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Download
The Emissions Reduction Fund: The Safeguard Mechanism (PDF - 94.77 KB)
The Emissions Reduction Fund is central to the Governments Direct Action Plan to cut emissions
to five per cent below 2000 levels by 2020 and to 26 to 28 per cent below 2005 levels by 2030. It
comprises an element to credit emissions reductions, a fund to purchase emissions reductions,
and a safeguard mechanism.
The crediting and purchasing elements will lower national emissions, while funding
businesses to undertake projects that will improve their productivity, for example through more
efficient industrial processes, improved household and commercial energy efficiency and
improved soil productivity.
The safeguard mechanism will protect taxpayers funds by ensuring that emissions reductions
paid for through the crediting and purchasing elements of the Emissions Reduction Fund are not
displaced by significant increases in emissions above business-as-usual levels elsewhere in the
economy.
Background
The final design of the safeguard mechanism has been determined following extensive
consultation with businesses and the community. The Emissions Reduction Fund Green Paper was
released in December 2013 for public comment, followed by a White Paper in April 2014 outlining
key design features. A consultation paper canvassing options for the safeguard mechanism was
released in March 2015. The views expressed in over 85 submissions have informed the final
design.
The legislative framework for the safeguard mechanism is set out in the National Greenhouse
and Energy Reporting Act 2007 (the Act), through amendments included in the Carbon Farming
Initiative Amendment Act 2014.
The administrative detail of the safeguard mechanism is set out in the legislative rules. This
includes: which kind of facilities will be covered; how emissions baselines will be set; and
administrative processes for demonstrating compliance with safeguard obligations.
The safeguard mechanism is also supported by amendments to a number of related legislative
instruments to give effect to the safeguard mechanism, including the National Greenhouse and
Energy Reporting Regulations 2008 and the National Greenhouse and Energy Reporting (Audit)
Determination 2009.
There is a minimum baseline of 100,000 t CO2-e to ensure that baselines cannot be below the
coverage threshold.
Baselines can be adjusted to accommodate economic growth, natural resource variability and
other circumstances where historical baselines will not represent future business-as-usual
emissions.
A net emissions approach will allow businesses to use Australian Carbon Credit Units
(ACCUs) to offset emissions above the baseline.
Multi-year monitoring will allow a facility to exceed its baseline in one year, so long as
average emissions over two or three years are below the baseline.
An exemption will be available for facilities whose emissions are the direct result of
exceptional circumstances, such as a natural disaster or criminal activity.
There will be a range of discretionary, graduated enforcement options that the Clean
Energy Regulator will be able to apply to deter non-compliance.
More information
Details about the Emissions Reduction Fund are available at www.environment.gov.au/emissionsreduction-fund.
Note: While the Commonwealth has made reasonable efforts to ensure the accuracy, correctness
or completeness of the material, the Commonwealth does not guarantee, and accepts no liability
whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of
this material. Any references to the potential costs or benefits of undertaking an activity in
accordance with an emissions reduction method are estimates only. This material is not a
substitute for independent
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