Quantitative analysis

A lower Safeguard threshold would also tighten baselines for existing facilities

Quantitative analysis 7 August 2026 11-minute read Climate policy · Industrial assets · Australia

Debate about a lower Safeguard threshold has focused on the facilities that would enter the scheme. The threshold also sets the minimum baseline for facilities already covered.

Lowering the threshold from 100,000 to 75,000 tonnes would reduce their aggregate FY2029–30 baseline by at least 0.92 Mt CO₂-e. The consultation paper quantifies the 4.1 Mt of emissions that would enter coverage, but not this separate effect on facilities already covered.

Question: How would a lower coverage threshold affect facilities already inside the Safeguard Mechanism?
Basis: The FY2024–25 and FY2023–24 Safeguard registers; the Safeguard Rule ss 10(1), 11, 56(4) and 58B; the consultation paper’s table 3.3; Heliovulcan’s dataset covering 88 gold operations.
Method: The analysis projects each covered facility’s published baseline to FY2029–30 using the legislated emissions reduction contribution. It then applies minimum baselines of 100,000, 75,000, 50,000 and 25,000 tonnes and compares the resulting aggregate baselines. Coverage status is taken from the register’s section 58B disclosure, and national totals are reconciled with the department’s published estimates.
Finding: Twenty-four covered facilities currently sit on the 100,000-tonne minimum baseline; 45 are projected to reach it by FY2029–30. Reducing the threshold to 75,000 tonnes would lower the aggregate baseline for existing covered facilities by at least 0.92 Mt CO₂-e a year. This is separate from the 4.1 Mt of emissions associated with newly covered facilities.
Limits: The model holds facility production and emissions intensity constant apart from the legislated decline factor. Public data do not provide emissions for individual sub-threshold facilities. For facilities already on the minimum baseline, the register does not disclose the lower calculated value behind it, so the estimated baseline reduction is a lower bound.

At a glance

Twenty-four covered facilities currently sit on the minimum baseline; 45 are projected to reach it by FY2029–30.
At a 75,000-tonne threshold, existing covered facilities would lose at least 0.92 Mt CO₂-e of aggregate baseline a year.
The effect falls disproportionately on resources facilities: 32 of the 45 projected facilities expected to reach the minimum baseline are in metal ore mining, coal mining or oil and gas.

The threshold changes two parts of the scheme

Three current policy processes address related parts of the Safeguard Mechanism.

The Carbon Leakage Review considers border adjustment and trade-exposed baselines.
The Climate Change Authority considers the post-2030 decline rate and onsite abatement.
The department’s consultation paper considers the coverage threshold and other scheme settings.

This analysis addresses one interaction in the department’s paper: the relationship between the coverage threshold and the statutory minimum baseline. The paper’s threshold table counts the newly covered facilities: 75,000 tonnes admits 48 facilities carrying 4.1 Mt of emissions, 50,000 tonnes admits 108 facilities and 7.8 Mt, and 25,000 tonnes admits 291 facilities and 14.2 Mt, with the largest increases in metal ore mining and oil and gas extraction. Section 3.5.1 states that the minimum baseline would fall with the coverage threshold:

“Under either approach, the minimum baseline — currently 100,000 tonnes — would fall to be consistent with the new coverage threshold.”

Safeguard Mechanism Review Consultation Paper, August 2026, section 3.5.1

The consultation paper quantifies the emissions and facilities that would enter the scheme, but it does not quantify the resulting reduction in baselines for facilities already covered. The reconstruction below indicates that the effect is material.

How the minimum baseline works

The Safeguard Rule uses different baseline values for compliance obligations and credit issuance. Section 10(1) prevents a covered facility’s compliance baseline from falling below 100,000 tonnes. Section 56(4), however, measures credit issuance against the lower baseline that would have applied without that floor.

Compliance obligation. A facility’s baseline is set to 100,000 tonnes if the number calculated under the ordinary rules comes out below 100,000.

National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015, s10(1)

Credit issuance. Credits are issued against the baseline that would have been calculated “if subsection 10(1) had not been enacted” — that is, against the unfloored number.

Same instrument, s56(4)

The two provisions serve different purposes. The minimum baseline limits the compliance burden on smaller or declining facilities. Using the unfloored baseline for credit issuance prevents the same facilities from receiving credits solely because their compliance baseline has been held at the minimum.

For a facility that remains covered while sitting on the minimum baseline, reported emissions will generally exceed its compliance baseline: the facility is covered because its emissions exceed 100,000 tonnes, and its baseline, once floored, is 100,000 tonnes. In FY2024–25, all 24 covered facilities on the 100,000-tonne minimum reported emissions above that level. The lowest reported 101,144 tonnes and the median 127,011 tonnes.

The other 19 facilities shown at 100,000 tonnes were no longer designated large facilities for the year and therefore carried no Safeguard obligation. They are excluded from the estimated effect of changing the minimum baseline; the register evidence for them, including one credited against its unfloored baseline under section 56(4), is in the technical appendix.

Falling below the threshold does not always end coverage: a facility inside a multi-year monitoring period stays in, and one facility in the 2024–25 table is covered on emissions of 80,908 tonnes on that basis. It is the only such case in the table.

The register shows the covered group on the minimum baseline growing year by year.

Exhibit 1 The compliance baseline and the crediting baseline diverge once the minimum applies

Baseline the facility must not exceed — s10(1) Baseline credits are measured against — s56(4) Emissions reductions that earn no credits

The chart shows a typical facility expected to reach the minimum baseline rather than a named site. Its baseline reaches 100,000 tonnes in FY2024–25 and would fall to 72,838 tonnes by FY2029–30 without the minimum. Twenty-four covered facilities are on exactly that baseline today, so they all project to the same figure. The gap between the compliance baseline and the crediting baseline represents emissions reductions that would reduce a facility’s surrender obligation but would not generate Safeguard Mechanism Credits. A covered facility cannot occupy the shaded band, because emissions inside it are below the coverage threshold; a facility whose emissions fall below the threshold may cease to be covered, subject to the multi-year monitoring provisions.

Source: National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015, s10(1) and s56(4); emissions reduction contribution schedule 0.951 (2023–24) declining 4.9 points a year to 0.657 (2029–30). Analysis by Heliovulcan.

Exhibit 2 The number of covered facilities parked on the statutory floor is compounding

Filed — counted in the published register Projected on the legislated schedule

The two panels share a time axis but not a scale, because one shows a count and the other a tonnage. The lower panel starts in 2025–26 because the held-back tonnage cannot be computed for the filed years: for a facility already on the floor, the register publishes the floored number and not the one behind it. The projection holds production and emissions intensity fixed. It does not model the separate convergence of facility-specific intensity toward the industry average, which would push more facilities onto the floor; 45 is therefore a conservative count. Facilities that have ceased to be covered are excluded throughout: the minimum applies to their published baseline but creates no obligation.

Source: Clean Energy Regulator published Safeguard baselines and emissions, FY2023–24 and FY2024–25 (208 covered facilities on 209 rows in the later year, from a 228-row table). Analysis by Heliovulcan.

A covered facility on the minimum baseline has emissions above 100,000 tonnes and a baseline of exactly 100,000 tonnes. It cannot comply without credits unless it falls below the coverage threshold.

The floor cohort is concentrated among smaller-emitting facilities in resource sectors. Of the 45 covered facilities projected to reach the floor by 2029–30, 17 are metal ore mines, 10 are coal mines and 5 are oil and gas facilities. Metal ore mining accounts for 38 per cent of the projected floor cohort, compared with 24 per cent of the covered register; coal mining runs the other way, at 22 per cent of the cohort against 32 per cent of the register, because coal mines are on average larger emitters and stay above the floor.

The composition of the cohort by sector, with the register shares, is charted in the appendix.

The effect on existing facilities

Because the minimum baseline moves with the coverage threshold, the threshold decision also determines whether the baselines of the 45 facilities expected to reach the minimum baseline resume declining.

Exhibit 4 A lower threshold changes both coverage and existing baselines

Baseline no longer granted to facilities already covered Emissions newly brought into the scheme

Both bars are measured in Mt CO₂-e, but they represent different effects and should not be added together. The teal bar measures the decline in allowable baselines for facilities already covered. The orange bar measures emissions entering the scheme, not the immediate compliance obligation created by their entry: on the department’s own Option 2 for new entrants, close to none of it is an obligation in the first year.

Coverage threshold	Covered facilities on the floor in FY2029–30	Extra baseline created by the statutory minimum	New facilities admitted	Newly covered emissions
100,000 t — current	45	0.99 Mt	—	—
75,000 t	25	0.07 Mt	48	4.1 Mt
50,000 t	0	0.00 Mt	108	7.8 Mt
25,000 t	0	0.00 Mt	291	14.2 Mt

Source: Floor columns — Heliovulcan reconstruction from the published FY2024–25 Safeguard register, projected to FY2029–30. Admissions columns — Safeguard Mechanism Review Consultation Paper, August 2026, table 3.3. The admissions columns are the department’s; the floor columns are not published by the department. “Extra baseline created by the statutory minimum” is the sum, over facilities expected to reach the minimum baseline, of the difference between the statutory minimum and the projected unfloored baseline.

Moving the threshold from 100,000 to 75,000 tonnes admits 48 facilities carrying 4.1 Mt of emissions. Those emissions are not an obligation: a newly covered facility receives a baseline, and only the gap between its emissions and that baseline must be covered. Under the department’s Option 2, where new entrants start near the top of the decline curve, the first-year obligation is close to zero.

The 0.92 Mt figure measures a separate effect: baseline that stops being granted to facilities already regulated, reporting and covered. That reduction translates directly into a tighter aggregate compliance limit for existing facilities. It applies through existing reporting and compliance arrangements, but it is not included in the consultation paper’s threshold table.

Why the effect changes sharply at particular thresholds

Three qualifications affect the estimate.

The estimate is a lower bound

For the 24 covered facilities already on the minimum baseline, the published 100,000 tonnes is the floored value; the calculated baseline behind it is lower, by an amount the register does not disclose. Projecting 100,000 forward therefore overstates their unfloored FY2029–30 baseline and understates the difference between the minimum baseline and the calculated baseline.

The effect changes sharply at particular thresholds

The effect changes unevenly because 24 facilities share the same published 100,000-tonne baseline and therefore project to the same 72,838 tonnes in 2029–30. At a 75,000-tonne threshold they remain just under the new minimum and stay floored; at 50,000 tonnes they move entirely off the floor. The precise transition depends on calculated baseline values that are not publicly disclosed. The distribution of projected baselines is charted in the appendix.

The analysis does not identify a preferred threshold

This analysis does not assess which coverage threshold should be adopted. It identifies an effect that should be included when the options are compared. The department’s reasoning against a 25,000-tonne threshold (291 new facilities, 18 new industry groups, administrative cost outrunning abatement) is not examined here.

Which sectors are most exposed

The practical effect is concentrated in resource sectors.

Both the department and the Authority raise the same concern. Net emissions fell 7.4 per cent and then 5.5 per cent across the two post-reform years, while gross emissions, before credits, fell 1.9 and 2.4 per cent. The difference was met with credits. The Authority states that material onsite abatement “appears limited to a few facilities”.

The facility register shows that credit use is concentrated in resource sectors.

Four-fifths of offset-credit surrender comes from three resource sectors: coal mining 48 per cent, oil and gas extraction 18 per cent and metal ore mining 15 per cent of the 10.5 million credits surrendered in FY2024–25. All non-resource sectors combined account for 19 per cent. The sector chart and totals, in the appendix →

Of the 24 facilities that surrendered offset credits equal to 30 per cent or more of their baseline — the threshold at which the regulator requires a written explanation of why more was not done on site — 22 are coal or metal ore mines: 12 and 10 respectively.

The measures under consideration, including quantitative limits on credit use, discounting so that more than one credit is needed per tonne, and vintage restrictions, would apply across the scheme. Their immediate effect would fall disproportionately on mining facilities. All three assume that the party holding the baseline can respond by investing on site. For a large and identifiable class of mines, it cannot.

A separate proposal raises an ownership problem at mine power stations

A lower threshold is only one proposal in the review. A separate proposal, tighter limits on ACCU use, raises an ownership problem for contractor-operated mine power stations.

At an off-grid mine, onsite abatement means changing what the power station burns or adding solar and storage in front of it. Heliovulcan examined station ownership at 39 Australian gold operations with onsite generation: 35 stations were contractor-owned, two were miner-owned and two were unresolved. Fifteen operations disclosed battery storage, and in each identified case the battery sat inside the power provider’s asset and contract.

The mine pays the Safeguard cost, but the power contractor may control the equipment needed to reduce emissions. Unless the contract passes that cost or benefit to the contractor, a higher credit price may not lead to investment. Before strengthening the price signal, the review should consider whether the party carrying the obligation also controls the relevant abatement asset. For this class of facility that is knowable only site by site.

The department projects the largest increase in facility numbers under a lower threshold in metal ore mining and oil and gas extraction. Many of those facilities are remote, off-grid or weak-grid operations with onsite power systems. The site-by-site evidence, the responsibility map and the coal comparison are in the technical appendix.

Technical appendix

The rebuild of the baseline calculation, the reconciliation against the department’s published figures, the limitations and the data tables behind each exhibit are set out separately: how this analysis was built →. Facility-level rows are in the Safeguard Atlas facilities table.

Implications for the threshold review

Include the baseline-floor effect in the options table. The consultation currently quantifies newly covered emissions but not the reduction in baselines for existing facilities.
Separate coverage from compliance impact. Emissions entering the scheme are not the same as the immediate surrender obligation created by the change.
Test whether the regulated party controls the abatement asset. At contractor-operated mine power stations, the facility carrying the Safeguard obligation may not control investment in generation, fuel switching or storage.

A threshold decision should therefore be assessed against both populations: facilities entering the scheme and facilities already covered whose minimum baseline would fall.