Managing excess emissions

Safeguard facilities that exceed or expect to exceed their baseline must manage their excess emissions.

The facility's responsible emitter can:

• surrender Australian carbon credit units (ACCUs) or Safeguard Mechanism credit units (SMCs)
• apply to become a trade-exposed baseline-adjusted (TEBA) facility
• apply to borrow baseline from the following year
• apply for a multi-year monitoring period (MYMP).

We will use our enforcement powers if a safeguard facility fails to manage excess emissions by the 1 April compliance deadline.

Anti-avoidance measures prevent a responsible emitter from defining or redefining a facility to avoid Safeguard Mechanism obligations. Learn more about reporting under the National Greenhouse and Energy Reporting (NGER) Scheme.

Surrender ACCUs and SMCs

Safeguard facilities can surrender ACCUs or SMCs to reduce their net emissions below their baseline.

If you're the responsible emitter, you can do this through your Australian National Registry of Emissions Units (ANREU) account. You can also arrange surrender from another person’s account.

Buy ACCUs

Find out how to buy ACCUs on the secondary market.

The cost-containment mechanism

Safeguard facilities that exceed their baseline may be eligible to buy ACCUs from us. The price is set at $75 in 2023–24. It will be indexed in future financial years by the Consumer Price Index (CPI) plus 2% each year.

Buy SMCs

We expect facilities that exceed their baselines will be able to buy SMCs in early 2025.

Find out more about SMCs.

Become a TEBA facility

A facility may apply to become trade-exposed baseline-adjusted (TEBA) facilities.

TEBA facilities receive a discounted baseline decline rate for up to 3 years:

• Non-manufacturing facilities must show that they meet the lower threshold of a cost impact metric based on revenue. They may be eligible for a decline rate as low as 2%.
• Manufacturing facilities must show that they meet the lower threshold of a cost impact metric based on ‘earnings before interest and taxation’ (EBIT). They may be eligible for a decline rate as low as 1%.

TEBA facility applications must demonstrate that your safeguard facility:

• is an emissions-intensive trade-exposed facility listed by Schedule 2 of the Safeguard Rule
• meets the lower threshold of the relevant cost impact metric.

You'll need to include an independent audit report in your application.

We must receive your TEBA application by 31 October after the first financial year you're proposing to decrease your baseline decline rate.

Complete the TEBA application in Online Services.

Borrow from a future baseline

Safeguard facilities may apply to borrow baseline from the following financial year. The facility’s baseline will decrease by the borrowed amount the following year, plus:

• 2% interest for the 2024–25 and 2025–26 financial years
• 10% interest for financial years from 2026–27 onwards.

Borrowing applications must:

• specify your facility's proposed borrowing adjustment (up to 10% of the baseline) for the financial year
• demonstrate that your facility is likely to be a safeguard facility next financial year.

We won't approve borrowing applications if in the relevant financial year your facility has:

• an MYMP in place
• been issued SMCs.

We will revoke a borrowing adjustment determination if an MYMP declaration covers that year.

We must receive your borrowing application by 28 February after the relevant financial year.

Complete the borrowing application in Online Services.

Apply for a multi-year monitoring period

Safeguard facilities with excess emissions and a plan to reduce them over multiple years may apply for an MYMP.

An MYMP can be up to 5 years. It gives the facility more time to implement emissions reduction projects and bring emissions below their baseline.

Applications for MYMPs must:

• specify the duration you're seeking the MYMP for
• specify the amount (or reasonably assumed amount) of covered emissions for the first year of the proposed MYMP
• outline your facility's plan to reduce emissions at or below the extended baseline by the end of the extended monitoring period (including a summary for publication on our website)
• explain any known risks that might cause your facility to exceed the extended baseline
• include the signature of a responsible financial officer for your facility or a person they've authorised.

If you have an MYMP in place at your facility, you may apply to:

• reduce the MYMP to a minimum of 2 years
• extend the MYMP to a maximum of 5 years
• revoke the multi-year period declaration.

MYMPs are limited to an end date of 30 June 2030.

We may reduce the length of your MYMP if you aren't reducing emissions.

We'll revoke a borrowing adjustment determination if it includes a year covered in an MYMP declaration.

At the end of the MYMP, you must explain how the facility performed against the emissions reduction plan from your application. Submit this to us by 31 October after the MYMP has ended. We will publish submissions on our website.

Learn about the application requirements for responsible emitters in our Safeguard Mechanism multi-year monitoring period application guide.

We must receive your MYMP application by 15 November after the first financial year of the proposed MYMP.

Complete the MYMP application form in Online Services.

Apply for an exemption

Safeguard facilities may apply for an exemption if they're likely to exceed their baselines as a direct result of:

• a natural disaster
• criminal activity.

Applications for exemptions must specify:

• the monitoring period you're seeking an exemption for
• the natural disaster or criminal activity that impacted your facility
• how the event directly resulted in your excess emissions situation
• the reasonable steps you took to mitigate the risks of excess emissions:
  • before the event (like emergency shut-down procedures)
  • after the event (like replacing damaged emissions reduction equipment).

We won't approve applications if the excess emissions are an indirect result of the event. For example, where your response to market changes caused by the natural disaster results in the excess.

We must receive your exemption application by 31 October after the financial year you're seeking exemption for.

We may revoke an exemption declaration if your application contains false or misleading information.