Facilities covered by the Safeguard Mechanism will have a baseline emissions number calculated for each monitoring period (usually a financial year). This is the number of carbon dioxide equivalent emissions (CO2-e) that the facility’s net emissions must not exceed.
Baselines decline each year in line with Australia’s climate targets.
A safeguard facility’s net emissions number is compared to its baseline emissions number for each monitoring period. If the net emissions are above the baseline, the responsible emitter must manage the excess emissions.
We will inform responsible emitters of their facility’s baseline in a position statement. This is issued through Online Services after 31 October – see more information about the submission deadline for NGER Scheme reports.
If you have questions about how your new facility’s baseline will be calculated, contact us.
How baselines are calculated
Baseline emissions numbers are calculated using the formulas set out in the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Safeguard Rule).
At a high level, the baseline emissions number is calculated as follows:
- Start with the quantity of each production variable produced by the facility during the financial year, as reported under the National Greenhouse and Energy Reporting (NGER) Scheme.
- Multiply the quantity of each production variable by the relevant emissions intensity number.
- If you have more than one production variable, add the results together.
- Apply the relevant baseline decline rate.
The baseline emissions number for a facility changes where there is either a:
Exceptions for different facility types
Shale gas facilities have a baseline of zero t CO2-e every financial year.
Landfill facilities and grid-connected electricity generators have different baseline settings.
Landfill facilities provide a service rather than produce an output, meaning they don't have identifiable production variables. For this reason, landfill facilities have different baseline setting arrangements from other facilities.
The baseline emissions number for a landfill facility is calculated using the following elements as set out in section 30 of the Safeguard Rule:
- the amount of non-legacy waste emissions before any capture and oxidation
- a default methane capture efficiency rate of 37.2%
- the near-surface methane oxidation factor in section 5.4(1) of the National Greenhouse and Energy Reporting (Measurement) Determination 2008
- the baseline decline rate.
The Safeguard Rule specifies a collective sectoral baseline for grid-connected electricity generators.
Individual grid-connected electricity generators are not covered by the Safeguard Mechanism unless the total emissions from all grid-connected electricity generators exceed the sectoral baseline.
The sectoral baseline applies to all electricity generators connected to Australia's 5 main electricity grids:
- National Electricity Market
- South West interconnected system
- North West interconnected system
- Darwin to Katherine network
- Mount Isa-Cloncurry supply network.
The sectoral baseline is set at 198 million t CO2-e per year. This is based on the electricity sector's emissions from the 2009–10 to 2013–14 financial years.
A grid-connected electricity generator will receive a separate baseline emissions number for activities not directly related to electricity generation where they collectively exceed the safeguard threshold. For example, this could include fugitive emissions from coal mining.
Quantity of production variable
The Safeguard Rule sets out a range of products made by facilities, called production variables. The responsible emitter of a safeguard facility must:
- identify each product the facility generates and the corresponding production variable
- measure the quantity of the product for each financial year.
Facilities may have multiple production variables with different products or services being delivered and measured, in accordance with Schedule 1 of the Safeguard Rule.
For more information, see the Safeguard Mechanism document published by the Department of Climate Change, Energy, the Environment and Water. This can help responsible emitters identify the relevant production variables for their facility and measure production quantities.
Emissions intensity
Emissions intensity means the amount of emissions released for each unit produced. Lower emissions intensity indicates fewer emissions per unit produced.
The baseline formula includes an emissions intensity number for each production variable. Depending on the facility’s circumstances, this may be one of the values specified in Schedule 1 of the Safeguard Rule:
- default emissions intensity number (representing Australian industry averages)
- best practice emissions intensity number (representing international best practice levels adapted for the Australian context). Not all production variables have a best practice emissions intensity number.
The department’s Safeguard Mechanism document outlines what is included in the default and best practice emissions intensity numbers for each production variable.
The relevant value used to calculate the baseline depends on whether the facility or its production variables are classified as new or existing. An existing facility may also be eligible for an emissions intensity determination (EID).
New facilities
Facilities are defined as new if they began all commercial production on or after 1 July 2023.
When calculating the baseline for these facilities, the emissions intensity number for each production variable is either its:
- best practice emissions intensity number – this must be used if one is specified in Schedule 1
- default emissions intensity number.
Existing facilities
Facilities are defined as existing if they have production variables that began commercial production before 1 July 2023.
When calculating the baseline for these facilities, the emissions intensity number for a production variable depends on whether:
- it is a new or existing production variable
- an EID is in place.
A new production variable is one that began commercial production on or after 1 July 2023.
The emissions intensity number for these production variables is either the:
- best practice emissions intensity number – this must be used if one is specified in Schedule 1
- default emissions intensity number.
An existing production variable is one that began commercial production before 1 July 2023.
No EID in place
For a production variable without an EID, if it began commercial production before 1 July 2022, the emissions intensity number is either its:
- best practice emissions intensity number – this must be used if one is specified in Schedule 1
- zero.
If the production variable began commercial production during the 2022–23 financial year, use the default emissions intensity number specified in Schedule 1.
EID in place
For a production variable with an EID, the emissions intensity number is a hybrid of the:
- facility-specific emissions intensity number set out in the EID
- default emissions intensity number.
An EID gives an existing facility a smooth transition to the default emissions intensity number for its existing production variables.
When an EID is in place, the production variable has a facility-specific emissions intensity value. This is based on historical emissions and production data from 1 July 2017 to 30 June 2022.
The production variable’s emissions intensity each year is a hybrid of the:
- facility-specific emissions intensity number set out in the EID
- default emissions intensity number.
Over time, the facility-specific portion of this combination reduces and the default portion increases. This transitions the facility to the default emissions intensity by the 2029–30 financial year, as shown below.
| Financial year | 2023–24 | 2024–25 | 2025–26 | 2026–27 | 2027–28 | 2028–29 | 2029–30 |
|---|---|---|---|---|---|---|---|
| Industry-average to facility-specific ratio | 10:90 | 20:80 | 30:70 | 40:60 | 60:40* | 80:20 | 100:0 |
See our EID data for more information about facility-specific emissions intensities.
Apply for an EID
Responsible emitters of existing facilities may be eligible for an EID for either:
- an existing production variable.
- a new production variable that is substantially similar to an existing production variable.
EID applications are due by 31 October after the end of the relevant financial year. They must include an independent audit report.
Learn about the application requirements in our emissions intensity determination guideline.
Complete the EID application in Online Services.
Baseline decline rate
Baselines decline by 4.9% each financial year through to 30 June 2030. Facilities with a trade-exposed baseline-adjusted (TEBA) determination have a lower decline rate, which may be as low as 1%, for 3 financial years.
The decline rate is applied to the baseline emissions number using a scaling factor, known as the emissions reduction contribution. This represents the total baseline decrease since 1 July 2023.
| Financial year | Decline rate | Emission reduction contribution |
|---|---|---|
| 2023–24 | 4.9% | 95.1% |
| 2024–25 | 4.9% | 90.2% |
| 2025–26 | 4.9% | 85.3% |
| 2026–27 | 4.9% | 80.4% |
| 2027–28 | 4.9% | 75.5% |
| 2028–29 | 4.9% | 70.6% |
| 2029–30 | 4.9% | 65.7% |
| 2030–ongoing* | 3.285% | 62.4% |