Safeguard Mechanism (Crediting) Amendment Act 2023

On 30 March 2023, the Safeguard Mechanism (Crediting) Amendment Bill 2022 was passed by both Houses of Parliament. This Act amends the National Greenhouse and Energy Reporting Act 2007 to establish a framework for the issuance of safeguard mechanism credits (SMCs).This Act includes a 'hard cap on pollution', through inserting additional legal objects to the National Greenhouse and Energy Reporting Act, including (i) ensuring total net safeguard emissions for all of the financial years between 1 July 2020 and 30 June 2030 do not exceed a total of 1,233 million tonnes of carbon dioxide equivalence, and (ii) ensuring that net safeguard emissions decline to no more than 100 million tonnes of carbon dioxide equivalence for the financial year beginning on 1 July 2029.It also amends the Income Tax Assessment Act 1997 (to provide that SMCs receive the same tax treatment as other specified units), the Australian National Registry of Emissions Units Act 2011 (to provide ownership and transfer arrangements of SMCs), the Clean Energy (Consequential Amendments) Act 2011, the Clean Energy Regulator Act 2011, and the Carbon Credits (Carbon Farming Initiative). To implement and align with the amendments, the Government intends to amend the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 and other subordinate legislation in April 2023.