A borrowing adjustment lets a Safeguard facility increase its baseline for one financial year by up to 10% of its unadjusted baseline. The borrowed amount, plus interest, comes off the following year’s baseline.
Key points
- Borrow up to 10% of the unadjusted baseline
- Repay from next year's baseline with interest
- Interest is 10% for 2025-26 onwards
- No SMCs in the borrowing year
- Due 28 February
The cost of borrowing
- For 2024-25 or earlier, the next year’s baseline falls by the borrowed amount plus 2%.
- For 2025-26 or later, it falls by the borrowed amount plus 10%.
Who can borrow
- The facility has not been issued SMCs for the year.
- It is not in a multi-year monitoring period for the year.
- It is likely to be a designated large facility in the following year.
Effect on SMCs
A facility cannot be issued SMCs for the first year of a borrowing adjustment, even if it later comes in under its adjusted baseline.
How to apply
Applications are due by 28 February after the end of the first financial year of the proposed borrowing, through Online Services. The CER’s borrowing adjustment application guideline sets out the eligibility tests, the information required and how the adjusted baselines are calculated.
What unadjusted baseline means
The 10% limit is measured against the facility’s baseline for the first year before the borrowing adjustment is applied.
A worked illustration
Take a facility with an unadjusted baseline of 1,000,000 t CO2-e for 2025-26. It can borrow up to 100,000 t CO2-e, raising its 2025-26 baseline to 1,100,000 t CO2-e. Its 2026-27 baseline is then reduced by the borrowed 100,000 t CO2-e plus 10%, a total of 110,000 t CO2-e. The figures are illustrative only.
How it fits with other options
Borrowing cannot be combined with a multi-year monitoring period in the same year, and a trade-exposed baseline-adjusted determination is not available for a year with a borrowing adjustment. The 28 February deadline falls before the 31 March surrender deadline and the 1 April compliance deadline, so the borrowing decision sits early in the compliance cycle.
References & sources
Primary regulatory documents and authoritative references underpinning this answer.