Australian Carbon Market Undergoes Structural Transformation with New Safeguard Mechanism
The Australian carbon market is experiencing a significant structural transformation, moving from a voluntary-driven system to one primarily influenced by mandated compliance obligations. This shift is largely due to the reformed Safeguard Mechanism (SGM), which now covers 208 of Australia’s largest industrial facilities, those emitting over 100,000 tonnes of carbon dioxide equivalent annually. The SGM mandates a 4.9% annual baseline decline through to fiscal year 2030, with post-2030 baseline settings under review and expected to be finalized by July 1, 2027. This regulatory change has elevated Australian Carbon Credit Units (ACCUs) into a core financial risk-management asset for major industrial emitters. In the 2024-25 compliance year, 141 facilities exceeded their baselines by a combined 13.7 million tonnes CO2-e, leading to the surrender of 10.8 million ACCUs to manage the shortfall. While Safeguard Mechanism Credits (SMCs) offer a secondary compliance currency, ACCUs remain the dominant tool for comp...
