Glen Whitehead October 2012 Australia’s Mandatory Company Greenhouse Gas Reporting System 1

National Greenhouse and Energy Reporting System (NGERS) The objectives of the NGER Act are to: Underpin our carbon pricing mechanism Meet our international reporting obligations Inform policy development and the public Assist government programs and activities Avoid duplication by streamlining reporting nationally 2

Impact of NGERS on Reporting Obligations

NGERS – Key Criteria Key Criteria International acceptability Domestic credibility One system = national accounts + carbon market Cost effectiveness for sustainability

NGERS – What is reported? Corporations that meet an NGER threshold must annually report on their: greenhouse gas emissions (scope 1 and 2), energy production, energy consumption, and other information specified under NGER Legislation

NGERS – What is reported? – Scope 1 emissions Energy Industrial Processes Waste CO2CH4N2OHFCsPFCsSF6 Fuel Combusti on Fugitive emissions

NGERS – Who reports? When?

NGERS – How do companies estimate emissions? Facilities may choose estimation method: Indirect modelled approaches –Method 1: EF = default factor from national inventory –Method 2/3: EF = estimated factor from facility-specific data and sampling analysis standards Direct approach –Method 4: direct measurement of emissions

How do companies report? - OSCAR Online System for Comprehensive Activity Reporting: Web-based reporting tool using credentialed access Provides a single interface for companies to report under NGER obligations, reducing burdens on business

NGERS - How is quality ensured? National Measurement System Fuel classifications –Alignment with tax system –Alignment with commercial standards Commercial measurement standards for sampling, analysis Analysis must be undertaken by an accredited laboratory.

NGERS - How is quality ensured? Validation process following each reporting period by Government regulator Validation informs targeted guidance and assistance to help business meet their obligations Audit framework and risk of fines Public disclosure - company data is published on the Regulator website Facility ex post controls

Audit Framework Independent assurance model Aligns with financial assurance framework Utilises existing assurance standards

Audit Framework Auditors –financial practitioners –Greenhouse gas accounting professionals –Environmental auditors –Engineers Public Register maintained Up-skilling of auditors over time

Audit Framework Audit under Carbon Pricing Mechanism –Pre-submission audits for liable entities NGER pilot audit trail program –65 audits –No fraud or deliberate non-compliance were identified –Some errors mostly unrelated to liability Overestimates > underestimates An evaluation of the pilot audit program is published on the Clean Energy Regulator website.

NGER and the Carbon Pricing Mechanism Carbon price liability applies to direct emissions (scope 1) from a facility A liable entity has ‘operational control’ of a facility and may have several facilities A facility is liable if it has scope 1 emissions of 25,000 tonnes CO 2 -e each year or more or if it is a natural gas supplier Reported emissions under the National Greenhouse and Energy Reporting (NGER) System are used to determine liability 15

Use of NGERS data in the Inventory

Consistent decision making framework –Complete coverage, consistent method applied – eg Cement, coal in electricity generation –Partial coverage, consistent methods applied – eg natural gas in electricity generation –Partial coverage, different methods applied – eg Waste