Australia should radically expand Labor’s planned heavy industrial, resources and manufacturing emissions reduction policy by including electricity and transport, and slashing the threshold for big polluters from 100,000 tonnes to 25,000 tonnes, more than doubling the number of companies captured.

Warning that the Albanese government’s approach of incremental changes to the so-called safeguard mechanism may not be enough to avoid exporters being punished by cross-border mechanisms in places such as Europe, the Productivity Commission said the policy should be made as broad as possible to spur cost-effective emissions cuts as the country strives for net-zero by 2050.