​T​he safeguard threshold

The safeguard mechanism commenced​​ on 1 July 2016 and a​pplies to facilities that emit more than 100,000 tonnes carbon dioxide equivalent (CO₂-e) covered emissions in a financial year. 

This extends to businesses across a broad range of industry sectors, including electricity generation, mining, oil and gas extraction, manufacturing, transport, and waste.

Emissions baselines represent the reference point against which emissions performance will be measured under the safeguard mechanism. A safeguard facility must keep its net emissions levels at or below its baseline.

We will publish a list of all facilities covered under the safeguard mechanism, after emissions have been reported under the National Greenhouse and Energy Reporting scheme for each financial year.

For more information see safeguard facility reported emissions.

Covered emissions

The safeguard mechanism applies only to covered emissions. Covered emissions are defined as scope 1 emissions, including direct emissions from fugitive emissions and emissions from fuel combustion, waste disposal and industrial process such as cement and steel making.

Some scope 1 emissions are not covered by the safeguard mechanism. These include:

• legacy emissions from the operation of a landfill facility (that is, emissions from waste deposited at the landfill before 1 July 2016),
• emissions which occur in the Greater Sunrise unit area or Joint Petroleum Development Area,
• emissions from the operation of a grid-connected electricity generator in a year covered by the sectoral baseline, and
• emissions not covered under the National Greenhouse and Energy Reporting (Measurement) Determination 2008.

Sectoral coverage

The safeguard mechanism has been designed to accommodate the unique circumstances of the electricity generation, transport and waste sectors.

Sectoral baseline: electricity generation

A sectoral baseline of 198 million tonnes of carbon dioxide equivalent will apply collectively to grid-connected generators until this baseline is exceeded. If the sectoral baseline is exceeded, individual baselines will apply to each generator.

A sectoral approach has been adopted as the electricity generation sector behaves more like a single entity, where the energy produced is centrally coordinated to meet demand in real-time.

For more information see sectoral baseline.

Transport

To accommodate interstate transport operations, transport businesses will have the option to define their facilities on a state or national basis.