Safeguard Mechanism credit units (SMCs) are tradeable credits. They incentivise responsible emitters to reduce their facilities' emissions beyond their baselines.
Responsible emitters that earn SMCs can trade them. This could include:
- selling them to responsible emitters of other facilities with emissions above their baselines
- surrendering them to meet their own compliance obligations.
An SMC represents one tonne of carbon dioxide equivalent (tCO2-e) emissions below a facility's baseline.
SMCs are generated within a regulated emissions limit, which restricts the overall emissions of all facilities covered by the Safeguard Mechanism. SMCs aren't offsets.
The price of SMCs is determined by market forces such as supply and demand.
SMC eligibility
You may apply for SMCs if you’re the responsible emitter of a facility that has a standard baseline and either its:
- emissions are below its baseline in a particular financial year
- emissions are below its extended baseline at the end of a multi-year monitoring period (MYMP).
If your facility's emissions are below the safeguard threshold, you may also be eligible for SMCs.
We won't issue SMCs if your facility has a borrowing adjustment determination in the relevant financial year.
Applying for SMCs
You should apply for SMCs as soon as possible after submitting the facility’s emissions and energy report for that financial year. We will issue SMCs in late January following the relevant reporting period.
You must have an Australian National Registry of Emissions Unit (ANREU) account to receive SMCs. SMCs will be issued into ANREU accounts in the new Unit and Certificate Registry.
The new Unit and Certificate Registry
We’re transitioning from the current ANREU system to the new Unit and Certificate Registry. The registry will progressively hold all units and certificates we administer. It will allow account holders to manage their units or certificates in one location. Learn more about the Unit and Certificate Registry.
We may revoke SMCs issued:
- on false or misleading information
- as a result of fraudulent conduct.
Complete the SMC issuance application in Online Services.
Find out more in our SMC issuance and carbon unit surrender guideline.
Trading SMCs
You can buy, sell and surrender SMCs through an ANREU account in the new Unit and Certificate Registry. Read our Unit and Certificate Registry guidance.
SMCs aren't offsets. They allow responsible emitters of facilities with emissions below their baselines to sell their SMCs to responsible emitters of facilities with emissions above their baselines.