The ‘Safeguard Mechanism’ is a legislated framework in Australia for heavy emitting facilities (approximately 215 facilities producing more than 100,000 tonnes carbon dioxide equivalent (t CO2-e) each year) to measure, report and manage their carbon emissions by setting baselines and requiring facilities to keep emissions at or below a respective baseline for this facility.
The Australian Government's National Greenhouse and Energy Reporting (Safeguard Mechanism) Amendment (Reforms) Rules 2023 has been passed by Parliament, with the new arrangements taking effect from 1 July 2023.
On an annual basis, each covered facility is required to report its emissions to the Clean Energy Regulator. If emitted above the baseline during a compliance year, facilities in-scope will have an obligation to settle their over emission and will need to consider if a provision is required to be recognised at a reporting date.
Conversely, if emitted below the baseline, facilities will receive Safeguard Mechanism Credits (SMCs) and will need to consider government grant accounting for the carbon credits.
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Keep up-to-date with changes in accounting standards and regulatory requirements in Australia through KPMG’s financial reporting updates.
Overview of accounting standards & regulatory requirement changes for financial reporting.
Australian resource centre on the financial reporting impacts of climate change and developments in sustainability reporting.
Australian resource centre on the financial reporting impacts of climate change.