•   This Part sets up a mechanism to ensure that net covered emissions of greenhouse gases from the operation of a designated large facility do not exceed the baseline applicable to the facility.

•   The mechanism starts on the safeguard commencement day.

•   A facility is a designated large facility for a financial year if the number of tonnes of carbon dioxide equivalence of the total amount of covered emissions of greenhouse gases from the operation of the facility during the year exceeds the number specified in the safeguard rules.

•   The net emissions number for a facility for a period is the number of tonnes of carbon dioxide equivalence of the total amount of covered emissions of greenhouse gases from the operation of the facility during the period:

  (a)   reduced by surrendered prescribed carbon units (for this purpose, Australian carbon credit units purchased by the Commonwealth are taken to have been surrendered); and

  (b)   increased by Australian carbon credit units that were issued in relation to the facility.

•   Each designated large facility will be subject to a monitoring period. If, at the end of a monitoring period, the net emissions number for the facility for the monitoring period exceeds the baseline emissions number for the facility for the monitoring period, an excess emissions situation exists in relation to the facility.

•   If a person is the responsible emitter for a facility, the person must ensure that an excess emissions situation does not exist in relation to the facility.

•   This Part also sets up a scheme for issuing and relinquishing safeguard mechanism credit units.