The Net Zero System — Where The Money Goes

Australia’s carbon system gives each of 219 industrial facilities an annual cap on the CO₂ it may emit, then cuts that cap by 4.9 per cent every year, and lets them meet it by buying credits produced elsewhere. This memo sets out how the system works, which projects it funds, how much, and where the money ends up.

1. The numbers

• The Safeguard Mechanism covers facilities emitting more than 100,000 tonnes CO₂-e a year. In 2023–24 that was 219 facilities, about 31 per cent of national emissions.
• Each facility’s cap — the tonnes of CO₂ it is allowed to emit in a year — is cut by 4.9 per cent every year to 2030. The cuts stack, so the cap is more than 20 per cent lower after five years. From 2030 the proposed annual cut is 3.285 per cent.
• A facility that emits more than its cap has to hand in ACCUs or Safeguard Mechanism Credits to cover the difference. Government offers Safeguard facilities ACCUs at a fixed $75 (2023–24), rising CPI plus 2 per cent a year.
• ACCU spot price, late July 2026: about $38 a tonne. Government sells ACCUs to facilities over their cap at a fixed $75, and the civil penalty for not complying is $330 a tonne.
• Across the first two compliance periods, covered facilities handed in 21.9 million credits — a cost of roughly $760 to $800 million at market prices.
• Transport emitted 90 Mt in 2022, about 21 per cent of national emissions — light vehicles ~54 Mt, heavy vehicles ~22 Mt, domestic aviation and shipping ~8 Mt, rail ~1.5 Mt. On a full fuel cycle basis road transport alone reached 106 Mt in 2022–23.
• The scheme covers transport operators above 100,000 tonnes a year — the large airlines and rail freight companies — but not the 19 million light vehicles or most road freight, because no individual operator reaches the threshold.
• Exports produced 1.15 billion tonnes of CO₂ overseas in 2023 — thermal coal 443 Mt, metallurgical coal 430 Mt, LNG 231 Mt, oil 48 Mt. About three times the domestic account, and none of it in Australia’s figures.
• The Commonwealth has about $22 billion committed to clean energy programmes, and returned $1.3 billion of it in the 2026–27 Budget.
• Government projections miss the legislated 2030 target by 25 to 68 Mt and 2035 by 86 to 200 Mt.

2. What is not captured — the exports

Australia’s domestic account runs at roughly 440 million tonnes a year, and the Safeguard Mechanism reaches about 31 per cent of it. Alongside that sits a second figure, three times larger, which appears in no Australian target, projection or facility cap.

The amounts

In 2023 the coal, gas and oil Australia shipped produced 1.15 billion tonnes of CO₂ when burned at the destination.

Calculated by Climate Analytics for the Australian Human Rights Institute from the Australian Energy Update, Resources and Energy Quarterly and Australia’s National Greenhouse Accounts. Counting all greenhouse gases rather than CO₂ alone raises Australia’s total footprint to 1.7 billion tonnes CO₂-e for 2023.

The scale, stated plainly

• Australia’s export carbon footprint is about three times its domestic footprint. Roughly 80 per cent of the country’s total fossil CO₂ occurs outside its borders.
• Australia accounts for approximately 4.5 per cent of global fossil CO₂ emissions — third largest fossil fuel exporter by energy, behind Russia and the United States, and second by greenhouse gas footprint because of the coal share.
• Australia supplies about 52 per cent of world metallurgical coal exports and 17 per cent of thermal coal exports.
• LNG export capacity grew from 25.5 million tonnes a year in 2012 to 62 million tonnes in 2022.
• Cumulative CO₂ from exports, 1961 to 2023: 30 billion tonnes. Under current policy that rises by roughly 15 billion tonnes by 2035.
• Exports between 2024 and 2035 would consume about 7.5 per cent of the estimated remaining 200-billion-tonne global carbon budget; 9.1 per cent including Australia’s domestic emissions.
• 78 per cent of Australian LNG, metallurgical coal and thermal coal is bought by four countries: Japan, China, South Korea and India. Japan is the largest buyer of both LNG and thermal coal; India of metallurgical coal.
• Volumes are projected to hold near current levels to 2035. Thermal coal declines slightly from its 2023 record; metallurgical coal and LNG stay approximately flat.

Iron ore, separately

Australia exports about 900 million tonnes of iron ore a year, processed overseas into roughly 560 million tonnes of iron. Those emissions are not fossil fuel combustion and are not in the figures above, but they are created by an Australian export, processed abroad, and counted against the processing country.

Why this chapter is here

This memo does not argue that export emissions should be added to Australia’s target. Under international accounting they belong to the country that burns the fuel, and every major buyer has its own target.

The point is narrower. The carbon system works on the 440 million tonnes and says nothing about the 1,150 million tonnes — and several of the facilities it charges are the ones producing the larger number. A gas plant surrenders units for the CO₂ it strips out during processing. It surrenders nothing for the gas. A coal mine pays for the methane that leaks out of it, not for the coal it sells.

So at an export facility the scheme rewards making extraction cleaner, not extracting less. Moomba and Gorgon are both exactly that: capture projects at gas plants, paid in credits, attached to operations whose primary output is not covered at all.

3. Electricity

Electricity generation is the largest single block inside the domestic account and the one the current programme spend is aimed at. The target is 82 per cent renewables by 2030, supported by the Capacity Investment Scheme underwriting 32 GW of new capacity and $20 billion of Rewiring the Nation finance for transmission.

Two constraints matter for what follows.

• Grid decarbonisation does not reach transport. A vehicle burning imported diesel is unaffected by the fuel mix of the grid it drives past.
• The hold-up is building it, not inventing it. Transmission costs are 25 to 55 per cent higher in real terms than 2022. HumeLink has run 190 per cent over, from $1.1bn to $3.3bn; Marinus Link 250 per cent, from $1.1bn to $3.8bn; Project EnergyConnect 84 per cent, from $2.23bn to $4.1bn.

4. How the system works

Four parts, and it is worth being clear about what each one does.

• The Safeguard Mechanism. Gives each facility an annual cap on the CO₂ it may emit — the scheme calls this its baseline. The cap is worked out from how much the facility produces multiplied by an emissions figure for its industry, and it is cut by 4.9 per cent every year. What falls is the permitted tonnage, not the facility’s actual emissions. Emit more than the cap and the operator has to hand in credits to cover the excess. Emit less and the operator is given Safeguard Mechanism Credits for the difference, which it can keep for later or sell to another facility.
• The ACCU scheme. Administered by the Clean Energy Regulator. One ACCU is one tonne of CO₂ stored or avoided, issued against an approved method — carbon capture and storage, planting vegetation, soil carbon, capturing landfill gas and others. ACCUs can be sold privately, sold to the government under a fixed-price contract, or surrendered for Safeguard compliance.
• Trade-exposed relief. A facility that competes against overseas producers can apply for a slower cut — as low as 1 per cent a year for manufacturers, 2 per cent for others — but only for three years, and only once the scheme is already costing it more than 3 per cent of its operating profit. The relief comes after the cost.
• The Nature Repair Market. A second market, in biodiversity certificates, which can be earned on the same land as carbon credits.

What the system buys is a credit: a certificate issued because a tonne was measured somewhere. Part Three sets out why that matters.

5. The emitters — who pays

219 facilities carry the obligation: mines, LNG trains, smelters, cement, chemicals, waste, and the last two oil refineries. Each has an annual cap on the CO₂ it may emit, cut by 4.9 per cent every year. The cuts stack, so by 2030 the cap sits more than a quarter below where it started.

A facility that cannot physically reduce its emissions has three options: hand in ACCUs, hand in Safeguard Mechanism Credits bought from a facility that came in under its own cap, or use the banking and borrowing rules to defer. All three are financial. None of them requires the facility’s emissions to fall.

What it has cost so far

Two compliance periods have now closed, and the Clean Energy Regulator publishes the results.

2023–24: 7.1 million ACCUs plus 1.4 million SMCs. 2024–25: 10.8 million ACCUs plus 2.6 million SMCs. Before any flexibility measures were applied, 153 of the 215 covered facilities were above their cap in 2023–24 by an aggregate 10.7 Mt. Sixty facilities came in under their cap and were eligible for about 9.2 million Safeguard Mechanism Credits.

Two things stand out from those numbers.

• Credits handed in rose 58 per cent in one year, from 8.5 million to 13.4 million.
• ACCU surrenders jumped 479 per cent in the first reformed period, from 1.2 million the year before to 7.1 million.

The cost, at market prices

Generic ACCUs were assessed at A$33.75 a tonne in April 2025 and about A$38 in late July 2026. SMCs traded at A$31.25 in March 2025, a small discount to ACCUs.

Cost calculated from unit counts published by the Clean Energy Regulator and market prices assessed by S&P Global Platts and Core Markets. Actual outlays differ: many facilities hold credits bought earlier at lower prices, some generate their own, and SMCs bought from another facility transfer money between covered companies rather than out of the sector. The figures indicate scale, not audited spend.

Two ceilings sit above the market price. A facility over its cap can buy ACCUs from the government at a fixed $75 (2023–24), rising CPI plus 2 per cent a year. And a facility that neither reduces emissions nor hands in credits faces a civil penalty of one penalty unit per tonne of excess emissions — A$330 a tonne as at November 2024.

So the choice facing a facility over its cap is a credit at about $34 to $38, a government credit at $75, or a penalty at $330. That ordering explains the behaviour: in 2023–24, 84.5 per cent of everything handed in was an ACCU bought on the market. Holdings in the national registry stood just under 50 million ACCUs at the end of 2024, with Safeguard entities holding around 60 per cent of them.

The refineries

Those are sector totals. For an individual facility the position is clearer in the case of the refineries.

Australia has two refineries left — Ampol’s Lytton in Brisbane and Viva Energy’s Geelong. Both are covered. The Institute of Public Affairs calculates a Safeguard cost of up to $79.9 million for Lytton and $85.6 million for Geelong — $165.5 million to 2029–30 — and $7.1 to $11.7 billion across all covered facilities. Those are the IPA’s figures and are stated as such; the scheme design they are calculated from is not in dispute.

The relevant fact is the context. Australia imports 80 to 90 per cent of its refined transport fuel. The scheme applies a declining carbon cost to the last domestic production of the commodity the country is least able to supply itself.

6. The sinks — who gets paid

Moomba CCS — working as designed

Santos, 67 per cent, with Beach Energy at 33 per cent, adjacent to the Moomba gas plant in the Cooper Basin. It captures reservoir CO₂ from gas processing, compresses it, pipes it about 50 km and injects it into depleted fields.

• Design capacity 1.7 Mt a year. Lifecycle cost under US$30 a tonne, among the lowest of any CCS project globally.
• First injection 30 September 2024. 2.3 million tonnes stored by mid-2026.
• $15 million Commonwealth grant against a project of about $210 million.
• Over 1.19 million ACCUs issued to 30 September 2025, including the first ever issued under the CCS method.
• Monitoring and verification under a plan approved by South Australian authorities; results confirm containment.

Two facts sit alongside that record. The CO₂ is reservoir CO₂ that came up with the gas — the project stops CO₂ being released rather than removing CO₂ already in the air. And because it reduces emissions at a Safeguard-covered facility, the ACCUs issued are added back to that facility’s compliance number, which is the correct treatment and means the reduction is counted once, at the plant that made it.

Gorgon CCS — well short of its condition of approval

Chevron, with ExxonMobil and Shell, at Barrow Island. The world’s largest CCS project, approved on the condition it capture 80 per cent of the CO₂ stripped from its reservoir, on a five-year rolling average from July 2016.

• Injection began August 2019, three years late.
• 44 per cent captured across FY2019–20 to FY2023–24, and declining: 33 per cent, 34 per cent, then 30 per cent in FY2023–24, its lowest.
• Designed for 4 Mt a year; running at about a third of that. Partners have spent more than A$3.2 billion.
• Missed the five-year target by roughly 7.4 Mt; penalised in carbon credits worth about A$180 million.
• In January 2021 the injection system was found clogged with sand.
• The Commonwealth contributed $60 million, with no penalty attached to failure.

An IEEFA review of 13 CCS projects worldwide found three met their targets.

Bayu-Undan — proposed, not built

Santos with Eni. Capture at Darwin LNG, then transport 500 to 800 km of pipeline into the Bayu-Undan field for injection beneath the seabed — in Timor-Leste waters, across a maritime boundary. Intended to be more than twice the size of Gorgon, on more complex engineering. Gorgon’s pipeline is 7 km. Project economics are not published, and liability for a leak is unresolved between the two countries.

Rushy Lagoon — trees on a farm

Rushy Lagoon and East Wyambi, 21,744 hectares of dairy, beef and cropping country near Cape Portland in north-east Tasmania — the state’s largest farm. Sold to the Tasmania Natural Asset Trust, managed by Gresham House, Britain’s largest forestry asset manager, with Aviva Investors.

The $8.8 million grant was received in May, months before the Treasurer approved the sale. Forecast output: 3.2 million ACCUs, 5 million tonnes of timber, 12 million pine trees, and 190 jobs across the project’s life. The trust will also earn biodiversity certificates under the Nature Repair Market.

Three further facts.

• That single estate covers more than half the total area established by the Commonwealth’s entire four-year plantation grant programme, which closed in May at about 40,000 hectares nationally.
• Australia’s plantation estate is at a 20-year low — 1.973 million hectares in 2014–15 down to 1.709 million in 2024–25.
• The Commonwealth scrapped the water rule, which had kept plantation projects in high-rainfall regions out of the ACCU scheme.

7. The programme spend

Approximately $22 billion was earmarked for renewable energy in the 2024–25 Budget, of which ARENA received the largest share. The Capacity Investment Scheme underwrites 32 GW of new capacity by 2030 rather than granting a fixed sum. Figures are commitments, not outlays.

8. Where the money ends up

Set two decisions side by side, both from the same period.

The 2026–27 Budget returned $1.3 billion in uncommitted funding from clean energy manufacturing — $1 billion from Hydrogen Headstart and $300 million combined from Solar Sunshot and Battery Breakthrough — as part of $63.8 billion in savings and reprioritisations.

In the same period the Clean Energy Finance Corporation committed $69 million to converting Tasmania’s largest farm to pine, alongside an $8.8 million establishment grant.

And the CEFC’s largest single investment ever is $3.8 billion to Marinus Link stage 1 — the transmission project running 250 per cent over its original budget.

Taken together: funding was withdrawn from building things, committed to producing credits, and concentrated in a transmission project that is not being built to budget. In the Rushy Lagoon case the money went to an overseas fund manager, and what it produces is a stream of credits that lets emissions continue at a facility somewhere else.

9. What earns a credit, and what does not

An ACCU is issued for a tonne of CO₂ that can be measured against a starting point. Something has to be happening that a meter or a survey can count: gas pumped underground, or trees standing where there were none.

Infrastructure that removes the need to emit generates nothing, because there is no cap or starting point against which to measure a tonne that was never produced. A rail line that takes a million tonnes of freight off diesel earns no credit. A transmission line that lets a coal unit run fewer hours earns no credit. A charging network that turns over a vehicle fleet earns no credit.

The system pays for measured reductions and pays nothing for capacity that removes the need to burn fuel. Money follows the payment.

10. Transport — and what the scheme reaches

Transport emitted 90 Mt CO₂-e in 2022, about 21 per cent of Australia’s emissions. On-road vehicles were 85 per cent of that. Transport emissions have grown faster than any other sector since 1990.

Climate Change Authority, Transport Sector Pathways Review (2024), for 2022; rail from the National Greenhouse Gas Inventory. Subsector figures do not sum exactly to the totals because of rounding. Measured on a full fuel cycle basis — counting the energy used to produce and deliver the fuel as well as burn it — road transport alone reached 106 Mt in 2022–23, a record. Domestic aviation nearly halved during the pandemic, from 11.1 Mt in 2018–19 to 6.0 Mt in 2020–21, and is now setting new highs. International aviation and shipping are excluded from national accounts entirely.

What the scheme covers, and what it does not

The Safeguard Mechanism does cover transport. Its 219 facilities span mining, manufacturing, transport, oil, gas and waste, so an operator whose own emissions pass 100,000 tonnes a year is inside the scheme — which takes in the large airlines and the major rail freight operators.

What it does not reach is everything below that line, and that is where the tonnage sits.

• Roughly 19 million light vehicles. No private owner emits 100,000 tonnes. The largest single source in the sector is composed entirely of units too small to be regulated by this instrument.
• Most road freight. Australia’s trucking industry is largely small operators, and few cross the threshold as a single business.
• Fuel itself is not the covered thing. The scheme measures a facility’s own emissions. It does not charge the sale of the diesel or petrol that produces 90 Mt when burned.

Why grid policy does not reach it either

A vehicle burning imported diesel is unaffected by the fuel mix of the grid it drives past. Renewable generation reduces emissions from electricity; it does not reduce emissions from combustion in a vehicle that is not connected to the grid.

Rail is the exception, and it runs the other way. Electrified rail is already the lowest-emission mode per unit moved — about 41 grams of CO₂ per passenger kilometre against 171 for a car — and it is one of the few transport modes that does get cleaner as the grid does, because it draws its energy from the grid. Australia’s freight task is instead concentrated on road, which raises emissions for the same tonnage by a factor of about three.

So the largest source the scheme does not reach is also the cheapest one to reduce, because it responds to running cost rather than to regulation. That is the subject of Part Four.

11. How long the storage lasts

The two kinds of storage carry different risks, and the scheme treats a tonne from each as the same.

• Storing CO₂ underground lasts, where it works. Gorgon shows it does not always work, and that the consequence of failure is a penalty in credits rather than the emissions not occurring.
• Carbon in trees is held in the standing timber. Fire, disease, drought or harvest releases it again, and the credit runs for a few decades against fossil carbon released for good. Rushy Lagoon carries a 25-year horizon on land that is also intended to produce 5 million tonnes of timber.

A credit handed in for compliance is cancelled the same way in both cases.

12. Sending the emissions offshore

The risk is named in the professional advice written for the scheme. PwC puts it plainly: the critical risk is carbon leakage, where Australian facilities shut down and move offshore to areas with a lower carbon price, in countries that often have higher emissions intensity, which results in higher global emissions — an unintended consequence of the Safeguard Mechanism.

The refineries are the clearest example. A tightening cap, and so a rising carbon cost, on Lytton and Geelong, in a country importing 80 to 90 per cent of its refined fuel, points one way: the fuel gets refined somewhere else and shipped here. Australia’s reported emissions fall, the emissions themselves do not, and the country imports more of its fuel than before.

The slower-cut relief exists for exactly this risk, but a facility only qualifies once the cost has passed 3 per cent of its operating profit, and it lasts three years.

13. Price, and the fleet

At 30c/kWh an electric vehicle is about three times cheaper to run than petrol. At 10c/kWh it is 8.9 times cheaper — about $270 a year against $2,400 for the same driving. At three times cheaper, early adopters switch. At nearly nine times, fleets do.

The emissions arithmetic holds even on the current generation mix. An electric vehicle charged on a coal-heavy grid emits about 144 grams of CO₂ a kilometre against the Australian petrol fleet average of 191 grams — a quarter better on coal, because an electric drivetrain converts energy to motion above 90 per cent efficiency against 25 to 30 per cent for combustion. On the current grid it is 76 grams, and it improves every year the grid improves, with no new purchase.

China’s new-vehicle share passed 60 per cent in 2026 while purchase subsidies were being withdrawn, which indicates buyers were responding to running cost rather than to the subsidy. No credit was issued for any of it.

14. The build

The MMA programme builds capacity rather than producing credits. At maturity it comprises approximately 1,000 GW of desert solar firmed by 40 GW of pumped hydro, connected by an HVDC backbone carried inside the same corridor that carries freight rail, water, gas and fibre — so the cables are an added cost on a structure being built anyway, rather than a separate line needing its own route and its own land access.

Generation is sited in the interior, where the resource runs at 2,400 to 2,800 kWh per square metre a year against 1,600 to 1,800 in the coastal zones now being developed, on Crown land, with no competing agricultural use. No farmland is converted, and no credit is claimed for any of it.

Freight moves to electric rail, which is three to four times more efficient per tonne-kilometre than diesel rail and roughly ten times more efficient than road. Surplus generation is exported by subsea cable into Asia-Pacific grids, so coal plants there run fewer hours.

15. The ledger

At programme maturity: approximately 275 to 325 Mt a year retired domestically — about 140 from the grid, 80 to 100 from transport, 20 to 30 each from industrial process heat and from mining and agricultural diesel, and 15 to 25 from a billion trees planted on aqueduct water rather than on farmland. A further 455 to 585 Mt a year is displaced overseas, because cheap Australian electricity arriving in a regional grid is used ahead of that grid’s own coal, so those coal plants run fewer hours.

The residual is named rather than offset: 145 to 195 Mt remains at 2050 — gas leaking from old wells and mines, agricultural emissions outside the programme, and hard-to-abate industrial chemistry. That is about 60 per cent of the legislated path delivered by things that get built, with the remaining 40 per cent stated as an engineering problem still to be solved.

16. MMA’s position

Everything above is the record. What follows is Modern Movement Australia’s position on it.

The scheme is an accounting instrument, not a build programme

Over two compliance periods, covered facilities handed in 21.9 million credits at a cost of roughly $760 to $800 million. Money moved. Certificates were issued and cancelled. Nothing was built that reduces the need to burn fuel.

That is not a criticism of the facilities or of the Regulator, both of which are doing what the legislation requires. It is a statement about what the legislation asks for. The scheme measures tonnes against a cap and settles the difference in units. It has no mechanism to fund a transmission line, a rail corridor or a generator, because none of those produces a measurable tonne against a baseline.

Its reach does not match the problem

• It covers 31 per cent of domestic emissions.
• It reaches almost none of the 90 Mt from transport, because 19 million light vehicles and most road freight sit below the 100,000-tonne threshold.
• It says nothing about the 1,152 Mt leaving in ships, which is roughly three times the domestic account.

What it has funded

One carbon capture project that works at under US$30 a tonne. One that captures 30 per cent after $3.2 billion and a $60 million public contribution with no penalty attached to failure. And $77.8 million of public money into a $142 million purchase of Tasmania’s largest farm by an overseas fund manager, to plant pine for credits, at a time when the national plantation estate is at a twenty-year low.

In the same period the Commonwealth returned $1.3 billion of uncommitted clean energy manufacturing funding, and its financing arm’s largest single investment remains $3.8 billion in a transmission project running 250 per cent over budget.

And it points the wrong way on production

The risk is named in the professional advice written for the scheme itself: facilities close, production moves to a jurisdiction with a lower carbon price and often a higher emissions intensity, and global emissions rise. The last two Australian refineries carry a tightening cap in a country that imports 80 to 90 per cent of its refined fuel.

The position

MMA’s position is that the Safeguard Mechanism and the credit scheme attached to it should be wound up, and the money and administrative effort redirected into building the energy system.

The model is the one China used and the memo has already set out. Government plans and builds the generation, the transmission and the freight corridors over decades. The build lowers the price of electricity. The price does the switching — households, fleets and industry move because the arithmetic favours it, not because they are paid to, mandated to, or charged for not doing so. China’s vehicle share passed 60 per cent while purchase subsidies were being withdrawn.

Three consequences follow from running it that way.

• It reaches what the scheme cannot. Cheap electricity reaches every vehicle, every household and every business, including all the ones below 100,000 tonnes.
• It leaves capacity behind. A credit is cancelled on surrender. A transmission line, a rail corridor and a generator are still there in fifty years.
• It does not push production offshore. Lower input costs keep refining, smelting and manufacturing here rather than exporting them to a dirtier grid.

Emissions fall as a consequence of that build, and the ledger at section 15 sets out by how much. The argument is not that the emissions do not matter. It is that a scheme which issues certificates is not the instrument that reduces them, and Australia has now spent two compliance periods and most of a decade demonstrating it.

17. Summary

Australia’s carbon system sets a falling limit on 219 facilities holding 31 per cent of national emissions, and lets them meet it by buying units. It reaches almost none of the 90 million tonnes a year from transport, and it does not touch the 1.15 billion tonnes leaving in ships — three times the domestic account, and 80 per cent of the country’s total fossil CO₂.

The units come from carbon capture at gas plants, where one project works at under US$30 a tonne and the largest captures 30 per cent after $3.2 billion, and from trees planted on farmland — in the largest recent case, $77.8 million of public money into a $142 million purchase by a foreign asset manager, on the state’s biggest farm, at a moment when the national plantation estate is at a 20-year low.

In the same period the Commonwealth returned $1.3 billion of uncommitted clean energy manufacturing funding, and its financing arm’s largest investment remains $3.8 billion in a transmission project 250 per cent over budget.

The purpose of a carbon system is to change what a country builds. This one pays for credits. The things that would remove the need to burn fuel — cheap electricity, an electric vehicle fleet, freight on rail, generation built where the sun is — earn no credits, and so receive no money from it.

MMA’s position is that it should be wound up and replaced with a build programme on the model set out in Part Four: government builds the system, the price of electricity falls, and the switching happens on economics rather than on subsidies, mandates or accounting.

18. Sources

1. DCCEEW, Safeguard Mechanism overview — coverage above 100,000 t CO₂-e; 219 facilities in 2023–24 representing about 31 per cent of national emissions; reformed scheme commencing 1 July 2023; baselines as production multiplied by an emissions-intensity value; the 4.9 per cent default annual decline rate to 2030; trade-exposed baseline-adjusted determinations. Cited in sections 1, 4 and 5.
2. King & Wood Mallesons and PwC Australia, Safeguard Mechanism guidance — the post-2030 proposed decline rate of 3.285 per cent; TEBA minimum decline rates of 1 per cent for manufacturing and 2 per cent for other sectors, available once the scheme cost exceeds 3 per cent of EBIT, for three years; the fixed ACCU purchase price for Safeguard facilities of $75 in 2023–24 rising CPI plus 2 per cent; banking and borrowing provisions; and the statement that the critical risk is carbon leakage, where facilities close and move offshore to jurisdictions with lower carbon prices and higher emissions intensity, resulting in higher global emissions as an unintended consequence of the Safeguard Mechanism. Cited in sections 1, 4, 5 and 12.
3. International Carbon Action Partnership, Australian Safeguard Mechanism — Safeguard Mechanism Credits, banking to 2030, borrowing up to 10 per cent of baseline, and the 2026–27 scheme review. Carbon Market Institute — the decline rate exceeding 20 per cent cumulatively within five years, and the estimate of 205 Mt CO₂-e of reductions to 2030 relative to a no-reform projection. Cited in sections 1 and 4.
4. Clean Energy Regulator, 2024–25 Safeguard Mechanism data insights and Quarterly Carbon Market Report, December quarter 2024 — 139 facilities surrendering 10.8 million ACCUs and 2.6 million SMCs, 13.4 million units in total, for the 2024–25 compliance period; 153 of 215 covered facilities above their baselines in 2023–24 by an aggregate 10.7 Mt before flexibility measures; 60 facilities below their baselines and eligible for approximately 9.2 million SMCs; over 8 million SMCs issued to 57 facilities as at 18 February 2025; holdings of just under 50 million ACCUs in the national registry at the end of 2024 with Safeguard and Safeguard-related entities holding around 60 per cent; the definition of an SMC and of a facility’s net emissions number; and deemed surrender of ACCUs purchased by government under a carbon abatement contract. S&P Global Platts — 142 facilities incurring a total liability of 9.2 Mt in 2023–24 and surrendering 7.1 million ACCUs and 1.4 million SMCs, with ACCUs 84.5 per cent of units surrendered and a 479 per cent increase on the 1.2 million surrendered the previous year; generic ACCUs assessed at A$33.75 a tonne on 15 April 2025; and SMCs last traded on 21 March 2025 at A$31.25, a A$1.80 discount to generic ACCUs. International Carbon Action Partnership — the maximum civil penalty of one penalty unit per tonne of excess emissions a year, a penalty unit being A$330 as at November 2024, with infringement notices charged at one third of the maximum. Cited in sections 1 and 5.
5. Institute of Public Affairs, The $165.5 million carbon tax on our last two refineries (April 2026) — the Ampol Lytton and Viva Energy Geelong refineries as the last two in Australia and both Safeguard-covered; the IPA’s calculated Safeguard cost of up to $79.9 million for Lytton, $85.6 million for Geelong and $165.5 million combined to 2029–30; and its estimate of $7.1 to $11.7 billion across all covered facilities. Stated as the IPA’s calculation. Cited in section 5.
6. Santos and Beach Energy, Moomba CCS — joint venture interests of approximately 67 and 33 per cent; capture of reservoir CO₂ from the Moomba gas plant, dehydration, compression, approximately 50 km of pipeline and injection into depleted fields; Phase 1 design capacity up to 1.7 Mt a year; lifecycle cost under US$30 a tonne; first injection 30 September 2024; approximately 2.3 million tonnes stored by mid-2026; more than 1.19 million ACCUs issued for injections to 30 September 2025, including the first issuance under the CCS method; and monitoring and verification under a plan approved by South Australian authorities. business.gov.au — the A$15 million grant from the Carbon Capture Use and Storage Development Fund against a project of approximately A$210 million. Clean Energy Regulator — the 25-year crediting period and the add-back of ACCUs to a Safeguard facility’s net emissions to prevent double counting. Cited in sections 6 and 16.
7. IEEFA, Gorgon CCS underperformance hits new low in 2023-24 — approval on condition of capturing 80 per cent of CO₂ removed from the reservoir on a five-year rolling average from July 2016; injection beginning August 2019, three years late; 44 per cent captured between FY2019–20 and FY2023–24; 33 per cent in FY2021–22, 34 per cent in FY2022–23 and 30 per cent in FY2023–24; design capacity of 4 Mt a year; more than A$3.2 billion spent by Chevron, ExxonMobil and Shell; operation at about one third of design capacity; the 7 km injection pipeline into the Dupuy formation; and the finding that of 13 CCS projects reviewed worldwide, three achieved their targets. Geoengineering Monitor — the five-year target missed by approximately 7.4 Mt and penalties in carbon credits worth approximately A$180 million; the injection system found clogged with sand in January 2021; and A$250 million made available for CCS and CCUS projects in September 2021. The Australia Institute, quoted in The Guardian — the $60 million provided to Chevron for CCS with no penalties attached for failure. Cited in section 6.
8. IEEFA, Bayu-Undan: A test bed for carbon trading or a distraction? — capture at Darwin LNG with transport of 500 to 800 km for injection at the Bayu-Undan field in Timor-Leste waters, across a maritime boundary; intended scale more than twice that of Gorgon CCS with more complex engineering; project economics not published; and unresolved liability arrangements between Australia and Timor-Leste. Cited in section 6.
9. Reporting on the Rushy Lagoon sale — The Examiner, The Land, Tasmanian Country, Wood Central, Pulse Tasmania and Farm Weekly: Rushy Lagoon and East Wyambi totalling 21,744 hectares near Cape Portland, Tasmania’s largest farm, sold to the Tasmania Natural Asset Trust managed by Gresham House with Aviva Investors; $69 million from the Clean Energy Finance Corporation and $73 million from the shareholders in a $142 million project; an additional $8.8 million Support Plantation Establishment Program grant received in May, before the sale was approved; approval by the Treasurer on Foreign Investment Review Board advice; forecast output of 3.2 million ACCUs, 5 million tonnes of timber, 12 million pine trees and 190 jobs across the project life; biodiversity certificates under the Nature Repair Market; the $73 million Support Plantation Establishment Program closing in May at approximately 40,000 hectares nationally, with this single estate covering more than half that area; the plantation estate falling from 1.973 million hectares in 2014–15 to 1.709 million in 2024–25, a 20-year low; and the removal of the water rule which had excluded high-rainfall plantation projects from the ACCU scheme. Cited in sections 6, 8 and 16.
10. ARENA, Record funding for ARENA; DCCEEW, Powering Australia; Clean Energy Finance Corporation, Rewiring the Nation Fund; Centre for Independent Studies, Counting the Cost; Norton Rose Fulbright, Roll on the throttle; and pv-tech reporting on the 2026–27 Budget — approximately $22 billion earmarked for renewable energy in the 2024–25 Budget; the $7.1 billion ARENA package and $1.5 billion baseline over seven years; $2 billion per round for Hydrogen Headstart; the $6.7 billion hydrogen production tax incentive at $2 per kilogram from 2027–28; $1.7 billion for the Future Made in Australia Innovation Fund; $1 billion for Solar Sunshot; $400 million for the Powering the Regions Industrial Transformation Stream; $20 billion of Rewiring the Nation finance and the $19 billion CEFC Rewiring the Nation Fund; $13.7 billion of CEFC commitments over the decade to 2022–23; the Capacity Investment Scheme underwriting 32 GW by 2030; the CEFC’s $3.8 billion commitment to Marinus Link stage 1 as its largest ever investment; and the return of $1.3 billion in uncommitted funding in the 2026–27 Budget, comprising $1 billion from Hydrogen Headstart and $300 million from Solar Sunshot and Battery Breakthrough, within $63.8 billion of savings and reprioritisations. Cited in sections 1, 3, 7 and 8.
11. Climate Change Authority, Transport Sector Pathways Review (September 2024) — transport emissions of 90 Mt CO₂-e in 2022, 21 per cent of Australia’s total, with on-road vehicles at 85 per cent of the sector; light vehicles 60 per cent of transport emissions; heavy vehicles 24 per cent, comprising articulated trucks 11.7 Mt, rigid trucks 8.7 Mt and buses 1.6 Mt; domestic aviation and shipping 9 per cent; approximately 19 million cars in the light vehicle fleet with electric vehicles under 1 per cent of it; and no direct abatement options identified for domestic aviation and shipping. Bureau of Infrastructure and Transport Research Economics, Australian Infrastructure and Transport Statistics Yearbook — road vehicles at 84 per cent of full fuel cycle transport emissions in 2022–23 and aviation at 9 per cent; domestic road vehicle full fuel cycle emissions reaching a record 106,000 Gg CO₂-e in 2022–23; domestic aviation falling from 11,116 Gg in 2018–19 to 5,955 Gg in 2020–21. National Greenhouse Gas Inventory, via The Conversation — railways at approximately 1.5 Mt; 41 grams CO₂ per passenger kilometre for domestic rail against 171 grams for a passenger car; and road freight dependence raising emissions by a factor of three against rail or sea. DCCEEW, Safeguard Mechanism overview — covered facilities spanning mining, manufacturing, transport, oil, gas and waste. Cited in sections 1, 10 and 16.
12. Modern Movement Australia, Three Plans, One Grid — interior solar resource of 2,400 to 2,800 kWh per square metre a year against 1,600 to 1,800 in the coastal renewable energy zones; transmission costs 25 to 55 per cent higher in real terms than 2022 with delivery the binding constraint; and the 82 per cent renewables by 2030 target. Modern Movement Australia, The Coal Paradox and the EV Transition — 144 grams CO₂ per kilometre for an electric vehicle on a coal-heavy grid against an Australian petrol fleet average of 191 grams and 76 grams on the current grid; drivetrain efficiency above 90 per cent against 25 to 30 per cent for combustion; light and heavy vehicle emissions on the basis used in that memo; the running-cost ladder from three times at 30c/kWh to 8.9 times at 10c/kWh, being approximately $270 a year against $2,400; and electric rail three to four times more efficient than diesel rail and roughly ten times more efficient than road freight. Cited in sections 1, 3, 10, 13 and 14.
13. Climate Analytics, Australia’s global fossil fuel carbon footprint (August 2024), commissioned by the Australian Human Rights Institute, calculated from the Australian Energy Update, Resources and Energy Quarterly and Australia’s National Greenhouse Accounts — 1.15 billion tonnes of CO₂ from Australian fossil fuel exports in 2023, comprising 443 Mt thermal coal, 430 Mt metallurgical coal, 231 Mt LNG and 48 Mt oil; a further 46 Mt emitted domestically extracting, processing and distributing exports, for approximately 1.2 Gt attributable in total; 1.7 billion tonnes CO₂-e counting all greenhouse gases; cumulative export CO₂ of 30 billion tonnes 1961 to 2023, rising by approximately 15 billion tonnes to 2035; Australia at approximately 4.5 per cent of global fossil CO₂ with about 80 per cent from exports; third largest fossil fuel exporter by energy and second by greenhouse gas footprint; 52 per cent of world metallurgical coal exports and 17 per cent of thermal coal exports; LNG export capacity rising from 25.5 to 62 million tonnes a year between 2012 and 2022; 78 per cent of LNG, metallurgical and thermal coal bought by Japan, China, South Korea and India; and exports consuming approximately 7.5 per cent of the remaining 200 Gt carbon budget between 2024 and 2035, or 9.1 per cent including domestic emissions. The Conversation, ‘Australia could become the world’s first net-zero exporter of fossil fuels’ (2026) — approximately 900 million tonnes of iron ore exported annually, processed overseas into about 560 million tonnes of iron. Cited in sections 1, 2 and 16.
14. Modern Movement Australia, The Net Zero Path to 2050 Target — Department of Climate Change projections missing the legislated 2030 target by 25 to 68 Mt and the 2035 target by 86 to 200 Mt; approximately 1,000 GW of desert solar and 40 GW of Alice Hub pumped hydro; the domestic ledger of approximately 275 to 325 Mt a year and its components; international displacement of approximately 455 to 585 Mt a year by merit-order dispatch; the residual of approximately 145 to 195 Mt at 2050 stated rather than offset; and the HumeLink, Marinus Link and Project EnergyConnect cost overruns of 190, 250 and 84 per cent. Cited in sections 1, 2, 3, 8 and 15.
15. IEEFA and Michael West Media — Moomba reducing its adjacent gas plant’s emissions by more than 50 per cent, and the 55 km Moomba pipeline against Gorgon’s 7 km. Core Markets — ACCU spot price of approximately A$38 a tonne in late July 2026. Cited in sections 1 and 6.