Upcoming Mallesons seminarsAustralian corporations that consume or produce energy at or above the National Greenhouse and Energy Reporting Act reporting thresholds.
What do you need to do?Begin assessing whether you trigger the thresholds and, if so, commence recording the relevant data from 1 July 2008.
Matthew Davis
Solicitor
Louis Chiam
Partner
T +61 3 9643 4086
A large number of Australian businesses will, for the first time, be required to monitor and report their energy use and greenhouse gas emissions under new Commonwealth legislation to take effect on 1 July 2008.
In addition to introducing mandatory greenhouse gas reporting, the new legislation sets a low threshold for energy reporting, significantly increasing the number of businesses that will be required to report their energy consumption. This will be particularly relevant to sectors such as commercial buildings and vehicle fleets which were typically below the previous (higher) thresholds.
Reporting requirements
The National Greenhouse and Energy Reporting Act 2007 (Cth) obliges all Australian corporations that control facilities and consume or produce energy or emit greenhouse gases above specified thresholds to report this data to the Greenhouse and Energy Data Officer.
Fulfilling this reporting obligation requires a corporation to ask itself many detailed questions such as “How much electricity, gas and fuel do I consume?”, “What are my ‘facilities’?”, “Do I have ‘operational control’?” and “If I have to report, how do I do so?”
The Act also describes the reporting thresholds in terms not commonly used for most businesses (“terajoules” of energy and “kilotonnes” of CO2-e emissions), which makes its relevance harder to appreciate at a glance. Based on electricity and diesel individually, you may need to report if your annual bills are in the order of $2.8 million and $2.9 million respectively.
What data needs to be collected?
The Act defines energy broadly and includes electricity, natural gas as well as certain fuels. You should consider your energy inputs and start collecting consumption information (for example, electricity and gas bills as well as fuel invoices).
The Act also requires tracking of the Kyoto gases (Carbon dioxide, Methane, Nitrous oxide, Sulfur hexafluoride, Hydrofluorocarbons and Perflourocarbons ) therefore you must consider all these gases and report a total CO2-e amount.
What are the reporting thresholds?
The reporting thresholds apply to facilities and corporate groups as described in the table below.
Financial Year 1 July 2008 |
Single facility |
Corporate group |
Consumption of energy |
100TJ |
500TJ |
Production of energy |
100TJ |
500TJ |
Emission of greenhouse gases |
25kt CO2-e |
125kt CO2-e |
The corporate group thresholds progressively (and quickly) decrease over the next three financial years. Therefore companies that may miss this year’s thresholds may be caught in future.
You need only report for those facilities over which you have “operational control”
The test for operational control is whether the corporation has the authority to introduce and implement operating, health and safety and environmental (OHSE) policies.
The allocation of OHSE authority is both a factual and legal question. In many cases, the contractual arrangements between the relevant parties will be important in determining who has operational control.
Commercial buildings
A number of commercial premises will be caught by the Act, most for the first time. However, regulations have not yet been made to clarify who has “operational control” (and therefore the reporting obligations) as between the three typical parties - the owner, the facilities manager and the tenants.
It is likely that if one party clearly has full authority to introduce and implement OHSE policies then that party will be deemed to have operational control.
However, if the OHSE authority is shared then the party with the greatest authority to implement these policies is taken to have operational control.
Where the application of these operational control tests creates an ambiguous result, it is expected that the guidelines will adapt the test to apply to the party who has control over the energy billings.
Transport
Similarly, corporate vehicle fleets typically involve the relevant corporation together with a financier / lessor, a fleet manager and individual users.
In some cases, the entity that claims fuel tax credits may be deemed to have operational control over the transport activities for which the fuel is used.
However, transport fleet managers that do not claim fuel tax credits may nevertheless be deemed to have operational control provided they satisfy the Act.
What do you need to do? Prepare now for 1 July.
Corporations, who have not already, need to start preparation for their reporting now. Key issues include:
- Identifying assets and describing them in terms of their Australian and New Zealand Standard Industrial Classification (ANZSIC) code
- Assessing operational control including:
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- Determining whether the thresholds are triggered. Collect and review old electricity, gas and fuel bills to get a feel for the energy consumption for all the companies in your corporate group.
When you need to report
Corporations who are required to report must register by 31 August 2009 and submit their report by 31 October 2009. Organisations that currently report under the Energy Efficiency Opportunities Act 2006 (Cth) will use the same reporting system. For more information please see our Harmonisation of greenhouse reporting schemes alert.
Information must be tracked from 1 July 2008.