real emissions from these 63 facilities were 18% above their targets in 2024-25. That is shocking.
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As shown in the ‘Safeguarding the Fossil Fuel Industry’ report, the heaviest users of carbon offsets to ‘meet’ targets under the SGM are extractive fossil fuel companies, mainly coal mining companies. Both coal and gas extraction facilities have seen a rising reliance on carbon offsets, as described above. Non-fossil facilities (such as metal miners) have seen a rising use of offsets too, but not even close to the same extent as fossil fuel companies.
The extraction of fossil fuels in Australia has a double hit for climate. The process is extremely emissions intensive, with coal and gas mining accounting for nearly a fifth of domestic emissions in Australia. This impact is spread across a litany of problems, such as methane leakage from coal mines or the use of gas, by gas companies in processing gas for export as liquefied natural gas (LNG).
The second hit comes from the expected use of these products once they are sold (primarily in countries other than Australia). While these ‘scope 3’ emissions are not accounted for under this policy or in any of Australia’s emissions accounting schemes, the consequences are directly felt by Australians as the atmospheric impact is global.
The fact that fossil fuel companies, the industry with the most immediate and urgent need for emissions reductions, are simultaneously the heaviest users of falsified emissions reductions via dodgy offsets is a marker of just how broken the Safeguard Mechanism is. The Safeguard Mechanism is not just ineffective as a climate policy; it is effective as a booster of fossil fuels.
Ketan Joshi is a climate analyst and writer.
