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The safeguard mechanism

18 August 2022

NGER​​

Consultation on Safeguard Mechanism reform options

The Department of Climate Change, Energy, Environment and Water (DCCEEW) is consulting on options to reform the Safeguard Mechanism to help industry reduce emissions in line with Australia's climate targets.

The Safeguard Mechanism requires Australia's largest greenhouse gas emitters to keep their net emissions below an emissions limit (a baseline). The Australian Government proposes:

  • gradually reducing baselines to help Australia reach net zero emissions by 2050
  • introducing credits for facilities that emit less than their baseline
  • providing tailored treatment to emissions-intensive, trade-exposed facilities so businesses are not disadvantaged compared to international competitors and emissions do not increase overseas.

Visit DCCEEW’s consultation hub for more information on these reforms and the consultation activities.

Together with the reporting obligations under the National Greenhouse and Energy Reporting Act 2007, the safeguard mechanism provides a framework for Australia's largest emitters to measure, report and manage their emissions. It does this by requiring large facilities, whose net emissions exceed the safeguard threshold, to keep their emissions at or below emissions baselines set by the Clean Energy Regulator.

Threshold

The safeguard mechanism applies to facilities with scope 1 covered emissions of more than 100,000 tonnes of carbon dioxide equivalent (CO2-e) per year. See coverage for more information.

Emissions baselines

Under the safeguard mechanism, facilities are given a baseline which is the reference point against which net-emissions levels will be assessed. Net-emissions are the covered emissions from the operation of the facility plus any Australian carbon credit units (ACCUs) issued in relation to abatement activities occurring at the facility, minus any ACCUs surrendered for the facility, for that year. Facilities must keep their net emissions at or below their baseline. See the baselines section of our website for more information.

Who is responsible?

Safeguard obligations rest with the person with operational control of the facility. This person is referred to as the 'responsible emitter' and may be an individual, a body corporate, a trust, a corporation sole, a body politic or a local governing body. The responsible emitter is required to keep the facility's net emissions at or below its emissions baseline.

Managing excess emissions

Responsible emitters with a facility that has, or is likely to, exceed its baseline have several options to manage the excess emissions situation.

  • pursue activities that would reduce the covered emissions of the facility
  • surrender prescribed carbon units to reduce the net-emissions of the facility - Australian carbon credit units (ACCUs) are the sole currently prescribed units. Both Kyoto and non-Kyoto ACCUs can be used as offsets under the safeguard mechanism
  • seek an alternative baseline that better aligns with the emissions profile of the facility such as a calculated baseline or production adjusted baseline
  • apply for a multi-year monitoring period that provides flexibility in how emissions are managed over a longer period
  • apply for an exemption where excess emissions are due to exceptional circumstances such as a natural disaster or criminal activity.

Safeguard and the NGER scheme

The safeguard mechanism is administered through the National Greenhouse and Energy Reporting (NGER) scheme and is designed to minimise additional mandatory reporting requirements.

This means that as well as keeping their net emissions below the baseline, safeguard facilities must adhere to the reporting and record keeping requirements of the NGER scheme.

Responsible emitters for safeguard facilities who are not already registered under the National Greenhouse and Energy Reporting Act 2007 must apply to register. Applications for registration are due by 31 August following the financial year in which the facility first exceeds emissions of 100,000 tonnes CO2-e of covered emissions.

Publishing reported emissions

The Clean Energy Regulator is required to publish information about all designated large facilities covered by the safeguard mechanism. This publication will occur after the 1 March deadline for managing excess emissions from the prior financial year.

For each facility covered by the safeguard mechanism, information published includes the baseline emissions number in force for that year, total reported emissions, the responsible emitter(s) for each facility, and any ACCUs surrendered.

Information is also published about any designated large facilities that remain in an excess emissions situation on or after the 1 March compliance deadline.

See Safeguard facility reported emissions for more information.


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