The Australian Aluminium Council (the Council) welcomes the opportunity to make a submission to the Climate Change Authority’s Annual Progress Advice Consultation Paper (the Paper) which includes how the Authority will assess the Safeguard Mechanism.
The 2026/27 Review of the Safeguard Mechanism is understood to be an opportunity to examine its operation, but it is important to recognise that it is based on only two years of publicly available data. Industry is making long term investment decisions to decarbonise, and policy certainty is an important way to reduce the risk associated with this decision making process – frequent policy change increases risk and undermines this investment. Therefore, the Council is supportive of the approach of that this review is not intended to instigate major structural changes but provides early indications of long term certainty and coverage beyond 2030.
The single biggest opportunity to decarbonise the energy intensive, vertically integrated Australian aluminium industry is through the combination of electrification or conversion to low emissions fuels for existing industrial processes and decarbonisation of the national electricity supply. Particularly in the aluminium industry, many investments are rightfully focussed on Scope 2 reductions, however there is currently no recognition of the reductions this is delivering to Australia’s national accounts. The Council does not support the inclusion of electricity in the Safeguard Mechanism, believing that the Safeguard Mechanism not the best policy for addressing any concerns about this sector’s emissions.
As recognised in the Carbon Leakage Review, over the longer term, the emissions intensive trade exposed (EITE) provisions under Safeguard Mechanism are unlikely to be sufficient to prevent carbon leakage and this will require further consideration and data beyond this year’s review. This calibration must be undertaken against competitor nations in each sector and is key to ensuring Australian industry is not disadvantaged while recognising the very dynamic global and geopolitical nature of these risks.
Read full submission here Aluminium CCA Annual Progress Advice inc Safeguard
