“The 2026 Iran war has revealed the costs of Australia being a fuel importer. We must restore our sovereign capability, and the first cab off the rank should be to exempt our remaining refineries from the Safeguard Mechanism,” said Saxon Davidson, Research Fellow at the Institute of Public Affairs.
The Safeguard Mechanism is the federal government’s marquee net zero policy that mandates large projects and facilities to reduce their emissions or purchase carbon credits to continue to operate.
The last two oil refineries in Australia – the Ampol Lytton Refinery in Brisbane and the Viva Energy Geelong Refinery – are currently regulated by the Safeguard Mechanism, which will, in the long term, curtail Australian fuel production. Previous IPA research found that facilities will incur a safeguard carbon tax cost between $7.1 billion and $11.7 billion by 2029-30. Using the same methodology, the IPA calculates that:
- The Lytton Oil Refinery faces a safeguard carbon tax cost of up to $79.9 million to 2029-30;
- The Geelong Oil Refinery faces a safeguard carbon tax cost of up to $85.6 million to 2029-30;
- This combines to a safeguard carbon tax cost of up to $165.5 million to 2029-30.
“The Safeguard Mechanism is a danger to our sovereign capability, as almost nine-in-ten of all the facilities targeted are in critical industries we need to survive as a self-reliant nation, such as mining and manufacturing.” Mr Davidson said.
While the Safeguard Mechanism is a direct burden on our sovereign capability, the underlying policy of net zero is the catalyst for Australia’s decline.
“Fuel is the headline vulnerability we are facing, however the policy of net zero emissions by 2050 is a direct threat to our energy security and manufacturing sectors.”
“Replacing reliable and cheap energy such as coal and gas with intermittent and expensive alternatives such as wind and solar means we won’t be able to manufacture products ourselves. Under the policy of net zero, we are on course to become even more dependent on imports.”
“We must use the lessons of the current fuel crisis to ensure our future as a self-reliant nation. This means making Australia a country that takes advantage of our natural resources and services the needs of our country first, and abandoning emission reduction targets set by global conferences.” Mr Davidson said.
To download the IPA’s research on the Safeguard Mechanism click here.
