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Safeguard mechanism for the Emissions Reduction Fund

Regulation Impact Statement – Department of the Environment

On 7 October 2015, the Minister for the Environment made the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 establishing the operational elements of the safeguard mechanism for the Emissions Reduction Fund. The purpose of the safeguard mechanism is to protect taxpayers’ funds by ensuring that emissions reductions purchased by the Government under the Emissions Reduction Fund are not offset by significant increases in emissions above business-as-usual levels elsewhere in the economy. The safeguard mechanism will commence on 1 July 2016. It is designed to ensure that:

  • business-as-usual economic growth is accommodated;
  • there are a range of emissions management options to assist businesses covered by the safeguard mechanism to meet their safeguard obligations;
  • a sectoral approach is taken to the coverage of grid-connected electricity generators; and
  • new investments are encouraged to perform at industry best practice.

A Regulation Impact Statement (RIS) was prepared and certified by the Department of Environment under the Australian Government’s best practice regulation requirements, and has been assessed as compliant and consistent with best practice by the Office of Best Practice Regulation (OBPR). The RIS estimates that the measure will increase regulatory costs by $487,693 per annum in aggregate. The OBPR has agreed to the estimated regulatory costs and the offsets.