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What standing still costs under the Safeguard Mechanism

Safeguard baselines fall every year to 2030. We worked out the bill for a facility whose emissions stay where they are.

A worked example for a typical site in Australia, built from published prices and benchmarks. It is not a client result. Money is in US dollars and rounded for reading.

US$2.5 million

in carbon credits by 2030 if emissions stay flat

  • 98,000 tof CO₂e over baseline across the four years to 2030
  • US$5.7 millionif the credits are bought at the cost-containment price

The problem

Australia's Safeguard Mechanism covers facilities that emit more than 100,000 tonnes of CO₂e a year. Each one has a baseline, and those baselines fall by 4.9% a year to 2030.

That decline is easy to underestimate. A facility that holds its emissions flat falls further behind its baseline every year, and every tonne above the line has to be covered with Australian Carbon Credit Units (ACCUs).

We took a facility emitting 200,000 tonnes a year, set its baseline at that level for 2025-26, and held its emissions flat.

The working

Each line follows from the one before it. The inputs and their sources are listed further down, so you can redo it with your own numbers.

Flat emissions against a falling baseline

Emissions, held flat 200,000 tSafeguard baseline 160,800 t9,800 t19,600 t29,400 t39,200 t
2025-262026-272027-282028-292029-30
The vertical axis starts at 150,000 t so the gap is visible. The shaded wedge is what the facility has to cover with credits.
  1. Gap in 2029-30

    baseline × yearly decline × years

    = 200,000 t × 4.9% × 4

    = 39,200 t over baseline

  2. Gap across four years

    baseline × yearly decline × (1 + 2 + 3 + 4)

    = 200,000 t × 4.9% × 10

    = 98,000 t over baseline

  3. Cost at the ACCU spot price

    gap × spot price × exchange rate

    = 98,000 t × A$36.95 × 0.6988

    = US$2,530,425

  4. Cost at the cost-containment price

    gap × fixed price × exchange rate

    = 98,000 t × A$82.68 × 0.6988

    = US$5,662,125

The fix

Every tonne cut on site is a credit the facility doesn't have to buy. Go below the baseline and the facility earns Safeguard Mechanism Credits it can sell or bank. The useful question is which abatement projects cost less per tonne than the credits they replace.

A costed abatement plan answers it. It lists each option, from fuel switching and electrification to process changes and efficiency, with its cost per tonne and its timing against the baseline curve. The projects cheaper than the credit price go first.

What would change the answer

Real baselines depend on production and on each facility's emissions intensity values, so they move with output. This example keeps production flat.

ACCU prices move as well. The spot price here is from August 2025 and the cost-containment price is the one for 2025-26.

Inputs and sources

  • Facility baseline, equal to 2025-26 emissions200,000 t CO₂e a yearAssumption for a typical site; covered facilities emit over 100,000 t
  • Baseline decline per year to 20304.9%Clean Energy Regulator, Safeguard Mechanism
  • Years to 2029-304 years2026-27 to 2029-30
  • ACCU spot price, Aug 202536.95 AUD/tCER Quarterly Carbon Market Report, June quarter 2025
  • Cost-containment price, 2025-2682.68 AUD/tClean Energy Regulator
  • AUD to USD0.6988 USD/AUDBangladesh Bank reference rates, 18 Oct 2026

Want your own numbers?

Describe what you want to fix and where. A specialist from the relevant team will reply by email.

info@engg.tech