We undertake our key activities within a complex and evolving environment shaped by Australia’s climate, energy and biodiversity policy settings, global economic conditions, rapid technological change and increasing expectations of regulators.
Economic conditions and market confidence
Global and domestic economic conditions can influence participation in our schemes and the behaviour of regulated entities. Volatility in energy markets, inflationary pressures, capital availability and shifts in investment patterns can affect decisions to undertake emissions reduction, renewable energy and battery storage and biodiversity projects. Demand for emissions-related units and certificates is influenced by those broader macroeconomic conditions and policy certainty, while microeconomic factors such as project costs, technology maturity and financing conditions shape participation at the project level.
As an economic regulator, we respond to periods of instability and economic change by:
strengthening our relationships with our regulated entities and government agencies
maintaining stable and transparent scheme administration, including timely and predictable decisions, clear guidance and reliable systems
streamlining and digitising processes where possible
publishing timely and quality market data and analysis
scaling participant support and risk-based regulatory effort to remain effective as economic conditions change.
Carbon markets: integrity, liquidity and trust
Efficient and effective carbon markets play an integral part in the success of our schemes, particularly as the number, interconnectedness and complexity of the schemes we administer grows. Markets for ACCUs, Safeguard Mechanism Credits (SMCs), and biodiversity and renewable energy certificates help convert emissions reduction, biodiversity outcomes and renewable generation into tradable value, supporting investment decisions across the economy. Regulated outcomes through the RET, and more recently, the reformed Safeguard Mechanism have driven private‑sector compliance demand as the key driver of market activity, alongside voluntary demand from organisations seeking to meet corporate emissions reduction and net zero commitments.
We continue to provide education and information to carbon markets to enable informed and active market participation, including through our Quarterly Carbon Market Reports (QCMR), which provide a regular view of supply and demand across the markets supporting the schemes we administer. We also monitor international carbon market developments to better understand implications for Australia’s domestic markets and to support Australia in meeting its international obligations under the Paris Agreement.
Managing legislative change
The legislative environment continues to evolve as the government responds to emissions reduction targets, energy transition priorities and emerging environmental markets. In recent years, we have successfully taken on responsibility for significant new functions, including the CHBP, reformed Safeguard Mechanism, the Nature Repair Market and the GO Scheme.
Following the May 2026 Budget, we were identified as the preferred entity to regulate new distributed energy devices (CENTR), subject to legislation. We will ensure that these devices meet national standards, are installed by accredited professionals, and are recorded in a centralised, national, installed device register to enable visibility, oversight and coordination. This new national framework is a key reform to modernising Australia’s economy by improving productivity and increasing competition across Australia’s energy ecosystem. It will empower Australians to maximise the benefits of their own energy systems and potentially enter the national electricity market if they choose.
Further policy development and refinement is expected over the coming years as Australia continues to progress towards its emissions reduction and biodiversity objectives. We are responding by seeking efficiencies in our operational model, building organisational flexibility, applying proportionate and risk‑based regulation, and strengthening internal governance, assurance and capability to ensure new and evolving requirements are implemented efficiently and effectively.
2026-27 scheme reviews
The Australian Government will review Safeguard Mechanism policy settings, led by the Department of Climate Change, Energy, the Environment and Water (DCCEEW), to ensure they are appropriately calibrated, including baselines and coverage, the use of credits and units, arrangements for international competitiveness and the treatment of the flexibility mechanism.
The Climate Change Authority is undertaking its fifth review of the ACCU Scheme and will provide a report to the Minister by the end of 2026. The review will assess whether the scheme is appropriately calibrated to deliver sufficient abatement in the context of Australia’s 2035 emissions reduction targets, changes to the Safeguard Mechanism, and developments in international carbon markets under Article 6 of the Paris Agreement.
The regulatory landscape
Australia’s regulatory environment is increasingly complex and fast‑moving, with expectations that regulation is fit for purpose, proportionate and adaptable, and supported by strong stewardship and modern digital capability. Our scheme participants expect clear rules and guidance, streamlined processes, accessible systems and compliance settings that are responsive to risk.
To meet these expectations, we focus on transparency in our decisions, constructive engagement with stakeholders and continuous improvement of our guidance, processes and systems. We are a risk-based regulator and adapt the way we work to support faster processing and decision‑making, stronger assurance and a better participant experience, while maintaining necessary safeguards.
"We should not only be a trusted regulator, but also future ready for the challenges that will emerge over the coming decades."
Matt Cahill
Regulator Board member
With integrity underpinning our regulatory role, we continue to identify opportunities to administer our schemes more efficiently and effectively, reducing unnecessary administrative burden while supporting market confidence and compliance. This approach enables us to deliver tangible benefits for participants and contribute to the Australian Government’s productivity agenda while upholding robust regulatory outcomes.
Responding to a changing climate
Australia’s climate is changing, increasing the likelihood of more frequent and severe events such as heatwaves, bushfires, floods and storms. These risks can impact the feasibility and timing of carbon abatement projects, production at Safeguard facilities, and the infrastructure and supply chains our scheme participants rely on. In turn, this has potential to disrupt the delivery of the schemes we administer with possible flow on effects to unit and certificate supply, market confidence and compliance outcomes.
We are committed to considering climate risks across our operations, consistent with the Australian Government’s approach to climate risk management and transparent reporting. We will:
- strengthen organisational resilience and continuity arrangements so we can provide consistent, accessible services during disruption
- maintain resilient and secure digital channels
- provide clear, timely guidance, including flexibility where possible and appropriate.
We will prioritise regulatory effort where climate disruption, remoteness or infrastructure constraints increase delivery and operational risks. We will work closely with DCCEEW and other agencies to support coherent administration across interconnected measures, noting that regional, disadvantaged and First Nations communities can be disproportionately affected.
While climate change creates risks for scheme delivery, the schemes we administer play an important role in mitigating climate change by supporting emissions reduction, renewable energy generation and carbon abatement across the economy.
We will also reduce emissions from our own operations, consistent with the APS net zero by 2030 target. Our footprint is driven mainly by electricity use in our Canberra office tenancy and business travel, with smaller contributions from purchased goods and services, and waste. Through our Emissions Reduction Plan we are improving energy performance with our building manager and co‑tenants, pursuing lower‑emissions electricity where feasible, promoting digital‑by‑default ways of working, and embedding sustainability in procurement and workplace practices.
Technological change and digital resilience
Technological change is a key driver of opportunity for the CER. We are positioning ourselves as a digitally driven delivery agency, with secure, scalable and user‑centred systems at the core of our operations. We are leveraging modern digital platforms, data analytics, automation and AI to streamline scheme administration, enable high‑volume transactions, and deliver faster, more consistent and accessible services to participants. This allows us to scale efficiently, improve user experience and support the effective operation of carbon and energy markets.
We are building on our digital foundations through the targeted application of AI to support regulatory functions at scale. We will progressively adopt AI‑enabled tools to improve the consistency, timeliness and quality of decision‑making, and generate deeper insights across our data. While always ensuring appropriate human oversight, we will reduce manual handling and administrative burden for both the CER and our scheme and market participants, while enabling a more proactive and risk‑based approach to compliance.
This approach aligns with the Australian Government’s broader direction for responsible AI adoption, including national settings that support productivity, capability, safety and public trust. As those settings continue to evolve, we will ensure our use of AI remains proportionate, accountable and consistent with whole-of-government expectations by embedding strong controls and oversight measures. This will support assurance, transparency and effective risk management while maintaining public trust.
As cyber threats continue to grow in frequency, sophistication and impact across government and industry, we face an increasingly challenging risk environment. We are actively managing these risks to maintain confidence in the registries and markets we support. This includes strengthening how we oversee third-party and cloud service providers to protect sensitive information, maintaining continuity of operations and preserving the integrity of transactions and data. We continue to mitigate these risks through strong cyber security practices, robust identity and access controls, resilient system architecture and active vendor management, and we will continue to invest in our digital resilience and capability. This ensures the protection of sensitive information, continuity of operations, and the integrity of transactions and data in an evolving threat landscape.