Ben Meyer

Ben Meyer

Thursday, 06 August 2015 15:42

Safeguard Mechanism Review

The recently released Reputex report “Recapping The Safeguard Mechanism – Toothless Tiger… Or Hidden Dragon?” has analysed the potential for the Federal Governments Direct Action policy to effectively manage Australia's emission growth. Their analysis concluded that the Safeguard Mechanism, as it currently stands, will cover approximately 80 companies and 261 facilities yet only approximately 85 facilities will actually be affected by any compliance obligation.

The report argues, nevertheless, that the Safeguard Mechanism, while currently ineffectual, has the potential to evolve to be more effective, with businesses with facilities covered by the scheme facing a significant compliance risk should this eventuate. In support of this, Environment Minister Greg Hunt is on record stating “…the safeguards (sic) mechanism … allows us to work with individual firms on a budget which can be adjusted and progressively tightened throughout the 2020s through to 2030 and 2040 and 2050.”

Furthermore, Reputex states, that the reality of tighter baselines or caps on greenhouse gas emissions either through an improved safeguard mechanism or another policy instrument, are inevitable given the necessity to manage Australia’s emissions growth and the potentially significant abatement task that may be required from Australia’s yet to be released post-2020 emissions targets.

Given this, businesses should prepare for the eventuality of a more stringent greenhouse gas policy.

 

 

Reporting fuel combustion and the associated energy consumption for certain fuel types is optional if the amount consumed is less than the reporting thresholds (See Table 1).

Table 1. Materiality Thresholds

Fuel type

Threshold per instance of a source

Measurement Determination section

Petroleum-based oils and greases (other than used as fuel)

5,000 L

Division 2.4.1, section 2.39(a)

Other liquid fuels (not mentioned in s2.39(a))

1,000 L

Division 2.4.1, section 2.39(b)

Gaseous fuels

1,000 m3

Division 2.3.1, section 2.18

Solid Fuels

1 tonne

Division 2.2.1, section 2.2

 

'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 is different from that used by another activity."

For example:

The combustion of liquid petroleum gas (LPG) in the engines of distribution vehicles and the combustion of LPG in the engines of forklifts at any given facility are taken to be a separate instance of a source. This is because the class of equipment used to perform the activities are different.

Discerning Materiality

Determining whether or not a particular NGERs reportable substance will trip thresholds can be undertaken in a variety of ways. Consulting historic datasets and NGER reports will show reporters if substances have met or exceeded thresholds in previous reporting periods. Undertaking representative-sampling and applying the results across similar operations can also provide robust estimates to reporters as to whether particular substances will breach thresholds. Finally, reporters may choose to directly measure the consumption for the reportable items in question and report remissions regardless of whether thresholds have been breached.

Yesterday the Federal Treasurer, the Honourable Wayne Swan, announced the 2013/2014 Federal Budget for Australia.

We have summarised some of the key items of most interest to our clients and friends:

Accelerated Funding: Clean Technology Investment Program (CTIP)

  • The CTIP program will retain a $1 billion budget; however the timeframe will now see $160 million being brought forward to 2014-2015 rather than 2015-2017. As a result the program will deliver the same total over a seven year period. This ‘front-loading’ is expected to instigate industry participation earlier, therefore increasing industry stimulus particularly for cleaner energy initiatives.
  • Budget statement from AusIndustry 15 May 2013 “The key message for AusIndustry customers and stakeholders is that CTIP program demand is strong and growing.  There is no change to the funding commitment.  The Government has maintained its $1 billion commitment to the investment programs”.

Treasury Downgrade Australian Carbon Unit Price Projections for Flexible Price Period

  • The carbon pricing mechanism remains within the Clean Energy Future Package, although some changes have been made. As a consequence of the flailing European Union (EU) carbon price and the fact that our scheme will link with the EU’s (on 1 July 2015) the Government has revised Australia’s projected price during the flexible period. Revisions are down from $29.00/carbon unit to $12.10 for the 2015/16 compliance year and $18.60 for 2016/17.
  • Impacts
    • landfill operators who have used the $29 price projection to calculate their future ‘carbon loading cost’ for each tonne of waste deposited to landfill post 1 July 2012 may be required to re-calibrate their carbon-loading charge
    • manufacturers, and other participants, who have used the $29 projection to increase the costs of goods or services produced post 1 July 2012 may need to re-visit their pricing strategy and the impacts of up-stream energy intensive inputs they purchase.
  • Additional budgetary measures can be found at Minister Combet’s latest media release here.

The Department has also released a discussion paper for New Development Regulations. Under theSecuring 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.

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)

Current Requirements

Proposed Requirements

Fulfil annual data requirements as stipulated in EEO public reporting templates and regulations

Corporations only required to publically report:

  • Short description of how the corporation is managing its energy use
  • Overview of assessment results
  • Detailed description of at least one opportunity per key activity/business unit
  • Statement that corporation has met EEO assessment requirements

Corporations can now determine:

  • The format of public reports
  • How reports are made public and have flexibility within the timeframes as to when the reports are made public

 

 

Table 2. Proposed Changes Government Reporting Summary (DRET, 2013)

Current Requirements

Proposed Requirements

Fulfil annual data requirements (twice per cycle) as stipulated in EEO public reporting templates and regulations

As a replacement for the opportunity summary tables, proposal to provide either a list of the top 10 energy efficiency opportunities, or the number of opportunities equivalent to 80% of total energy savings with:

  • Energy and financial savings
  • Payback and implementation status

As a voluntary alternative to providing energy performance indicators:

  • Provide energy use and production data at an appropriate level

 

Table 3. Assessment Framework - Major Changes Summary (DRET, 2013)

Current Requirements

Proposed Requirements

1 – Leadership

Key Requirements unchanged

2 – People

Key Requirements 2.1 and 2.2 merged

3 – Information, data and analysis

  • Wording change to Key Requirement 3.1 to clarify reason for business contextual information
  • Merging key requirements 3.2 and 3.3 so as to simplify requirements

4 – Opportunity identification and evaluation

  • Remove requirement to assess potential opportunities to an accuracy of 30%
  • Accuracy now commensurate to an accuracy commensurate with financial investment associated with potential implementation

5 – Decision making

  • Increased flexibility about what contextual information is presented to decision makers
  • Merge Key Requirement 5.2 and 5.1
  • Alter 5.3 to emphasis review processes to encourage learning from assessments

 6 – Communicating Outcomes

Slight changes to information requirements

Thursday, 05 September 2013 16:41

EERS access and training videos roll-out

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 here 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.