Australian carbon credit units (ACCUs) and Safeguard Mechanism credit units (SMCs) both represent one tonne of carbon dioxide equivalent, and both can be used by Safeguard facilities. They differ in where they come from, what they represent and how they can be used.
Key points
- Both represent one tonne of CO2-e
- ACCUs come from offsets projects, SMCs from facilities below baseline
- ACCUs are offsets, SMCs are not
- Both can be surrendered under the Safeguard Mechanism
- Only ACCUs can be voluntarily cancelled
Where they come from
ACCUs are issued under the ACCU Scheme to registered projects that store carbon or avoid emissions, such as vegetation, agriculture, waste and energy efficiency projects. SMCs are issued to responsible emitters whose Safeguard facility emits below its baseline in a monitoring period.
What they are
ACCUs are carbon offsets. The Clean Energy Regulator (CER) describes SMCs as an accounting tool within the Safeguard Mechanism’s regulated emissions limit, not offsets. A facility can earn SMCs even if its total emissions rise, as long as its emissions stay below its baseline.
Legislation
ACCUs are issued under the Carbon Credits (Carbon Farming Initiative) Act 2011. SMCs are issued under the National Greenhouse and Energy Reporting Act 2007 and the Safeguard Mechanism Rule.
How they can be used
Both are prescribed carbon units, so each one surrendered reduces a Safeguard facility’s net emissions number by one tonne. Both can be traded and are held in ANREU accounts in the Unit and Certificate Registry.
ACCUs can also be sold to the Australian Government under carbon abatement contracts, and can be voluntarily cancelled to offset emissions. SMCs cannot be voluntarily cancelled.
Who can receive them
Any eligible participant with a registered project can be issued ACCUs. Landfill facilities and facilities in the first year of a borrowing adjustment cannot be issued SMCs.
Relinquishment
Both can be required to be handed back. ACCUs can be relinquished where they were issued on false or misleading information or stored carbon is lost. SMCs can be relinquished where they were issued on false information or because of NGER reporting errors.
References & sources
Primary regulatory documents and authoritative references underpinning this answer.