Baselines for high-emitting facilities plus annual emissions reductions
Industrial facilities emitting in excess of 100,000 tonnes CO2-e annually are covered under the Federal Government’s Safeguard Mechanism. The Safeguard applies to approximately 215 organisations in Australia; these organisations must comply with baseline emissions levels and in addition must now demonstrate annual emissions reductions.
We have highly experienced NGER-registered auditors in our team who help organisations with the Safeguard Mechanism and a range of Climate Solutions Fund – ERF services.
How the Safeguard works
Each Safeguard facility has a baseline for annual net greenhouse gas emissions. If the baseline is exceeded the facility must act as follows:
- Reduce emissions below the baseline.
- Buy emissions reductions from another Safeguard facility, now known as Safeguard Mechanism Credits (SMCs).
- Buy and surrender Australian Carbon Credit Units (ACCUs).
Covered entities and ‘responsible emitters’
According to the Department of Climate Change, Energy, the Environment and Water (DCCEEW), covered facilities include mining, manufacturing, transport, oil and gas, and waste sectors. Safeguard responsibilities fall to the person with operational control of the facility. The ‘responsible emitter’ may be:
- an individual,
- a corporation,
- a partnership,
- a trust,
- a local council.
Climate goals and changes to the mechanism
In 2022 the Australian Government committed to net zero emissions by 2050 and a 43 percent emissions reduction below 2005 levels by 2030 (205 million tonnes of greenhouse gas emissions). To meet these targets, big industrial emitters must demonstrate a 4.9 percent emissions intensity reduction each year. Safeguard facilities may earn credits (SMCs) if their own emissions fall below baseline levels, then sell the credits to entities that are not in compliance.
Emissions under the mechanism
The Safeguard Mechanism applies to Scope 1 emissions: direct greenhouse gas emissions, or those created as a direct result of an organisation’s activity. Emissions must remain at or below established levels as per the National Greenhouse and Energy Reporting Scheme (NGER) and past reported data under the scheme. The minimum baseline is 100,000 tonnes CO2-e.
Read more about NGER (DCCEEW) here.
Administration and the role of the Clean Energy Regulator (CER)
The Clean Energy Regulator (CER) administers the mechanism as per the National Greenhouse and Energy Reporting Act 2007 and amendments in the Carbon Farming Initiative Amendment Act 2014.
Safeguard facilities report emissions to the Regulator. CER publishes this information on their website along with obligations and deadlines, covered facilities and baselines, the amount of covered emissions, and compliance through Australian Carbon Credit Units (ACCUs).
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