From 1 July 2023, the Commonwealth Safeguard Mechanism will transition to a ‘baseline and credit’ emissions market, with declining baselines set to align Australia’s largest emitting industrial facilities with net-zero emissions by 2050.
To incentivise emissions reductions, Safeguard Mechanism Credits (SMCs) will be issued where a facility reduces emissions below its baseline, which may be traded to another entity. Companies will therefore be given flexibility to manage their excess emissions, based on the least-cost combination of internal emissions reductions, and external abatement (SMCs and/or offsets).
The transition to a regulatory-led market is forecast to be supportive for ACCU prices, with
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