The Safeguard Mechanism requires Australia’s largest greenhouse gas emitters to keep their emissions within set limits, in line with national climate targets: a 43% reduction from 2005 levels by 2030 and achieving net zero emissions by 2050.
If a facility emits more than its assigned baseline, it must take action to address the excess emissions. Each year, the Clean Energy Regulator assesses the facility’s actual emissions against its baseline for the relevant reporting period.
Facilities that go over their emissions baseline are required to address the excess. Each year, a safeguard facility’s actual emissions are assessed against its baseline for the relevant monitoring period.
Most facilities regulated under the Safeguard Mechanism are assigned a default baseline of 100,000 tonnes of CO₂-e per year, unless another baseline category applies. There are three main types of baselines:
Note: Facilities that qualify as trade-exposed baseline-adjusted (TEBA) may be eligible for lower annual decline rates, as low as 1%.
Applies to most industrial facilities and is based on:
Used for waste management facilities and is calculated using:
Applies to electricity generators connected to major Australian grids:
This collective baseline is fixed at 198 million tCO₂-e annually.
Facilities that exceed or expect to exceed their baselines can manage excess emissions by:
Yes. Emitters may apply for an exemption if a facility exceeds its baseline due to a natural disaster or criminal activity, provided they can demonstrate:
Exemptions will not be granted for indirect consequences, such as operational changes in response to market shifts caused by a disaster.
Facilities that emit below their baseline may be eligible to earn Safeguard Mechanism Credit Units (SMCs). These credits can:
To earn and trade SMCs, the responsible emitter must have an account with the Australian National Registry of Emissions Units (ANREU).
Emission Intensity: The amount of emissions produced per unit of output.
Safeguard Mechanism Credit Units (SMCs): Tradable credits representing one tonne of CO₂-e emissions below a facility’s baseline.
Australian Carbon Credit Units (ACCUs): Tradable units issued by the Australian Government representing one tonne of CO₂-e that has been avoided, reduced, or removed through eligible projects.
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