To help Australia meet its climate targets and ensure Australia remains competitive in a decarbonising world, the Australian Government reformed the Safeguard Mechanism to reduce carbon emissions at Australia’s largest industrial facilities.

Applying to facilities that emit more than 100,000 tonnes of carbon dioxide (CO2) equivalent in a year, the Safeguard Mechanism sets legislated targets, known as baselines, on their net greenhouse gas emissions.

• 43% by 2030

  By 2030, national carbon emissions must have reduced by 43% from 2005 levels.

• Baseline

  Existing facility baselines have been set using site-specific, carbon emissions-intensity values and will transition to industry average emissions intensity values by 2030.

• 4.9% annually

  Safeguard facilities must decrease their carbon emissions by 4.9% below their baseline each financial year, starting in 2024 until 2030.

• Buy carbon credits if above baseline

  If they exceed their allowable carbon emissions, facilities must manage any excess emissions by buying Australian Carbon Credit Units to offset them. 

  Where a facility purchases and then surrenders ACCUs equivalent to >30% of their baseline, a publicly available disclosure must be made.

• Earn carbon credits if under baseline

  Facilities that don't exceed their baseline may be eligible to earn Safeguard Mechanism credit units (SMCs) which they can keep to offset future emissions or sell. 

• Reporting

  Safeguard facilities must report carbon emissions progress to the Clean Energy Regulator, annually under the National Greenhouse and Energy Reporting Act.

• Penalties

  In the worst-case scenario, a penalty of $295.00 per tonne of excess carbon emissions will apply where Safeguard targets are not met through carbon abatement. Adverse findings can also be reported publicly. 

• Net Zero by 2050

  Australia has committed to net zero emissions by 2050. 

The Australian Carbon Credit Units (ACCUs) play an important role in Australia’s efforts to combat climate change. They are tradable certificates that correspond to the reduction or removal of one tonne of carbon dioxide equivalent emissions. 

ACCUs are generated through a range of eligible projects, including renewable energy, energy efficiency, and land management initiatives. These projects must adhere to specific methodologies and reporting requirements in order to earn credits and participate in the Emissions Reduction Fund (ERF) auctions. 

Through these auctions, the Clean Energy Regulator awards government contracts for the delivery of emissions reduction, expanding the carbon credit market and helping Australia reach its emission reduction targets.

Our partner, LMS, is Australia’s largest emissions reducer under the Emissions Reduction Fund with over 15% of the Australian Carbon Credit Units coming from LMS methane abatement projects.

Under the Safeguard Mechanism, facilities must report on their scope 1 and 2 carbon emissions and demonstrate each year that their emissions are falling in line with baseline targets.

Scope 1: direct carbon emissions created within the facility. 

Scope 2: indirect carbon emissions, like electricity purchased from the grid or purchased heating and cooling. 

Selling methane to Carbon Logica to transform it into power reduces scope 1 carbon emissions in a cost-effective way. It is the easiest and fastest way to reduce carbon emissions.