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.
Under the safeguard mechanism, facilities are given a baseline which is the reference point against which net-emissions levels will be assessed. A safeguard facility must keep its net emissions levels at or below its baseline.
There are four main types of emissions baselines:
-
Production-adjusted baselines — determined based on actual production levels. A production adjusted baseline can be fixed based on the highest year of production during the calculated or benchmark baseline period (see below), or annually adjusting based on actual production for each year.
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Calculated baselines— determined based on an independently audited forecast of production and either forecast emissions intensity provided by the responsible emitter or the default emissions intensity value.
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Benchmark baselines— based on benchmark emissions intensities (that is, the best, least emissions intensive standard for production) and an independently audited forecast of production. A landfill-benchmark baseline will be based on a benchmark capture efficiency rate for non-legacy emissions.
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Reported baselines— determined based on the historical high point of emissions reported under the National Greenhouse and Energy Reporting scheme between 2009-10 and 2013-14.
Reported baselines cease on 1 July 2021. Facilities will need to apply for a different type of baseline for 2021-22, onwards.
A facility must exceed the 100,000 tCO2-e threshold to be covered by the safeguard mechanism. A baseline cannot be set below this level.
If a facility does not have one of the four types of baselines, then a default emissions baseline of 100,000 tonnes of carbon dioxide equivalent (tCO2-e) will apply.
In some circumstances a facility covered by the safeguard mechanism may apply for a
baseline variation.
A summary of all types of emissions baselines
|
Baseline |
Criteria |
Determined by |
Duration |
Earliest start |
|---|
|
Default | Designated large facility with no other type of baseline | Safeguard Rule | Ongoing unless replaced by another baseline | 1 July 2016 |
|
Production-adjusted | Either: - Existing or expired calculated, or benchmark baseline; or
- Open to any facility applying for an annually adjusting baseline using default emissions intensity values.
| Upon application using actual production | Ongoing unless replaced by another baseline | 1 July 2018 |
|
Calculated | - Transitional (from 1 July 2018)
- Inherent emissions variability
| Upon application using independent audit approach | Generally 3 years | 1 July 2016 |
|
Benchmark | New or significantly expanded facilities from 2020 | Best-practice | Generally 3 years | 1 July 2021 |
|
Landfill | Landfill facilities that exceed coverage threshold | Upon application using landfill baseline emissions formula | Ongoing | 1 July 2020 |
|
Sectoral | Grid connected electricity generators | Safeguard Rule | Until breached | 1 July 2016 |
|
Reported | NGER facilities with five years of data (2009-10 to 2013-14) | Based on historic high point |
Ceased on 1 July 2021 | 1 July 2016 |