Australia Safeguard Mechanism 2023

The Safeguard Mechanism caps net emissions of about 208 large industrial facilities (over 100,000 tCO2-e per year across coal, metals, oil and gas, manufacturing and transport) on a trajectory to 43% below 2005 levels by 2030 and net zero by 2050: no more than 100 Mt in 2029-30, zero per year from 2049-50, inside a 1,233 Mt decade budget. Reformed in 2023, production-adjusted baselines decline 4.9% each year to 2030 (then 3.285%), with trade-exposed facilities eligible for discounted decline rates. Facilities beating their baseline earn Safeguard Mechanism Credits (SMCs); those above must surrender ACCUs or SMCs or use flexibility measures (trade-exposed adjustments, multi-year monitoring periods, borrowing). Reported 2024-25 outcomes (Clean Energy Regulator, April 2026): covered emissions 132.7 Mt (down 2.4%), baselines 126.1 Mt (down 7.3%), 13.4 million units surrendered (up 49%), 6.7 million SMCs issued, 205 of 208 facilities compliant. For CCUS the mechanism matters twice: as a demand engine for ACCUs (including CCS methods) and because beating baselines through onsite capture is directly rewarded with SMCs.