National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015

The Safeguard Mechanism requires Australia’s largest greenhouse gas emitters to keep their net direct emissions of greenhouse gases, including CO2 and methane, below an emissions limit (a baseline). It covers the industrial sector, including facilities in electricity, manufacturing, transport, oil and gas production, mining and waste that emit more than 100,000 tonnes of scope 1 CO2e emissions per year. The Mechanism covers around half of Australia's total GHG emissions and aims to incentivise large emitters to undertake transformative abatement projects, such as the capture and destruction of coal mine fugitive emissions.
The Safeguard Mechanism builds on the National Greenhouse and Energy Reporting scheme’s reporting and record keeping requirements. Together, the National Greenhouse and Energy Reporting scheme and the Safeguard Mechanism help businesses to measure, report and manage their emissions. 
Originally, the Mechanism required Safeguard facilities to avoid increases in emissions beyond business-as-usual levels, meaning that baselines were adjusted according to levels of production while overall emissions limits stayed relatively consistent. Facilities that exceeded their baseline were required to manage their excess emissions by purchasing and surrendering Australian carbon credit units (ACCUs). In 2023, the Rule was reformed to require Safeguard facilities to reduce their emissions in line with Australia’s climate targets through annual tightening of the overall emissions limits. The reform also established Safeguard Mechanism Credit Units (SMCs), a new crediting mechanism specifically for Safeguard facilities which may be awarded and traded alongside ACCUs. 

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