About the Safeguard Mechanism
The Safeguard Mechanism is the Australian Government’s policy for reducing emissions at Australia’s largest industrial facilities.
It sets legislated limits—known as baselines—on the greenhouse gas emissions of these facilities. These baselines will decline, predictably and gradually, on a trajectory consistent with achieving Australia’s emission reduction targets of 43% below 2005 levels by 2030 and net zero by 2050.
The Safeguard Mechanism commenced in 2016. It was reformed in 2023 to ensure that covered facilities contribute to meeting these targets, while strengthening their competitiveness as the world moves to net zero.
Safeguard Mechanism coverage
The Safeguard Mechanism applies to industrial facilities emitting more than 100,000 tonnes of carbon dioxide equivalent (CO2-e) per year, including in:
- oil and gas production
- waste facilities.
The Safeguard Mechanism applies to the electricity sector in a different way by applying a single ‘sectoral’ baseline across all electricity generators connected to one of Australia’s main electricity grids. Individual grid-connected electricity generators are not covered as long as total emissions from grid-connected electricity generators do not exceed the sectoral baseline.
The Safeguard Mechanism is enacted through the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) and other legislation. Much of the detail is set out in the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Safeguard Rules), alongside the Carbon Credits (Carbon Farming Initiative) Rule 2015 (CFI Rule) and the Australian National Registry of Emissions Units Regulations 2011.
The reformed scheme will commence from 1 July 2023. The final design is outlined in the accompanying factsheet.
Statement of Reasons
Sections 22XS(1A) and (1B) of the NGER Act require the Minister to be satisfied that the Safeguard Rules are consistent with each of the safeguard outcomes in paragraphs 3(2)(b), (c) and (d), and that they take into account the safeguard outcomes in paragraphs 3(2)(e) and (f), of the NGER Act and publish a statement of reasons outlining why they are satisfied.
This Safeguard Mechanism document helps businesses understand emissions sources and calculations under the Safeguard Mechanism.
The responsible emitter who has operational control of the facility must ensure the facility’s net emissions do not exceed the baseline determined by the Clean Energy Regulator.
Read the definitions of a facility and operational control on the Regulator’s website.
Safeguard Mechanism and EPBC Act assessments
If your project involves actions that may impact the environment, you may need to refer it to our department for assessment.
If your project is likely to produce 100,000 tonnes or more of greenhouse gases each financial year, we must share the emissions information with:
- the Climate Change Minister,
- the Climate Change Authority, and,
- the Secretary of the department responsible for administering the National Greenhouse and Energy Reporting Act 2007. As at 2023 this would be the Secretary of the Department of Climate Change, Energy, the Environment and Water.
Read the Safeguard Mechanism and EPBC Act assessments to find out more about how the Safeguard Mechanism applies to project assessments conducted under the Environment Protection and Biodiversity Conservation Act, 1999 (EPBC Act).
To find out more about complying with the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), visit Advice for applicants and approval holders.
Role of the Clean Energy Regulator
The Clean Energy Regulator administers the National Greenhouse and Energy Reporting scheme and the Safeguard Mechanism. It publishes information like:
- Names of facilities
- Each facility’s:
- Safeguard baseline
- amount of covered emissions
- net emissions after compliance
- proportion of emissions from the major greenhouse gases
- quantity of Safeguard Mechanism Credits earned
- number and type of Australian Carbon Credit Units surrendered for compliance purposes, including the method under which they were created.
Read more about how the Regulator administers the Safeguard Mechanism on the Regulator’s website.
Recent public consultations
- Public consultation: Draft guidelines for setting international best practice benchmarks (closed 11 August 2023)
- Public consultation: Production variables update (closed 11 August 2023)
The Powering the Regions Fund will provide funding to support industry decarbonisation and workforce development.
Details of the consultation completed during the reforms can be found on Have Your Say.