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Commonwealth legislation
The Safeguard Mechanism caps greenhouse‑gas emissions from Australia’s largest industrial facilities by setting declining baselines, creating tradeable safeguard credits for outperformance, and allowing limited borrowing and exemptions for exceptional cases. It includes a TEBA pathway giving slower declines to emissions‑intensive, trade‑exposed firms and links to ACCUs and the wider carbon market.
2023 reforms tighten baselines (steeper annual declines), add best‑practice intensity benchmarks, enable credit trading between facilities, and restrict ACCU use—affecting big emitters, buyers/sellers of credits, and the Clean Energy Regulator.
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Direct links to the current provisions in National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015.
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
This is the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015.
This instrument is made under subsection 22XS(1) of the National Greenhouse and Energy Reporting Act 2007.
In this instrument:
accelerated depreciation factor has the meaning given by subsection 37(6).
Act means the National Greenhouse and Energy Reporting Act 2007.
adverse conclusion has the meaning given by the National Greenhouse and Energy Reporting (Audit) Determination 2009.
amount includes a nil amount.
askm means available seat kilometres.
assessed cost impact, for a facility for a financial year, has the meaning given by section 36.
Australian accounting standards means the accounting standards in force under section 334 of the Corporations Act 2001.
Note: In 2023, the Australian accounting standards were accessible at http://www.aasb.gov.au.
best practice emissions intensity, for a production variable for a financial year, means the best practice emissions intensity (if any) specified, in t CO2‑e per unit of the production variable, in relation to the production variable in Schedule 1 as in force at:
(a) if the financial year is the financial year beginning on 1 July 2023—the end of the financial year; or
(b) otherwise—the start of the financial year.
best practice emissions intensity number, for a production variable for a financial year, means the number that is equal to the best practice emissions intensity for the production variable for that financial year.
Note: Example: If the best practice emissions intensity for a tonne of glass in the financial year beginning on 1 July 2024 is 0.6 t CO2‑e per tonne of glass, the best practice emissions intensity number for a tonne of glass in that financial year is 0.6.
borrowing adjustment, for a facility for a financial year, has the meaning given by section 47.
borrowing adjustment determination means a determination made under section 50.
borrowing adjustment number, for a facility for a financial year: see subsection 50(3).
by‑product means a saleable output or other product that:
(a) results from a chemical or physical process undertaken by a facility other than for the purpose of producing the output; and
(b) will be disposed of, by sale or gift, without any further processing by the facility (other than further processing in accordance with standard industry practice); and
(c) contributes less than 10% of the facility’s revenue.
comparative production variable, for a related production variable, has the meaning given by paragraph 19(4)(b).
criminal activity means any activity that the Regulator has reasonable cause to believe involves the commission of an offence by one or more persons.
Darwin to Katherine network means the local distribution systems in items 1, 2 and 5 of Schedule 2 to the National Electricity (Northern Territory) (National Uniform Legislation) Act 2015 (NT) and any transmission or distribution system which is connected to those local distribution systems.
decision date, for an application under Part 3, has the meaning given by subsection 52(2).
default decline rate, for a financial year, has the meaning given by section 32.
default emissions intensity, for a production variable for a financial year, means the default emissions intensity specified, in t CO2‑e per unit of the production variable, in relation to the production variable in Schedule 1 as in force at the start of that financial year.
default emissions intensity number, for a production variable for a financial year, means the number that is equal to the default emissions intensity of the production variable.
Note: Example: If the default emissions intensity for a tonne of glass in the financial year beginning on 1 July 2024 is 0.8 t CO2‑e per tonne of glass, the default emissions intensity number for a tonne of glass in that financial year is 0.8.
default emissions reduction contribution, for a financial year, has the meaning given by section 31.
designated electricity network means one of the following electricity networks:
(a) the interconnected national electricity system within the meaning of the National Electricity Law set out in the Schedule to the National Electricity (South Australia) Act 1996 (SA);
(b) the South West interconnected system within the meaning of section 3 of the Electricity Industry Act 2004 (WA);
(c) the North West interconnected system within the meaning of section 2 of the Electricity Transmission and Distribution Systems (Access) Act 1994 (WA);
(d) the Darwin to Katherine network;
(e) the Mount Isa–Cloncurry supply network within the meaning of section 10 of the Electricity—National Scheme (Queensland) Act 1997 (Qld).
designated historical information, about a historical production variable for a facility, has the meaning given by subsection 14(5).
details, in relation to a declaration under this instrument, includes:
(a) the type of declaration; and
(b) the facility to which the declaration relates; and
(c) the responsible emitter for the facility to which the declaration relates; and
(d) the start and any end date of the declaration; and
(e) if the declaration is being varied—the nature of that variation.
due date, for an application under Part 3, has the meaning given by subsection 52(1).
dwtnmi means dead weight tonne nautical miles.
EBIT Guidelines has the meaning given by subsection 37(7).
eligible facility, for a financial year, has the meaning given by section 58B.
emissions intensity determination means:
(a) a determination made under section 19; or
(b) a successor determination.
emissions reduction contribution:
(a) for a regular facility for a financial year—has the meaning given by section 33; or
(b) for a trade‑exposed baseline‑adjusted facility for a financial year—has the meaning given by section 34.
existing facility has the meaning given by subsection 12(1).
facility‑specific emissions intensity number:
(a) of a historical production variable for a facility—has the meaning given by subsection 20(1); or
(b) of a related production variable for a facility—has the meaning given by subsection 20(5); or
(c) of a transitional production variable for a facility—has the meaning given by subsection 20(6).
first adjusted financial year, for a facility, has the meaning given by subsection 36(6).
grid‑connected electricity generator means a designated generation facility connected to a designated electricity network at any time during a financial year.
historical financial year has the meaning given by subsection 12(3).
historical production variable, for a facility, has the meaning given by subsection 12(2).
hypothetical baseline, of a facility for a financial year, has the meaning given by subsection 36(7).
identifying details has the meaning given by the NGER Regulations.
identifying information has the meaning given by the NGER Regulations.
input means:
(a) if the input relates to a landfill facility—a tonne of waste received by a landfill facility; and
(b) otherwise—anything that undergoes a chemical or physical process to produce an intermediate product or an output.
intermediate product means a product that:
(a) results from a chemical or physical process undertaken by a facility using one or more inputs; and
(b) is then used as an input for the production of an output at the same facility.
landfill facility means a facility for the disposal of solid waste as landfill, and includes a facility that is closed for the acceptance of waste.
legacy emissions has the meaning given by subsection 7(2).
limited assurance conclusion has the meaning given by the National Greenhouse and Energy Reporting (Audit) Determination 2009.
manufacturing facility: a facility is a manufacturing facility in a financial year if the primary production variable for the facility in the financial year is a manufacturing production variable.
manufacturing production variable means a production variable that is listed in the table in section 1 of Schedule 2.
multi‑year period declaration has the meaning given by subsection 65(1).
m3km means metres cubed kilometres.
national facility definition means the requirements for a transport facility applying as a result of a nomination under subregulation 2.19A(2) of the NGER Regulations.
new facility has the meaning given by subsection 29(2).
NGER (Measurement) Determination means the National Greenhouse and Energy Reporting (Measurement) Determination 2008.
NGER Regulations means the National Greenhouse and Energy Reporting Regulations 2008.
non‑commercial production variable, for a facility for a financial year, has the meaning given by subsection 12(5).
output means a product that is:
(a) if the output is from a transport facility—a transport service measured by service units; or
(b) if more than 25,000 megawatt hours of electricity is, or is to be, generated at the facility in a financial year—electricity generated at the facility; or
(c) otherwise—the last product resulting from a chemical or physical process undertaken by a facility using one or more inputs or intermediate products.
pkm means passenger kilometres.
pnmi means passenger nautical miles.
primary production variable, for a facility, means:
(a) if there is only one production variable for the facility—that production variable; or
(b) if there are 2 or more production variables for the facility—the production variable that is most significant for the operation of the facility, having primary regard to the share of revenue and covered emissions directly or indirectly attributable to that production variable.
production variable, for a facility, means a production variable that is applicable to the facility in accordance with Schedule 1.
production variable means a metric that is set out in a Part of Schedule 1.
qualified limited assurance conclusion has the meaning given by the National Greenhouse and Energy Reporting (Audit) Determination 2009.
qualified reasonable assurance conclusion has the meaning given by the National Greenhouse and Energy Reporting (Audit) Determination 2009.
quantity, of a production variable for a facility for a financial year, means the number of units of the production variable for the facility for that financial year.
Note: Example: If a facility produces 500 tonnes of glass in a financial year, the quantity of tonnes of glass for that financial year is 500.
ratio of cost impacts, for a facility for a financial year, has the meaning given by section 35.
reasonable assurance conclusion has the meaning given by the National Greenhouse and Energy Reporting (Audit) Determination 2009.
regular facility: a facility that is not a trade‑exposed baseline‑adjusted facility in a financial year is a regular facility in that financial year.
related production variable, for a facility, has the meaning given by paragraph 19(4)(a).
relevant historical financial year, for a production variable, has the meaning given by subsection 20(3).
relevantly associated with has the meaning given by section 16.
responsible financial officer, of a responsible emitter for a facility, means any of the following:
(a) if the person with operational control of the facility is an individual—that person;
(b) a person who holds or performs the duties of the position of the chief executive officer, chief financial officer or chief operating officer for the person with operational control of the facility;
(c) a person who holds or performs the duties of a position with equivalent or similar responsibilities to a person with a position in paragraph (b);
(d) an individual employed by the person with operational control of the facility who:
(i) makes, or participates in making, decisions that affect the whole, or a substantial part, of the business or affairs of the person; or
(ii) has the capacity to significantly affect the person’s financial standing.
Safeguard Mechanism default prescribed unit price, for a financial year, has the meaning given by section 38.
Safeguard Mechanism document means the document of that name published on the Department’s website, as in force from time to time.
Note: In 2023, the document could be accessed from http://www.dcceew.gov.au.
sectoral‑baseline financial year means every financial year before the financial year beginning on the first 1 July after the Regulator has published a statement on its website that the total reported scope 1 emissions of all grid‑connected electricity generators exceeded 198,000,000 t CO2‑e emissions in the previous financial year based upon reports submitted to the Regulator at the time of the statement. The Regulator must take all reasonable steps to publish the statement at least 4 months before the start of the financial year which is not a sectoral‑baseline financial year.
Example: If the sum of reported emissions from each grid‑connected electricity generator was 210,000,000 t CO2‑e in 2020‑21, by 28 February 2022 the Regulator would publish a statement on its website and the financial year beginning 1 July 2022 would not be a sectoral‑baseline financial year and emissions of grid‑connected electricity generators would be covered emissions in that year.
service unit means a unit of measure related to a transport facility (such as askm, dwtnmi, m3km, pkm, pnmi, tkm, tnmi or vkt) determined and measured by the responsible emitter for the facility taking into account:
(a) standard industry practice; and
(b) existing measurement systems used by the responsible emitter.
shale gas extraction facility has the meaning given by section 54.
significant cost impact threshold, for a facility, has the meaning given by subsection 35(4).
successor determination means a determination made under section 24.
t CO2‑e means tonnes of carbon dioxide equivalence.
tkm means tonne kilometres.
tnmi means tonne nautical miles.
trade‑exposed baseline‑adjusted facility: a facility is a trade‑exposed baseline‑adjusted facility in a financial year if it is determined to be a trade‑exposed baseline‑adjusted facility in that financial year under section 42.
trade‑exposed production variable means a production variable that is listed in a table in Schedule 2.
transitional production variable, for a facility, has the meaning given by subsection 12(4).
transition proportion, for a financial year, has the meaning given by section 13.
vkt means vehicle kilometres travelled.
waste product means an output or other product that:
(a) results from a chemical or physical process undertaken by a facility other than for the purpose of producing the output; and
(b) will be disposed of without any further processing by the facility (other than further processing in accordance with standard industry practice); and
(c) is not a by‑product.
(1) For section 22XI of the Act, the following scope 1 emissions of one or more greenhouse gases are not covered emissions for the purposes of the safeguard mechanism: (a) emissions of one or more greenhouse gases in circumstances where the Minister has not determined, under subsection 10(3) of the Act: (i) methods by which the amounts of the scope 1 emissions of the greenhouse gas are to be measured; or (ii) criteria for methods by which the amounts of the scope 1 emissions of the greenhouse gas are to be measured; (b) legacy emissions from the operation of a landfill facility; (c) emissions of one or more greenhouse gases from the operation of a grid‑connected electricity generator in respect of
This is an opening excerpt, not the complete document.