The Facilities method is applicable to organisations currently reporting under the National Greenhouse & Energy Reporting Scheme (NGERS), and provides a high-level, activity-neutral framework to calculate abatement from facilities. It is functionally consistent with the intent of the Industrial Electricity and Fuel Efficiency (IEFE) method.
However, this method unlike other approved ERF methods has a new requirement to ensure that proposed abatement projects are additional to what would have occurred without the fund. Under the Facilities method, a person with operational control of the facility is required to submit a ‘Statement of activity intent’ to the Regulator stating that the abatement activities proposed would not be (or would not have been) implemented at the facility during the period in the absence of a declaration of the project as being eligible for offsets. For abatement projects expected to generate more than 100,000 tonnes annually this statement must be signed by the CFO. A false statement is a criminal offence.
The baseline period relevant to the Facilities method comprises the four consecutive NGER reporting years preceding the start of a project (ie the start of the crediting period). Within this period, the facility cannot have undergone a major change. The baseline emissions intensity is calculated by determining the lowest emissions intensity (total annual emissions divided by the total of the production variable) within the four year baseline period. The baseline emissions intensity is then valid for the entire 7-year crediting period and can only be recalculated if the facilities experiences a change which will have a material effect on the level of project abatement achieved in an NGER reporting year.
Projects established under the Facilities method can include:
- Replacing or modifying boilers,
- Improving control systems and processes,
- Waste heat capture and re-use,
- Upgrading turbines ,
- Improving the efficiency of motors, fans and pumps with high efficiency conversions,
- Installing variable speed drives,
- Improving compressed air processes,
- Reducing industrial process emissions,
- Behavioural changes,
- Installing low emissions-intensity electricity generation equipment, and
- Fuel switching.
Ineligible abatement activities include: activities that generate abatement by changing the level of a production variable; activities that result in an increase in excluded NGER fugitive emissions; and activities that decrease onsite emissions while increasing emissions outside the project boundary.
The determination does not apply to facilities which: do not produce an output (ie large shopping centres, storage warehouses), are transport facilities, are part of another offsets project; use biomass; are part of a facility aggregate.
Note: The determination does allow facilities to reduce emissions from transport within the facility if the facility is not a transport facility.
For further information, the methodology is available from the comlaw website: https://www.comlaw.gov.au/Details/F2015L01346 or feel free to contact us.