Rewarding companies to do nothing is undermining Australia’s climate cuts

July 31, 2026 — 1:30pm

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Imagine trying to bail out a boat with a teaspoon while adding water by the bucket load.

Welcome to Australian climate policy.

The federal government is spending several billion dollars a year undermining its flagship emissions scheme.

That’s because the amount it gives back to the largest polluters in fuel tax credits vastly exceeds the payments the same companies have to make under the Safeguard Mechanism to drive down industrial pollution.

The top 18 recipients of the fuel tax credits collectively received a $3.3 billion rebate for the diesel they used over 2024-25. Under the Safeguard Mechanism, they paid just $150 million. That’s a ratio of 22 to one.

The analysis is from Climate Integrity, a not-for-profit group focused on corporate accountability, which commissioned Tim Baxter from NARU Research to look at the latest figures from Climate Energy Finance.

We all pay fuel excise when we buy petrol or diesel, but companies that use diesel off-road get that tax refunded. Whether you call it a subsidy as its opponents do, or a rebate as the business lobby does, the cost to taxpayers listed in the budget papers was $8.8 billion last year.

The Safeguard Mechanism caps how much the biggest polluters can emit, and shrinks it every year. In principle, they abate first, then buy Australian Carbon Credit Units (ACCUs) to cover the shortfall.

BHP received $622 million a year in fuel tax credits and had Safeguard Mechanism costs of $19 million, a ratio of........

© WA Today