What is the Safeguard Mechanism?
The Safeguard Mechanism is Australia's principal policy for reducing greenhouse gas emissions from the country’s largest industrial facilities. It aligns with the Australian Government’s emissions reduction targets of 43% below 2005 levels by 2030 and net zero by 2050.
Under the scheme, responsible emitters must keep their facility’s net emissions below a legislated baseline, which declines steadily over time. Responsible emitters are companies and entities with operational control of greenhouse gas emitting facilities.
The Safeguard Mechanism incentivises responsible emitters to reduce emissions from their facility’s activities.
Safeguard net emissions
Find out more about how a safeguard facility’s net emissions number is determined.
Safeguard baselines
Learn about the different types of baselines under the Safeguard Mechanism and how they are calculated.
How it works
Responsible emitters of facilities with net emissions that exceed their baseline must take action to manage the excess before the 1 April compliance deadline. They can either:
- surrender Australian carbon credit units (ACCUs) or Safeguard Mechanism credit units (SMCs)
- obtain a flexibility measure from the Clean Energy Regulator.
If your facility’s net emissions are below its baseline, you may be eligible to earn SMCs which can be sold or surrendered.
Managing excess emissions
Find out how safeguard facilities can comply with their obligations if their net emissions are above their baseline.
Safeguard Mechanism credit units
Learn about the eligibility requirements for Safeguard Mechanism credit units (SMCs).
Safeguard data
Learn about what we’re required to publish about safeguard facilities each financial year.
Who it covers
The Safeguard Mechanism applies to responsible emitters of facilities that emit more than 100,000 tonnes of carbon dioxide equivalent (tCO2-e) covered emissions a year (or other monitoring period). This includes mining, oil and gas production, manufacturing, transport and waste facilities.
Covered emissions means a facility’s scope 1 emissions, except:
- from legacy waste at a landfill facility (deposited before the Safeguard Mechanism began on 1 July 2016)
- from the Greater Sunrise special regime area
- from a grid-connected electricity generator in a financial year covered by the sectoral baseline
- emissions not covered under the National Greenhouse and Energy Reporting (Measurement) Determination 2008.
Safeguard and NGER reporting
The Safeguard Mechanism leverages data reported under the National Greenhouse and Energy Reporting (NGER) Scheme to minimise additional reporting requirements. All safeguard facilities must report under the NGER Scheme.
Responsible emitters that are not already registered must apply for NGER registration by 31 August after meeting the safeguard threshold. This includes subsidiaries of a registered controlling corporation’s corporate group. If a controlling corporation is also a responsible emitter, it does not need to register again.
If your facility is likely to be covered by the Safeguard Mechanism for the first time, we encourage you to contact us early when preparing your NGER reporting. We will help you understand safeguard obligations and any flexibility options that may be available.
Our role
We regulate the Safeguard Mechanism by:
- administering baselines
- ensuring facilities manage their excess emissions
- issuing SMCs
- publishing safeguard data.
The Department of Climate Change, Energy, the Environment and Water oversees the policy of the Safeguard Mechanism. Read the policy intent on the department’s website.
Legislative framework
- National Greenhouse and Energy Reporting Act 2007
- National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015
- National Greenhouse and Energy Reporting (Measurement) Determination 2008
The Safeguard Mechanism was reformed in 2023. Learn about the changes made to the scheme.
The department will review the Safeguard Mechanism’s policy settings in 2026–27.
