Understanding the policies shaping mining can be difficult when the detail gets technical, which is why the Upper Hunter Mining Dialogue has been bringing the experts directly to the community.
The Dialogue’s webinar series provides an opportunity for the community to hear from subject matter experts on issues relevant to mining in the Upper Hunter. For its latest webinar, the focus turned to the Safeguard Mechanism, a topic raised by community members wanting to better understand how greenhouse gas emissions from the mining sector are measured, reported and managed.
Patrick Passey, Director of the Safeguard Mechanism Review Team at the Department of Climate Change, Energy, the Environment and Water (DCCEEW), provided an overview of how the mechanism works and the review now underway.
The Safeguard Mechanism applies to facilities emitting more than 100,000 tonnes of CO2-e each year and currently covers around 30 per cent of Australia’s emissions. Oil and gas is the largest sector covered, closely followed by coal mining, with metal manufacturing, metal ore mining, transport, cement and chemicals among other industries captured by the scheme.
Facilities operate under emissions baselines that are linked to production. For coal mines, annual ROM coal production is multiplied by an emissions intensity value to determine the facility’s baseline, with the standard decline rate currently set at 4.9 per cent each year to 2030.
Facilities that emit below their baseline can earn Safeguard Mechanism Credits (SMCs), while those above can surrender SMCs or Australian Carbon Credit Units (ACCUs) to bring their net emissions within their baseline. ACCUs are generated through emissions avoidance or sequestration projects outside the Safeguard scheme, while SMCs reward facilities that reduce emissions below their own baseline.
Bringing the numbers closer to home, Patrick presented published Clean Energy Regulator data for Safeguard facilities across the Upper Hunter. Collectively, the facilities listed produced around six million tonnes of emissions in 2024-25, representing just under five per cent of total emissions covered by the Safeguard Mechanism.
Attention is now turning to what happens beyond 2030, with DCCEEW undertaking the first major review since the 2023 reforms.
The review will determine the baseline decline rate beyond 2030 and consider whether the scheme should do more to encourage onsite emissions reductions rather than reliance on credits. It will also examine whether the current 100,000-tonne threshold should be lowered and whether arrangements for trade exposed facilities remain appropriate.
During questions, the implications for existing NSW coal mines were raised. With the NSW Government’s new coal policy ruling out new greenfield coal mines, Patrick was asked how mines with long approvals and significant existing investment could shift production towards lower-emissions options.
“It’s not going to be an option in all cases,” Patrick acknowledged.
Instead, he said the mechanism would continue to incentivise reductions in emissions intensity at existing operations, pointing to electrification at open cut mines and reductions in ventilation air methane at underground mines as examples of potential decarbonisation options.
Consultation on the Safeguard Mechanism review is now underway, with submissions closing on September 18. DCCEEW expects to release a position paper in early 2027 before the review is finalised.
| WANT TO KNOW MORE? Watch the full webinar, along with previous webinars in the Upper Hunter Mining Dialogue series, at the Dialogue’s website: www.miningdialogue.com.au |
