Safeguard Mechanism (Baseline & Credit Scheme)

The Safeguard Mechanism is Australia's baseline-and-credit scheme for its largest industrial emitters, governed under the National Greenhouse and Energy Reporting (NGER) Act and administered by the Clean Energy Regulator.

It sets declining emissions baselines for covered facilities, which must keep Scope 1 emissions below their baseline or surrender credits, with baselines tightening over time to support Australia's 2050 net-zero goal.

The mechanism applies to facilities emitting at least 100,000 tonnes CO2e per year in Scope 1 emissions, across sectors such as mining, oil and gas, cement, steel, aluminum, waste, and chemical processing. Electricity generators are subject to a sectoral emissions cap.

Facilities must submit annual NGER reports by October 31, disclosing total Scope 1 emissions, emissions intensity, and credits surrendered, along with justification for any ACCUs exceeding 30% of the baseline. Independent audits are mandatory for facilities emitting at least 1 million tonnes CO2e annually.

The Safeguard Mechanism was introduced on July 1, 2016 and reformed in July 2023, with the baseline and credit scheme effective from July 2023 and FY 2023-24 the first reporting year under the reformed system. Facilities must submit NGER reports by October 31 annually and surrender credits by March 31.

A statutory review is scheduled for FY 2026-27. The sector emissions cap is reduced to about 100 million tonnes CO2e by FY 2029-30, with baseline tightening continuing beyond 2030 toward net zero by 2050.