We set baselines for safeguard facilities. Each year, a safeguard facility’s reported covered emissions are compared to the facility’s baseline for that monitoring period.
The Safeguard Mechanism requires facilities to keep their net emissions at or below their baseline. If a facility’s net emissions are above its baseline, they need to manage any excess emissions.
Types of baselines
A default baseline of 100,000 tonnes of carbon dioxide equivalent emissions (tCO2-e) per year applies to all facilities covered by the Safeguard Mechanism unless another type of baseline is relevant.
There are 3 main types of safeguard facility baselines:
- standard
- landfill
- sectoral.
Both standard and landfill baselines reduce each year in line with Australia's climate targets. The baseline for shale gas facilities is set to ‘zero’ tCO2-e per year.
The sectoral baseline is set at 198 million tonnes of tCO2-e per year and applies collectively to all grid-collected electricity generators.
Baseline decline rate
Standard and landfill facility baselines decline by 4.9% each financial year through to 30 June 2030. This is unless the facility has been declared a trade exposed baseline-adjusted (TEBA) facility. TEBA facility decline rates may be as low as 1%.
The decline rate is applied to baselines using a scaling factor known as the ‘emission reduction contribution’, which represents the total baseline decrease since 1 July 2023.
| Financial year | Decline rate | Emission reduction contribution |
|---|---|---|
| 2023–24 | 4.9% | 95.1% |
| 2024–25 | 4.9% | 90.2% |
| 2025–26 | 4.9% | 85.3% |
| 2026–27 | 4.9% | 80.4% |
| 2027–28 | 4.9% | 75.5% |
| 2028–29 | 4.9% | 70.6% |
| 2029–30 | 4.9% | 65.7% |
| 2030–ongoing | 3.285% | 62.4% |
Note: * The decline rate indicated in the above table for 2030 onwards is indicative. From 1 July 2030 decline rates will be set in 5-year blocks by the Department of Climate Change, Energy the Environment and Water. Read more in the fact sheet on the department’s website.
Standard baseline
Standard baselines are determined based on the amount of product each facility produces in a financial year.
Standard baselines are calculated at the end of each year using the facility’s:
- production quantities
- emissions-intensity values for each product it produces
- decline rate.
Production variables
Standard baseline facilities must:
- identify each product it produces
- measure the quantity of product it produces each financial year.
Schedule 1 of the Safeguard Rule defines a range of products produced at safeguard facilities (production variables).
The Department of Climate Change, Energy, the Environment and Water's Safeguard Mechanism document can help you identify and measure production quantities.
Emissions intensity
The emissions intensity for a product is the amount of emissions produced per unit of production.
The emissions intensity value for each production variable a facility produces depends on whether the facility or its production variables are new or existing as of 1 July 2023:
- Existing products produced by existing facilities covered by an emissions intensity determination transition from facility-specific emissions intensity values to industry-average values each financial year through to 30 June 2030.
- New products produced between 1 July 2022 to 30 June 2023 by existing facilities covered by an emissions intensity determination are subject to the ‘industry-average’ values that were in force during the 2022–23 financial year.
- New products produced by existing facilities, as well as all products produced by new facilities, after 1 July 2023 are subject to ‘best-practice’ emissions-intensity values.
If an existing facility does not have an emissions intensity determination for a financial year, its baseline for that financial year will be calculated using the best-practice emissions intensity value for all relevant historical production variables at the facility.
If a best-practice emissions intensity value has not been legislated for a historical production variable produced at the facility, that historical production variable will be given an emissions intensity value of zero.
If a baseline is calculated to be less than 100,000tCO2-e, the minimum baseline rule will take effect and the annual compliance baseline would be rounded up to 100,000tCO2-e.
Exceptions
All facilities with the ‘reservoir carbon dioxide from new gas fields’ production variable, regardless of whether the facility is existing or new, receive a ‘zero’ emissions intensity for the production variable.
The facility-specific emissions-intensity for each product produced at a facility will be published on the CER’s website.
Transitioning emissions intensity
The emissions-intensity of existing production variables at existing facilities covered by an emissions intensity determination is transitioning from facility-specific to industry average values.
Facility-specific emissions-intensity values will phase out by the 2029–30 financial year.
| Financial year | 2023–24 | 2024–25 | 2025–26 | 2026–27 | 2027–28 | 2028–29 | 2029–30 |
|---|---|---|---|---|---|---|---|
| Industry-average to facility-specific ratio | 10:90 | 20:80 | 30:70 | 40:60 | 60:40* | 80:20 | 100:0 |
Note: * The transition to industry-average emissions-intensity increases from 10% per year to 20% from the 2027–28 financial year.
Facility-specific emissions-intensity values for existing production variables are calculated based on emissions and production data from 1 July 2017 to 30 June 2022.
Apply for an emissions-intensity determination
Existing standard baselines facilities may apply for an emissions-intensity determination to:
- set the facility-specific value of an existing production variable
- assign the industry-average values that were in force during the 2022–23 financial year to products that were new to the facility between 1 July 2022 and 30 June 2023
- have a new production variable be considered a 'related production variable' and use the emission intensity value that has been set for the 'comparative production variable'.
The best-practice emissions-intensity values will apply to any production variables that aren't covered by an emissions-intensity determination.
Applications for emissions-intensity determinations must include an independent audit report.
Learn about the application requirements in our Safeguard Mechanism emissions-intensity determination guideline.
You can also watch the recording of the emissions intensity determination application webinar for more information.
Application deadline
Applications for the 2023–24 financial year (as the first year the determination would apply) are due by 30 April 2024. If you can't meet this deadline, you may request an extension.
Applications for later financial years are due by 31 October immediately after that financial year.
Complete the emissions-intensity determination application in Online Services.
Landfill baseline
The landfill baseline applies to waste facilities as they don't have identifiable production variables.
Landfill baselines are calculated using:
- the amount of non-legacy waste emissions before any capture and oxidation
- a default methane capture efficiency rate of 37.2%
- the near-surface methane oxidisation factor in section 5.4(1) of the Determination
- the decline rate.
Sectoral baseline
The sectoral baseline is a collective baseline for grid-connected electricity generators. This is because the electricity sector behaves like a single entity with the output centrally coordinated to meet demand.
The sectoral baseline applies to electricity generators connected to Australia's 5 main electricity grids:
- National Electricity Market
- South West interconnected system
- North West interconnected system
- Darwin to Katherine network
- Mount Isa-Cloncurry supply network.
The sectoral baseline is 198 million tCO2-e emissions. It's based on the electricity sector's emissions from the 2009–10 to 2013–14 financial years.
A grid-connected electricity generator will receive an additional standard baseline for activities not directly related to electricity generation where they collectively exceed the safeguard threshold. For example, fugitive emissions from coal mining.