Safeguard Mechanism credit units (SMCs) are tradeable credits. They incentivise responsible emitters to reduce a facility's emissions below its baseline.
A responsible emitter that is issued with SMCs can:
- trade them, including to other responsible emitters with a facility which 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.
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.
Eligibility for SMCs
A responsible emitter may apply for SMCs for a facility that has a standard baseline, and its emissions are below either its:
- baseline in a particular financial year
- extended baseline at the end of a multi-year monitoring period (MYMP).
If a facility's emissions are below the safeguard threshold, a responsible emitter may also be eligible for SMCs.
We won't issue SMCs for a facility that has a borrowing adjustment determination in the relevant financial year.
Applying for SMCs
Responsible emitters should apply for SMCs as soon as possible after submitting the relevant emissions and energy report for that financial year. 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. The SMCs will be issued and managed in ANREU accounts in the new Unit and Certificate Registry.
We may revoke SMCs issued as a result of:
- false or misleading information
- fraudulent conduct.
Complete the SMC issuance application in Online Services.
Find out more in our SMC issuance and carbon unit surrender guideline.
Trading SMCs
Any ANREU account holder can trade SMCs through their ANREU account in the new Unit and Certificate Registry. Read our Unit and Certificate Registry guidance.