Australian Safeguard Mechanism - Key Reform Features
Found in: Blog
Found in: Blog
The Australian Safeguard Mechanism (ASM) is a national policy established through the National Greenhouse and Energy Reporting Act 2007 (Cth) that aims to reduce greenhouse gas emissions from Australia's largest emitting facilities. The ASM was introduced in 2016 and applies to facilities that emit more than 100,000 tonnes of carbon dioxide equivalent (CO2-e) per year. It presently covers approximately 215 of the highest emitting facilities typically in the mining, oil and gas production and processing, manufacturing and transport and logistics sectors.
The ASM operates by setting a limit on the total amount of emissions that a facility can emit, called an emissions baseline. The person with operational control of a covered facility is required to manage its net scope 1 emissions so as not to exceed the emissions baseline set for the facility. Greenhouse gas emissions may be managed directly through abatement or indirectly via carbon credits that offset emissions. Failure to manage emissions leave a responsible emitter open to a number of discretionary enforcement options at the hands of the Clean Energy Regulator (CER) (including civil penalties up to $2.75million).
In March 2023, the Australian Government announced that it had brokered a deal with the Greens to implement major reform to the ASM through the Safeguard Mechanism (Crediting) Amendment Act 2023 (Cth).
The following is a summary of key aspects of the reforms which take effect on 1 July 2023:
The Australian Safeguard Mechanism is a national policy that aims to reduce greenhouse gas emissions from Australia's largest emitting facilities. The ASM has been credited with reducing Australia's emissions by an estimated 20 million tonnes of CO2-e since it was introduced. The Australian Government has also committed to increasing the ambition of the ASM in the future.
The reform of the ASM is expected to make the ASM more effective and efficient, and to ensure that it is consistent with Australia's international climate commitments.
The ASM has a number of benefits, including reducing greenhouse gas emissions, creating a market for carbon credits, providing funding for low-emissions projects, driving innovation in low-emissions technologies, and helping Australia meet its international climate commitments.
The ASM also faces a number of challenges, including the cost of compliance, complexity, enforcement, and making Australian industries uncompetitive on the international stage.
Despite these challenges, the ASM is an important policy that is helping Australia reduce its greenhouse gas emissions.
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