New Safeguard Mechanism provisions create opportunities

The Safeguard Mechanism for Plan

The Safeguard Mechanism is in transition, and the Clean Energy Regulator (CER) has introduced a number of new initiatives to help businesses reduce their potential Safeguard liability.  The new provisions also include one or two pitfalls, which must be managed before July 2020.

The CER has introduced provisions to reset the Baseline Number for all facilities covered by the Safeguard Mechanism.  Facilities experiencing growth should be able to increase their Baseline Number, however, unless facilities actively manage their Baseline Number, then Baseline Numbers could fall and generate operational constraints.

The first Calculated Baseline Numbers (commencing 1 July 2016) expired on 30 June 2019. Calculated Baseline Numbers commencing on 1 July 2017 will expire on 30 June 2020.  Reported Baseline Numbers (the first Baseline Numbers issued by the CER in 2016) will expire on 1 July 2020.

From 1 July 2020, facilities that do not have a new Baseline Number in place will revert to a default emissions baseline (100,000 t CO2-e).  Any Baseline Number reduction could generate operational constraints and/or a Safeguard liability.

Businesses seeking to develop a new Baseline Number to cover the 2019-20 reporting period must ensure they are in a position to apply for a new Baseline Number by July 2020.

The CER has broadened the eligibility of Calculated Baseline Numbers, and introduced a new category of Baseline Number which varies with production.  The new Safeguard provisions do offer opportunities to increase Baseline Numbers and reduce Safeguard risk.  Now is the right time to review the adequacy of Baseline Numbers and develop a strategy to reduce the risk of future Safeguard liability.

For further information on the Safeguard Reporting and transition process please contact Malcolm Sedgwick at msedgwick@umwelt.com.au.