NGER Reporting Details Released

Key Point

• The first reporting period for the NGERS commences 1 July 2008, so potentially liable reporting corporations must understand the detail of their reporting obligations now.

The National Greenhouse and Energy Reporting Regulations and National Greenhouse and Energy Reporting Amendment Bill 2008, which proposes to amend the National Greenhouse and Energy Reporting Act 2007, were released yesterday 26 June 2008 as a further development in the National Greenhouse and Energy Reporting System (NGERS). The first reporting period under NGERS commences 1 July 2008.

What are the proposed amendments to the Act?

The Bill proposes minor administrative changes to better reflect the intent of the Act and the outcome of stakeholder consultations in relation to the Regulations. It also would allow the Greenhouse and Energy Data Officer (GEDO) to publish additional information reported by companies. The Bill does not change the Act in any substantial form, nor does it impose any additional regulatory burdens on companies.

What impact will the proposed changes have on you?

The following changes to the Act may affect your business:

• if you decide to submit a report about a Greenhouse Gas Projects (GHG Projects) you will no longer need to base it on the methods and criteria determined by the Minister; instead you must include the information to be specified in the Regulations. Those criteria have not yet been specified in the Regulations, since they will be significantly influenced by policy decisions regarding the design of Australia's proposed emissions trading scheme. It is expected that criteria for reporting GHG Projects will be released when the emission trading design features are finalised;

• you will be able to report on your greenhouse gas (GHG) emissions offsets. Your report will need to contain the information as specified in the Regulations (which like the information regarding GHG Projects is not yet available). A maximum penalty of $110,000 may be incurred for providing inaccurate and misleading information;

• your scope 1 and 2 GHG emissions and your energy production and consumption will be published by the GEDO, along with the methods you used to calculate them; and

• the maximum penalty you may incur for not reasonably facilitating and assisting an external auditor will be reduced from $110,000 to $27,500.

Regulations

There are no real surprises in the Regulations as they are similar to those suggested in the National Greenhouse and Energy Reporting System Regulation Policy Paper . We provided a detailed analysis of the Act and the Policy Paper in previous Carbon Insights. The Government also indicated its proposed position in respect of some of the more contentious elements of the Regulations in its Technical Responses to Stakeholder Feedback on the Regulations Policy Paper released last month.

The Regulations provide the procedural requirements for the Act to operate and the details to allow compliance. The Regulations also expand technical definitions and deal with issues of interpretation, registration requirements, reporting obligations, disclosure of reported information and application to GEDO for determinations on a company's responsibility for reporting.

The key features of the Regulations are that they:

• introduce the concept of overall control which refers to the control over an activity or series of activities at a facility that involve the production of GHG emission, production of energy or consumption of energy. This is similar to the concept of operational control in section 9 of the Act with respect to facilities. You will have overall control of activities, and therefore need to report on them, if you have the authority to introduce and implement any of the following for the activities:

• operating policies;

• health and safety policies; and

• environmental policies.

If another company also satisfies these requirements, then whoever has the greatest authority to introduce and implement the operating and environmental policies will be taken to have overall control;

• clarify the circumstances in which an activity or activities will form part of a single undertaking or enterprise and provide examples of activities attributable to various industry sectors, with specific regulations for the transport and electricity, gas and pipeline sectors;

• provide details as to how a registered company can apply to be deregistered;

• include details about the GHG emissions, energy production and energy consumption data that must be included in a report and the different requirements for the GHG emissions from various sources, such as from coal mining sources and carbon capture and storage sources;

• specify how a company may:

The Regulations also specifically address the challenges of reporting in respect of vertically integrated businesses. In an effort to reduce administrative cost of separate monitoring of linked sites, the Regulations provide a flexible option to enable registered corporations to report by aggregating facilities which involve integrated production processes, provided that they are located within a single State or Territory. Where the facilities aggregated are classified into different ANZSIC divisions, data must still be separately apportioned among those divisions although this is allowed to be done using estimates.

What now?

The first reporting period for the NGERS commences 1 July 2008. It is therefore critical that potentially liable reporting corporations:

• identify their corporate group;

• determine if they or a member of the corporate group has operational control of any facilities, or overall control of any activities that involve the production of GHG emissions, production or consumption of energy;

• consider nominating a responsible entity if they are in a joint venture or partnership;

• assess the corporate group's GHG emissions, energy consumption and energy production for the relevant reporting period. This will involve choosing the method by which it is proposed to determine emissions from the consumption of a particular energy type, such as the default estimation method, or the use of facility specific information measured directly by approved instruments;

• determine which of the group's activities form part of a single undertaking or enterprise, and the relevant industry classification under ANSZIC of those activities. This would include considering whether the activities form part of a vertically integrated business;

• put in place a procedure (and, if necessary, contractual requirements) so that any suppliers, contractors or other sub-operators that have knowledge of the corporation's emissions, energy consumption and/or energy production are obliged to provide that information promptly to enable the corporation to meet its NGERS responsibilities;

• register if the corporation may reach one of the prescribed thresholds after 1 July 2008. While liable corporations must register no later than August 2009 for FY09, early registration will enable access to the Online System for Comprehensive Activity Reporting through which information will need to be submitted; and

• seek advice to ensure that the corporation is compliant with NGERS.

The National Greenhouse and Energy Reporting (Measurement) Determination was released this afternoon. This instrument specifies the approved methods by which entities are required to measure GHG emissions, and the production and consumption of energy in accordance with the Act and Regulations. The Determination specifies methods that allow for both direct emissions monitoring, and the estimation of emissions through the tracking of observable, closely related variables (such as data obtained from invoices for fuel consumption or purchases).

Another instrument to be made under the Act but which is yet to be released concerns the requirements and processes for external audits and the qualification of auditors. We will update you as to your obligations under this instrument once this instrument is released.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.