Background to the policy review
The Australian Government has committed to review the Safeguard Mechanism in 2026-27 to ensure that the scheme is appropriately calibrated and delivering emissions reductions in line with Australia’s legislated emissions targets.
The review will take place three years after the implementation of Safeguard Mechanism reforms, providing empirical data to evaluate the effectiveness of the policy, true-up baselines to 2030, and ensure that the operation of the scheme after 2030 can support long-term investment in on-site emissions reduction.
While formally positioned as a re-calibration exercise, the review’s breadth, interaction with parallel policy processes, and focus on post-2030 policy settings mean that outcomes will drive the long-term shape of Australia’s carbon market, and future price formation. As a result, the 2026-27 policy review is a key watch for stakeholders, and gives rise to a number of potential structural risks for market development.
In this market briefing, we present our expectations for the 2026–27 Safeguard Mechanism policy review, including the scope and timeline, and the key watchpoints that we expect to receive the closest attention.
What is the scope of the 2026-27 policy review?
The scope of the 2026-27 Safeguard Mechanism policy review was set back in 2023,
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