Safeguard Mechanism credit units (SMCs) are tradeable credits. They are issued to responsible emitters who reduce their facility's emissions below its baseline and meet other eligibility requirements.
A responsible emitter that is issued with SMCs can:
- trade them, including to other responsible emitters with a facility that exceeds its emissions baseline
- surrender them to meet their own Safeguard Mechanism compliance obligations.
An SMC represents one tonne of carbon dioxide equivalent (tCO2-e) emissions below a facility's baseline. The price of SMCs is determined by market forces such as supply and demand.
SMCs are an accounting tool within the Safeguard Mechanism’s regulated emissions limit. They are not offsets. This is different from ACCUs, which represent one tCO2-e of emissions that would have otherwise been released into the atmosphere.
Eligibility for SMCs
A responsible emitter may apply for SMCs if their facility has net emissions below its baseline for the relevant monitoring period (which can include an MYMP).
We can't issue SMCs for a:
- landfill facility
- facility that has increased its baseline for the financial year with a borrowing adjustment.
Some facilities with emissions below the safeguard threshold may also be eligible for SMCs if they have previously been covered by the Safeguard Mechanism. These are called eligible facilities.
Learn more about the rules for eligible facilities in Appendix A of the SMC issuance and carbon unit surrender guideline.
Applying for SMCs
We recommend that responsible emitters apply for SMCs as soon as possible after their safeguard position statement for the financial year has been issued in Online Services. We will issue SMCs in late January following the relevant reporting period.
A responsible emitter must have an Australian National Registry of Emissions Unit (ANREU) account to be issued SMCs. You can manage SMCs through your ANREU account in the Unit and Certificate Registry.
Find out more in our SMC issuance and carbon unit surrender guideline.
Trading SMCs
ANREU account holders can trade SMCs through their ANREU account in the new Unit and Certificate Registry.
Read our Unit and Certificate Registry guidance.
Relinquishing SMCs
We may require responsible emitters to relinquish SMCs that were issued because of false or misleading information, including an error in NGER reporting.
A court may also order responsible emitters to relinquish SMCs that were issued based on fraudulent conduct.