Safeguard Mechanism Reforms - 2023

As part of Australias effort to reduce emissions by 43% by 2030, the federal government has proposed a number of changes to the Safeguard Mechanism which will take effect from 1st July 2023. Key points are:

• Facility baselines will all be reset as of 1st July 2023 and only production-adjusted baselines using government-determined production variables will be allowed; reported, calculated and fixed baselines will no longer be allowed.
• Facilties will still be able to apply initial site-specific emission intensity values but in order to do so, they will need to submit an application by April 2024. The values will be calculated based on the middle two values from the four most recent years of data
• Beyond the 2023/24 reporting period, emission intensity values and will then reduce by 4.9% per year every year until 2030. Most facilities will comfortably stay below the baselines at first, but will find it impossible to do so by 2030 without significant changes in their processes
• A separate change is that from 2023, facilties which do emit below their baseline will generate credits (SMCs) which can be sold to facilties which are exceeding their baselines or banked for use in future years.
• Currently, facilities who need to purchase offsets, can only use domestic ACCUs which are generally more expensive than international offsets