Safeguard Mechanism credit units (SMCs) are tradeable credits. They incentivise safeguard facilities to reduce their emissions beyond their baselines.
Safeguard facilities that earn SMCs can:
- sell them to other safeguard facilities
- surrender them to stay within their baseline
- retain them for future use until 2030.
An SMC represents one tonne of carbon dioxide equivalent (tCO2-e) emissions below a facility's baseline.
SMCs are generated within a regulated emissions limit which restricts the overall emissions of all safeguard facilities.
SMC eligibility
You may apply for SMCs if your facility has a standard baseline and either your:
- emissions are below your baseline in a particular financial year
- net emissions are below your net baseline at the end of a multi-year monitoring period (MYMP).
If your facility's emissions are below the safeguard threshold, you may also be eligible for SMCs.
We won't issue SMCs if your facility has a borrowing adjustment determination in the relevant financial year.
Applying for SMCs
You should apply for SMCs as soon as possible after submitting the facility’s emissions and energy report for that financial year. We will issue SMCs in late January following the relevant reporting period.
You must have an Australian National Registry of Emissions Unit (ANREU) account to receive SMCs.
We may revoke SMCs issued:
- on false or misleading information
- as a result of fraudulent conduct.
When to apply
Facilities will be able to apply for SMCs in late 2024.
Trading SMCs
You can buy, sell and surrender SMCs through ANREU.
SMCs aren't offsets. They allow facilities with lower emissions reduction costs to sell their SMCs to facilities with higher costs.
When to trade
SMCs will be available to buy, sell and surrender from early 2025.