The revised mechanism, which uses ACCUs as one of the ways to comply, brings carbon pricing sharply into focus for emitters, investors, and customers.

It charts a clear path towards a 43 per cent reduction in emissions by 2030, giving emitters clarity over the effort needed. The requirement to justify to the Clean Energy Regulator the use of offsets if it covers more than 30 per cent of emitters’ expected emissions reductions target will also put the focus on reductions.

It’s still too early to say how emitters will meet the average annual reduction of 4.9 per cent. The share of reductions versus ACCUs will inevitably vary depending on industries. But harder-to-abate sectors are expected to rely more on ACCUs, especially during the first few years of the revised scheme.

By bringing Australia up to speed with more advanced jurisdictions, such as the European Emissions Trading System, a clear and visible price on carbon creates consistency and helps prepare Australia for a world in which carbon border adjustment mechanisms (CBAMs) will become the norm across multiple regions.

Each industry is faced with its own challenges when it comes to decarbonisation, but sourcing renewable electricity is an effective and proven way for organisations to remove a significant amount of emissions. The challenge is to make it as easy as possible for companies of any size to source green electricity.

The price of carbon should also encourage companies to start their own projects to generate ACCUs, either for their own benefit or to trade in the market and generate an additional source of revenue.

It’s clear that carbon accounting and pricing is going to become ubiquitous and more important for organisations, regardless of their size. While most of the impact to date has been felt by larger businesses, such as the ASX200 companies, these effects will naturally percolate across the supply chain.

Smaller businesses also need to focus on their carbon footprint. Calculating that footprint and working on ways to reduce it is no longer a “nice to have” strategy. Those who treat this as a “must have” will gain competitive advantage.

At Westpac we’re actively looking for opportunities to reduce our Scope 1, 2 and 3 emissions. For example, we’ve committed to sourcing the equivalent of 100 per cent of our electricity requirements in Australia from clean energy sources by 2024.

We’re also committed to partnering with customers to support and incentivise their businesses, developing new financial offerings to assist them on their transition pathways. We are sharing our deep expertise and working collaboratively to help them meet their net-zero goals right across the supply chain.

The bank has a strong focus as the leading financier to greenfield renewable energy projects in Australia. In the past five years, we’ve helped to deliver $10 billion worth of capital investment across 28 new projects.

The recent $540 million Lightsource bp project in which we participated was one of the largest renewable energy finance deals in Australia and is a great example of what’s possible in partnership. Lightsource bp’s new solar farms are backed by PPAs with industry heavyweights including Boral, Orica, Mars Australia and Engie.

The use of government carbon credits is a practical way to deliver a price of carbon that will encourage firms to embrace low or zero-carbon technology while retaining some degree of flexibility to support critical industries that are finding it more difficult to decarbonise.

Westpac has long been a partner and financier to organisations that strive to meet their net-zero ambitions and we will continue to finance renewables to support the transition at scale, which includes a focus on harder to abate industries as they seek to achieve their targets.

We know the transition isn’t linear or straightforward. But the revised safeguard mechanism is a constructive market-based scheme that will help steer corporate Australia towards its Paris-aligned goals.

Anthony Miller is chief executive of Westpac Institutional Bank