Greenhouse Emissions Reporting – Is Your Corporation Compliant?
The National Greenhouse and Energy Reporting Act 2007 and its Regulation (NGER Scheme) introduces a single national reporting framework for information related to greenhouse gas emissions, greenhouse gas projects, energy consumption and energy production of corporations. The NGER Scheme is intended to underpin the establishment of the Carbon Pollution Reduction Scheme (CPRS).
How does the NGER Scheme apply to your corporation?
The NGER Scheme requires the “controlling corporation” of a group to be registered under the NGER Scheme if the collective total of carbon gases emitted or energy produced or consumed by the group in any financial year (including the financial year ended 30 June 2009) exceeds the reporting thresholds.
It is important to note that even if a corporation is not required to register, the NGER Scheme may have an indirect impact on a corporation because of the flow-on effect from contracts and arrangements with registered corporations.
The “controlling corporation” must apply for registration under the NGER Scheme by 31 August in the financial year after the reporting thresholds are met. For many corporations the first report will be due on 31 August 2009.
The Australian Government has made an online calculator available at https://www.oscar.gov.au/Deh.Oscar.Extension.Web/Content/NgerThresholdCalculator/Default.aspx to assist “controlling corporations” in calculating whether it is likely to trigger any of the reporting thresholds.
Implications of the NGER Scheme for your corporation
Corporations should assess whether its current level of emissions exceed the reporting thresholds. A corporation may also wish to register under the NGER Scheme if it believes that its future expected level of emissions will exceed the reporting thresholds.
In specific circumstances, corporations may wish to pass the “operational control” of a facility to its subcontractors. This option requires careful consideration of the risks and benefits. ‘Operational control’ for the purposes of the NGER Scheme may be retained by a head contractor if it retains the authority to control operating policies, health and safety policies or environmental policies. In many instances, it will be impossible for a corporation to hand control of these matters to a subcontractor.
If ‘operational control’ of a facility is contracted or subcontracted to an independent contractor at arms length, the NGER reporting obligation in relation to that facility will move to the contractor/subcontractor. In some instances, this may reduce the level of emissions produced by the corporation group below the reporting thresholds. It may therefore be possible to weigh the benefits of retaining ‘operational control’ of all facilities against the NGER compliance costs.
Caution is advised, however, as the contractual terms for complete transfer of ‘operational control’ will be extensive and there will be significant business and other risks in contracting-out the control of significant business facilities.
If a corporation will, or expects that it is likely to exceed the reporting thresholds, it should consider establishing an internal reporting, review and auditing process, which will assist the corporation to report its emission measurements to the 95% confidence level. Corporations should also review existing contracts and arrangements to ensure that contractors/ subcontractors collect and provide the data necessary for the corporation to prepare a NGER Scheme compliant report.
Corporations that are not required to register under the NGER Scheme should also consider whether their processes will facilitate the collection and provision of NGER Scheme compliant data to corporations directly affected by the NGER Scheme.
Registration under the NGER Scheme
What are the reporting thresholds?
There are four different reporting thresholds. A “controlling corporation” of business operations which exceeds any of the reporting thresholds must apply for registration under the NGER Scheme.
The reporting thresholds are:
If the total amount of greenhouse gases emitted from operation of the group’s facilities has a carbon dioxide equivalence of:
- For financial year 1 July 2008 – 125 kilotonnes or more;
- For financial year 1 July 2009 – 87.5 kilotonnes or more; or
- For later financial years – 50 kilotonnes or more.
If the total amount of energy produced from operation of the group’s facilities is:
- For financial year 1 July 2008 – 500 terajoules or more;
- For financial year 1 July 2009 – 350 terajoules or more; or
- For later financial years – 200 terajoules or more.
If the total amount of energy consumed from operation of the group’s facilities is:
- For financial year 1 July 2008 – 500 terajoules or more;
- For financial year 1 July 2009 – 350 terajoules or more; or
- For later financial years – 200 terajoules or more.
If the operation of the group’s facility causes:
- Emission of greenhouse gases that have a carbon dioxide equivalence of 25 kilotonnes or more;
- Production of energy of 100 terajoules or more; or
- Consumption of energy of 100 terajoules or more.
Guidelines for Calculations
There are four methods for calculating greenhouse gas emissions and energy production and consumption in National Greenhouse and Energy Reporting (Measurement) Determination 2008. Generally, emission measurements must be documented, comparable with the measured emissions by similar corporations in that industry, and accurate at the 95% confidence level.
Obligations of Registered Corporations
A registered corporation must provide a report in respect of each financial year to the Greenhouse and Energy Data Officer (GEDO) regarding their:
- greenhouse gas emissions;
- energy production; and
- energy consumption,
from the operation of the group’s facilities. The report must be submitted before 30 October of the following financial year. Once a corporation has been registered with the NGER scheme, the primary contact person will receive a login and password for the Online System for Comprehensive Activity Reporting (OSCAR). From inception, the NGER Scheme will use and create electronic databases recording energy, waste and greenhouse emission data.
The National Greenhouse and Energy Reporting Amendment Bill 2009 includes amendments to allow a corporation with financial control of a facility to apply to the GEDO for a reporting transfer certificate to enable the corporation with financial control of a facility, to assume the obligation of the corporation with operational control for reporting under the NGER Scheme. The explanatory memorandum states:
The proposed provisions will closely reflect the existing Category B Liability Transfer Certificate (LTC) provisions outlined in the Carbon Pollution Reduction Scheme (CPRS) Bill 2009. By design, this will promote consistency in the terminology, concepts and rules between the existing NGER Act reporting regime and the future CPRS, thereby ensuring a high degree of continuity between current and future reporting arrangements.
The CPRS is planned to commence on 1 July 2011.
By Ben Yeoh and Terry Grace.
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