Safeguard Mechanism credit units

Safeguard Mechanism credit units (SMCs) are tradeable credits. They incentivise safeguard facilities to reduce their emissions beyond their baselines.

Safeguard facilities that earn SMCs can trade them. This could include:

• selling them to other safeguard facilities
• surrendering them to stay within their baseline.

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 safeguard facilities. SMCs aren't offsets.

The price of SMCs will be determined by market forces such as supply and demand. 

SMC eligibility

You may apply for SMCs if your facility has a standard baseline and either your:

• emissions are below your baseline in a particular financial year
• net emissions are below your net 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.

We may revoke SMCs issued:

• on false or misleading information
• as a result of fraudulent conduct.

Complete the SMC issuance application in Online Services. 

Trading SMCs

You can buy, sell and surrender SMCs through an ANREU account in the new Unit and Certificate Registry.

SMCs aren't offsets. They allow facilities with lower emissions reduction costs to sell their SMCs to facilities with higher costs.