A sectoral approach is taken to grid-connected electricity generators because the electricity sector behaves more like a single entity, where the output produced is centrally coordinated to meet demand in real time.

A sectoral baseline will apply collectively to grid-connected generators until it is exceeded. Once the sectoral baseline is exceeded, individual baselines will apply to each generator.

The sectoral baseline only applies to electricity generators connected to designated electricity networks, which comprise Australia’s five main electricity grids: the National Electricity Market, the South West interconnected system, the North West interconnected system, the Darwin to Katherine network and the Mount Isa-Cloncurry supply network.

How is the sectoral baseline set?

The sectoral baseline is set at 198 million tonnes CO₂-e, based on electricity sector’s emissions from 2009–10 to 2013–14. As part of the annual National Greenhouse and Energy Reporting data publication, the Clean Energy Regulator publishes total scope 1 emissions from grid-connected generators to assist the sector to prepare for the sectoral baseline under the safeguard mechanism.

The sectoral baseline will be in place unless the sector’s aggregated emissions exceed the baseline. After this point, electricity generation facilities would be required to comply with their own individual facility baseline, which would apply in the financial year after which the Clean Energy Regulator publishes the reported exceedance.

If moved onto individual baselines, electricity generators would have access to most of the same baseline adjustment and emissions management options as facilities though they will not be eligible under the inherent emissions variability criteria.

Any electricity generation facility that exceeds the safeguard threshold and is not connected to one of the relevant electricity grids will be treated the same as any other safeguard facility.