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In Focus: Latest Safeguard Mechanism Updates for 2024

The Safeguard Mechanism, one of Australia’s key emissions reduction tools, covering over a quarter of the country’s emissions underwent a series of reforms last year.

The latest proposed Safeguard Mechanism update makes it more robust, but also will have significant implications on some emitters.

Emissions Intensity Determination – an important Safeguard Mechanism update

In the latest proposed Safeguard Mechanism update, a subtle clarification was made that has potentially material impacts to covered entities. This surrounds Emissions Intensity Determination or EID, which establishes the site-specific intensities of production variables at each facility. 

Facilities without an EID must now either use a best practice baseline for a production variable (PV), or if no best practice value has been prescribed, default to a zero baseline for that PV.

Facilities without an EID will now be held to low best practice, or a zero intensity for their PVs. This poses a significant risk to responsible businesses and potentially material financial costs.  

This change was needed to close a known loophole and simplify compliance. However, it comes late with many organisations already appointing advisers and auditors to complete their EID applications before April 2024.

Time is now of the essence for those without an EID.

Responsible emitters now have 3 ½ months left to collect historical years data, prepare the intensity calculations and EID application, and have it audited.

The audit timeframe is the most concerning – as all historical years’ data may need to be audited to a reasonable assurance standard by 30th April 2024, with time also needed for executive review and sign-off.

Safeguard Mechanism updates – Other proposed changes

Other changes to look out for include the addition of seven new production variables; including one for mine rehabilitation, hydrogen, lithium ore, and renewable fuels amongst others.  The mine rehabilitation PV will mean that large mining facilities will effectively have a baseline emissions allocation for end of mine life and significant rehabilitation activities.

There have also been some significant modifications to existing PVs, and updates on several industry default intensities, slight clarifications for Trade Exposed Baseline Adjusted facilities, and publication of some best practice intensities in Schedule 1.

In general, several clarifications have been made that remove uncertainty and tighten definitions, for a more robust piece of legislation. This was informed by weeks of consultation with industry, to ensure the mechanism is fit for purpose.  

A forward-looking instrument encouraging clean transformation of industry

One of the most exciting things we can see is how the Safeguard Mechanism is actively accommodating and encouraging clean transformation of industry without penalising facilities for doing the right thing. This includes addition of a mine rehabilitation production variable, a hydrogen production variable, clean fuels and accommodations for cleaner production in both steel and oil and gas.

Prior to the latest Safeguard Mechanism update, there was a chance facilities would try to access the industry average values if they didn’t submit an EID. This would mean that if a facility was less intense than the industry average, they would have extra headroom before they would have to make any real reductions.

This change ensures every existing facility is measured against its own starting point – and if they don’t apply for an EID they could face serious liability upfront.

For more information and the latest updates visit the Consultation Hub.

Want to understand more about the Safeguard Mechanism and Emissions Intensity Determination?

Our team has deep subject matter knowledge of, and experience with, environmental reporting under the Emissions Reduction Fund and Safeguard Mechanism updates and legislation. We can help you:

  • Review your historical NGER data for any method changes or updates required for any Emissions Intensity Determination calculations,
  • Calculate your emissions intensity in line with the Safeguard Rule Amendments,
  • Prepare your Emissions Intensity Determination application,
  • Model of your anticipated Baseline Emissions Number out to 2030.

Learn more about our compliance services and read about the reforms in our article: Safeguard Mechanism 2.0 – Reform Changes and Safeguard Mechanism Credits.

We’ve been technical experts and trusted advisors to some of Australia’s most well-known companies for over a decade, contact us via email to see how we can assist or call +61 3 7035 1740

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    ATIYAH

    CARBON NEUTRAL PRODUCT

    ​AWESOME STREETFOOD, ZERO CARBON – that’s Atiyah. With its launch in 2020, Atiyah became Australia’s first 100% renewable-run street food zero-carbon kitchen certified under Climate Active. Atiyah sets operational carbon efficiency benchmarks and raises awareness about the global warming impact of food choices. They even disclosed the footprint of every item on their menu to empower their customers’ low-carbon lifestyle. We assist ATIYAH with their carbon neutrality certification.

    ORIGIN

    CARBON NEUTRAL ORGANISATION & PRODUCT

    Responsible business is at the heart of what Intrepid does. Intrepid has been a pioneer in measuring and reporting carbon emissions since 2010. When it joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.

    NEXTDC

    CARBON NEUTRAL ORGANISATION & PRODUCT NEXTDC are one of Australia‘s most trusted providers of data centre solutions. Since 2018 we’ve been assisting them with their Greenhouse Gas (GHG) accounting and in March 2021, the company broke ground with the launch of NEXTneutral, an innovative Climate Active-compliant colocation opt-in program for their customers. Learn more.

    GOODMAN

    COMMERCIAL & INDUSTRIAL PROPERTY
    Goodman Group is an ASX20 global property expert in logistics and business space. It owns, develops and manages industrial property in 17 countries. We provide strategic advisory on Goodman’s operational GHG inventory and trajectory, the GHG intensity of its investment portfolio, net zero pathway and carbon neutral certification, as well as the renewable energy delivery strategy.

    ISPT

    PROPERTY FUND MANAGEMENT
    ISPT is one of Australia’s largest unlisted property fund managers, with over $11.9 billion of funds under management. We assist ISPT with its net zero pathway, land-based offset strategy as well as maintaining its carbon neutral certification. When ISPT joined the Climate Active network, it pioneered many concepts. It became the first participant under Climate Active to voluntarily include base building operations on all its owned and operated properties into its organisational certification and, as an industry first, procured 100% Australian Carbon Credit Offset Units (ACCUs).

    BHP

    METALS & MINING
    BHP is an ASX listed, world-leading resources company and are among the world’s top producers of major commodities, including iron ore, metallurgical coal and copper. They also have substantial interests in oil, gas and energy coal. We assist BHP comply with energy and greenhouse gas legislation and advise facilities on matters related to energy use and production emissions.

    Intrepid

    TRAVEL
    Intrepid Travel is the largest small group adventure travel company in the world. Responsible business is at the heart of what Intrepid does. We assist Intrepid with their Human Rights reporting obligations as well as many aspects of its GHG accounting and reporting. This includes its Science-based target (SBT), making them the first tour operator with approved SBT. When Intrepid joined the Climate Active family in 2018, it became the largest global provider of carbon neutral certified travel adventures and the first company to voluntarily include all global operations in its certification.

    LION

    BEVERAGES
    Lion is a global beverage company with a portfolio of brands in beer, cider, wine, spirits, seltzers, and non-alcoholic drinks. Lion has four large and four small Australian breweries, and its brands include XXXX, GOLD, Tooheys New, and Little Creatures. We assisted Lion to become Australia’s first large-scale brewer to be certified as carbon neutral under Climate Active in 2020.

    QANTAS Airline

    AIRLINE
    Founded in the Queensland outback in 1920, Qantas has grown to be Australia’s largest domestic and international airline. We have worked with Qantas since 2016 on a variety of emissions reduction projects.

    ORICA

    METALS & MINING
    Orica is the world’s largest provider of commercial explosives and innovative blasting systems to the mining, quarrying, oil and gas and construction markets, a leading supplier of sodium cyanide for gold extraction, and a specialist provider of ground support services in mining and tunnelling. We assist Orica with their regulatory reporting such as NGERs and also carbon abatement projects.

    Fulton Hogan

    CONSTRUCTION
    Fulton Hogan has more than 80 years experience in the transport, water, energy, mining, civil construction and land development infrastructure in New Zealand, Australia and the South Pacific.
    We assist Fulton Hogan comply with NGER and NPI legislation for their extensive national operations. We work Fulton’s team to streamline reporting procedures to avoid duplicating data handling and transparently demonstrate data flows and aggregations.

    TOYOTA AUSTRALIA

    AUTOMOTIVE
    Toyota Australia was founded in 1963 and is one of Australia’s leading automotive companies. We have worked with Toyota since 2018 on many aspects of its GHG accounting, target setting, reduction initiatives, and reporting. We continue to inform strategic decisions around the contribution of the Australian business to the realisation of Toyota’s global Environmental Challenge 2050.

    H&H Group / Swisse Wellness

    CONSUMER GOODS
    H&H Group is a global health and nutrition company listed on the Hong Kong Stock Exchange. Consumer brands include Biostime, Solid Gold Pet, Dodie, Good Goût, Aurelia Probiotic Skincare, CBII, and Swisse Wellness, a vitamin, supplement, and skincare brand, born in Australia in 1969. We have been working with Swisse and the group on many aspects of its GHG accounting and reporting, including the ongoing management of its Climate Active certification.

    AGL ENERGY

    ENERGY
    AGL is one of Australia’s leading energy companies offering electricity, gas, solar and renewable energy services, plus internet and mobile plans. We have assisted AGL for over five years on a variety of activities including audit and assurance projects.

    VIVA ENERGY

    ENERGY
    Viva Energy is a leading energy company which supplies about a quarter of Australia’s fuel requirements. Viva Energy make, import, blend and deliver fuels, lubricants, solvents and bitumen through extensive national and international supply chains. We assist Viva Energy with a range of energy and greenhouse gas related projects. These include annual NGER reporting, Safeguard baseline setting, advice on Emission Reduction Fund opportunities and emission trajectories.