Corporations that emit greenhouse gases or that produce or consume energy above the National Greenhouse and Energy Reporting Act reporting thresholds.
What do you need to do?Check that your greenhouse gas and energy consumption and production reporting methods comply with the Regulations.
Partner
T +61 3 9643 4086
Dominic Bortoluzzi
Partner
T +61 2 9296 2178
Author
Chris Case
Last Friday the Federal Government completed a release of three legislative instruments to streamline reporting under the National Greenhouse and Energy Reporting (NGER) Act as well as providing Regulations and a monitoring methodology instrument, known as a “Determination”, to allow corporations to consolidate their reporting obligations.
NGER Regulations - reporting obligation revealed
A corporation has a reporting obligation if it:
- passes the “overall control” and “operational control” tests which apply to activities and facilities respectively, and
- meets the facility or corporate group reporting thresholds
A corporation has “overall control” or “operational control” if it has the authority to introduce and implement operating, health and safety and environmental policies. Where more than one corporation satisfies these tests, the corporation with the greatest authority is taken to have "overall control" or “operational control”.
Step 1 - “overall control” of activities forming a single undertaking or enterprise
This involves assessing:
- what are the primary and, if applicable, ancillary products and services that are provided, and
- where they are performed.
Special rules apply to particular activities listed in the Regulations including the transport sector, electricity and gas as well as industry specific sectors.
Step 2 - “operational control” over a facility
Corporations which have “operational control” over “facilities” which meet the 25kt emission or 100TJ energy thresholds, or the 125kt emission or 500TJ energy thresholds in the case of the controlling corporation's group, must register by 31 August 2009 and report by 31 October 2009 their greenhouse gas and energy consumption and production for the financial year starting 1 July 2008.
Generally, a “facility” is an activity or series of activities that form a single undertaking or enterprise, which produces greenhouse gas emissions or consumes or produces electricity.
NGER (Amendment) Bill 2008 - new features
Scope 1 (direct) and scope 2 (indirect) emissions will now be publicly disclosed rather than just one merged figure. Corporations will also disclose the accuracy rating and method used to measure their emissions. It is intended that these changes will better inform investors as to a corporation’s carbon profile.
The bill also proposes to separate the reporting of projects which reduce emissions and offsets. This means corporations will no longer be prohibited from reporting offsets which are generated outside of their corporate group.
NGER (Measurement) Determination 2008 – what is it?
The Determination mandates the methods by which the amounts of the emissions, reductions, removal, offsets and the production or consumption of energy for facilities are to be measured.
The Determination deals with both scope 1 (direct) and scope 2 (indirect) measurement methodologies.
The four categories of scope 1 (direct) emissions addressed are:
- fuel combustion
- fugitive emissions from fuels (including extraction, manufacturing and distribution steps)
- industrial processes emissions, and
- waste emissions (including organic material, landfill and wastewater facilities).
Scope 2 (indirect) methodologies deal with emissions attributed to the purchase of electricity.
How is the Determination used?
The Determination allows for the estimation of emissions in the above categories using 4 general methods:
- Method 1 derives from the National Greenhouse Accounts method, known as the “default method”
- Method 2 is a facility specific method (using accepted industry practices)
- Method 3 is the same as method 2 but is based on equivalent Australian standards, and
- Method 4 applies facility specific measurements based on Continuous Emissions Monitoring (CEM) or Periodic Emissions Monitoring (PEM) techniques.
Method 1 is the simplest method and will be the preferred method for most corporations.
What do I do now?
Given the complex technical and legal nature of emissions reporting and the 1 July start date for the first reporting period, corporations that have monitoring methodologies in place, and those who are developing them, should check, as soon as possible, to determine whether the facilities over which they have operational control meet the reporting thresholds. We can help you work through the detail of the regulatory instruments to determine this.