- January 20, 2014
- Carbon Estimation Errors to Cost Businesses $872k
The latest version of the Carbon Pricing Mechanism’s ‘Liable Entities Public Information Database’ (LEPID) dated 17 January 2014, shows that estimation errors have cost six liable entities over $872,000 in additional carbon costs.
Under the legislation organisations could choose to apply 75% of the previous year’s emissions from liable facilities, or use their own methodology to estimate. Where their methodologies have proven incorrect, an ‘estimation error unit shortfall charge’ must, and subsequently has, been applied by the Clean Energy Regulator (CER). The shortfall charge is 30% on top of every carbon unit due, bringing the cost to $29.90 per tonne of carbon from the $23 normally applicable for the 2012/13 year.
Another eight liable entities have had their shortfall charge waived by the CER. These entities were involved in joint ventures, where a legislative technicality meant that joint venture participants would not reasonably use the ‘safe’ method (i.e. using 75 per cent of the previous year’s data). This practically ‘forced’ them to estimate (and run the risk of an estimation error). They have been listed on the LEPID as being subject to an estimation error shortfall charge, however the 30% penalty has been waived.
Three other organisations have been hit with a ‘provisional unit shortfall charge’ for not acquitting the appropriate number of units, and one liable entity has been handed both a provisional and estimation error shortfall charge.
Errors a Small Fraction of Total Units Surrendered
The errors in carbon units estimated and subject to the shortfall penalty equate to only 0.06% of the total eligible emissions units surrendered (includes Australian Carbon Credit Units -from the Carbon Farming Initiative- and the free carbon units under the Jobs and Competitiveness program). The 0.06% error margin excludes the joint venture participants who had their estimation error waived.
Of the 348 liable entities currently listed on the LEPID, only 2.6% have been handed an estimation error, or provisional unit shortfall charge.
The CER can waive an Estimation Error and a Late Payment Penalty, but not a Provisional Unit Shortfall Charge
It is important for liable entities to understand what the CER can and can’t do with regards to estimation error and provisional shortfall charges. As discussed earlier, estimation error shortfalls may be waived by the CER, however provisional unit shortfall charges cannot be waived as they are legislated. Liable entities may appeal to the Department of Finance to have any debt waived at the discretion of the Minister. Even if successful they will remain on the LEPID as having a provisional unit shortfall. Our information is that this only occurs in rare circumstances and the likelihood of success would need to be considered prior to making such an application. .
Liable entities that are hit with a provisional unit shortfall charge may also be subject to a late payment penalty if payment was not made by 24 June 2013. This becomes particularly important as liable entities may not have recognised a provisional shortfall until the final emissions numbers were submitted in October 2013 or later. This penalty can be applied retrospectively and equates to 20% p.a. of the value of the shortfall charge, applied on a daily basis. Our information from the CER is that late payment penalties from a provisional unit shortfall will be dealt with on a case-by-case basis, although the CER does have the authority to waive these.
Click (here) to view the latest version of the LEPID.
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Clean Energy, Compliance, Covered Emissions, Interim Emissions Numbers, Joint Ventures
- November 22, 2013
- EEO, CFI and NGER Latest News
Highlights of November 2013 Newsletter
The latest Energy Efficiency Opportunities (EEO) newsletter can now be accessed from the EEO website. Some key information includes the achievements that Linfox, the largest trucking and logistics corporation in the Asia Pacific, has obtained by participating in the EEO Program. The corporation’s commitment to cut 50 of its 2006/07 emissions by 2015 is certainly admirable.
EEO participants are also encouraged to visit the findings of ClimateWorks Australia’s research project, Tracking Progress Towards a Low Carbon Economy, to gain a snapshot of most promising opportunities across different sectors and industries.
The Department of Industry is also seeking feedback with regards to the new reporting template (Excel Spreadsheet) and requesting participants to accompany a draft version of the spreadsheet along with other documentation before final submission. See our earlier post for further information.
The new online portal, EEO Net, is scheduled to be fully operational by the end of November. Participants will be notified of the date and activation instructions will be emailed to the EEO contact person.
The 2013 National Conference organised by the Energy Efficiency Council will be held on the 3rd and 4th of December in Melbourne. For further information and special offers for EEO participants, please visit the EEC website here.
The Commonwealth Government is also seeking input from the EEO participants with regards to design of the Emissions Reduction Fund (ERF) for inclusion of potential options of low-cost abatement.
The Clean Energy Regulator is planning to hold a series of workshops in the first half of 2014 on the sequestration group of methodologies. For more information and registration, please visit the Regulator’s CFI events webpage.
The Regulator is also urging project proponents who are currently operating under the following schemes to request for transition into the Carbon Farming Initiative if they believe their project may be eligible:
- Commonwealth Government’s Greenhouse Friendly TM initiative;
- NSW Government’s Greenhouse Gas Reduction Scheme;
- ACT Government’s Greenhouse Gas Abatement Scheme;
- Verified Carbon Standard administered by the VCS Association
The Regulator published emissions numbers reported by liable entities last week. Liable entities are required to purchase and surrender enough eligible emissions units to match the emissions number by 3 February 2014.
In addition, according to the Regulator, 10% of the reporters failed to fulfill their reporting obligation by 31st of October versus the 12% non-compliance rate in the last reporting year.
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Carbon Farming Initiative, Carbon Pricing Mechanism, EEO, NGER, Reporting Systems
- November 13, 2013
- New EEO Template Spreadsheet for Annual Reporting
The Department of Industry has released a new template spread sheet to assist in the EEO annual reporting requirement.
To make meeting the 31 December 2013 reporting deadline easier, the EEO Program has developed a spread sheet for submission of the Government Reports. This is an initial step in improving lodgement of reports and other EEO documentation.
How do I access the spread sheet?
Why should I use the spread sheet?
The spread sheet is designed to simplify the reporting process. It includes validation rules to quickly identify basic errors and is structured to enable faster feedback to corporations. There is also a quick reference guide to assist you to complete the template.
Get/give feedback on your report
To allow time for feedback and any changes that may be needed, the department encourages participants to submit drafts by December 1. Using the spread sheet to complete the Government Report will speed up this process.
You can submit the completed form through your Industry Support Officer or the EEO Program email inbox at email@example.com For questions on the form, please contact your ISO. We are also keen to take feedback on the new template as well.
What if I have already drafted my report using the old template?
You are still able to submit your report using the old versions of the template.
Next steps – EEO Net, an online portal for program participants
The EEO Program is in the process of developing an online portal for companies to lodge reports, Assessment Plans and registration applications. It is anticipated that this will be launched by late November 2013. Companies are encouraged to use this portal to lodge their Government Reports this year and will be informed when it is active. Until then please contact your ISO.
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- November 11, 2013
- 2013 NGERs season highlights, lowlights and what’s next
Another NGERs Season Over! Highlights, Lowlights and what’s next…
With the 31 October NGERs deadline been and gone we thought it would be timely to congratulate all our clients and friends the successful submission of the 2012/13 reports!
From our perspective some of the highlights and ‘not-so-high – lights’ were:
- The new Emissions and Energy Reporting System (EERS)
- We found the system quite intuitive and for the most part functionality from its predecessor OSCAR, has improved
- Expanded mandatory audit requirements for large liable emitters
- The mandatory audit regime has expanded significantly under the Clean Energy Act
- These audits are an important governance control and underpin the veracity of the reported liable emissions
- Audits also provide for liable entities to continually improve their response to this complex program under both NGERs and the Clean Energy Act
- Clean Energy Regulator (CER) Support
- We found the CER was well resourced and officers had a strong working knowledge of the legislation
- In the final weeks the CER was calling reporters yet to lodge to ensure they were on track to submit by 31 October. A great approach to engage the reporting community and encourage compliance
- ‘CER Best and Fairest’ – we’d like to nominate Thomas Hodgson as the 2013 ‘CER Best and Fairest’. Thomas provided some invaluable advice to us and our clients on some complex issues efficiently and professionally during the final stages of the reporting period.
- The NGER report submission process
- We found the actual report submission process with regard to CEO equivalent sign-off and the ability to nominate others to submit on the CEO’s behalf was an improvement on past requirements
- Also the flexibility and functionality with the EERS Client Portal was great
- The Carbon Farming Initiative (CFI)
- We have been quite busy on the CFI front, and the program is providing some fantastic Kyoto compliant offset opportunities – currently over 2.7M ACCU’s have been generated
- Contained quite a few bugs and inexplicable error messages. It’s no fun watching a CEO get error after error as they try to submit a final report!
- EERS was not ready until quite late in the reporting period, after an initial proposed launch date of April 2013 – adding pressure on reporters and advisors, especially those with large and complex inventories
- Training could/should have been advertised and implemented further and wider
- The imminent repeal of the Carbon Pricing Mechanism
- In our opinion the current mechanism represents our best opportunity to meet 5% carbon reductions by 2020 at the lowest cost for our clients – particularly under an internationally linked ETS from 2014/15
- The Direct Action Plan (DAP) is not looking quite so promising, and a lot of great work (from policy developers, Regulators and liable entities) will likely be lost post 2013/14.
- The loss of one of our best and brightest public servants
- Blair Comley former head of the former Department of Climate Change and Energy Efficiency, has been lost to the Australian Public Service (APS) under the change of government
- Having worked under Blair as a policy advisor and regulator, Matt Drum found him to be one of the most intelligent and hard-working professionals you could ever hope to meet. His knowledge of the carbon and energy policy arena will be sorely missed.
DAP consultation is now in full swing. The terms of reference for the ‘Emissions Reduction Fund (ERF)’ are out – with submissions due by 18 November. The Green Paper is due in December 2013 with the White Paper following in early 2014.
We are heavily involved in the consultation process with the Department of Environment Taskforce (charged with the policy design) and the Carbon Market Institute. Some of the critical issues we want to see some clarity on include:
- How will the proposed ‘baseline, credit and penalty’ approach work?
- Who will be liable? i.e.
- Will it be 100% voluntary opt-in?
- Will all NGERs reporters be liable (approximately 750)?
- Will only those liable under the carbon price (approximately 370) of NGER reporters be liable
- How will baselines be set?
- At the corporate, facility, sectoral or activity level?
- How will penalties be applied where baselines are exceeded?
- Will international offset units be available to meet penalties?
- Will penalties be financial in nature?
- How will the audit and verification regime be implemented?
- Who will be liable? i.e.
- How will the CFI operate and how will demand for ACCUs be maintained?
- Will energy efficiency savings be incorporated and if so how will these be aligned to Kyoto requirements and how will ‘additionality’ be applied?
- How will the ERF and reverse auction process operate?
- Who will be eligible?
- How will payments be made? Type and timing?
If you have any other items of interest, or key questions, please let us know and we can feed these into the consultation process and report back.
Materiality for 2014 NGERs
Materiality thresholds for 2013/14 reporting year have been included. Reporters need to apply these to their data capture and management strategies going forward in order to reduce the reporting burden. Please see below an overview of the amendments taken from the CER website:
Reporting of immaterial amounts
The following amendments have been incorporated into the Measurement Determination and they apply from 1 July 2013.
Reporting fuel combustion and the associated energy consumption related to a separate instance of a source are optional if the amount combusted is less than the reporting thresholds set out in Table 1.
‘Separate instance of a source’ is defined in section 1.9A of the Measurement Determination as:
“If 2 or more different activities of a facility have the same source of emission, each activity is taken to be a separate instance of the source if the activity is performed by a class of equipment different from that used by another activity.”
The combustion of liquefied petroleum gas in the engines of distribution vehicles of the facility operator and the combustion of liquid petroleum fuel in lawn mowers at the facility, although the activities have the same source of emissions, are taken to be a separate instance of the source as the activities are different and the class of equipment used to the perform the activities are different.
Reporting of electricity consumption at a facility is optional if the amount consumed is less than 20,000 kilowatt hours. The amount of 20,000 kilowatt hours was chosen because it is more than the average amount of electricity consumed by a 6 person household in Australia.
Table 1: materiality thresholds
Fuel type Threshold per instance of a source Petroleum-based oils and greases 5,000 L Other liquid fuels 1,000 L Gaseous fuels 1,000 m3 Solid Fuels 1 tonne
Australian Institute of Environmental Accountants (AIEA) 2013 Annual Conference – Registrations Closing Soon!
The AIEA conference will be held in Fremantle WA on 28 and 29 of November 2013. The Conference is a great event for those involved ‘on the ground’ in the carbon, energy, pollution and water reporting and management fields. Please click here for further information.
- The new Emissions and Energy Reporting System (EERS)
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Compliance, EERS, NGER
- September 5, 2013
- Australian Institute of Environmental Accounting (AIEA) 2013 Conference
The AIEA conference will be held in Fremantle WA on 28 and 29 of November 2013. The Conference is a great event for those involved ‘on the ground’ in the carbon, energy, pollution and water reporting and management fields.
Speakers and presentations are generally focussed on practical problems and solutions and delivered by recognised experts in the field – from consultants to corporate environmental officers and government representatives.
Click the link below to view the registration page and further information:
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- September 5, 2013
- EERS access and training videos roll-out. Face-to-face training still to come…
The Clean Energy Regulator’s (CER) Emissions and Energy Reporting System (EERS) used for reporting under the NGERs and Clean Energy Act is up and running! The CER is in the process of distributing passwords to Executive Officers and Client Administrators as we speak. Don’t worry if you have not received yours yet, as the process is staged (from A-Z) however it should be completed by next week (13 September). If you are a nominated Executive Officer or Client Administrator (formerly known as the Primary Contact under NGERs) and have not received access by the end of next week you should contact the CER on 1300 553 542.
If you have only recently registered a controlling corporation or liable entity (including government body), you would have been required to nominate a responsible Executive Officer and Client Administrator – they will receive access over the coming week also.
The CER has released training videos which offer a good insight into the new system which has replaced OSCAR. The videos cover the following topics:
- Introduction to EERS
- Reporting electricity consumption
- Reporting gaseous fuel combustion
- Reporting liquid fuel combustion
- Generating and submitting a report
Click on the link below to go to the CER training videos:
From our review of EERS it looks like the CER has done a great job. The format and functionality is a lot more intuitive and user friendly than the predecessor. The CER will also be rolling out face-to-face sessions later in September – we will notify you when the dates and locations are finalised. Historically (for OSCAR) training has been delivered in most capital cities.
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Compliance, EERS, NGER, Reporting Systems
- August 12, 2013
- Petroleum Based Oils and Greases ‘Directly Liable’ Under Carbon Pricing Mechanism
In some circumstances emissions from petroleum based oils and greases (PBOGs) may be considered ‘covered emissions’ under the Carbon Pricing Mechanism (CPM) attracting the $23 per tonne of carbon dioxide equivalents (tCO2-e) liability.
An example of where PBOGs may be covered emissions is at a ‘directly liable large gas consuming facility’ (covered emissions greater than 25,000 tCO2-e) that also has a vehicle fleet carrying out ancillary activities and consuming PBOGs in the process.
It is assumed that in many circumstances oils and greases used for lubrication purposes (particularly in internal combustion engines) will partially oxidise, or combust, and release CO2-e into the atmosphere. Subdivision 2.40A of the NGER (Measurement) Determination 2008 contains the methodologies for estimating emissions from PBOGs, and there are a couple ways to approach the task. The default method assumes ~40 per cent of the PBOGs will be combusted.
There may be instances where PBOGs are being utilised and do not produce emissions, for example hydraulics etc. Our advice (based on discussions with the Clean Energy Regulator – CER) is if you believe no oxidisation occurs in some or all applications, you should have some supporting evidence or documentation.
We thought it would be pertinent to advise our clients and friends of this issue well before the section 22A reports for covered emissions are due (31 October), as PBOGs are typically small emission sources and usage data can be difficult to obtain.
Remember, this direct ($23/ tCO2-e) liability only applies at facilities captured under the CPM. NGER reporters have always been required to report PBOGs in similar circumstances as described above under the normal section 19 reports, also due 31 October.
We understand the CER is likely to release some explanatory material shortly, and if/when this is published we will notify our clients and friends and provide a link. In the meantime feel free to contact us directly if you would like any further information or clarification.
Disclaimer: this article should be considered general information only and not formal legal advice.
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Carbon Pricing Mechanism, Covered Emissions
- May 30, 2013
- Proposed EEO Program Changes – Comments Due Tomorrow!
As part of the Full Cycle Evaluation of the Energy Efficiency Opportunities Program, the Department of Resources, Energy and Tourism held public consultations in Brisbane, Perth, Melbourne and Sydney from the 13th to 24th of May 2013.
The Department tabled their proposed changes to the program which focussed on three major areas: Reporting, Assessment Framework and Recognition of Energy Management Excellence.
During the Melbourne consultation, Department representatives expressed desire to reduce compliance costs for business. Additionally, they stressed that the proposed changes will not add any additional compliance obligations to existing participants and that the changes will not affect first or second cycle assessment plans already approved by the Department.
In terms of Public Reporting the Department’s changes seek to simplify the mandatory reporting requirements of the EEO program, facilitate public communication of reporting outcomes and simplify the amalgamation of annual public reporting into existing corporate reporting methods and timelines. A summary of all changes is detailed in table 1.
For Government Reporting the time period of twice per cycle remains the same. However, as a replacement for the opportunity summary tables, participants have the option to provide either a list of the top 10 most viable energy efficiency opportunities or the number of opportunities equivalent to 80% of the total energy saving. Additionally, participants no longer have to provide energy performance indicators and can provide energy consumption and production data “to an appropriate level”. A summary of all changes is detailed in table 2.
Changes were proposed to the Assessment Framework to provide participants with greater flexibility as to how they meet the intent of the EEO assessment framework, simplify and reduce the information needed for key requirements and remove areas of duplication and requirements that do not add value. The largest proposed changes were removing the requirement to assess potential opportunities to an accuracy of +/- 30 % and instead assessing potential opportunities to accuracy commensurate with the financial investment associated with potential implementation.
The Department also introduced their new initiative “Recognition of Energy Performance Excellence”. The proposed initiative seeks to recognise participants that have excellent energy management systems and processes. It aims to reward participants who meet their criteria by publically reporting their achievements and by allowing recognised corporations to base their assessment on their own processes and systems rather than complying with specific requirements of the EEO Assessment Framework.
Written feedback (page 4) for all the proposed changes will be accepted until the 31st of May. The Department aims to have the revised regulations in place by August 2013 at the latest.
Summary of Proposed Changes to the EEO
Table 1. Public Reporting Changes Summary (DRET, 2013)
Table 2. Proposed Changes Government Reporting Summary (DRET, 2013)
Table 3. Assessment Framework – Major Changes Summary (DRET, 2013)
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- May 30, 2013
- Energy Efficiency Opportunities – New Development Regulations
The Department has also released a discussion paper for New Development Regulations. Under the Securing a Clean Energy Future Package, the Australian Government announced that new developments and expansion projects would be included in the EEO program. The aim is that projects that meet an energy use threshold when operational will be required to assess the potential for energy productivity improvements from the initial design concept through to commercial operation.
The energy use threshold includes projects where:
- the new development or expansion will utilise an additional energy use of 0.5 PJ per financial year or greater
- there are multiple new developments or expansions which will each utilise an additional energy use of greater than 0.25 PJ (but less than 0.5 PJ), and cumulatively add up to more than 0.5 PJ, when developed simultaneously
- there are multiple projects (five or more) which are all the same and will each add at least 0.1PJ of energy use when operating. (DRET, 2013)
While eligible projects in the Generation, Mining, Oil and Gas, Manufacturing and Infrastructure sectors are likely to trigger for EEO under the proposed changes, projects in the Buildings and Road Transport sectors are not.
Importantly Participants that can demonstrate to have substantially met the intent of the six Key Elements of the Assessment Framework will be able to seek an exemption from an EEO assessment. A reporting obligation will remain however.
Written feedback (page 7) for all the proposed changes will be accepted until the 31st of May.
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- May 30, 2013
- National Greenhouse and Energy Reporting (Measurement) Amendment Determination 2013: consultation draft
The Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education has developed a consultation draft to facilitate discussion and obtain feedback on the proposed National Greenhouse and Energy Reporting (Measurement) Amendment Determination 2013 (No. 1).
The draft Amendment Determination details updated methods and changes to calculation methods of Greenhouse Gas emissions associated with Coal Seam Gas exploitation, solid waste disposal on land and a revised emission factor for fugitive emission from brown coal mining. The Amendment Determination also seeks improvements for streamlining company reporting and incorporates responses from previous consultations.
Feedback will be received by the department until the 6h of June 2013.
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