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2004 2005 2006 2007
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
NATIONAL GREENHOUSE AND ENERGY REPORTING BILL 2007
REVISED EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for the Environment and Water Resources,
the Honourable Malcolm Turnbull MP)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE
HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
CONTENTS
OUTLINE .....................................................................................................................................................5
FINANCIAL IMPACT STATEMENT .....................................................................................................5
REGULATION IMPACT STATEMENT.................................................................................................6
1. INTRODUCTION ...............................................................................................................................7
2. STATEMENT OF THE PROBLEM ..............................................................................................10
BACKGROUND ...................................................................................................................................10
THE NEED TO STREAMLINE GREENHOUSE AND ENERGY REPORTING ...........................................................12
THE NEED FOR REGULATION.....................................................................................................................15
3. OBJECTIVES ..................................................................................................................................19
4. THE PROPOSED NATIONAL REPORTING SYSTEM AND ALTERNATIVES..................19
INTRODUCTION ...................................................................................................................................19
OPTION I. THE PROPOSED NATIONAL REPORTING SYSTEM: STREAMLINED REPORTING
UNDERPINNED BY PURPOSE-BUILT LEGISLATION ....................................................20
OPTION II. BASELINE 1: NO CHANGE TO CURRENT REPORTING ARRANGEMENTS...................33
OPTION III. BASELINE 2: CURRENT AND NEW REPORTING ARRANGEMENTS ............................33
OPTION IV. NON-REGULATORY ALTERNATIVE: STREAMLINING WITHOUT NEW LEGISLATION ..
...................................................................................................................................34
OPTION V. REGULATORY ALTERNATIVE: GREENHOUSE AND ENERGY REPORTING THROUGH
THE NATIONAL POLLUTANT INVENTORY (NPI)......................................................35
5. COSTS AND BENEFITS OF THE PROPOSED NATIONAL REPORTING SYSTEM AND
ALTERNATIVES .............................................................................................................................40
INTRODUCTION ...................................................................................................................................40
OPTION I. THE PROPOSED NATIONAL REPORTING SYSTEM, INCLUDING ALTERNATIVE
THRESHOLD LEVELS..................................................................................................40
OPTION II. BASELINE 1: NO CHANGE TO CURRENT REPORTING REQUIREMENTS ....................43
OPTION III. BASELINE 2: CURRENT AND NEW REPORTING ARRANGEMENTS ............................44
OPTION IV. NON-REGULATORY ALTERNATIVE: STREAMLINING WITHOUT LEGISLATION .......44
OPTION V. REGULATORY ALTERNATIVE: GREENHOUSE AND ENERGY REPORTING THROUGH
THE NATIONAL POLLUTANT INVENTORY (NPI)......................................................46
SUMMARY ...................................................................................................................................47
6. CONSULTATION............................................................................................................................49
7. EVALUATION..................................................................................................................................56
8. REVIEW ............................................................................................................................................57
APPENDIX 1: INDICATIVE LISTS OF EQUIPMENT AND FUEL TYPES.....................................58
APPENDIX 2: LIST OF DATA ELEMENTS.........................................................................................60
ATTACHMENT A: FACILITY-LEVEL COST BENEFIT ANALYSIS GEORGE WILKENFELD & ASSOCIATES
(MARCH 2006) COSTS AND BENEFITS OF A NATIONAL GREENHOUSE AND ENERGY REPORTING
FRAMEWORK. ...................................................................................................................................62
Contents..............................................................................................................................................64
Page 2
Terminology and Abbreviations.........................................................................................................65
Gases ..................................................................................................................................................66
EXECUTIVE SUMMARY ...........................................................................................................................67
1. THE PROBLEM....................................................................................................................................75
BACKGROUND ...................................................................................................................................75
Policy Context ....................................................................................................................................75
Greenhouse and Energy Reduction Programmes..............................................................................77
Proliferation of reporting obligations ...............................................................................................81
IMPACTS ON STAKEHOLDERS ..................................................................................................................88
Business..............................................................................................................................................88
Government ........................................................................................................................................93
The Public ..........................................................................................................................................97
EFFORTS TO ADDRESS THE ISSUES ........................................................................................................104
The Joint Working Group on Greenhouse and Energy Reporting ..................................................104
This document ..................................................................................................................................106
2. OBJECTIVES AND OPTIONS .........................................................................................................109
OBJECTIVES .................................................................................................................................109
General Objectives...........................................................................................................................109
A National Greenhouse Energy and Reporting Framework ...........................................................110
PROPOSED REGULATION AND ALTERNATIVES ......................................................................................112
Alternative Approaches....................................................................................................................112
Non-Regulatory Options ..................................................................................................................113
Regulatory Options ..........................................................................................................................114
3. COSTS, BENEFITS AND OTHER IMPACTS................................................................................118
FACTORS AFFECTING COST-BENEFIT ANALYSIS ..................................................................................118
Number of Business Entities Potentially Affected............................................................................118
Business Reporting Costs.................................................................................................................128
Government Costs ............................................................................................................................129
AGGREGATED COSTS AND BENEFITS ....................................................................................................132
The Options ......................................................................................................................................132
Sensitivity Factors............................................................................................................................135
4. RANKING OF OPTIONS ..................................................................................................................139
QUANTIFIABLE CRITERIA......................................................................................................................139
OTHER CONSIDERATIONS .....................................................................................................................141
OVERALL RANKING OF OPTIONS ...........................................................................................................145
References ........................................................................................................................................146
Appendix 1 Terms of Reference ....................................................................................................147
Appendix 2 Sites in Emissions Categories by Sub-sector ...............................................................151
ATTACHMENT B: COMPANY LEVEL COST BENEFIT ANALYSIS GEORGE WILKENFELD & ASSOCIATES
(JUNE 2006) COSTS AND BENEFITS OF A NATIONAL GREENHOUSE AND ENERGY REPORTING FRAMEWORK
ADDITIONAL ANALYSIS. ..........................................................................................................................152
Contents............................................................................................................................................153
1. BACKGROUND ..................................................................................................................................154
BACKGROUND .................................................................................................................................154
THIS STUDY .................................................................................................................................154
THRESHOLDS AND TRIGGERS ................................................................................................................156
Triggers in this Analysis ..................................................................................................................156
Simplification of Threshold Assumptions.........................................................................................157
Details to be defined in regulation...................................................................................................158
ENERGY, SECTORAL AND EMISSIONS COVERAGE.................................................................................160
Agriculture .......................................................................................................................................160
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Mining ..............................................................................................................................................161
Manufacturing..................................................................................................................................161
Transport..........................................................................................................................................161
Commercial and Services.................................................................................................................162
Generation .......................................................................................................................................163
Construction.....................................................................................................................................163
Water, sewerage and gas .................................................................................................................163
Waste ................................................................................................................................................163
2. METHOD OF ANALYSIS .................................................................................................................165
METHOD .................................................................................................................................165
Single Factor Site Analysis ..............................................................................................................165
Dual Factor Site Analysis ................................................................................................................166
THE RELATIONSHIP BETWEEN COMPANIES AND SITES .........................................................................168
Scenarios ..........................................................................................................................................169
3. FINDINGS............................................................................................................................................171
References ........................................................................................................................................176
ATTACHMENT C: LIST OF STAKEHOLDERS THAT PROVIDED WRITTEN SUBMISSIONS ON THE APRIL 2006
CONSULTATION PAPER - A STREAMLINED NATIONAL REPORTING FRAMEWORK FOR GREENHOUSE AND
ENERGY DATA: REDUCING THE BURDEN. ...............................................................................................177
ATTACHMENT D: LIST OF STAKEHOLDERS THAT PROVIDED WRITTEN SUBMISSIONS ON THE OCTOBER
2006 DRAFT REGULATION IMPACT STATEMENT - A NATIONAL SYSTEM FOR STREAMLINED GREENHOUSE
AND ENERGY REPORTING BY BUSINESS. ..................................................................................................178
NOTES ON INDIVIDUAL CLAUSES..................................................................................................179
PART 1 INTRODUCTION...............................................................................................................179
Division 1 Preliminary..................................................................................................................179
Division 2 Interpretation...............................................................................................................180
PART 2 REGISTRATION................................................................................................................182
Division 1 Applying for Registration ............................................................................................182
Division 2 The Register.................................................................................................................183
Division 3 Registration and deregistration of corporations.........................................................183
PART 3 OBLIGATIONS OF REGISTERED CORPORATIONS ...................................................184
PART 4 - DISCLOSURE OF INFORMATION ..................................................................................186
PART 5 ENFORCEMENT ...............................................................................................................188
Division 1 Civil penalties..............................................................................................................188
Division 2 Infringement notices ....................................................................................................189
Division 4 Liability of chief executive officers of corporations....................................................191
PART 6 ADMINISTRATION ..........................................................................................................192
Division 1 The Greenhouse and Energy Data Officer..................................................................192
PART 7 MISCELLANEOUS............................................................................................................198
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NATIONAL GREENHOUSE AND ENERGY REPORTING BILL 2007
OUTLINE
The National Greenhouse and Energy Reporting Bill 2007 (the Bill) establishes a
single, national framework for reporting greenhouse gas emissions, abatement actions
and energy consumption and production by corporations from 1 July 2008.
The Bill lays the foundation for the Australian Emissions Trading System announced by
the Prime Minister on 17 July 2007. Robust data reported under this Bill will form the
basis of emissions liabilities under emissions trading, and will inform decision making
during the establishment of the emissions trading system, including with regard to
permit allocation and incentives for early abatement action.
The Bill also gives effect to the decision of the Council of Australian Governments
(COAG) on 13 April 2007 to streamline the reporting obligations of corporations. It will
eliminate duplicative reporting and reduce red tape currently imposed by the patchwork
of separate state, territory and national reporting schemes.
The Bill includes the following elements mandatory registration of controlling
corporations with the national system, requirements for registered corporations to keep
records and provide reports, requirements concerning the security and disclosure of
information under the scheme, compliance and enforcement arrangements,
administration arrangements (including the establishment of the position of Greenhouse
and Energy Data Officer), and compliance monitoring arrangements.
FINANCIAL IMPACT STATEMENT
The Government has appropriated $26.1m over five years from 2007-08 to introduce
the measure. Ongoing funding will be required in subsequent years to maintain the
national reporting system and to continue administration of the programme.
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REGULATION IMPACT STATEMENT
A national system for streamlined
greenhouse and energy reporting by
business
REGULATION IMPACT STATEMENT
Council of Australian Governments Greenhouse and Energy
Reporting Group
November 2006
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1. Introduction
The Commonwealth, State and Territory governments have agreed to develop a
nationally consistent framework for greenhouse and energy reporting by industry to
meet the current and prospective reporting needs of government, business and the
public.
On 14 July 2006, the Council of Australian Governments (COAG) considered
recommendations by the Environment Protection and Heritage Council (EPHC) and the
Ministerial Council on Energy (MCE) on this matter, which were developed following a
national stakeholder consultation process held during April 2006.
COAG agreed that a single streamlined system that imposes the least cost and red tape
burden is the preferable course of action. The reporting system will be based on
national purpose-built legislation to provide for cost-effective mandatory reporting and
disclosure at the company level. COAG has asked senior officials to report back, by
December 2006, with a detailed proposal for the reporting system, including advice on
timing, thresholds and governance arrangements.
A COAG Greenhouse and Energy Reporting Group (CGERG) was formed under the
auspices of the COAG Climate Change Group to prepare this advice. With the COAG
decision having settled key foundation issues, such as the case for mandatory reporting
and the preference for purpose-built legislation, the CGERG focused on key details of
how the national reporting framework will be designed and implemented, while building
on the analysis and consultation conducted previously.
The national reporting system will improve management of energy and greenhouse
information, streamlining data collection, reporting and verification to meet a range of
greenhouse and energy information needs and programme requirements. Streamlining
will include:
· data collection through a single, online entry point based on the Greenhouse
Challenge Plus Programme's Online System for Challenge Activity Reporting
(OSCAR);
· a standardised greenhouse and energy reporting data set; and
· a consistent methodological approach.
The proposed legislation will make reporting mandatory for companies with energy
production/use or greenhouse gas emissions above certain thresholds. Mandatory
reporting would occur through the streamlined reporting system. The streamlined
reporting system would remain available to companies below the threshold, which were
participating in relevant greenhouse and energy programmes.
This Regulation Impact Statement (RIS) includes a detailed description of the preferred
option, including specific proposals on key design elements of the reporting system that
will need to be written in the legislation, such as reporting thresholds, public disclosure,
data security and access, compliance, and timing of implementation. The preferred
option for the proposal is summarised in Figure 1, and is explained in more detail in
Page 7
section 4 below on The proposed national reporting system: Streamlined reporting
underpinned by purpose-built legislation, along with other options for consideration,
including baseline or `business as usual' scenarios, streamlining without a legislative
underpinning and inclusion of greenhouse gases in the National Pollutant Inventory
(NPI).
Stakeholder consultation was conducted during October 2006, on the basis of a draft
RIS. Feedback from stakeholders, including 37 written submissions and comments
made at two stakeholder forums, has informed this RIS.
Figure 1: Diagram of proposed reporting requirements
under a Greenhouse Gas Emissions and Energy Reporting Act
Thresholds Company considers whether it Legislation sets out annual reporting thresholds:
applied is a reporting entity (i.e. (a) Company threshold
exceeds reporting thresholds). i. Year 1: 125 kt CO2-e gross direct and indirect GHG
emissions or 500 TJ energy produced or consumed
ii. Year 2: 87.5 kt CO2-e or 350 TJ
iii. Year 3 and subsequently: 50 kt CO2-e or 200 TJ
(a) Facility threshold of 25 kt CO2-e or 100 TJ (from year 1).
To assess threshold, company may refer to published tables estimating
emissions from activities such as fuel combustion, enter activity data into
OSCAR for calculation of emissions, and/or discuss with designated and
trained contacts in relevant jurisdiction.
Registration If likely to be a reporting Registration enables the administrator to plan activities over the following
entity, company not already year and to provide reporting entities with training in use of
registered must register. OSCAR-based national online reporting tool and reporting guidelines.
Administrator may advise
company that it does not meet Reporting period must be Australian July-June financial year (the default)
criteria and is not a reporting or calendar year (if the reporting entity elects this approach during
entity. Reporting entity may registration).
choose reporting period.
Confirmatio Company may apply to Company-specific factors and methods will only be approved if
n of factors administrator for approval of demonstrably more accurate than the default methods referenced by the
and methods company-specific factors and reporting guidelines.
methods. Administrator decides
approval, based on advice from
inter-jurisdictional reporting
advisory panel.
Data Reporting entity collects Required data comprises:
collection required data in accordance (b) Public data which will be published on Internet:
with Reporting Guidelines · Sum of total gross direct/scope 1 and indirect/scope 2
(based on AGO Factors and greenhouse gas emissions (mandatory)
Methods Workbook and · Gross direct/scope 1, indirect/scope 2 and indirect/scope 3
ABARE Fuel and Electricity greenhouse gas emissions (voluntary);
Survey methodologies) and any · Total greenhouse gas emissions offsets (voluntary);
approved company-specific · Net greenhouse gas emissions, calculated by subtracting offsets
factors and methods. from gross emissions (voluntary)
· Total energy produced (mandatory);
· Total energy consumed (mandatory);
· Information explaining company's greenhouse gas emission and
energy profile and actions being taken or planned to reduce
emissions and increase energy efficiency (voluntary).
(c) Non-public data needed to calculate the above, or data otherwise
Page 8
required by the reporting guidelines - for example, emission factors
activity data such as quantity of output (coal, aluminium, lime or
clinker, etc), electricity consumed or fuel combusted; fuel type and
type of equipment used to generate or consume energy. Scopes 1
and 2 emissions, scope 3 emissions (optional) and emissions offsets
reported separately to allow aggregation of data across companies
without double counting.
Submission Reporting entity must submit Non-compliant reporting entity will receive reminder notices.
of report acquired data through Administrator will work with reporting entity to help bring it into
OSCAR-based national online compliance. Legal action may be taken if reporting entity does not take
reporting tool by no later than corrective action.
4 months after completion of
reporting period.
Record- Reporting entity must keep
Keeping records to allow independent
verification of required data.
Sharing of Administrator makes available Access to required data by participating jurisdictions is needed to meet
data to each jurisdiction: objectives of the Act, including providing data to inform government
· Required Data related to policy making and programme implementation and effect streamlining
all facilities located within (i.e. meeting data requirements across different programmes and
that jurisdiction jurisdictions through a single report using a standardised data set
· Data relating to all submitted into a single National Online Reporting Tool).
jurisdictions aggregated
by jurisdiction and MOUs between administrator and other agencies would identify persons
ANZSIC code authorised to access data; confidentiality protocols, including methods for
· Additional data covered recording access, and preventing and reporting unauthorised access; and
by an MOU between purposes for which data may be used.
administrator and another
agency Act will include provisions covering the protection of confidential
· Additional data for which information and offences and penalties for breach of confidentiality.
company has consented to
disclose to a jurisdiction
Public Administrator publishes public Contextual information includes emissions and energy statistics at
disclosure data for each company, and national, State and Territory, and sectoral levels.
contextual information through
national online reporting tool Reporting entity may apply to administrator to suppress disclosure of
by 30 November of each year. public data. Administrator makes decision based on assessment of whether
disclosure would reveal proprietary business, competitive or trade secret
information about a specific facility, technology or corporate initiative.
Independent Administrator causes a Target companies could include a random sample and companies or
verification proportion of company reports sectors identified as having high risk of non-compliance.
to be independently verified
each year.
Rectification Administrator may request A discrepancy is material if a decision based on required data would
of reports company to rectify deficiencies change if the discrepancy was corrected. Verifiers must determine what
in record-keeping that prevent represents a material discrepancy when undertaking a verification using
required data to be verified or their own professional judgment and taking into account the characteristics
material discrepancies in and circumstances of the reporting entity being verified.
required data identified by the
independent verifier within a
prescribed period.
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1. Statement of the problem
Background
The earth's climate is changing. During the past 100 years, global average surface
temperature increased by about 0.6°C. The twentieth century was the warmest of the
past 1800 years in the northern hemisphere, and globally the 10 warmest years on record
have all occurred since 1990. It is becoming increasingly clear that greenhouse gas
emissions resulting from human activity is a major cause of this climate change.
In its third assessment report released in 2001, the Intergovernmental Panel on Climate
Change (IPCC) stated that "there is new and stronger evidence that most of the warming
observed over the last 50 years is attributable to human activities". The IPCC is
continuing to detail evidence of climate change and to provide projections about the
possible future impacts of climate change, which include significant environmental and
economic impacts both globally and in Australia over the next century.
Climate change is inextricably linked with energy issues. Australia's energy sector
greenhouse gas emissions increased by 34% between 1990 and 2004, and accounted for
69% of Australia's net national greenhouse gas emissions in 2004. While the
availability of abundant and cheap energy has provided Australia with a competitive
advantage, improving the sustainability of these sources is fundamental to Australia's
continued prosperity.
To address the twin challenges of combating climate change and securing our energy
future Australian governments have put in place a range of greenhouse and energy
programmes. Some of these are designed primarily to deliver information and data to
meet international obligations and to underpin development of government policies and
programmes. For example, the Fuel and Electricity Survey is the primary vehicle for
collecting energy consumption data to underpin national energy policy analysis, as well
as to meet Australia's reporting obligations to a range of international bodies, including
the International Energy Agency.
Other programmes are designed to encourage action to reduce greenhouse gas emissions
and/or sustainable, efficient and environmentally responsible use of our energy
resources.
Table 1 lists current voluntary and mandatory programmes with greenhouse/energy
reporting needs, and the year of commencement for each of the programmes. Some of
these programmes require additional information to be reported, such as emissions
reduction actions. The cost benefit analysis at Attachment A provides further detail on
greenhouse and energy programmes and their different characteristics, including
whether they are voluntary or mandatory.
Page 10
Table 1: Existing programmes with greenhouse and/or energy reporting requirements.
Greenhouse or Energy Reporting Year Voluntary or Report greenhouse
Programme Established Mandatory? gas or energy
emission
reductions, offsets
or abatement
actions?
ABARE Fuel and Electricity Survey (ABARE 1973 V No
FES)
Ozone Protection and Synthetic Greenhouse 1989 M No
Gas Management Act
National Greenhouse Gas Inventory (NGGI) 1990 V No
Greenhouse Challenge 1995 V Yes
Australian Petroleum Statistics 1996 V No
National Pollutant Inventory (NPI) 1998 M No
NSW Load Based Licensing 1999 M No
Mandatory Renewable Energy Target (MRET) 2001 M Yes
Protocol for Environmental Management; 2001 M Yes
Greenhouse Emissions and Energy Efficiency
in Industry (EPA Victoria Industry Greenhouse
Programme)
NSW/ACT Greenhouse Gas Abatement 2003 M&V Yes
Scheme1
Greenhouse Challenge Plus2 2004 M&V Yes
Queensland EcoBiz 2004 V Yes
3
NSW Energy Savings Plans and Fund 2005 M Yes
Queensland 13% Gas Scheme 2005 V Yes
4
Energy Efficiency Opportunities (EEO) 2006 M Yes
1
The NSW/ACT Greenhouse Gas Abatement Scheme is a mandatory program for benchmark participants
(e.g. electricity retailers) but voluntary for abatement certificate providers, including most electricity
generators. NSW generators are, however, required to report emissions annually.
2
Mandatory for companies seeking more than $3million in fuel tax credits. Voluntary for other
companies.
3
Mandatory for companies using more than 10 GWH/yr at a site. Companies required to prepare Energy
Savings Plans are encouraged to apply for the Energy Savings Fund.
4
Mandatory for companies greater than 0.5PJ of energy/yr.
Page 11
The need to streamline greenhouse and energy reporting
Because they evolved separately, many of the existing reporting requirements have
unique characteristics, including reporting formats, methodologies and definitions.
There has been some standardisation of reporting methodologies, for example through
widespread use of the AGO Factors and Methods Workbook and adoption of World
Business Council for Sustainable Development/World Resources Institute Greenhouse
Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). In
addition the AGO has progressively combined the reporting requirements for
Greenhouse Challenge and Generator Efficiency Standards under the Greenhouse
Challenge Plus Programme (GCP), so that electricity generators who are members of
both initiatives can submit a combined report. A part of this report is also used for the
NGGI, although the compilers of the NGGI must still approach about 20 generators each
year (non-members of GCP, or members who fail to report).
However, important differences remain in the reporting requirements of existing
programmes that will not be removed without political will across all jurisdictions.
Differences remain with respect to:
· emission source categories covered: most reporting programmes cover on-site fuel
combustion and the off-site emissions associated with purchased electricity, but
there are differences in the treatment of on-site fugitive and industrial process
emissions and off-site transport;
· fuels covered: most programmes cover only the main fuels such as coal, natural gas
and the common transport fuels; others include all fossil fuels, or all energy forms
including renewable fuels;
· greenhouse gases covered and modes of reporting: carbon dioxide only, all 6 Kyoto
Protocol gases expressed as carbon dioxide equivalent (CO2-e), all gases expressed
as a single CO2-e value, etc;
· the emission factors used to derive emissions from energy used, their source,
whether they correspond to `Scope 1, 2 or 3' as defined by the GHG Protocol, the
rules for non-standard factors etc;
· the treatment of `offsets' such as carbon take-up by forestry activities: some schemes
do not recognise offsets at all, some permit them to be separately reported and some
permit them to be netted from total emissions;
· reporting periods (whole calendar or financial year, or six-month periods) and
frequencies (annual or other); and
· constraints on passing on data to third parties.
These factors are not left to the discretion of reporting entities, but are fully detailed in
the reporting forms and accompanying guidelines and manuals prepared by the
respective Data Requiring Agencies.
While some of the differences may appear minor, in effect they mean that at present a
report prepared by a reporting entity for one agency may not be accepted by any other
agency. Even those agencies with lesser or simpler data needs specify data requirements
Page 12
in particular formats, so entities participating in more than programme must repackage
the data for each.
The companies with the highest emissions are often caught by, or choose to participate
in, several programmes with greenhouse and energy reporting and reduction reporting
elements.
Boxes 1 and 2 below provide real case studies provided by two companies operating
across jurisdictions and reporting to multiple greenhouse and energy programmes.
Box 1: Case Study 1 A multi-jurisdictional company with mining, gas and
electricity operations
Programmes under which this company reports include:
- NSW/ACT Greenhouse Gas Abatement Scheme (mandatory)
- Greenhouse Challenge Plus, including Generator Efficiency Standards (GES)
(voluntary)
- National Greenhouse Gas Inventory (voluntary)
- Mandatory Renewable Energy Target (mandatory)
- Fuel and Electricity Survey (voluntary)
- Queensland 13% Gas Scheme (mandatory)
- Protocol for Environmental Management; Greenhouse Emissions and Energy
Efficiency in Industry (EPA Victoria Industry Greenhouse Programme)
Box 2: Case Study 2 - A mining company operating in multiple jurisdictions
Programmes under which this company reports include:
- Greenhouse Challenge Plus (mandatory)
- Energy Efficiency Opportunities (mandatory)
- NSW Energy Savings Plan (mandatory)
- National Greenhouse Gas Inventory (voluntary)
- Western Australian Greenhouse Gas Inventory (mandatory, upon commencement of
programme)
Large mining, petroleum and manufacturing companies, especially those with high
non-energy greenhouse emissions as well as high energy use, may also participate in and
report to a number of programmes. The Fuel and Electricity Survey respondents with
higher energy use are also likely to take part in one or more greenhouse programmes.
The repackaging of data to meet the different reporting requirements of multiple
programmes creates cost for industry. Attachment A outlines the following assumed
elements of the annual costs to business of greenhouse and energy reporting. Estimated
values for these costs used in the analysis in Attachment A are summarised in Table 2.
· An annual fixed administrative cost to the Reporting entity of participating in
greenhouse and energy reporting programmes this is assumed to be constant
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irrespective of the number of programmes or the number of sites involved, once staff
resources are assigned to this area;
· An annual fixed cost per site this is the cost of collecting the data for that site,
without formatting it for reports; and
· Annual variable cost per site this is the cost of preparing different reports from the
same base data, and so is sensitive to the number of different reports required.
Table 2: Estimated annual fixed and variable costs to companies of greenhouse and energy
reporting
Emissions category Fixed costs Fixed sites cost Variable
kt CO2-e/yr $/Entity $/site cost $/site
report
>125 10 000 1 200 900
25-125 10 000 1 200 900
10-25 5 000 800 600
5-10 2 000 600 400
The annual variable cost per site could be reduced by replacing existing reporting
arrangements with a single online reporting tool enabling collection of data for all
relevant programmes in a streamlined way. To ensure that such annual variable costs
did not rise again in future, future reporting requirements would also need to be
streamlined through the same system.
Table 3 shows estimates of the annual costs of current reporting arrangements to
reporters and government, drawing on the analysis at Attachment A.
It was estimated that there are currently 3 077 companies reporting to greenhouse and
energy programmes. These companies report on 5 600 sites and produce 7 475 reports
per year. The current total cost to the economy of current greenhouse and energy
reporting arrangements was estimated at $16.2m per year.
It was estimated that streamlining of reporting through a single online reporting tool,
without any increase in the total number of companies reporting and with one report
required per facility (ie a reduction in the number of reports per year from 7 475 to
5 600), would deliver a reduction in total annual reporting cost to the economy of
around $1.7m, or 10% of current reporting costs. The cost reduction for reporting
entities would be around $1.2m per year or 9%. The cost reduction to governments
owing to streamlined administration would be around $0.5m per year or 16%.
Page 14
Table 3: Estimated total annual fixed and variable costs to business, and annual administrative
costs to governments of greenhouse and energy reporting under current and streamlined reporting
scenarios
Entities Sites Reports Reporting Entity (RE) Costs $m/yr Govt Total
costs annual
$m costs
$m
Fixed Fixed Variable Total
costs/ costs/ costs/ RE
entity site site costs
Current 3 077 5 600 7 475 6.0 3.5 3.5 13.0 3.2 16.2
reporting
Streamline 3 077 5 600 5 600 6.0 3.5 2.2 11.8 2.7 14.5
d reporting
The need for streamlining is increasing. The start dates for existing programmes in
Table 1 shows that there has been a significant increase in the number of greenhouse and
energy programmes since 2003. This trend is continuing there are already new
reporting needs being considered. The Western Australian, South Australian and
Northern Territory governments have already committed to legislate within their own
jurisdictions if a national reporting system is not established. The States and Territories
are considering a national emissions trading scheme that would require high quality,
company-level data in a nationally consistent format, which could not be delivered by
existing reporting programmes. In the absence of a centrally available data source, each
new programme will require its own reporting system, adding to the average number of
reports required of reporting entities and hence to the annual variable cost to reporters.
Industry has clearly indicated that it considers the current reporting environment
inefficient and the burden of reporting to multiple programmes unacceptably high.
The need for regulation
There are likely to be limits to the extent to which existing reporting requirements in all
jurisdictions can be streamlined through a single reporting system without a legislative
underpinning. There could be legal obstacles related to data collection and transfer
across jurisdictions due to the range of confidentiality provisions under current
programmes. There are also likely to be practical reasons why some programmes are
less able to be adapted to a streamlined data collection framework.
Also, a voluntary approach to streamlining may not be fully effective in removing
existing, duplicative reporting requirements or restricting the future growth of reporting
requirements. In practice, programme managers would be reluctant to abandon their
own reporting requirements, particularly where these were needed to meet legislated
obligations, in favour of a reporting system without legislative backing. Programme
managers would have concerns about their access to collected data, the continuation of
the reporting system and the quality of data reported. This problem could be addressed
by legislating a requirement for jurisdictions to remove duplicative reporting
requirements and ensure that future greenhouse and energy data needs were met through
the streamlined system, where possible.
There are also significant problems with the current greenhouse and energy reporting
environment that will not be addressed by streamlining alone. The overall data set
provided through existing programmes is incomplete, not consistently robust and often
not comparable across jurisdictions and between programmes. The sectoral coverage,
Page 15
thresholds and emissions focus of reporting requirements varies significantly between
programmes in different jurisdictions, as does the degree to which data are subject to
verification.
Although approximately 60% of Australia's greenhouse gas emissions in the sectors
investigated in the cost benefit analysis at Attachment B are covered by reporting under
existing programmes, only a fraction of the data collected are available to any one
programme or jurisdiction, due to confidentiality provisions and a lack of data sharing
protocols between programmes and jurisdictions.
It is estimated that around 60% of companies that would trigger a reporting threshold of
50 kt CO2-e or 200 TJ of energy annually are already reporting to one or more
mandatory or voluntary programmes. However, significant data gaps exist where other
companies, which are not currently covered by mandatory programmes, choose not to
report under voluntary programmes.
The Commonwealth, State and Territory governments have found that current data
collections are not adequate to meet their needs, and have an interest in increasing the
quality of the information about greenhouse gas emissions and energy use/production
in the economy that they can access. This information is necessary for:
· compiling national energy statistics in order to supply governments and industry
with vital data;
· meeting Australia's reporting obligations as a member of the International Energy
Agency, reporting to the United Nations and participating in Asia Pacific Economic
Cooperation (APEC) energy programmes;
· compiling the National Greenhouse Gas Inventory (NGGI) on order to meet
Australia's reporting obligations under the UN Framework Convention on Climate
Change;
· general economic and trade forecasting and planning;
· planning, implementing and monitoring national-level greenhouse gas reduction and
energy efficiency programmes; and
· planning, implementing and monitoring State-level greenhouse gas reduction and
energy efficiency programmes.
The range of data needs is relatively wide, partly because of the differing policy
approaches to greenhouse gas reduction taken by the various governments. Some of the
more complex reporting requirements come out of the structuring of programmes to fit
jurisdictional boundaries, both regulatory and geographical. For example, the
accounting needs of a State-based baseline-and-credit scheme such as the NSW
Greenhouse Gas Abatement Scheme may be more complex than would necessarily be
the case for, say, a national emissions permit trading scheme.
The data collected by the FES, including from around 280 companies (representing
around 2 500 sites) that use or produce more than 100 TJ energy annually, are more
detailed than energy data collected by other programmes. The high quality and detailed
Page 16
data provided through the FES are essential to provide Australia's national energy
statistics, which are the basis of efficient and effective energy policy and vital to
meeting Australia's international reporting obligations under the International Energy
Agency Energy Agreement and the United Nations Framework Convention on Climate
Change.
The number of companies responding to the FES has been declining over time, as
companies have been more reluctant to report voluntarily in light of increasing reporting
demands under other programmes. If the integrity of this data collection is not
maintained, Australia's energy policy processes and compliance with international
obligations would be compromised.
Over the past decade there has been some deterioration in the greenhouse and energy
data available to governments, whether collected by the FES or directly reported. For
example, the share of power generation energy use covered by direct reports has fallen
from near 100% in the early 1990s (when most generators were publicly owned) to
about 80%. The balance of fuel use (and emissions) is now indirectly inferred from
other data sources.
Effective energy efficiency and greenhouse reduction programme planning relies on
more detailed information, including how the energy delivered to customers is actually
used. For residential and smaller business users, this information can be gathered by
random survey and statistical methods. The wider variability of energy use in medium
to large manufacturing businesses, however, requires more direct reporting.
Many policymaking agencies spend considerable resources in commissioning special
studies, trying to access data from other agencies in the face of jurisdictional and
confidentiality barriers, and making comparisons across data sets which are often
inconsistent. It is likely that they would be in a better position to develop informed
policies if they could access the same, high-quality data set. Greater co-ordination of
data collection would also provide a better base for assessing the impacts of energy
efficiency programmes.
Improved data availability and quality would also enhance the ability of policymakers to
assess, implement and monitor a range of other potential measures for addressing
greenhouse gas emissions which current greenhouse and energy reporting programmes
could not support. Recognising this, most State and Territory governments have
indicated an intention to introduce new reporting requirements. As mentioned above,
State and Territory governments are considering new measures that will require
additional reporting by business. While programmes such as these may go some way
towards addressing data gaps, they would not provide all the data necessary for national
energy statistics, and may lead indirectly to a further reduction in reporting to the FES.
Page 17
The non-reporting by a significant number of companies that would trigger a reporting
threshold of 50 kt CO2-e or 200 TJ of energy annually means that these companies may
not have an active greenhouse and energy management plan in place. Many greenhouse
and energy programmes are based on the premise that reporting entities derive benefits
from their participation in greenhouse and energy reporting, including:
· the value to corporate image and reputation of participation in the reporting
programme;
· enhanced credibility of the entity's public statements regarding its emissions;
· a general interest in increasing the quality of national energy and greenhouse data;
and
· focussing the entity's attention on opportunities for increasing energy efficiency and
reducing greenhouse gas emissions that it would not otherwise be aware of.
Public scrutiny of companies' emissions may encourage greenhouse gas emission
reductions and more efficient use of energy, as public perceptions of companies are at
stake. However, company-level data are not available in a consolidated, publicly
accessible format under current arrangements.
Many companies are aware of public and investor interest in their energy use and
emissions. `Triple bottom line' reporting on financial, social and environmental
indicators is becoming widespread among global and national companies.
The work of the Carbon Disclosure Project an international initiative encouraging
large companies to disclose information on their exposure to carbon risks has
demonstrated that there is a substantial demand for this information amongst
institutional investors to support decision making. The Carbon Disclosure Project
encourages the FT500 largest companies in the world to publicly disclose information
on their greenhouse gas emissions. The most recent report of the Carbon Disclosure
Project states that 225 institutional investors are signatories to the project, representing
over US$31.5 trillion in assets globally. Climate change related risks to companies
identified in the report as reasons for public disclosure of emissions data include:
regulatory risks resulting from national and international regulations to curtail
greenhouse gas emissions; competitive risks generated by a possible decline in
consumer demand for energy-intensive products and a rise in costs for energy-intensive
processes; and reputational risks from perceived inaction on climate change.
Companies, and their industry associations, also wish to publicise their efforts to
reduce emissions and to increase the efficiency of their resource use, including energy
and water. Gaining recognition for such efforts is a major incentive for participation in
voluntary programmes such as Greenhouse Challenge Plus.
This creates some tension between the perceived value of public disclosure of
greenhouse and energy data which can be seen in a positive light and the wish to
withhold data which could reveal information of use to competitors. Some companies
resolve this tension by publicising their efforts to reduce emissions and their estimates of
emissions saved, while not revealing the absolute level of emissions or the trend over
time. Some report total emissions (in CO2-e), and sometimes emissions per unit of
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output, but do not report energy use, emissions broken down by source or separate fuel,
or the level of output.
Some companies try to follow one or more of the guidelines for calculating emissions,
such as those of the Greenhouse Challenge Plus or the World Business Council for
Sustainable Development. However, there is no standard format for publicly reporting
emissions, which for complex entities means combining data from a large number of
disparate sites and operating entities and presenting them in a way that is both internally
consistent and comparable with other companies.
Those trying to provide data in good faith have to develop their own reporting formats
(or select from a wide range of possible formats) and convince data users that the
method of data collection is valid, and has been rigorously applied.
Users of data are rarely in a position to compare different companies' emissions or
emissions-reduction performance because of inconsistency of data formats, legitimate
doubts about consistency of method and quality and the lack of sufficient
disaggregation of reported results to allow users to check at least some of the
assumptions.
1. Objectives
Recognising the above problems, the Commonwealth, State and Territory governments
have agreed to work together to develop a nationally consistent framework to streamline
and strengthen greenhouse and energy reporting by business that will meet the current
and prospective reporting needs of government, business and the public.
To this end, the proposed mandatory reporting system would meet the following
objectives:
1. To provide a single, cooperative, streamlined reporting system for greenhouse and
energy data across all jurisdictions that imposes the least cost and red tape burden
needed to maintain the integrity of existing national data collections;
2. To provide for the removal of current, and avoidance of future, duplicative reporting
requirements;
3. To provide greenhouse and energy data that are nationally consistent, robust and
comparable across jurisdictions to inform decision making on greenhouse and
energy policy and actions by government and business; and
4. To make information on the greenhouse and energy related performance of
companies available to the public, while maintaining the confidentiality of
commercially sensitive information.
1. The proposed national reporting system and alternatives
Introduction
The proposed national reporting system, including purpose-built national legislation, is
described below, along with regulatory and non-regulatory alternatives to the proposed
approach.
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Several alternatives refer to the streamlining of greenhouse and energy reporting.
Streamlining in this RIS means the replacement of existing duplicative greenhouse and
energy reporting processes, both voluntary and mandatory, with a single online reporting
system. Streamlining could be pursued with or without a regulatory underpinning, with
varying degrees of success.
Under any regulatory approach, the threshold levels define the number of companies
that would be required to report and the proportion of national emissions that would be
reported. Thus, threshold levels would be the key determinant of the costs and benefits
of the proposed national reporting system.
The lower the threshold level, the higher the number of companies required to report,
the greater the total reporting and administration costs and the greater the coverage of
emissions and energy data available to government and other stakeholders. While a
higher threshold would involve less cost, there is a risk that existing national data
collections would not be maintained.
Three different threshold settings, explored in the analysis at Attachment B, are
described in Table 4.
Table 4: Threshold models analysed in Attachment B
Model 1 Mandatory reporting of company-wide emissions and energy data by
companies above 50 kt of CO2-e or 200 TJ of energy
Model 2 Mandatory reporting of company-wide emissions and energy data by
companies above 25 kt of CO2-e or 100 TJ of energy
Model 3 Mandatory reporting of company-wide emissions and energy data by
companies above 50 kilotonnes (kt) of carbon dioxide equivalent (CO2-e)
or 200 terajoules (TJ) of energy annually plus reporting of site-level
emissions and energy data for sites that exceed 25kt CO2-e or 100TJ of
energy
Facility-level thresholds were also explored in the analysis at Attachment A, including
thresholds set at 1 kt CO2-e, 5 kt of CO2-e, 10 kt of CO2-e, 25 kt of CO2-e and 125 kt of
CO2-e and equivalent energy use/production levels.
These threshold levels could apply under any regulatory approach.
Option I. The proposed national reporting system: Streamlined reporting
underpinned by purpose-built legislation
(i) Overview
It is proposed that national purpose-built legislation be developed to underpin a
nationally consistent framework for streamlined greenhouse and energy reporting by
industry. In addition, all elements of the proposal to streamline greenhouse and energy
reporting outlined below under Option IV: Non-regulatory alternative: Streamlining
without new legislation would be pursued as part of the preferred alternative.
The form of the legislation has not been decided. Options include stand-alone
Commonwealth legislation, or a mirror legislative model under which legislation would
be enacted in all participating jurisdictions.
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The legislation would provide for mandatory reporting of greenhouse and energy data
by business through a single, online entry point. An online reporting tool will be
developed in parallel to the development of the legislation. The online tool will be
based on the Greenhouse Challenge Plus Programme's Online System for Challenge
Activity Reporting (OSCAR), which will require significant modification to meet the
requirements of the national reporting system.
The Commonwealth, State and Territory governments are committed to removing
existing duplicative reporting requirements within their jurisdictions where their current
data needs can be reasonably met by the proposed national mandatory reporting system.
This commitment also applies to any future reporting requirements.
Programmes proposed for inclusion in the streamlined reporting system are listed in
Table 5.
Table 5: Programmes proposed for inclusion in the streamlined reporting system
ABARE Fuel and Electricity Survey (ABARE FES)
Energy Efficiency Opportunities (EEO)
Greenhouse Challenge Plus (GCP) including Greenhouse Friendly (GHF) and Generator
Efficiency Standards (GES)
National Greenhouse Gas Inventory (NGGI)
National Pollutant Inventory (streamlining to focus on fuel consumption data)
Queensland EcoBiz
Northern Territory GHG Reporting Programme
NSW Energy Savings Plans
South Australian Greenhouse Strategy
Protocol for Environmental Management; Greenhouse Emissions and Energy Efficiency in Industry
(EPA Victoria Industry Greenhouse Programme)
NSW/ACT Greenhouse Gas Abatement Scheme
Mandatory Renewable Energy Target (MRET)
Queensland 13% Gas Scheme
WA Greenhouse Gas Inventory (WAGGI) (Proposed)
Victorian Environment Protection (Amendment) Act 2006 Environment and Resource Efficiency
Plans (effective 1 July 2007)
The Commonwealth, State and Territory governments will establish and implement a
Plan of Action to further streamline greenhouse and energy reporting that will include:
1. Transition arrangements from the current reporting environment to use of the
national reporting system, including approaches to dealing with current differences
between programmes (for example with regard to emission/energy factors, reporting
methodologies, verification and compliance procedures);
2. Phased removal of existing duplicative reporting requirements;
3. Expansion of the streamlining data set to include additional, non-mandatory
company-level information including action plans, abatement data, energy efficiency
savings, emissions and energy projections, performance/intensity indicators,
benchmarks and standards, and standardisation of verification procedures;
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4. Further development and refinement of the online reporting tool to better meet the
needs of governments, reporting entities and data users; and
5. Rationalisation of greenhouse and energy programmes.
In addition, further exploration of the integration of greenhouse and non-greenhouse
emissions reporting by business, which could lead to further streamlining of emissions
data reporting, may be considered following implementation of the national reporting
system for energy and greenhouse data.
Detail on the key design elements of the legislation is elaborated below. Much of the
operational detail of the national reporting system will be elaborated through guidelines,
including Reporting Guidelines.
(i) Objects clause
The legislation would include an objects clause reflecting the objectives set out in
section 3 above. This clause would provide transparency regarding the purpose of the
legislation and guide its implementation and future development.
(ii) Thresholds for reporting
Thresholds will be set that, at a minimum:
6. maintain the integrity of appropriate national energy and greenhouse gas emission
data collections and provide for a picture of industry greenhouse gas emissions and
energy consumption and production in Australia by state/territory and industry; and
7. do not significantly increase the cost to business.
To deliver on these aims, the proposed approach to thresholds includes:
8. a company-level threshold to be phased in during the first three years following
commencement of the legislation, set at:
a) 125 kilotonnes (kt) of carbon dioxide equivalent (CO2-e) or 500 terajoules (TJ)
of energy annually for the first year;
b) 87.5 kt CO2-e or 350 TJ of energy annually for the second year; and
c) 50 kt CO2-e or 200 TJ of energy annually for the third and subsequent years.
9. a facility-level threshold of 25 kt CO2-e or 100 TJ of energy annually to apply from
the start of the new system;
10. reporting of company-wide emissions/energy data by all companies triggering the
above thresholds (the possibility of requiring companies triggering only the facility
threshold to report only data relating to facilities above this threshold will be
reconsidered during the development of the legislation).
11. formal review and possible amendment of the threshold levels following submission
of the first reports subject to threshold (c) above, to ensure that the threshold is set at
Page 22
an appropriate level that maintains appropriate coverage levels and does not impact
significantly on small enterprises.
The thresholds would apply to the combined total of gross scope 1 (fuel and energy
produced or consumed and greenhouse gas emissions produced directly by the
company) and gross scope 2 (greenhouse gas emissions from consumption of electricity,
heat or steam imported from sources outside the company boundaries) data.
Company-level thresholds would be applied at the highest level of the corporate
structure rather than to subsidiaries. Scope 3 emissions and emissions offsets would not
be considered in applying the threshold, but would be reported by companies
participating in mandatory reporting, at their discretion.
Companies falling below the thresholds could participate in the national reporting
system by voluntarily joining one of the programmes listed in Table 5. There may be
some opportunity for companies that fall below the thresholds to elect to participate in
the legislated elements of the reporting system, including compliance provisions,
although these companies may be required to cover the administrative costs to
government resulting from their participation.
It is recognised that the proposed model introduces a greater level of complexity to the
threshold design than has been considered in previous consultations. However, the
different elements are intended to deliver on the above aims in different ways. The
company-level threshold is intended to exclude companies with relatively low total
emissions/energy use or production, while the lower, facility-level threshold is intended
to capture large facilities operated by companies that do not trigger the company-level
threshold, recognising the significance of facility-level data to existing data collections.
Table 6 illustrates how the threshold system would work for greenhouse gas emissions
for three hypothetical companies, each with three facilities. Company A, with
company-wide emissions of 125 kt CO2-e, would trigger the company-level threshold.
Company B, with company-wide emissions of 40 kt CO2-e and a highest facility-level
emissions figure of 20 kt CO2-e, would not trigger either the company-level or
facility-level thresholds. Company C, with company-wide emissions of 40 kt CO2-e and
a highest facility-level emissions figure of 25 kt CO2-e, would not trigger the
company-level threshold, but would trigger the facility-level threshold.
Company A would be required to report company-wide emissions. Company C would
be required to report only emissions from Facility X data from facilities Y and Z
would not be reported. Company B would not be required to report any emissions.
Table 6: Application of threshold model to hypothetical companies
Company Facility Triggers Triggers Reports
company facility
threshold? threshold?
A: 125 kt CO2-e X=60kt Company-wide emissions
(125 kt CO2-e)
Y=40kt
Z=25kt
B: 40 kt CO2-e X=20kt Not required to report
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Y=15kt
Z=5kt
C: 40 kt CO2-e X=25kt Facility X emissions only
(25 kt CO2-e)
Y=10kt
Z=5kt
(i) Data subject to mandatory reporting
This section deals with the data to be submitted by companies to government it does
not deal with data to be made public, which is covered under Public disclosure below.
The key data to be provided through the proposed national mandatory reporting system
would be fuel and energy produced/consumed by fuel type and equipment type,
emissions of each of the six Kyoto Protocol classes of gases (where methodologies
permitted separate estimation of the gases), and total emissions of the six classes of
greenhouse gases in carbon dioxide equivalent. The six Kyoto Protocol classes of gases
are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). Fuel types and
equipment types would be similar to those currently used by the ABARE Fuel and
Electricity Survey (an indicative list is at Appendix 1). The list of fuel and equipment
types will be refined during the development of reporting guidelines under the
legislation.
The legislation would apply to companies in all sectors of the economy. Reporting of
emissions from all IPCC emissions sectors, except agriculture and land use change and
forestry, would be mandatory from the outset of the national system. Reporting of
agricultural emissions would not be mandatory in the first instance, as methodologies in
the agriculture sector are not yet sufficiently robust to provide meaningful data at the
company level. Reporting of agricultural emissions would become mandatory once
robust methodologies were available. Work to develop such methodologies is being
carried out by the Australian Greenhouse Office and COAG.
Emissions from the land use change and forestry sector would not be mandatory unless
companies were also reporting carbon sinks within their own boundaries, because
Australia already has in place a system to provide detailed data on emissions from land
use change and forestry the National Carbon Accounting System. While not
mandatory, reporting of emissions from all IPCC sectors would be encouraged.
Data would be reported to facility-level resolution (although companies would have the
option of aggregating smaller sites see Aggregation level for data collection below),
with separate reporting of scope 1 and scope 2 data. The applicable emissions and
energy data for each facility would be those included in Scopes 1 and 2, as defined in
the GHG Protocol operational boundary definitions. These would include fuel and
energy produced or consumed and greenhouse gas emissions produced directly by the
company (Scope 1), and greenhouse gas emissions from consumption of electricity, heat
or steam (Scope 2) imported from sources outside the company boundaries. Scope 1
and Scope 2 data would be reported separately.
Page 24
These key data will in most cases be an output of the online reporting tool, rather than
reported directly by the company. Where data are provided through standard default
methodologies (see Emissions/energy factors and methodologies below), companies
would report underlying activity data, to which standard energy content conversions and
emissions factors will be applied. A list of data elements applying to the default
methodologies is provided for information at Appendix 2.
The online reporting tool will enable uploading/downloading of information to/from in-
house reporting systems.
Box 3 illustrates the types of data that may be reported by a company in this example,
data relating to cement manufacture.
Box 3: Emissions and energy data from cement manufacture
Information aboutinvolves grinding and heating need to be provided. This would include:
Cement manufacture the reporters would also of raw materials
(including `calcination' of limestone to calcium oxide), production of clinker
· Contact information of clinker, and addition of other materials. The registered business
from these materials, grinding minimum information would include the
main emission sources are CO2 released from calcination, heating in cement
kilns (combustion of gas, coal, biomass, used tyres, different), ABN/ACN, postal and street
name of the company, trading name (if etc), and electricity
consumption for mechanical grinding and blending. persons and details;
addresses, primary and secondary contact
Cement manufacturers would be required to submit the following data. Only
· Corporate hierarchy includingon Public Disclosure) would be units;
data identified as public data (see section subsidiaries and business
disclosed.
· Primary Australian and New Zealand Standard Industry Classification (ANZSIC) for
· · fuel consumed by fuel type and equipment type, and associated direct
each facility; and
CO -e emissions (scope 1);
2
·
· · quantity company and facilities being reported on individually by street address.
Location ofof clinker produced and associated direct CO2 emissions
(scope 1);
Companies would also be able to report offsets acquitted under government programmes
in participating jurisdictions. Some contextual information, including the scheme under
which the offsets were acquitted, would need to be reported with offsets. Where a
company reported offsets in the agriculture or land use change and forestry sectors
within its own boundaries, it would also need to report its emissions or emitting
activities in those sectors to ensure balanced reporting. Consideration will be given to
including offsets in the mandatory data set.
Companies could also report other data on a voluntary basis, including greenhouse gas
emissions from indirect activities (GHG Protocol Scope 3), companies' actions to
reduce emissions and make more efficient use of energy, and other contextual data and
information.
Offsets and scope 3 data would not be considered in applying mandatory reporting
thresholds, and would need to be reported separately from scope 1 and scope 2 data.
(ii) Emissions/energy factors and methodologies
As a default, companies would report using Australian Bureau of Agriculture and
Resource Economics Fuel and Electricity Survey (ABARE FES) energy content factors
listed in the ABARE FES fuel type summary and fuel codes, and standard emission
factors and methodologies from the AGO Factors and Methods Workbook, as updated
from time to time, in line with improvements to the methodology supporting the
Page 25
National Greenhouse Gas Inventory and in consultation with all participating
jurisdictions.
Company-specific factors and methods, or direct emissions measurements, could be
approved, in consultation with all participating jurisdictions, where these were more
accurate than the default methods specified in the ABARE FES and the AGO Factors
and Methods Workbook and consistent with the National Greenhouse Gas Inventory
methodology. Approval procedures would be established for this purpose under the
legislation.
Emissions data would be calculated and reported to the nearest calculable tonne using
either the default or approved alternative emissions factors and methodologies and the
relevant activity data.
(iii) Data quality
The accuracy of reported data would be dependant on the quality of the underlying data.
Reporters would be encouraged to assess their data gathering processes and to improve
these processes over time. Guidance on data sourcing, record keeping and ongoing
monitoring and review of data sets by the reporting entity would be set out in the
reporting guidelines.
(iv) Aggregation level for data collection
It is proposed that data be reported by companies to facility-level resolution. That is,
companies would report data on individual facilities, although they would have the
option of aggregating smaller facilities for reporting purposes.
To provide for cost-effective reporting of small sites while still providing useful data,
the online reporting tool will offer reporting entities with a number of smaller sites the
option of aggregating those sites for reporting purposes to 3 digit ANZSIC level for
industrial facilities and 2 digit ANZSIC level for commercial/transport operations and
by state/territory.
Statistically valid site sampling could also be undertaken in accordance with
international practices and the reporting guidelines, and the results extrapolated across
similar small sites. For example, a business could assess a sample of retail outlets that is
representative of a larger population of outlets; a sample of vehicles that is
representative of a larger fleet of vehicles (road, rail, air or water) or a sample of
machines or processes that are used in the same way at other sites, or a sample of
commercial buildings that is representative of a population of commercial buildings.
Companies would need to provide information on the methodology used.
Companies would not be permitted to aggregate any individual sites over the
facility-level threshold of 25 kt CO2-e or 100 TJ of energy annually.
Additional guidance on the treatment of small sites would be provided in the reporting
guidelines.
(v) Frequency of reporting
Companies would be required to submit reports once annually.
Page 26
Reports would be due no later than four months after the end of the reporting period.
The default reporting period would be the Australian financial year, although companies
would be able to nominate a calendar year reporting period when they register as a
reporting entity under the legislation.
To enable collation of data on either a financial or calendar year basis to meet the
different needs of government programmes, the online reporting tool would divide the
data into two equal halves, unless companies voluntarily provided their data in more
accurate six-month blocks. Where data are provided in a single block, companies would
be required to advise of any significant differences between the first and latter halves of
the reporting period, for example the acquisition or commissioning of new plant
increasing emissions.
(vi) Public disclosure
In this document public disclosure refers only to the publication of data in the public
domain. Disclosure of data other than by publication in the public domain is dealt with
under Data security and access below.
It is proposed that company-level data be made publicly available online by the national
reporting system.
For greenhouse gas emissions, the basic level of disclosure would be a single aggregated
total of gross emissions in CO2-e (i.e. combining scope 1 and scope 2 emissions). Only
total energy consumed and produced would be required for public disclosure.
Provision would be made in the legislation to publicly disclose additional data where the
company had given its consent or requested to do so. Data for voluntary disclosure
would include gross scope 1 emissions, gross scope 2 emissions, total offsets, total net
emissions, underlying activity data, companies' actions to reduce emissions and make
more efficient use of energy, and indicators such as greenhouse gas emissions per unit of
production.
Companies would still be bound by disclosure protocols of existing programmes in
which they participate.
The legislation would establish a procedure through which companies could apply to
have confidential data exempted from public disclosure, where necessary to protect
commercial confidentiality. Each application would be considered on a case-by-case
basis against set criteria, based on the principle that there would be no public disclosure
of information that could reveal proprietary business, competitive or trade secret
information about a specific facility, technology or corporate initiative.
The administrator of the mandatory reporting scheme would be empowered to publish
additional data appropriately aggregated, for example, by ANZSIC code, region or
locality, fuel type and equipment type. This activity would be coordinated with other
data and statistical agencies to avoid duplication. Rules safeguarding commercial
confidentiality, developed by the Australian Bureau of Statistics, would apply to the
disclosure of such data.
Page 27
(vii) Data security and access
This section deals with data security and the circumstances and conditions under which
access may be given to data that is not publicly disclosed. Relevant models would be
considered in preparing the legislation, for example legislation related to the Australian
Bureau of Statistics, the Australian Taxation Office and the Renewable Energy
(Electricity) Act 2000.
Data security
The legislation would require that the data be stored securely in a centralised database
and that confidentiality arrangements be put in place. The legislation would allocate
responsibility for data security, including for establishing relevant protocols and
procedures governing data security and access, physical security of premises where data
is stored and enforcement of confidentiality requirements (see Compliance below).
Data access
To enable streamlining of reporting across jurisdictions, governments would agree to
use the national reporting system where it could reasonably meet existing greenhouse
and energy reporting needs and needs under the proposed national legislation. To
ensure continued streamlining into the future, provision would be made in the legislation
for the national reporting system to be used, where possible, as the data collection tool
by new greenhouse and energy programmes that are established at a time later than the
preparation of the legislation.
Page 28
The legislation would require the administrator (see Roles and responsibilities below) to
make available to each jurisdiction:
· All reported data related to all facilities located within that jurisdiction;
· Data relating to all facilities in all jurisdictions aggregated by jurisdiction and
ANZSIC code;
· Additional data covered by an agreement between the Administrator and another
agency; and
· Additional data which the company concerned has consented to disclose to a
jurisdiction.
Data made available to jurisdictions under the national system may only be used for:
· All existing purposes for which greenhouse and energy data currently collected
under the programmes listed in Table 5 are used;
· Informing decision making on greenhouse and energy policy and actions;
· Undertaking legal proceedings connected with the national reporting system or with
the current and future energy or greenhouse programmes that are agreed to be
included in the national reporting system, including with regard to compliance,
verification and breeches of energy or greenhouse laws;
· Publication of reports on greenhouse gas emissions and energy, consistent with the
confidentiality provisions relating to the national greenhouse and energy reporting
system; and
· Purposes relating to greenhouse emissions and energy use, in connection with other
legislative instruments.
Agreements between the Administrator and agencies would identify persons authorised
to access data; confidentiality protocols, including methods for recording access, and
preventing and reporting unauthorised access; and purposes for which data may be used.
For example, data may be provided for policy analysis and program development,
management and assessment.
(viii) Definition of company boundaries
The company at the top of the corporate hierarchy will be defined as the reporting entity
rather than a subsidiary. The proposed approach to defining boundaries around company
activities (organisational boundaries) within which greenhouse and energy data will be
collected and reported is for the reporting entity to report all emissions and energy data
relating to facilities/sites over which they have operational control.
Operational control is attributed to a company, or one of its subsidiaries, if it has full
authority to introduce and implement its operating policies at an operation. Operational
policies include occupational health and safety, and environmental policies. Operational
control does not necessarily mean the ability to make all decisions for an operation.
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Operational control is distinct from equity share or financial control. While financial
and operational control are aligned in most cases, a company that owns an interest in an
operation does not necessarily have operational control over that operation. For
example, under a joint venture the company that has responsibility for, and control over,
the operation of a jointly owned facility may not have financial control over the facility.
Guidance on operational control is provided in the WRI/WBCSD Greenhouse Gas
Protocol Corporate Accounting and Reporting Standard.
Some complexities will need clarification in the legislation, for example, in relation to
leased buildings and contracting out. It may be preferable for the lessee of a building to
include electricity use in their inventory where they pay the bill despite some ambiguity
over whether they have operational control.
While reporting using operational control would be mandatory, companies would be
able to provide additional data voluntarily, based on equity share or financial control to
define organisational boundaries.
In exceptional circumstances, where the application of operational control would give
rise to unreasonable complexity and cost, a company may apply to the Administrator, on
the basis of agreed criteria, to report using financial control or equity share methods. In
these cases, the company would be required to explain how the alternative method
would change reported data.
(ix) Independent verification
An independent verification system would be established and companies would be
required to keep adequate records to allow independent verification of reports. It would
be anticipated that all companies would aim for best-practice reporting and continuous
improvement in ascertaining the company's emissions in order to capture the benefits of
greenhouse reporting such as the identification of opportunities to reduce emissions and
the management of greenhouse risks. Independent verification and the required levels of
report completeness and data accuracy would be based on the principles of best-practice
reporting as described in the GHG Protocol and outlined in detail in the verification
guidelines.
To ensure an adequate supply of verifiers, the Administrator could, if necessary,
coordinate verifier training and accreditation with administrators of other greenhouse
and energy programmes.
A proportion of companies would be subject to independent verification each year. As a
basic approach, companies would be chosen randomly for verification. In addition,
more targeted verification could be conducted based on a risk management approach.
The administrator of the national reporting system would have responsibility for
establishing a panel of appropriately qualified independent verification providers and for
arranging verification of reports.
If verification of the same, equivalent or higher standard by an accredited verifier had
been initiated by a company or another agency, this could be recognised as satisfying
verification requirements under the national reporting system. A procedure based on
transparent criteria would need to be established for the recognition of alternative
verifications in the verification guidelines.
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The Greenhouse Gas Emissions & Energy Data Office would bear the cost of
verification except where verification had been initiated by the company or another
agency.
Best practice reporting requires companies to capture all emitting activities as accurately
and as completely as possible. In order to reduce the reporting burden it will be suitable
to estimate the impact of activities where emissions are difficult to quantify and where
the inaccuracies introduced by estimation are immaterial. Materiality refers to the
relative significance of discrepancy (error, omission or misrepresentation) in the
company's reports.
A discrepancy is material if a decision based on the report by any party would change if
the discrepancy was corrected. Verifiers would determine what represents a material
discrepancy when undertaking a verification using their own professional judgment and
taking into account company characteristics and the potential use of the reported data.
Further guidance on what constitutes a material discrepancy could be provided in the
verification guidelines.
Independent verification would identify any material discrepancies in company reports
and identify suitable amendments. A company may be requested to rectify such
inaccuracies or rectify any record-keeping discrepancies that prevent verification within
a prescribed period.
(x) Compliance
The compliance provisions of the legislation would be informed by A Guide to Framing
Commonwealth Offences, Civil Penalties and Enforcement Powers (Australian
Government Attorney-General's Department, 2004) and relevant models will be
considered, including the Energy Efficiency Opportunities Act 2006 and the
Renewable Energy (Electricity) Act 2000.
Key compliance steps could include:
· Registration by companies likely to exceed the reporting threshold, during the first
six months of the first reporting period;
· Submission of the report within the required timeframe; and
· Verification that the report is to the required standard.
A compliance pyramid would be established, under which the compliance response
would be escalated gradually, from a cooperative approach through to legal action. The
sequence of actions taken where reporters were found to be out of compliance could
include:
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· Verbal advice;
· A warning letter; and
· Legal action with penalties sought.
Appropriate penalties could apply to:
· Failure to keep records (companies would be required to maintain sufficient records
to enable verification of data, for a specified time);
· Failure to lodge report;
· Providing false or misleading information;
· Failure to provide information that is required;
· Breaches of confidentiality requirements.
(xi) Roles and responsibilities
Participating jurisdictions
Some of the roles and responsibilities of the participating jurisdictions will be defined in
the proposed legislation. Accompanying the proposed legislation will be an agreement
between the Commonwealth, State and Territory governments, which will further
elaborate arrangements for the governance of the national reporting system, including
roles and responsibilities.
Table 7 presents a model for roles and responsibilities under the proposed legislation, as
well as arrangements that would primarily be established under the governance
agreement.
Involvement of stakeholders
The involvement of stakeholders, including data reporters and users, will be important in
developing and implementing the national reporting system. Stakeholder input will be
sought in elaborating detailed elements of the reporting system such as reporting
guidelines and processes for treatment of confidential information. It is also proposed
that stakeholders would be involved in the work of a Reporting Advisory Group, which
would have responsibility for matters such as the development of reporting guidelines
(see Table 7 below).
Table 7: A model for roles and responsibilities which could be assigned under governance
arrangements and legislation
Governance Agreement Greenhouse Gas Emissions and Energy Reporting
Act
COUNCIL OF AUSTRALIAN GOVERNMENTS PARLIAMENT
· Sign intergovernmental agreement and any
amended versions
MINISTERIAL COUNCIL MINISTER/S
· Oversee implementation of, and provide policy · Must obtain agreement of Ministerial Council on
guidance on, national reporting system, including initial bill, any amendment bills and proposed
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general oversight of intergovernmental agreement regulations this requirement to be specified in
and legislation intergovernmental agreement and, if possible,
· Approve draft legislation (initial bill, amendment legislation [advice is being sought on this matter].
bills and proposed regulations, including reporting · Must not hinder Administrator from performing
guidelines) functions and duties (e.g. distributing data to
· Develop and implement action plan to streamline jurisdictions or disclosure of `public' data, as
reporting authorised by legislation)
· Monitor operational performance of national · May refer matters to Administrator for advice
reporting system, and report to COAG on strategic · May require Administrator to provide information
issues necessary to meet ministerial accountabilities and
· Coordinate with other ministerial councils on duty to uphold laws of Commonwealth
greenhouse and energy reporting · Table annual reports on national reporting system
· Initiate review of national reporting scheme, in parliament
intergovernmental agreement and legislation in · Ensure decisions of Ministerial Council are acted
accordance with review provisions in on
intergovernmental agreement and legislation
· Agree changes to national reporting system
· Recommend to COAG any proposed
amendments to intergovernmental agreement
· Respond to stakeholder and other advice on
issues relating to national reporting system
· Nominate State and Territory members of
Reporting Advisory Group
· Oversee work of Reporting Advisory Group
· Agree annual budget and work programme of
national reporting system, including Greenhouse
Gas Emissions and Energy Data Office.
REPORTING ADVISORY GROUP ADMINISTRATOR
To comprise Chairperson, Administrator or delegate Statutory office holder
(ex officio), representatives of each jurisdiction, and Greenhouse Gas Emissions & Energy Data Office
non-government members with relevant qualifications Non-statutory body; administrative unit within an
and expertise. existing agency.
· Develop reporting guidelines and factors and · Administer national greenhouse and energy
methods reporting system
· Implement streamlining work programme, · Collect, compile, analyse and disseminate
including investigation of non-inventory greenhouse and energy data
greenhouse/energy data · Provide access to database and data to
· Provide advice to Administrator on technical Commonwealth, State and Territory bodies as
matters related to administration of legislation, required by legislation, and--by arrangement with
including development of online reporting tool, other agencies--other services, advice or assistance
applications for non-disclosure, use of company- relating to greenhouse and energy data
specific factors and methods, etc · Arrange public disclosure of `public' data
· Undertake other tasks relating to the national · Ensure inter-jurisdictional coordination of
reporting system, as required by the Ministerial operations related to national reporting system,
Council, including through sub-groups and including ongoing streamlining of reporting, provision
consultancies as appropriate of training and technical advice to reporting entities,
public awareness, and compliance activities
· Formulate, and ensure compliance with, standards
for carrying out data operations
· Operate national online reporting tool and make it
available to reporting entities and jurisdictions
· Approve applications for non-disclosure of data,
and company-specific factors and methods
· Accredit third-party verifiers
· Ensure compliance with mandatory reporting
requirements
(i) Timeframe for legislative framework
It is envisaged that mandatory reporting under the national reporting system would
begin no later than 1 July 2008, with submissions of first reports due by the end of
October 2009.
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To effect a smooth transition to the new system, prior to this date the Commonwealth,
State and Territory governments would amend the relevant programmes, whether
mandatory or voluntary, to enable collection of greenhouse and energy data covered by
the national reporting system exclusively through the national online reporting tool.
Companies would be encouraged to participate, on a voluntary basis, in a trial reporting
period in 2007-08, with submission of reports for the reporting period submitted by the
end of October 2008.
Option I. Baseline 1: No change to current reporting arrangements
This alternative would involve no action by COAG to streamline current reporting
arrangements.
It should not be seen as a `do-nothing' option for COAG or a `business as usual'
scenario, as it would require all jurisdictions to refrain from introducing any new
programmes requiring new greenhouse and energy reporting arrangements in the future,
including where jurisdictions have already indicated an intention to do so. Effectively,
this alternative would require an agreement by all jurisdictions to that effect. This is not
considered a realistic option but is included as a baseline against which alternatives can
be compared.
Table 1 lists current greenhouse and energy reporting programmes.
Option II. Baseline 2: Current and new reporting arrangements
Like Baseline 1 above, this alternative would involve no action by COAG to streamline
current reporting arrangements.
It differs from Baseline 1 in that it would not require jurisdictions to refrain from
introducing new greenhouse and energy reporting programmes. Given that there are
already new reporting needs being considered by many jurisdictions, this option could
be considered a `business as usual' scenario. It could also be regarded as a `do-nothing'
option because no action would be required of COAG in order for new reporting
arrangements to be introduced.
The Western Australian, South Australian, Northern Territory and Victorian
governments have indicated commitments to new reporting requirements for their
jurisdictions. States and territories are also considering a national emissions trading
scheme that would require new data reporting. Furthermore, the COAG communiqué of
14 July 2006 noted that "the States and Territories reserved the right to use the NPI if
the Commonwealth, States and Territories failed to reach agreement on national
purpose-built legislation at COAG's next meeting." The NPI alternative is discussed
separately below.
Option III. Non-regulatory alternative: Streamlining without new legislation
Streamlining of greenhouse and energy reporting would involve an agreement by all
jurisdictions to remove existing mandatory and voluntary greenhouse and energy
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reporting arrangements and replace them with reporting through a single online
reporting tool and standard data set, where data needs can be met through this system.
Streamlining forms part of the preferred approach discussed above, but could also be
pursued as a separate alternative without a legislative underpinning.
The programmes proposed for inclusion in a streamlined reporting process in the first
instance are listed in Table 5. Other programmes could be included over time.
The national online reporting tool for streamlined reporting would be based on the
Online System for Challenge Activity Reporting (OSCAR), currently the online
reporting tool for Greenhouse Challenge Plus. OSCAR handles greenhouse, energy,
waste, water and cost data. Reporters can submit data online, with a high level of data
security. Users can manage their own data and details, and control who can access their
data. In-built validation and submission functions highlight data anomalies, reduce
reporting times and assist users to produce accurate reports. Users can create charts and
tables of data-trends for sectors, business units, regions or facilities.
OSCAR stores all necessary conversion and emission factors to convert energy, fuel,
waste and materials consumption data into greenhouse gas emissions in quantities of
carbon dioxide equivalent.
OSCAR would need further development to serve multiple programmes and increase
functionality. This would include enabling information download from company data
systems.
A greenhouse and energy reporting data set would be developed to cover all data that
could be reported for programmes identified in Table 5. The data set would be the same
as that proposed in Appendix 2 but could also include some additional elements
currently reported under some voluntary and mandatory programmes, such information
on energy efficiency and emissions abatement activities.
Not all categories or elements identified in the greenhouse and energy reporting data set
would be reported under all programmes. Reporting entities would only report the items
required by programme(s) they participate in (and any other items they wish to report
voluntarily).
Where companies or facilities are reporting to multiple programmes, not all data would
be made available to all programmes. Programme administrators would only have
access to information already required under their programme or any voluntary data.
Option IV. Regulatory alternative: Greenhouse and energy reporting through
the National Pollutant Inventory (NPI)
The COAG communiqué of 14 July 2006 stated that:
In relation to energy and greenhouse gas emissions reporting, COAG agreed that a
single streamlined system that imposes the least cost and red tape burden is the
preferable course of action. To this end:
· COAG agreed that Senior Officials report back to COAG in December 2006 with
a proposal for streamlining emissions and energy reporting in line with the
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above objectives. The report should be based on the preparation of national
purpose-built legislation to provide for cost-effective mandatory reporting and
disclosure at the company level at the earliest practicable date. The report will
also need to include advice on timing, thresholds and governance arrangements;
· COAG also agreed that the NPI would not be used as a vehicle for reporting
greenhouse gas emissions and that no further work be undertaken by the
Environment Protection and Heritage Council on incorporating greenhouse gas
emission reporting in the NPI pending finalisation of the above report; and
· COAG further agreed that every effort should be made to reach agreement on a
national purpose-built legislation by December 2006. States and Territories
reserved the right to use the NPI if the Commonwealth, States and Territories
failed to reach agreement on national purpose-built legislation at COAG's next
meeting.
The NPI NEPM was established in 1998 under the NEPC Act 1994. A draft varied NPI
NEPM and an accompanying Impact Statement was released by the National
Environment Protection Council (NEPC) in June 2006 to provide a basis for public
consultation of the proposed variation of the NPI NEPM. These documents were
prepared prior to the COAG agreement of 14 July 2006 and include a detailed proposal
for the inclusion of greenhouse gases in the NPI. Most of the text in this section has
been based closely on the draft varied NEPM, as this is the most up-to-date publicly
available version of the NPI proposal.
This alternative assumes that greenhouse and energy reporting would be streamlined
through the online reporting tool based on OSCAR, consistent with Option IV outlined
above. This would enable streamlined reporting of the full greenhouse and energy data
set currently collected, which would not be possible if reporting were to be done directly
to the NPI. The NPI would provide for mandatory reporting of relevant greenhouse and
energy data and mandatory public disclosure of greenhouse gas emissions. Once
collected, the relevant data would be transferred from the greenhouse and energy
reporting tool to the NPI. This is one of three options discussed in the Impact Statement
accompanying the draft varied NPI NEPM.
Other aspects of this alternative are taken from the draft varied NPI NEPM and from
suggestions about how the draft NEPM variation may be updated and implemented. It is
recognised that the draft varied NEPM may change and a greater level of detail will be
elaborated, should COAG fail to reach agreement on the preferred alternative and EPHC
resumes its work on the inclusion of greenhouse gases in the NPI.
(i) Thresholds for reporting
In the draft varied NPI NEPM, a new threshold for greenhouse gas reporting is proposed
of 25 kt CO2-e, equivalent to 100TJ of energy use.
This threshold would be applied at a business entity level and would include: emissions
of the six Kyoto classes of greenhouse gases. Emissions or energy use would be
included arising from activities conducted at any facility operated by the business entity
and activities conducted outside the boundary of the business entity's facilities, but
attributable to the activities of the business entity, such as a transport fleet or the off-site
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generation of electrical energy where that electrical energy is used by the business
entity.
In addition, there is an existing facility-level threshold currently requiring reporting of
activity data for estimating other combustion gases, that would require facility-level
reporting of carbon dioxide and nitrous oxide where individual facilities burn 2 kt of
fuel (approximately equivalent to 5 kt CO2-e greenhouse gas emissions).
(ii) Data subject to mandatory reporting
The draft varied NEPM includes the reporting of the 6 Kyoto greenhouse gases
(scope 1) emissions in addition to the indirect (scope 2) emissions described in Option 1,
section 4(iii).
Information concerning energy, in the form of both fuel usage and electricity
consumption, is already reported to the NPI voluntarily, as a means of demonstrating
compliance with thresholds and activity data for the calculation of emissions. The ability
to mandate energy data collection without further changes to the NEPM may be
possible, since clause 9(1)(c) in the NEPM specifies that "any information that may be
required to assess the integrity of the emission data" is to be provided. The legal basis
for collecting some energy data, such as production of coal, oil, gas, and electricity if
not used to assess the integrity of emissions data would need to be investigated and
may require changes to the NEPC Act.
Companies would be able to report additional data into OSCAR on a voluntary basis, as
outlined in Option 1.
(iii) Emissions/energy factors and methodologies
As a default, companies would report using Australian Bureau of Agriculture and
Resource Economics Fuel and Electricity Survey (ABARE FES) energy content factors
listed in the ABARE FES fuel type summary and fuel codes, and standard emission
factors and methodologies from the AGO Factors and Methods Workbook, as updated
from time to time, in line with improvements to the methodology supporting the
National Greenhouse Gas Inventory and in consultation with all participating
jurisdictions.
An estimation technique which is likely to provide more accurate emission data than the
technique set out in the relevant industry reporting materials can be used upon
agreement with implementing jurisdictions, as is the case with current program
arrangements.
(iv) Data quality
Before providing data to the Commonwealth under the draft varied NPI NEPM, each
participating State and Territory shall, for each reporting facility located within that
State or Territory undertake any reasonable action within its powers which it considers
necessary for that particular reporting facility to confirm the accuracy of the information
furnished by the occupier.
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(v) Aggregation level for data collection
Businesses are required to supply data to the states and territories at the facility level.
The draft NEPM variation is silent regarding the possible aggregation of smaller sites. It
is proposed that, to provide for cost-effective reporting of small sites while still
providing useful data, reporting entities with a number of smaller emitting sites would
have the option of aggregating those sites into a single `facility' for reporting purposes.
While this could be implemented in a number of ways, a "small facility" cut off
threshold would most likely be used to determine aggregation level.
(vi) Frequency of reporting
Companies can submit reports at either of two set periods of the year (calendar or
financial year) for any 12-month reporting period agreed with the jurisdiction. The
default reporting period is the Australian financial year. Reports are due no later than
three months after the end of the reporting period.
(vii) Public disclosure
The Commonwealth releases facility-level emissions information gathered by
31 January to the general public for the preceding financial year via the NPI web site
and publishes reports summarising NPI information.
It is proposed that company-level greenhouse data be made publicly available online,
with the 6 Kyoto classes of greenhouse gases and indirect emissions displayed
separately to the current NPI substances. The 6 Kyoto greenhouse gases would be
displayed individually, where methodologies exist to do so.
Claims that data should be treated as confidential is already dealt with in the NEPM and
briefly outlined below.
(viii) Data security and access
Data security
Participating jurisdictions ensure that information provided by companies is not released
to the public prematurely, unless the jurisdiction is legally compelled to release it, and
that information provided is not able to be altered, unless as provided for by the NEPM.
A claim by a reporting facility that particular information should be treated as
Commercial in Confidence is, unless the existing law of the relevant participating
jurisdiction provides otherwise, dealt with through existing clauses in the NEPM and a
corresponding Commercial in Confidence handbook. A claim that information should be
treated as confidential on the grounds of national security can also be assessed by the
Commonwealth, as outlined in the existing NEPM.
Secure storage of information is provided by participating jurisdictions where
confidentiality claims have been granted or have been sought and are being assessed, or
information is supplied in confidence for the purposes of developing aggregated
emissions data, or information is supplied for the purposes of verifying emissions data.
Data Access
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As stated in the NEPM, a participating State or Territory is not to release any of the
information provided to it unless the occupier consents to its release, the State or
Territory is legally compelled to release it, or it is specifically required by another State,
Territory or Commonwealth data gathering program. This information can only be
supplied to the State, Territory or Commonwealth program that requires it.
(ix) Definition of company boundaries
Under the draft varied NPI NEPM, business entities would be identified by Australian
Business Number (ABN). Greenhouse gas emissions would be attributable to the
business entity where they arose from activities conducted at any facility operated by the
business entity and activities conducted outside the boundary of the business entity's
facilities, but attributable to the activities of the business entity, such as a transport fleet
or the off-site generation of electrical energy where that electrical energy is used by the
business entity.
For facility-level reporting of carbon dioxide and nitrous oxide, the occupier of a facility
would be required to report emissions.
It is proposed that, instead, the approach outlined in Option 1 could be adopted under the
NPI. That is, the approach to defining boundaries around company activities
(organisational boundaries) within which greenhouse and energy data will be collected
and reported is for companies to report all emissions and energy data relating to
facilities/sites over which they have operational control.
(x) Verification
Each participating State or Territory conducts assessments of integrity of reported
emission and transfer data, from reporting facilities located within its jurisdiction, in
accordance with preferred outcomes and procedures as agreed between participating
jurisdictions in MOUs between the Commonwealth and State and Territory
Governments. Site compliance inspections are also carried out in some instances,
particularly where there is reason to believe that a reporting facility has failed to report
as required.
(xi) Compliance
All compliance and enforcement is carried out by State and Territory implementation
staff and is detailed in State and Territory legislation. These follow the principles stated
in the current NEPM.
Enforcement action may be taken by the relevant participating jurisdiction if a reporting
facility does not provide information required under the NEPM to the nominated agency
of the relevant participating jurisdiction, or provides false or misleading information to
the nominated agency.
The enforcement action will, unless the law of the relevant participating jurisdiction
provides otherwise, be taken in accordance with the following principles:
(a) the occupier of the reporting facility will be given the opportunity for an impartial
hearing;
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(b) if, following that hearing, the nominated agency thinks that the circumstances so
warrant--
(i) the occupier may be named in the annual report of the Council as breaching
its reporting requirements; and/or,
(ii) appropriate penalties may be prescribed.
Information provided by a reporting facility solely for the purposes of the NPI will not
be used by a participating jurisdiction as evidence in any court proceedings for non-
compliance with another obligation imposed by the jurisdiction.
(xii) Roles and responsibilities of jurisdictions
The roles and responsibilities of jurisdictions would be the same as those already
established under the NEPC framework.
(xiii) Timeframe for legislative framework
The NEPC is scheduled to consider the draft varied NEPM in April 2007. Amendments
to the NEPM could be implemented from 1 July 2007, although it is recognised that
further consideration of the legal basis for greenhouse gas reporting under the NEPC Act
is required and that relevant regulations and information technology infrastructure
would need to be put in place. A review of the NEPC Act is scheduled to be completed
in June 2007.
1. Costs and benefits of the proposed national reporting
system and alternatives
Introduction
The costs of alternative approaches to a national reporting system and have been
estimated in two analyses, which are attached to this report.
The first analysis (Attachment A) was commissioned by the EPHC/MCE working
groups and undertaken by George Wilkenfeld and Associates and Energy Strategies. It
informed the drafting of the consultation paper, Reducing the Burden. This analysis
compared the potential costs of mandatory reporting under different facility-level
thresholds with a `BAU' scenario. It included a full description of the methodologies
and assumptions underlying the analysis, including sensitivity analysis.
The second analysis (Attachment B) was commissioned by the Australian Greenhouse
Office and undertaken by George Wilkenfeld and Associates. Building on the first
analysis, it compares the potential costs of mandatory reporting under two
company-level thresholds and a mixed company-level and facility-level threshold model
with a `BAU' scenario (which corresponds with Option 2: Baseline 1 in this RIS). It
includes a description of the refinements made to the methodologies and assumptions
since the first analysis.
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The differences between the methodologies used in the two reports are largely due to the
difference in focus (ie facility-based reporting compared to company-based reporting).
Both analyses are used in this RIS.
The benefits of the proposed national reporting system and alternatives are discussed
qualitatively in this RIS. The benefits of greenhouse and energy reporting are difficult
to quantify because they are non-financial. The one quantitative measure available is
the total emissions coverage of each alternative, and this is discussed.
Each alternative is also discussed in the context of the four objectives of the proposed
national reporting system.
Option I. The proposed national reporting system, including alternative
threshold levels
The proposed model includes both replacement of existing reporting arrangements with
a single streamlined reporting system and national legislation making reporting
mandatory for companies above certain thresholds.
Costs
The costs of this alternative include costs of mandatory reporting by entities triggering
the thresholds, as well as continued voluntary reporting by companies below the
thresholds. The reporting thresholds would determine the number of new reporters
brought into the system, and would thus be the primary determinant of marginal costs of
the proposed system. Three threshold models, already described in Table 4, were
analysed in Attachment B.
The analysis at Attachment B defines cost categories and provides estimates of average
costs in each category. For reporting entities, the cost categories are:
· Annual `entity costs': representing the fixed cost to the business of participating in
the reporting regime (whether mandatory or voluntary), and of collecting and
submitting data, irrespective of the number of sites. The costs are estimated at $10
000 per annum for companies triggering threshold model 1, $5 000 for businesses
triggering threshold model 2 but not model 1 and report on all their sites, $4 000 for
businesses that trigger threshold model 2 but not model 1 and report only on
individual sites greater than 2k kt or 100 TJ energy (for threshold model 3), and $1
000 for those businesses which only have sites below 25 kt or 100 TJ but report
voluntarily.
· Sites costs: representing record-keeping costs per site. The cost estimate ranges from
$2 000 for a site which meets Trigger A on its own to $200 for a small site below
25kt/100TJ (eg a branch owned by a national bank, a shop owned by a national
retailer). In the BAU scenario, site costs are increased by the estimated average
number of reports prepared for each site (1.25).
These costs are summarised in Table 8.
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Table 8: Summary of annual reporting costs to reporting entities
Entity and Site Types $/year
Entity cost per reporter (entities > 50 kt/200 TJ) $10 000
Entity cost per reporter (entities between 25 kt/100 TJ and 50 kt/200 TJ reporting all sites) $5 000
Entity cost per reporter (entities between 25 kt/100 TJ and 50 kt/200 TJ reporting only sites > 25 kt/100 TJ) $4 000
Entity cost per smaller voluntary reporter $1 000
Site cost per site (sites > 50 kt/200 TJ) $2 000
Site cost per site (sites between 25 kt/100 TJ and 50 kt/200 TJ) $1 200
Site cost per site (larger sites below 25 kt/100 TJ) $500
Site cost per site (smaller sites below 25 kt/100 TJ) $200
In addition, there may be some cost to companies in terms of staff time in dealing with
verification processes under a mandatory reporting system.
The administrative costs to governments of the proposed reporting system are estimated
in the analysis at Attachment B as:
· Annual processing costs of $500 per report from each business larger than
50 kt/200 TJ, $400 per report from each business between 25 kt/100 TJ and
50 kt/200 TJ and $300 per report for sub-threshold reporters below 25 kt/100 TJ.
· Recurrent fixed administrative costs of running the national greenhouse and energy
reporting system database of $1 m per year (including information technology costs
and system management costs).
It is assumed that if a mandatory framework is established, those currently reporting
businesses which fall below the threshold will continue to report, but gain some cost
savings from producing a single annual report, rather than making multiple reports as at
present. These continuing sub-threshold businesses are termed `sub-threshold
reporters'. As thresholds are lowered, the number of sub-threshold reporters falls, since
some will become mandatory reporters. The elimination of multiple reporting also
lowers the administrative costs to data requiring agencies, since fewer reports need to be
processed.
The annual cost would increase to $16.1m under threshold model 1 an increase of
$2.9m above the cost of existing reporting arrangements as estimated in Attachment B.
Under threshold model 2, annual costs would be $17.6m, or $4.4m higher than current
costs. Under threshold model 3, the annual reporting cost would increase by $3.5m to
$16.7m.
The cost of reporting for entities currently participating in multiple programmes would
decrease due to streamlining. The average cost per reporter would increase under the
threshold models due to an increase in the average size of reporters, reflecting the fact
that all new reporters are larger than average and hence have higher compliance costs.
The average annual costs per participating business are estimated at $3 323 under
current reporting arrangements, where the average size of reporting entities is relatively
small, $4 016 under Model 1, $4 201 per annum under Model 2 and $4 054 per annum
under Model 3, reflecting the increased average size of reporting entities under these
models rather than an increase in costs for entities already reporting. Information on the
benefits of the proposed reporting system is given under Benefits below.
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The threshold proposed in section 4 above corresponds closely to threshold model 3.
Benefits
Objective 1: A single, cooperative, streamlined reporting system
This alternative would deliver a single, cooperative streamlined reporting system for
greenhouse and energy data across all jurisdictions. It would enable a data set to be
created and made mandatory under legislation, ensuring that existing national data
collections, including greenhouse gas data and energy statistics, were maintained. The
cost and red-tape burden would depend on the thresholds found necessary to maintain
the integrity of national data collections. It would also provide for continued reporting
of companies not triggering the reporting thresholds, through the same online reporting
tool.
Objective 2: Removal of current duplicative reporting requirements
Under the current proposal, all jurisdictions would agree to remove existing
arrangements for the reporting of greenhouse and energy data and replace these with a
single, streamlined reporting system where this could be achieved while still meeting the
requirements of the underlying programmes. This agreement would be embodied in the
governance agreement and/or the legislation.
Objective 3: Consistent, robust and comparable; inform decision making by government
and business
The proposal includes provision for all jurisdictions to agree on the use of standard
methodologies, data elements and definitions of such things as organisational boundaries
and emissions scopes, ensuring that data would be consistent and comparable across
programmes and jurisdictions. Total data coverage in the sectors analysed would be
around 69.6% under threshold model 1, 74.2% under threshold model 2 and 71.2%
under threshold model 3. Data access provisions in the legislation would ensure that all
jurisdictions had access to data to inform policy making, including access to all data
relevant to the specific jurisdiction and aggregated data for all jurisdictions. All
companies above the thresholds would be required to report and thus would be in a
position to make informed decisions on greenhouse and energy policy and actions.
Objective 4: Make information available to the public
Public disclosure of information on the greenhouse and energy related performance of
companies forms part of the proposal. This information would be available centrally
and online, and in a consistent format. Provisions would be included in the legislation to
ensure the protection of confidential information.
Option I. Baseline 1: No change to current reporting requirements
Costs
Different estimates of the total annual costs to the economy of current reporting
arrangements were derived from the analyses at Attachment A and Attachment B.
These differences arose from differences in methodology between the two analyses.
Attachment A put the total annual cost at $16.2m. This includes an estimated
compliance cost to business of $13m and government costs of $3.2m. The costs to
business from this analysis are given in Table 2.
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Attachment B put the total annual cost at $13.2m, of which around 83%, or $11m, is
borne by reporting entities. This analysis estimated the average annual cost per entity
to be $3 323 under current reporting arrangements.
Benefits
Objective 1: A single, cooperative, streamlined reporting system
This alternative would not deliver a streamlined reporting system. Because current
programmes include duplicative reporting arrangements, there is higher cost and red
tape than is necessary to deliver the current level of reported data.
Objective 2: Removal of current duplicative reporting requirements
Existing reporting requirements would not be removed under this alternative.
Objective 3: Consistent, robust and comparable; inform decision making by government
and business
Current reporting arrangements deliver data coverage in the analysed sectors of 60.6%,
but only a small proportion of these data is available to support policy making and
programme implementation in any one jurisdiction.
Objective 4: Make information available to the public
Data are not currently available to the public in a centralised location or in a consistent
format. Companies that are currently reporting would continue to be in a position to
make informed decisions on greenhouse and energy policy and actions.
Option II. Baseline 2: Current and new reporting arrangements
Costs
Under this alternative it is assumed that new reporting requirements would be imposed,
including those already identified by some jurisdictions, and that these would lead to
increased reporting costs to reporting entities and governments.
Average annual cost per entity of current reporting arrangements plus additional
reporting requirements, which would likely apply to more relatively large emitters, are
expected to be greater than $3 323. The marginal costs of new/proposed reporting
requirements cannot be quantified.
Benefits
Objective 1: A single, cooperative, streamlined reporting system
This alternative would not deliver a streamlined reporting system. Because current
programmes include duplicative reporting arrangements, there is higher cost and red
tape than is necessary to deliver the current level of reported data. Future reporting
requirements would add to the number of reporting systems, and hence the cost and red
tape burden.
Objective 2: Removal of current duplicative reporting requirements
Existing reporting requirements would not be removed under this alternative.
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Objective 3: Consistent, robust and comparable; inform decision making by government
and business
Individual jurisdictions would introduce reporting requirements with the aim of meeting
specific policy and programme needs. Data coverage in the analysed sectors would be
expected to increase above 60.6%, although not all of these data would available to
support policy making and programme implementation in any one jurisdiction.
Companies reporting under current and new programmes would be in a position to make
informed decisions on greenhouse and energy policy and actions.
Objective 4: Make information available to the public
Individual jurisdictions may choose to make some data available to the public under
specific programmes.
Option III. Non-regulatory alternative: Streamlining without legislation
Costs
It is assumed that this alternative would effectively be the same as Baseline 2, except
that current reporting arrangements would be replaced by a single streamlined reporting
system and that planned reporting requirements would use this system to deliver their
data, thereby avoiding any duplication of reporting.
The analysis at Attachment A found that replacing current reporting arrangements with a
single streamlined online reporting system would deliver a reduction in total annual
reporting cost to the economy of around $1.7m, or 10% of current reporting costs. This
would be achieved through a reduction in the number of reports per year from 7
475 currently to 5 600 under a streamlined system. The cost reduction for reporting
entities would be around $1.2m per year or 9%. The cost reduction to governments
owing to streamlined administration would be around $0.5m per year or 16%.
The analysis at Attachment A assumes no new reporting, either voluntary or mandatory.
In practice, the costs of a streamlined reporting system would be expected to increase as
new programmes were implemented because these would bring new reporters into the
system. Annual reporting and administration costs could be expected to remain around
10% lower than the costs of Baseline 2, and may tend towards the costs of the preferred
model as the percentage of companies with relatively high emissions/energy use covered
by reporting requirements increased over time. The additional costs associated with new
reporters would be partially offset by more cost-effective reporting under a national
system, compared with business as usual.
Benefits
Objective 1: A single, cooperative, streamlined reporting system
This alternative would aim to deliver a single, cooperative streamlined reporting system
for greenhouse and energy data across all jurisdictions. It would enable the maintenance
of existing national data collections, including greenhouse gas data and energy statistics,
through a standard data set. This option offers the least cost and red-tape burden, but
would rely on voluntary reporting to maintain the integrity of national data collections.
There are likely to be limits to the extent to which existing reporting requirements in all
jurisdictions can be streamlined through a single reporting system without a legislative
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underpinning. There could be legal obstacles related to data collection and transfer
across jurisdictions due to diverse confidentiality provisions under current programmes.
There are also likely to be practical reasons why some programmes are less able to be
adapted to a streamlined data collection framework.
Objective 2: Removal of current duplicative reporting requirements
This alternative would not provide a means to ensure removal of existing reporting
requirements, although this would be encouraged by a COAG decision to that effect. In
practice, programme managers would be reluctant to abandon their own reporting
requirements and systems, particularly where these were needed to meet legislated
obligations, in favour of a reporting system without legislative backing. Programme
managers would have concerns about their access to collected data, the continuation of
the reporting system and the quality of data reported.
Objective 3: Consistent, robust and comparable; inform decision making by government
and business
Under this alternative, data coverage in the analysed sectors would be expected to
increase above 60.6%, consistent with the increase in coverage under the Baseline 2
alternative. Not all of these data would available to support policy making and
programme implementation in any one jurisdiction. Individual jurisdictions would
introduce reporting requirements with the aim of meeting specific policy and
programme needs. Companies reporting and under current and new programmes would
be in a position to make informed decisions on greenhouse and energy policy and
actions.
Objective 4: Make information available to the public
This alternative would not provide for improvements in public disclosure of data.
Individual jurisdictions may choose to make some data available to the public under
specific programmes.
Option IV. Regulatory alternative: Greenhouse and energy reporting through
the National Pollutant Inventory (NPI)
Costs
In the analysis at Attachment A it is concluded that the form of regulation selected is not
likely to have a significant impact on the cost of the reporting system. The costs of
establishing or modifying a reporting system would be small in relation to the on-going
costs, and the adjustment costs to government including the costs of developing
legislation would be small in comparison with those incurred by reporting entities.
Since it is assumed that the NPI option would be implemented along with streamlining,
the costs of the NPI option would include both mandatory reporting under the NPI and
continuation of reporting by companies under other existing greenhouse and energy
programmes not triggering the NPI threshold.
The precise costs of the NPI option have not been estimated. The costs of the NPI
alternative to individual reporting companies may be similar to those discussed above
for the preferred alternative. The threshold proposed in the draft NPI NEPM variation
released for public consultation in July 2006 corresponds most closely to threshold
model 2, although the facility-level threshold may capture more companies.
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Benefits
Objective 1: A single, cooperative, streamlined reporting system
There is some doubt about whether the NEPC Act, under which the NPI National
Environment Protection Measure has been made, offers a legal basis for the reporting of
greenhouse gas emissions in its current form. A review of the NEPC Act is scheduled
for completion in June 2007.
Assuming that greenhouse gas reporting could be mandated under the NEPC Act and
that consistent with Option IV, greenhouse and energy reporting were streamlined
through a single online tool, this alternative would deliver a single, cooperative
streamlined reporting system for greenhouse and energy data across all jurisdictions. It
would enable a data set to be created that would enable existing national data collections
to be maintained, although the maintenance of energy statistics would still rely on
voluntary reporting as some energy data could not be collected under the legal
framework underpinning the NPI. The cost and red-tape burden would depend on the
thresholds found necessary to maintain the integrity of national data collections.
Objective 2: Removal of current duplicative reporting requirements
The NPI alone would not provide a means to ensure that existing reporting requirements
were removed, although this could be encouraged by a COAG decision to that effect.
Objective 3: Consistent, robust and comparable; inform decision making by government
and business
Consistent and comparable greenhouse gas data could be provided through the NPI to
inform policy making and programme implementation. There would be greater
restrictions on the provision to jurisdictions of energy data collected for the purpose of
verifying emissions data. Not all the energy data required for energy statistics would be
reported under the NPI, so would only be collected through OSCAR on a voluntary
basis and could not be made available to jurisdictions with the NPI data. Total data
coverage in the sectors analysed would be around 69.6% under threshold model 1,
74.2% under threshold model 2 and 71.2% under threshold model 3. All companies
above the thresholds would be required to report and thus would be in a position to
make informed decisions on greenhouse and energy policy and actions.
Objective 4: Make information available to the public
Information on the greenhouse performance of companies would be publicly disclosed.
Mandatory disclosure of energy data would not possible under the NPI. Provisions are
already included in the NPI to protect confidential information.
Summary
Streamlined reporting underpinned by purpose-built legislation is the preferred
alternative because it is the only alternative that can ensure that all of the stated
objectives are met to the greatest degree possible. A voluntary approach would not
address some of the data quality issues arising from the patchwork of programmes
across jurisdictions, including the consistency and comprehensiveness of data for policy
analysis. There could be legal obstacles related to data collection across jurisdictions.
Furthermore, a voluntary approach to streamlining is unlikely to be effective in
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restricting the future growth of reporting requirements in all jurisdictions, meaning that
companies would be subject to new data requests over time. State and Territory
Governments have clearly indicated their intention to pursue the NPI for greenhouse gas
reporting, rather than a voluntary approach.
The NPI alone is not the preferred alternative because it would not provide for
mandatory reporting of all the energy data needed for national energy statistics, it does
not offer the means to ensure removal of duplicative reporting arrangements, and there
are doubts about whether it offers a legal basis for the reporting of greenhouse gas
emissions.
Summary data on non-regulatory alternatives and three threshold models under the
regulatory alternatives (ie the preferred alternative and the NPI) are given in Table 9.
The proposed threshold model for the preferred alternative corresponds to threshold
model 3; the threshold model proposed in the draft varied NPI NEPM corresponds most
closely to threshold model 2, although the NPI includes an additional, facility-level
threshold. Quantitative determination of a preferred option on the basis of net benefit to
the community is not possible owing to the non-quantitative nature of the benefits of
greenhouse and energy reporting.
The percentage of data coverage in the analysed sectors is of some use in comparing the
costs and benefits of different alternatives. It provides an indication of the proportion of
emissions/energy use occurring in companies that are reporting and are thus in a position
to make informed decisions on greenhouse and energy policy and actions. Percentage
data coverage is of less use in comparing the benefits for government decision making
of regulatory and non-regulatory alternatives, because under non-regulatory alternatives
there is no coordinated means to ensure that all relevant reported data is available to
support decision making when needed.
Based on data from Attachment B, the annual total cost per percentage point of data
coverage under threshold model 1 would be $0.231m. Under threshold model 2 it
would be $0.237m and under threshold model 3 it would be $0.235m. These figures are
around 6-9% higher than the annual total cost per percentage of data coverage under
current arrangements of $0.218m. It is not possible to compare these costs with the
costs per unit of data coverage under the Baseline 2 and non-regulatory streamlining
alternatives.
The preferred threshold model (model 3) has a higher cost per unit of data coverage than
model 1. This threshold model is preferred because reporting of data from all facilities
greater than 25 kt/100 TJ has been identified as necessary to ensure that the integrity of
current national data collections was maintained, and that this could be achieved without
applying a company-level threshold of 25 kt/100 TJ, which would lead to a higher cost
per unit of data coverage.
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Table 9: Summary of impacts of regulatory and non-regulatory scenarios
Scenario Total Total Additional Marginal total Proportion of Total annual
number of number of companies annual costs data covered cost per
companies companies reporting (i.e. above total in sectors percentage
reporting triggering as a result annual costs of included in unit of data
(mandatory new of new current analysis coverage
and mandatory regulation reporting
voluntary) reporting arrangements) % $m
thresholds
$m
Option I 3584 698 318 3.5 71.2 0.235
(preferred):
Streamlining
plus threshold
model 3 (50 kt
company + 25
kt facility)
Option II: 3266 0 0 0 60.6 0.218
Baseline 1
(existing
reporting
arrangements)
Option III: > 3266 >0 >0 >0 > 60.6 not
Baseline 2 estimated
(existing and
planned
arrangements)
Option IV: > 3266 >0 >0 = 0 or = 0 > 60.6 not
Streamlining estimated
without
national
legislation
Streamlining 3470 504 204 2.9 69.6 0.231
plus threshold
model 1 (50 kt
company)
Option V 3662 886 396 4.4 74.2 0.237
(approximate):
Streamlining
plus threshold
model 2 (25 kt
5
company)
1. Consultation
May 2005
Late in 2004 the Environment Protection and Heritage Council and the Ministerial
Council on Energy set up an inter-jurisdictional Joint Working Group (JWG) of officials
to develop options for a national approach to business reporting of greenhouse and
energy to meet a range of government, industry and community information needs. The
JWG sought comment during May and June 2005 on a consultation paper, Greenhouse
and Energy Reporting: Consultation Paper. Submissions were received from a
combination of industry associations, companies and government departments.
5
The NPI threshold is most closely approximated by this model but also includes a facility threshold
which may change data such as cost and emissions coverage.
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On the basis of this consultation process and feedback from participating jurisdictions,
the JWG found clear support for a nationally consistent approach to streamline
reporting, and recommended that inter-jurisdictional work on this approach continue.
April 2006
Inter-jurisdictional policy and technical working groups were established jointly by the
Ministerial Council on Energy and the Environment Protection and Heritage Council in
November 2005. The working groups undertook a national, public consultation process
during April 2006 on the basis of a consultation paper, A streamlined national reporting
framework for greenhouse and energy data: Reducing the Burden. Views received
during this process informed recommendations to, and the decision by, COAG.
The working groups received 49 submissions. Thirty-seven of these submissions were
from industry and industry associations and 11 were from other organisations, including
government departments and universities. A list of stakeholders that provided
submissions is at Attachment C.
October 2006
The COAG Greenhouse and Energy Reporting Group consulted stakeholders during
October 2006 on the basis of this draft Regulation Impact Statement. Advertisements
were placed in national newspapers on 7 October 2006 alerting stakeholders to the
commencement of the consultation process. Stakeholders who attended briefing
sessions during the previous consultation and/or provided submissions were notified of
this process, as were current members of Commonwealth Government greenhouse and
energy programmes. Interested members of the public were invited through a notice on
the AGO website to provide written submissions responding to this RIS.
Victorian Greenhouse Gas Emissions Reporting and Disclosure Pilot
Some State and Territory views in this process have been informed by the Greenhouse
Gas Emissions Reporting and Disclosure Pilot led by EPA Victoria.
Parties that will be affected by the proposed action
The parties that will be affected by the proposed action are:
· Companies that would be required to report under the proposed legislation. The
proposed thresholds are expected to capture relatively large emitters and/or
users/producers of energy. Small businesses will not be affected by proposed
national legislation, but may benefit from more streamlined reporting arrangements
where they are already participating in existing greenhouse and energy programmes.
· Data users and administrators of existing and proposed greenhouse and energy
programmes would also be affected by the proposed national reporting system; and
· Members of the public.
Outcomes of the October 2006 Stakeholder Consultation
Thirty-nine stakeholder submissions were received on the Draft RIS. Respondents
included 18 companies, 16 industry associations, 3 private citizens, 1 government
department, and 1 data user/research group. Industry association and company
respondents covered a range of industry sectors including mining, electricity generation
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and distribution, communications, aviation, water, agriculture, technology,
manufacturing, and the food and beverage industry. A list of stakeholders that provided
submissions is at Attachment D.
Overall feedback, through submissions and comments at the stakeholder forums,
indicated a high level of support for the preferred option. The majority of concerns
raised related to implementation issues such as thresholds for reporting, frequency of
reporting and the timeframe for the legislative framework, which have been addressed.
This feedback also highlighted a number of areas where more detailed consideration and
explanation is needed, and underlined the importance of substantial stakeholder
engagement in processes to develop the proposed legislation and supporting documents
such as reporting guidelines.
Views on the preferred and alternative options
Twenty-nine respondents provided comment. Of these, 23 indicated a preference for
Option I (the preferred option). These respondents included 8 companies, 13 industry
associations, 1 data user/research group and 1 government department. Two companies
who indicated a preference for other options expressed support for Option I as a fall
back.
Five of the respondents in support of Option I stressed the importance of the work to
progress streamlining, and requested further detail on how the transition from current
reporting requirements to the proposed new reporting regime would be achieved. The
need develop a Plan of Action to address expansion of the streamlined data set, removal
of current duplicative reporting requirements, progression into the new system, and
further development of the online reporting tool OSCAR has been acknowledged in the
overview section to Option I.
One company expressed a preference for Option V (reporting under the NPI), and 1
industry association indicated support for Option V as a fallback from Option I.
Two respondents (1 company, 1 industry association) indicated support for Option IV.
Fifteen respondents (5 companies, 10 industry associations) indicated opposition to
Option V. Five respondents (1 company, 4 industry associations) indicated opposition
to Options II-V.
Two companies and 3 industry associations commented on possible legislative models.
All five respondents indicated a preference for unitary Commonwealth legislation.
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Comments on design elements of the preferred option
(i) Thresholds
· 23 respondents provided comment.
· 12 respondents (5 companies, 7 industry associations) indicated support for a
threshold model including a 50 kt/200 TJ company-level threshold and a
25 kt/100 TJ facility-level threshold, with five of these respondents (including
1 company and 4 industry associations) indicating that companies triggering the
facility-level threshold only should be required to report emissions/energy data from
only that facility. These preferences have not been incorporated into the threshold
model under Option I, but will be subject to further investigation during the
development of the legislation.
· One major industry group stated opposition to any threshold lower than
125 kt/500 TJ. This respondent also indicated that, should a lower facility-level
threshold be implemented, companies triggering the facility-level threshold only
should be required to report emissions/energy data from only that facility.
· Other issues raised were that the proposed threshold model was too complex
(2 companies, 1 industry association), and that thresholds should be aligned with the
EEO approach where a controlling corporation participates if its emissions exceed
0.5PJ, and there is no facility level requirement (1 company, 3 industry
associations).
(ii) Data subject to mandatory reporting
· 12 respondents provided comment.
· 2 industry associations and 2 companies expressed support for the proposed model.
Two respondents provided additional comment, suggesting company contextual
information should be kept to a minimum, and companies should be encouraged to
report offsets and abatement actions. Under Option I offsets would be reported by
companies participating in mandatory reporting, at their discretion.
· 1 company and 4 industry associations commented that the development of robust
technologies for reporting of emissions from the agricultural sector should remain a
top priority.
· 1 company considered reporting by equipment type inappropriate as it would add
unnecessary complexity. It has been acknowledged under Option I that the list of
fuel and equipment types will be refined during the development of reporting
guidelines and under the legislation.
(iii) Emission/energy factors and methodologies
· 14 respondents provided comment.
· 6 respondents (5 companies, 1 industry association) supported the inclusion of
company-specific emission factors where approved by relevant jurisdictions.
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· There was support from 3 industry associations for the default methodologies
proposed.
· 3 respondents (2 companies, 1 private citizen) expressed concern with the use of the
AGO Factors and Methods Workbook (F&M Workbook) in its current form. The
F&M Workbook will be developed further with the assistance of the proposed
Reporting Advisory Group as part of the forward process.
(iv) Aggregation level for data collection
· 9 respondents provided comment.
· Some respondents supported the proposal to report to facility level resolution with
the option to aggregate sites where appropriate (2 companies, 2 industry
associations).
· 1 company preferred to report total energy use and greenhouse gas emissions and
site information only for those sites over the threshold.
· 1 company suggested the requirement to restrict aggregation of sites above
25kt CO2-e may place unreasonable burden on water utilities.
· 1 industry association suggested reporting for the lot feeding sector should be
according to the ABARE feedlot survey, as individual facility reporting would be
costly and inconvenient.
· 1 company questioned the theory behind aggregation of data, commenting that the
method misses the opportunity to gather detailed data, and appears to accommodate
businesses who may have indicated an unwillingness for more detail based on cost
concerns.
(v) Frequency of reporting
· 17 respondents provided comment.
· There was significant opposition to the proposed option (8 industry associations,
5 companies). These respondents preferred to report data once annually on a
calendar or financial year basis. Reporting of data in two six-monthly blocks was
considered by respondents to require additional work for little benefit, and to add
significantly to the administrative and financial cost of reporting. Accordingly, under
Option I companies will no longer be required to report data in two six-monthly
blocks, rather they will report once annually.
· 1 industry association suggested the data could be divided into two six-monthly
blocks by the administrator of the national reporting system. This suggestion has
been included in Option I, where the online reporting tool would divide the data into
two equal halves, unless companies voluntarily provided their data in more accurate
six-monthly blocks.
· 3 companies supported the proposed option.
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(vi) Public disclosure
· 15 respondents provided comment.
· The majority of respondents (6 industry associations, 3 companies) supported the
proposed option, 4 on the condition there is adequate protection of commercially
sensitive data. Two of these respondents (both industry associations) suggested the
confidentiality provisions for the new reporting system should align with other
economic collections by the ABS. Option I now states that the rules safeguarding
commercial confidentiality, developed by the ABS, would apply to the public
disclosure of aggregated greenhouse and energy data.
· It was suggested by 1 industry association that facility level data be publicly
available, with appropriate exemptions for commercially sensitive data.
· 1 data user/research group strongly advocated the mandatory separate disclosure of
scope 1 and 2 emissions in addition to combined scope 1 and 2 disclosure to meet
the needs of investors and analysts. This respondent considered it rare for large
companies to take the form of a single company and noted it was unclear how
corporate groups would be treated in the proposed reporting system.
· 1 industry association suggested the publication of aggregated total gross greenhouse
gas emission data does not give regard to the efficiency of particular commercial
operations and could be taken out of context.
(vii) Data security and access
· 12 respondents provided comment.
· The majority of respondents (5 industry associations, 3 companies) supported the
proposed option, agreeing that strong data security and access provisions should be
comprehensive from the commencement of the framework, and include
authorisation levels, policy development requirements and ongoing monitoring and
assessment.
· 2 industry associations suggested a criterion be included regarding the physical
security of facilities at which data is housed. One industry association suggested data
confidentiality and access protocols could be on par with that applying to data
supplied by business to the Australian Tax Office.
· 2 respondents commented on the confidentiality provisions of the proposed system.
One industry association suggested modification of the confidentiality provisions to
allow for exemption of industry segments where the character of that segment is
such that publication of emissions data would reveal commercially sensitive
information. Another industry association opposed public access to company data,
and recommended company data be automatically protected under legislation at each
jurisdictional level.
(viii) Definition of company boundaries
· 13 stakeholders provided comment.
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· The majority of comments (6 industry associations, 2 companies) concerned the
alignment of organisational boundaries across reporting programmes, particularly
between the proposal and the existing EEO programme (4 industry associations,
2 companies).
· 2 industry associations and 1 company supported the use of operational control also
on the proviso that the definition used is consistent with other programmes.
· 1 company strongly opposed the use of operational control for a mandatory reporting
system. Reasons include that it could be difficult to unambiguously define who has
operational control and that the underlying data can be commercially sensitive so in
some cases it may not be appropriate for operators to consolidate. They also had
concerns about the operator signing off on reports that relate directly to the
performance of an asset they do not own.
· 2 companies had questions around the obligation to report data when companies are
merged, de-merged, acquired or divested. One company suggested the supporting
legislation and online reporting tool allow for disaggregation and reassignment of
historical data in the event of changes to corporate structure. Option I now states that
company-level thresholds would be applied at the highest level of the corporate
structure, and not to subsidiaries.
(ix) Independent Verification
· 13 respondents provided comment.
· Over half of respondents (5 industry associations, 3 companies) commented that
consideration should be given to accepting independently verified inventories
already carried out by a recognised verifier on behalf of the company in question.
This has been recognised under Option I. It has also been suggested a procedure
based on transparent criteria be established for the recognition of alternative
verifications in the verification guidelines.
· 3 industry associations and 1 company considered the cost of verification should be
borne by the government as it is a compliance activity. Option I now acknowledges
that the Greenhouse Emissions and Energy Data Office would bear the cost of
verification except where it has been initiated by the company or another agency.
· 2 industry associations supported random selection of companies for verification.
· 1 respondent commented that materiality issues will need to reflect the needs of
different emitters and energy users, as it is unrealistic to report emissions data to the
nearest tonne for industry sectors such as electricity generation, or the transport
component of a company's operations, such as a small vehicle fleet.
(x) Roles and Responsibilities of jurisdictions
· 8 respondents provided comment (5 industry associations, 3 companies). All of these
respondents highlighted the need for the proposed national reporting system to be
based on agreement and commitment by all jurisdictions to ensure consistency in
implementation.
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· 1 company and 2 industry associations supported an administering agency
independent of any emission or energy regulator and of policy agencies, such as the
Australian Bureau of Statistics.
· 2 industry associations stressed the importance of preventing regulatory creep within
the mandatory system, stating that future changes to the legislation, MOUs,
guidelines and other related instruments should only be implemented with the
agreement of all jurisdictions, and after consultation with industry. One respondent
suggested this could be achieved through the inclusion of an `objects clause' in the
legislation. This has been included under Option I.
(xi) Timeframe for legislative framework
· 12 respondents provided comment.
· The majority of respondents (5 industry associations, 3 companies) supported the
proposed start date for the mandatory reporting system as it will give companies not
yet reporting time to set up the reporting systems required to comply with the
national framework.
· Most respondents (5 industry associations, 4 companies) opposed the application of
retrospective legislation for the 12 month reporting period from 1 July 2007. The
option to apply legislation retrospectively has been removed from Option I. Reasons
given for opposition to retrospective legislation included:
· Current reporting requirements are adequate to cover the intervening period;
· The online reporting tool will take at least 12 months of testing, fine-tuning, and
full appreciation;
· Retrospective legislation does not engender business certainty; and
· The timeframe is too tight for reporters to introduce adequate reporting systems.
· 1 company and 1 industry association suggested a provision by which entities could
voluntarily submit trial reports under the new reporting system prior to the scheduled
start date. This option has been included under Option I.
1. Evaluation
It is concluded that Option I best addresses the problem outlined in section 2, above, and
best meets the objectives laid out in section 3, above.
A voluntary approach would not address some of the data quality issues arising from the
patchwork of programmes across jurisdictions, including the consistency and
comprehensiveness of data for policy analysis. There could be legal obstacles related to
data collection across jurisdictions. Furthermore, a voluntary approach to streamlining
is unlikely to be effective in restricting the future growth of reporting requirements in all
jurisdictions, meaning that companies would be subject to new data requests over time.
State and Territory Governments have clearly indicated their intention to pursue the NPI
for greenhouse gas reporting, rather than a voluntary approach.
Page 56
The NPI alone is not the preferred alternative because it would not provide for
mandatory reporting of all the energy data needed for national energy statistics, it does
not offer the means to ensure removal of duplicative reporting arrangements, and there
are doubts about whether it offers a legal basis for the reporting of greenhouse gas
emissions.
Of the threshold models analysed, the proposed threshold model best meets the
objectives in the most cost effective way. It would provide sufficient coverage of
emissions and energy data to provide a sound basis for greenhouse and energy policy
development and programme administration and maintain the integrity of existing
national data collections, while avoiding creating an excessive compliance burden or
impacting on small business.
Responses from stakeholders during the October 2006 consultation process indicated
that Option I is strongly supported by stakeholders, particularly by industry.
2. Review
It is envisaged that the legislation will sunset no later than nine years after its
commencement, unless a decision was made before that date to extend the sunset to a
later date. Such later date would be a date not more than five years later than the sunset
date in place at the time such an agreement to extend the date is made.
No later than four years after the commencement of the legislation, and no later than
each succeeding period of five years, a review of the legislation would be conducted.
Each review of the legislation after the first would include a recommendation as to
whether the sunset of the legislation should be extended.
The Review will make recommendations on whether the arrangements for the national
reporting system and matters set out in the legislation should continue or cease to be in
force and whether the legislation should be repealed or amended.
Page 57
Appendix 1: Indicative lists of equipment and fuel types
Equipment Types
Aero engines Feedstocks Natural gas production and
Aerosol propellant Field and plant use distribution
Anode baking oven Flare and unaccounted losses Natural gas reticulation own use
Anode production Flocculating agent for coal dust and losses
Batch drier Fluid bed reactor Non-electric kiln
Bitumen heating plant Fluid bed roaster Other miscellaneous equipment
Blast furnace injection Fluid pumps Other mobile machinery
Boiler for mechanical power Food cookers Other non-fuel uses
Boiler for process heat Food preparing equipment Packaging equipment
Boiler for co-generation Furnace (electric) Paint curing ovens
Boiler for power generation Furnace (non-electric) Petroleum refining equipment
Briquette manufacturing Galvanising bath Piston engine for power generation
equipment General industrial. Electric Plaster products manufacture
Char manufacturing equipment equipment (eg motors, space Power station own use
Coal conversion equipment heating) Pulverised wall boiler for power
Coal products manufacturing Glass products manufacture generation
equipment Hydrogen reformer Pumped storage
Coal washery equipment Illumination equipment Reductant
Coil annealing Incinerator Reduction furnace
Coke oven Industrial heating equipment Road vehicle engines
Combined cycle gas turbine for Industrial hot oil heater Ships' internal combustion
power generation Inert or reducing atmosphere engines
Commercial appliances e.g. producing equipment Ships' steam engines
cooking, space heating, Inventory changes Solvents
lighting Iron & steel industry equip Spray drier
Communication equipment excluding blast furnace Stationary combustion engines
Compressor engines consumption Stationery materials-handling
Continuous drier LNG plant equipment equipment
Crushing & beneficiation plant Locomotive engines Tangentially fired boiler for power
Cutter stock LPG own use and losses generation
Direct fired batch reactor Metal melting equipment Textile industry equipment
Direct fired continuous reactor Metallurgical heating equipment Towns gas (reformed, tempered or
Domestic appliances e.g. Metallurgical process ancillaries synthetic) production
cooking, space heating, Miscellaneous electrical Turbine engine for power
lighting equipment generation
Dredging plant Mobile construction equipment Unspecified agricultural industry
Dust suppressant Mobile earthmoving plant equipment
Electric kiln Mobile engines Unspecified mining industry
Electric rock melting process Mobile materials-handling electrical equipment
Electrolytic cells equipment e.g. forklifts Water and sewerage treatment
Emission control equipment Natural gas pipeline use equipment
Explosives
Page 58
Fuel Types
Agricultural and food processing residues Other recyclable materials used as an energy source
(e.g. used lube oil and tyres, sewage sludge).
Bagasse
Petroleum fuel blends (e.g. blends of petroleum and
Biodiesel
ethanol).
Biogas
Petroleum products including:
Black coal coking
· automotive diesel oil
Black coal steaming bituminous
· automotive gasoline (petrol)
Black coal steaming sub-bituminous
· aviation gasoline (avgas)
Black liquor
· aviation turbine fuel (avtur)
Brown coal
· fuel oil
Coal seam methane
· kerosene, heating oil
Condensate
· liquid petroleum gas
Crude oil
· marine diesel oil
Electricity (from renewable or other sources)
· naphtha
Ethane
· refinery fuel
Ethanol
· sulphur
Fuels derived from coal, including:
· lubes and greases
· blast furnace gas
· bitumen
· Benzene toluene and xylene
· petroleum coke
· coal tar
· waxes
· coke
· other oil feedstock
· coke oven gas
· synthetic petroleum products derived from
· briquettes natural gas.
· gaseous fuels derived from coal Reformed gas
· synthetic liquid. Sewage gas
Hydrogen and reductants Solar energy
Landfill gas Solvents
Liquid natural gas Steam (if used to provide energy).
Methanol Town gas
Natural gas commercial quality Unconventional crudes and related oils (e.g. shale
Natural gas non commercial quality oil).
Natural gas liquids Wind energy
Wood and wood waste.
Page 59
Appendix 2: List of data elements
IPCC Category7 Algorithm elements8
sector6 (some of these items will be collected from business, some
items (eg. emissions factors) are agreed by programmes)
Fuel production activity data (eg quantity of each fuel type used
Production by fuel type in each equipment type)
equipment/technology type energy contents (eg of each fuel type)
Stationary combustion activity data (eg quantity of each fuel type used
energy by fuel type in each equipment type)
equipment/technology type energy contents (eg of each fuel type)
emission factors (eg GHG by fuel type)
oxidation/conversion factors
electricity (end use, transmission imported (consumed)
and distribution and retail) purchased
equipment/technology type transmitted and distributed
emission factors
electricity (generation and generated
cogeneration) exported (sent out)
equipment/technology type power station own use and losses
capacity
capacity/output factors
imported (consumed)
thermal efficiency
emission factors
additional factors (eg. Heat recovered and input
into prime movers & boilers)
Stationary renewables activity data (eg quantity of each energy type
energy by energy type used in each equipment type)
cont'd equipment/technology type energy contents (eg of each energy type)
Transport combustion activity data (eg quantity of each fuel type used
by fuel type in each equipment type)
technology used energy contents (eg of each fuel type)
emission factors (eg GHG by fuel type)
oxidation/conversion factors
Fugitive coal mining activity (eg quantity of coal mined, recovered
methane)
emissions, emission factors
oil and gas activity (eg venting and flaring activity)
emissions factors
6
Column 1 identifies the relevant IPCC sector.
7
Column 2 identifies the categories under which different data would be reported.
8
Column 3 indicates the data required by different programmes within each of the sectors. Some of the listed data
would be reported by businesses and some (such as emissions factors) would be provided/agreed by programme
administrators.
Page 60
IPCC Category7 Algorithm elements8
6
sector (some of these items will be collected from business, some
items (eg. emissions factors) are agreed by programmes)
Industrial mineral products activity (eg. production and consumption of
processes chemical products carbonates, non-energy use of fossil fuels)
metals products process related emissions factors and GHG
emissions
production and consumption of GHG emissions
halocarbons and SF6 activity (eg production and/or consumption)
emissions factors (eg loss rates)
use of explosives activity
emissions factors
Waste solid waste disposal activity (eg food disposal)
additional constants
emissions factors
wastewater activity (eg generation, population or production
levels)
additional constants
emissions factors
Page 61
Attachment A: Facility-level Cost Benefit Analysis George Wilkenfeld & Associates
(March 2006) Costs and Benefits of a National Greenhouse and Energy Reporting
Framework.
Costs and Benefits
of a
National Greenhouse and Energy Reporting
Framework
George Wilkenfeld and Associates
with
Energy Strategies
for
the Joint Environment Protection and Heritage
Council/Ministerial Council on Energy
Policy Working Group
March 2006
GEORGE WILKENFELD AND ASSOCIATES Pty Ltd
ABN 78 003 846 848
ENERGY AND WATER POLICY AND PLANNING CONSULTANTS
PO Box 934 Newtown NSW 2042 Sydney Australia
Tel (+61 2) 9565 2041 e-mail: geosanna@ozemail.com.au
Page 62
Published by the Australian Greenhouse Office in the Department of the Environment and Heritage, as secretariat for the
Environment Protection and Heritage Council and Ministerial Council on Energy Policy and Technical Working Groups.
© Commonwealth of Australia 2006
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process
without prior written permission from:
The Communications Director, Australian Greenhouse Office
Department of the Environment and Heritage
GPO Box 787
Canberra ACT 2601
Email: communications@greenhouse.gov.au
ISBN: 1 921120 51 7
This book is available electronically at www.greenhouse.gov.au/reporting
Important notice
This paper is intended as a basis for consultation with stakeholders. It should be regarded as a working document prepared by the
Policy and Technical Working Groups on Greenhouse and Energy Reporting, which will report to the Environment Protection and
Heritage Council and the Ministerial Council on Energy on the outcomes of this consultation.
The views and opinions expressed in this publication do not necessarily reflect those of the Australian, state and territory
governments, the Environment Protection and Heritage Council, or the Ministerial Council on Energy.
While reasonable efforts have been made to ensure that the contents of this publication are factually correct, the Australian
Government does not accept responsibility for the accuracy or completeness of the contents, and shall not be liable for any loss or
damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this publication.
Page 63
Contents
Terminology and Abbreviations.........................................................................................................65
Gases ..................................................................................................................................................66
EXECUTIVE SUMMARY ...........................................................................................................................67
1. THE PROBLEM....................................................................................................................................76
BACKGROUND 76
Policy Context ....................................................................................................................................76
Greenhouse and Energy Reduction Programmes..............................................................................78
Proliferation of reporting obligations ...............................................................................................83
IMPACTS ON STAKEHOLDERS ..................................................................................................................90
Business..............................................................................................................................................90
Government ........................................................................................................................................95
The Public ..........................................................................................................................................99
EFFORTS TO ADDRESS THE ISSUES ........................................................................................................106
The Joint Working Group on Greenhouse and Energy Reporting ..................................................106
This document ..................................................................................................................................108
2. OBJECTIVES AND OPTIONS .........................................................................................................111
OBJECTIVES 111
General Objectives...........................................................................................................................111
A National Greenhouse Energy and Reporting Framework ...........................................................112
PROPOSED REGULATION AND ALTERNATIVES ......................................................................................114
Alternative Approaches....................................................................................................................114
Non-Regulatory Options ..................................................................................................................115
Regulatory Options ..........................................................................................................................116
3. COSTS, BENEFITS AND OTHER IMPACTS................................................................................120
FACTORS AFFECTING COST-BENEFIT ANALYSIS ..................................................................................120
Number of Business Entities Potentially Affected............................................................................120
Business Reporting Costs.................................................................................................................130
Government Costs ............................................................................................................................131
AGGREGATED COSTS AND BENEFITS ....................................................................................................135
The Options ......................................................................................................................................135
Sensitivity Factors............................................................................................................................138
4. RANKING OF OPTIONS ..................................................................................................................142
QUANTIFIABLE CRITERIA......................................................................................................................142
OTHER CONSIDERATIONS .....................................................................................................................144
OVERALL RANKING OF OPTIONS ...........................................................................................................149
References ........................................................................................................................................150
Appendix 1 Terms of Reference ....................................................................................................151
Appendix 2 Sites in Emissions Categories by Sub-sector ...............................................................155
Page 64
Terminology and Abbreviations
ABARE Australian Bureau of Agricultural and Resource Economics
ABS Australian Bureau of Statistics
AGO Australian Greenhouse Office
DEH Department of the Environment and Heritage
DITR Department of Industry, Tourism and Resources
DRA Data Requiring Agency. An agency (Commonwealth, State or Territory) which
currently requires entities to report greenhouse and/or energy data.
EEOA Energy Efficiency Opportunities Assessment. A programme of DITR
ESAA Energy (formerly Electricity) Supply Association of Australia
FES Fuel and Electricity Survey. Survey of historical and projected energy use, conducted
annually by ABARE since 1973
GEPR Greenhouse and Energy Projection Reporting. Systematic reporting by REs (not
participating in energy efficiency or greenhouse gas reduction programmes) of
projected energy use and greenhouse gas emissions
GER Greenhouse and Energy Reporting. Systematic reporting by REs of actual historical
energy use and greenhouse gas emissions
GWP Global Warming Potential
NGGI National Greenhouse Gas Inventory
NGERA National Greenhouse and Energy Reporting Agency. The agency with the function of
administering the NGERR (could be an existing agency or a cross-jurisdictional
entity)
NGERR National Greenhouse and Energy Reporting Requirement. The agreement (if
voluntary) or legislation under which REs and DRAs participate in national reporting.
NPI National Pollutant Inventory
NPV Net Present Value
Pollutant A substance classified as a pollutant for the purpose of the NPI. (At present, does not
include the main greenhouse gases: CO2, CH4 or N2O).
PRR Programme and Reduction Reporting. Systematic reporting by participants in energy
efficiency or greenhouse gas reduction programmes of actions taken or planned
and/or estimated reductions achieved or projected.
RE Reporting Entity. The corporate or other entity with the obligation to submit reports
under the NGERR
Page 65
Gases
Global Warming
Potential (GWP)
CF4 Perfluoromethane (a PFC)* 6,500
C2F6 Perfluoroethane (a PFC)* 9,200
CH4 Methane* 21
CO Carbon monoxide NA
CO2 Carbon dioxide* 1
CO2-e CO2-equivalent (a) 1
HFCs Hydrofluorocarbons*(b) 3,800 11,700
N2O Nitrous oxide* 310
NMVOC Non-methane volatile organic compound NA
NOx Oxides of nitrogen NA
PFCs Perfluorocarbons* 6,500 9,200
SF6 Sulphur hexafluoride* 23,900
SO2 Sulphur dioxide NA
* Emissions of these gases are covered by the Framework Convention on Climate Change (a) Not a gas,
but a GWP-weighted accounting term (b) Includes several distinct HFCs with different GWPs.
Page 66
Executive Summary
Background
There is a large number of programmes which require (or invite) business and other
entities to monitor and report energy use and greenhouse gas emissions to
Commonwealth, State or Territory agencies.
Some of these programmes also require or invite businesses to investigate or undertake
activities to increase efficiency of energy use and take other measures to reduce
emissions.
These programmes have nearly all evolved independently. They differ greatly with
regard to their basic approaches, the conditions of participation (voluntary, mandatory,
or the incentive to create valuable tradeable instruments), the trigger thresholds for
participation (scale of energy use, rules for site aggregation) and range of energy forms
or emissions taken into account.
The common factor is that each programme requires participants to report their
historical energy use and/or greenhouse gas emissions. Many reporting entities
participate in more than one programme, and are required to submit different reports to
more than one Data Requiring Agency. It is estimated that the average is about 1.33
reports per reporting entity, but for the largest emitters it can be as high as seven.
Multiple reporting increases costs and reduces the value of the reporting effort, because:
· the data are distributed across a number of Agencies, and cannot be combined due
to technical, regulatory or confidentiality barriers. Consequently, governments as a
group cannot make optimum use of the data for policy and planning purposes;
· the aggregated information prepared by each Agency and made available to the
public is less accurate than it could be, because no reporting framework has
comprehensive coverage; and
· where entities choose to disclose information about their emissions to the public,
they cannot demonstrate that they have used a single standard method of
calculation, because there are so many available. This undermines public
confidence in business reporting of emissions and in statements about measures to
reduce them.
A consistent national approach to greenhouse and energy reporting could address these
issues, reduce the cost of the reporting effort and increase its value.
A first step would be the establishment of a consistent reporting framework for
historical energy use and greenhouse gas emissions. The establishment of such a
framework is the subject of the present study.
The ideal model would be a single annual energy and greenhouse report to which all
Agencies could have controlled access, so no Agency would need to request additional
Page 67
historical greenhouse or energy reports from participants. This would satisfy the
requirements of those programmes which are concerned solely with energy and
greenhouse data collection.
Harmonising the reporting of measures taken to reduce emissions, their projected
impacts and their actual effects is far more difficult, and is beyond the scope of the
present study. Agencies operating programmes with greenhouse or energy reduction
objectives as well as data collection objectives would still need to seek the relevant
additional data.
While the establishment of a national greenhouse and energy reporting framework
would not on its own eliminate greenhouse programme overlaps, it would create the
conditions for their convergence.
It would also make possible the development and implementation of new types of
measures, which could not be adequately supported by the present fragmented reporting
arrangements.
It would also provide a basis for more detailed, consistent and credible public disclosure
of corporate or site emissions. However, the choice of the mode or level of disclosure is
a separate issue; automatic public disclosure is not necessary to meet the main
objectives and benefits of the reporting framework.
Objectives
This report was commissioned by the Department of the Environment and Heritage on
behalf of the Environment Protection and Heritage Council/Ministerial Council on
Energy Working Group on Greenhouse and Energy Reporting. The Working Group has
identified the following objectives for energy and greenhouse reporting:
1. reduce the overall burden on industry and business in reporting greenhouse gas
emission and energy data;
2. provide appropriate and consistent information on the greenhouse and energy
related performance of companies for:
a. investors and business planners - to improve the flow of market information
and thereby facilitate sound market decisions;
b. the general public - to inform public debate on greenhouse and energy
issues; and
1. ensure that data provided by companies to governments is nationally consistent,
robust and comparable across programmes that may be located in different
jurisdictions to inform government policy making.
The criterion used in this report for testing options against Objective 1 is a monetary
one. The existing arrangements impose a range of quantifiable costs on Reporting
Entities, whether those are privately owned `industry and business' or whether they are
public agencies, as many participants are. They also impose costs on the Data
Requiring Agencies.
Page 68
To the extent that a proposal is likely to reduce overall monetary costs to Reporting
Entities, it would satisfy Objective 1. However, the distribution of cost and benefits
between different groups of Entities and changes in the pattern of costs to Agencies also
need to be taken into account.
The criteria for assessing proposals against Objective 2 are essentially qualitative and in
large measure subjective. There is no objective measure of the `soundness of market
decisions' with regard to the value which investors attach to the energy use or
greenhouse gas emissions of a company's operations. Nor is there a measure of the
extent to which `public debate on greenhouse and energy issues' may be inhibited by
limitations in the quantity and quality of data publicly available on the performance of
individual companies.
Objective 3 could conceivably be met by adopting a completely new common
greenhouse and energy reporting requirement without abandoning or modifying any of
the existing requirements, or by designating one of the existing programmes as the data
collection point and ensuring that all Entities join it, but without removing their other
reporting obligations. This would achieve Objective 3, a `nationally consistent, robust
and comparable' data collection, and most probably advance Objective 2 as well, but at
the expense of increasing the reporting burden and so failing Objective 1.
Options
This report reviews the existing reporting arrangements in detail, considers a range of
options to establish a national greenhouse and energy reporting framework and
estimates the costs and benefits compared to the option of leaving the arrangements as
they are (the `Business as Usual' case). The options are summarised in Table S1.
Only quantifiable reporting costs are subject to cost-benefit analysis. Other factors such
as the preferred extent of public disclosure of collected data are matters of judgement
for governments.
Table S1 Summary of Options
Option Reporting Entities Data Requiring Corresponding option in
(REs) Agencies (DRAs) Terms of Reference
1. BAU As at present Each free to set own a. Status Quo
rules
2. Establish NGERR, Voluntary participation Some incentive to b. Harmonisation without
without new regulation accept NGERR reports additional legislation
3. Establish NGERR, Mandatory participation Strong incentive to c. extend NPI
with new regulation accept NGERR reports d. new NEPM
4. Establish NGERR, Mandatory participation Obligation to accept e. New specific legislation
with new regulation NGERR reports
The `Business as Usual' option would achieve little progress towards the Objectives.
The number of reporting requirements is not likely to fall, and may well continue to
increase. There may be some rationalisation of the technical aspects of reporting
requirements, as there has been in the past, although the further opportunities seem to be
limited.
Page 69
The second option is the establishment of a consistent national greenhouse and energy
reporting framework, but without regulation. This would require agreement between
Data Requesting Agencies to harmonise their existing data requirements and to forego
the future imposition of new requirements. The incentive for them to agree to this
would presumably be access to better data than they get now, or lower-cost ways to
obtain data. Alternatively, governments could direct their Agencies to participate.
A regulatory approach may have a greater chance of success in implementing a national
reporting framework than a non-regulatory approach, since it would remove many of
the risks facing any single agency trying to establish a framework on its own, and avoid
the delays and uncertainties of agencies negotiating an agreed framework.
There is no existing regulation capable of supporting a national greenhouse and energy
reporting framework without extensive modification. The only possibility so far
identified the National Pollutant Inventory may need extensive modification.
Alternatively, new legislation would be required either within the National Environment
Protection Measure (NEPM) framework, or outside it.
Any of these regulatory options would take some time. Expert legal advice would be
required to establish which option could be implemented most rapidly and could best
meet the technical requirements of the framework, once those are defined.
In any case, the form of regulation eventually selected is not likely to have a significant
impact on the costs of the framework. The `adjustment' costs of changing to a new
framework are small in relation to the on-going costs, and the adjustment costs to
government including the costs of developing legislation are small in comparison
with those which would be incurred by Reporting Entities.
Public Disclosure
There is no necessary link between the obligation to report data to a national reporting
framework and the obligation (or choice) to disclose the data publicly.
Establishing a national framework would provide the capability for greater detail,
quality and consistency in data disclosure than at present. Once the data are compiled
for the purposes of reporting to government there are no additional monetary costs
associated with public disclosure, whether by the Reporting Entity or by the Data
Requiring Agency.
Mandating public disclosure of all or part of the reported data requires government to
balance the interests of reporting entities with those of data users, and with the general
public interest in reducing greenhouse gas emissions. In general:
· The implementation of a nationally consistent reporting framework would enable
government to increase the quality of aggregated public reporting on greenhouse gas
emissions and energy use;
Page 70
· The implementation of a nationally consistent reporting framework is itself likely to
increase the quality and extent of voluntary public reporting of greenhouse gas
emissions and energy use by the businesses affected; and
· The cost and benefits of public disclosure can be treated separately from the costs
and benefits to governments and other stakeholders of measures to improve the
quantity and quality of greenhouse and energy data.
Analysis
The analysis is based on modelling the number of sites which exceed given emissions
thresholds in the Manufacturing, Mining, Commercial and Services and Electricity
sectors. The number of Entities is also considered, because whether site-based or
company-based thresholds are used will lead to differences in coverage and hence costs.
Energy-related emissions natural gas, coal and petroleum (Scope 1 emissions) and
electricity imported from off-site (Scope 2 emissions) and non-energy fugitive and
industrial process emissions are all included.
Figure S1 illustrates the estimated number of sites exceeding successively lower
emission thresholds in the Mining, Manufacturing, Commercial and Services and
Electricity Generation sectors. Figure S2 indicates the percentage of sectoral emissions
covered. Because average site emissions (mostly attributed to Scope 2 electricity use)
are so much lower in the Commercial sector, emissions coverage would still be low
even if a large number of sites were obliged to report.
Figure S3 illustrates the estimated net present value (NPV, at a 10% discount rate) of
the costs incurred by both Reporting Entities and Data Requiring Agencies over a
projected 12 year period, under different threshold scenarios. If the NPV is lower than
in the BAU case, this indicates that there would be reduction in quantifiable reporting
costs, and hence a net monetary benefit.
Figure S1 Estimated Number of Sites Exceeding Emission Thresholds
Page 71
14000
12000
Number of sites exceeding threshold
10000
8000 Commercial
Manufacturing
Mining
6000 Generation
4000
2000
0
>125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Figure S2 Percentage of Sector Emissions covered
100%
90%
Generation
80%
cumulative % of sectoral emissions
70% Manufacturing
60%
Mining
50%
40% 3 sectors combined (sub-
threshold voluntary
reporting continues)
30%
3 sectors combined
20% (mandatory reporting
only)
10%
Commercial
0%
>125 >25 >10 >5 >1 All
Site emissions thresholds (kt CO2-e)
Figure S3 Estimated reporting costs under alternative scenarios
Page 72
300
250
200
$M Net Present Value
DRA recurrent costs
DRA adjustment costs
150
RE recurrent costs
RE adjustment costs
100
50
0
Business Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
as usual >125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Net Present value of costs incurred over 12 year period, at 10% discount rate
Conclusions
The costs of the options examined are summarised in Table S2. The Voluntary
implementation scenario assumes the introduction of a new single report for all existing
Reporting Entities, without the addition of any new Entities. There are some initial
adjustment costs to both Reporting Entities and Data Requiring Agencies, but these are
rapidly offset by lower annual costs (even assuming that the new framework carries
recurrent fixed administrative costs of $1m per year, plus $300 variable cost per data
report processed).
The potential monetary benefits of moving to a single report would be appreciable for
existing entities, reducing overall reporting costs by about 8% (Table S2). However,
the potential reporting costs to new entities captured by mandatory thresholds would
exceed these cost savings for threshold below 125 kt. However, other benefits of lower
thresholds would include:
· a quantifiable increase in the proportion of emissions covered (see below);
· a major increase in data consistency, quality and useability, in moving from the
present regime to a mandatory regime, but the value of this cannot be quantified.
The only valid basis for differentiating the costs of the regulatory options as a group is
by participation threshold, rather than by the form of the regulation. Whatever
regulation is used, it would need to satisfy certain characteristics if it is to support the
Page 73
successful implementation of the framework. The costs of amending legislation or
implementing new legislation are low in comparison with other costs (they form only
part of the `DRA adjustment costs' in Figure S3), and any cost differences between
alternative regulatory approaches would be negligible.
Table S2 indicates the proportion of the emissions of end user entities in the mining,
manufacturing, commercial and services sectors that would be covered by mandatory
reporting at each successive threshold, ranging from 66% at present up to 88% if all
sites above 1kt report.
Table S2 Summary of costs and emissions coverage
Options (a) NPV of 12-yr Coverage of $M per % Comparison with BAU Coverage
total cost end user covered of
$M(b) emissions (c) electricit
y sector
emissions
Cost Increment in $m per
increment % of additiona
$M emissions l % of
covered coverage
Non- 1 BAU $110.7 66.0% $ 1.7 80.0%
regulatory
2 Voluntary $101.6 66.0% $ 1.5 -$9.1(d) 0% 80.0%
Regulator 3 Mandatory >125 $109.0 78.2% $ 1.4 -$1.7 12% -$0.1 97.1%
y or
4
Mandatory >25 $124.1 81.6% $ 1.5 $13.4 16% $0.9 99.3%
Mandatory >10 $146.3 83.0% $ 1.8 $35.6 17% $2.1 99.7%
Mandatory >5 $166.8 84.3% $ 2.0 $56.1 18% $3.1 99.9%
Mandatory >1 $253.6 88.2% $ 2.9 $142.9 22% $6.4 100.0%
(a) Table 13. (b) Table 21; 10% discount rate over 12 year projection period. (c) % of estimated sum of
emissions from end user energy consumption, fugitive and industrial process emissions from mining,
manufacturing, commercial and services sites. (d) Saving from elimination of multiple reporting.
The cost per % of emissions covered is a rough indicator of the cost-effectiveness of
each threshold level (Figure S4). A threshold as low as 5 kt might be justifiable on this
indicator, when improvements in data quality are taken into account. However, the
average cost of coverage at the 1 kt threshold is about 70% higher than the BAU.
Figure S4 Total greenhouse and energy reporting costs per percentage point of
emissions covered
Page 74
3.5
3.0
$M NPV per Percentage Point Emisssions Coverage
2.5
2.0
1.5
1.0
0.5
0.0
BAU Voluntary Mandatory >125 Mandatory >25 Mandatory >10 Mandatory >5 Mandatory >1
Site emissions thresholds (kt CO2-e)
Overall Ranking of Options
If objective 1 were the sole or over-riding criterion, the preferred option would be a
voluntary framework or a mandatory framework with a 125 kt threshold, since these
appear to have lower costs than the present arrangements.
However, objective 3 requires factors such as coverage and data quality to be taken into
account. This places the optimum threshold at 10 kt, or arguably even 5 kt.
The 1 kt threshold has much higher costs than other options, and the increases in
emissions coverage beyond a 5 kt threshold are small.
All options have a similar capability to support the provision of `appropriate and
consistent information on the greenhouse and energy related performance of
companies', so there is no basis to differentiate between them with regard to objective
2.
*****
Page 75
1. The Problem
Background
Policy Context
Energy
Monitoring and planning for energy supply, consumption, imports and exports has been
a long-standing function of the Commonwealth and some State and Territory
governments since the oil crises of the 1970s.
The predecessors of the Department of Industry, Tourism and Resources (DITR)
commenced an annual survey of large energy users in 1973/74. The survey is now
called the Fuel and Electricity Survey (FES) and is managed by the Australian Bureau
of Agricultural and Resource Economics (ABARE). This data collection forms one of
the key bases of historical energy data and projections of energy demand at a national
and State level. It is also an essential input to the National Greenhouse Gas Inventory,
which Australia must report annually to the International Energy Agency as one of its
obligation under the United Nations Framework Convention on Climate Change
Some industry associations also regularly compile and publish data on energy
consumption (and production) covering their industry, or at least the members of their
association. Examples include Energy Supply Association of Australia (formerly the
Electricity Supply Association of Australia), which covers most large electricity
generators, and the Australian Petroleum Production and Exploration Associations,
which covers producers of oil and natural gas.
The Australian Bureau of Statistics (ABS) has also collected data on energy use at the
household, manufacturing site, commercial building or company level from time to
time, although there are no collections with the continuity of the FES.
These energy reporting arrangements were not necessarily related to obligations to
reduce energy consumption or increase the efficiency of energy use. Their main aim
was to ensure that policy-makers and the public had access to the best available data,
while preserving confidentiality. Public disclosure is generally limited to the State and
Territory level, or to the industry level for the whole of Australia complete
disaggregation at both state and industry level is limited. None of these collections
report data publicly at the company or site level.
Greenhouse Gas Emissions
Measuring and reducing greenhouse gas emissions were adopted as policy objectives by
the Commonwealth, and some State and Territory governments even before the
adoption of the first National Greenhouse Response Strategy by the Council of
Australian Governments in 1992.
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Australia's first National Greenhouse Gas Inventory, covering emissions for the years
1987/88 and 1989/90, was published in 1994. The Australian Greenhouse Office
(AGO) within the Department of the Environment and Heritage (DEH) now compiles
the NGGI annually, and publishes a revised series recalculated back to 1990 using the
latest data and methodologies.
As emissions from fuel combustion account for over 63% of national emissions, the
NGGI relies heavily on accurate and comprehensive reporting by energy users to the
Fuel and Electricity Survey and on the response of the largest fuel users such as power
stations to direct requests for data (Table 1). The estimation of fugitive emissions from
fuels and industrial process emissions rely on a combination of direct reporting by
companies to the NGGI and the application of standard factors to published production
data, such as coal mined or aluminium smelted.
Calculating emissions from fuel use relies not only on data about the quantity of each
type of fuel consumed, but also on the quality of the fuel and the equipment in which it
is combusted.
The chemical composition of the fuel determines the emissions intensity per unit of
energy (expressed as eg kt CO2/PJ). This is relatively consistent for refined fuels such
as petroleum products, but varies up to + 1% from year to year for natural gas and up to
+ 3% for generation coal. These qualitative variations are not reported by the FES, and
can only be monitored by direct data requests.
The combustion characteristics of fuel using equipment have a major bearing on the
emissions of CH4 and N2O, as well as CO, NOX, SO2 and NMVOCs. Estimating
emissions from industries, sites or transport fleets relies on data on the share of fuel
used in equipment of different types or vintages, not just on the total quantity used. For
`Other Stationary Energy' use, this data is based on responses to ABARE's FES survey,
and for Transport, on data about engine technology and the age of the vehicle fleet.
Table 1 Main Data Sources and Estimation Methods used in the NGGI
Sector or Subsector Mt CO2-e Share of Main data sources and estimation
2003(a) total methods
Electricity 190.3 34.6%Direct data requests, FES
Other Stationary Energy 77.8 14.1%FES, statistical methods
Transport 79.8 14.5%FES, statistical methods
Fugitive 26.4 4.8%Direct data requests, statistical methods
Industrial Processes 32.3 5.9%Direct data requests, statistical methods
Solvent & Other product use N(b) NA(b)Statistical methods
Agriculture 97.3 17.7%Statistical methods
Land Use, Land Use Change & Forestry 34.8 6.3%Statistical methods
Waste 11.4 2.1%Statistical methods
Net emissions 550.0 100.0%
Non-energy 175.8 32.0%
Energy fuel combustion 347.9 63.2%
Energy - fugitive 26.4 4.8%
(a) Source: NGGI 2003 (b) Emissions consist entirely of NMVOCs, which have zero Global Warming
Potential and hence do not contribute to CO2-e total.
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The estimation of emissions from Agriculture, Land Use, Land Use Change and
Forestry and Waste is somewhat different in that there are more data aggregation levels
between individual sites or emitters and the NGGI, and in some cases the data
collection process bypasses individual sites entirely. Agriculture emissions are derived
mainly from livestock population estimates and crop production statistics, and land use
change emissions from ground observations collected by satellite.
Airborne Pollutants
Pollutants are substances considered to have potential for direct impacts on the health of
humans, animals or plants at or near the site of emissions, or downstream or downwind.
In this respect they differ from greenhouse gas emissions, where the negative impacts
are likely to be indirect via contribution to global climate change, and the effects
generalised rather than localised.
The National Pollutant Inventory (NPI), established in 1998, is a publicly accessible
database containing information on the types and amounts of listed substances emitted
to the Australian environment. Information in the database is supplied by State and
Territory environment agencies which receive the information from facilities in their
jurisdictions. The legislation which established the NPI requires the owners of facilities
which trigger the reporting criteria to report annually. The States and Territories
themselves estimate pollution from `diffuse, non-industrial' sources such as
transportation, domestic and commercial activities, and emissions from facilities that
are not reported because the relevant thresholds are not exceeded or the industry is
excluded from reporting.
Some substances listed on the NPI (CO, NOX, SO2 and NMVOCs) are emitted during
the same fuel combustion processes which lead to the emission of the greenhouse gases
CO2, CH4 and N2O, which are not listed on the NPI. One of the triggers for a facility to
report to the NPI is the quantity of fuels used on site, data which the facility may also
report to the Fuel and Electricity Survey or the NGGI.
Greenhouse and Energy Reduction Programmes
The energy, greenhouse and pollutant reporting arrangements described above focus
exclusively or primarily on historical data.9 They are described as `D' type programmes
on Table 2. Their main purpose is to help to accurately document the consumption of
energy and the emission of greenhouse gases and pollutants over time, to improve
forecasting and to assist policy-makers, researchers and participants in the energy
supply industry. The NPI has the additional objective of making information about
potentially hazardous substances publicly available.
The main purpose of a second, larger group of programmes (indicated `R' in Table 2) is
to encourage or require participants to report on their energy use or emissions as part of
demonstrating that they have taken steps to increase their efficiency of energy use
9
The FES also invites respondents to estimate emissions for some years into the future to assist ABARE
in developing national projections of energy use (ABARE also uses other inputs for this purpose, such as
projections of economic activity, together with an overall modelling framework).
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and/or to reduce emissions by other means. These programmes generally require two
categories of reporting by participants:
· Greenhouse and energy reporting (GER): the reporting of historical data, similar to
the reporting only programmes;
· Programme and reduction reporting (PRR): this covers measures that the entity
proposes to take to reduce emissions and their projected impacts on business as
usual (BAU) emissions as well as measures taken and their estimated impacts;
Those programmes where participation is mandatory often require an initial collection
of greenhouse and energy data for `screening' purposes - to establish whether the entity
triggers the criteria for inclusion in the programme, and if so, the category of
participation. In general, entities using more energy or with higher emissions have
more programme obligations. The screening data may not actually be reported if the
entity determines that it falls below the participation threshold, but would presumably
need to be available should the agency running the mandatory programme decide to
audit the entity.
The `Reduction' type programmes serve a number of objectives:
· They serve greenhouse reduction policy by directly engaging the large emitters;
· They can create incentives for large emitters to take action by giving them monetary
incentives (eg the creation of saleable instruments such as Renewable Energy
Certificates (RECs), NSW Greenhouse Abatement Certificates (NGACs) or
Queensland Gas Electricity Certificates (GECs);
· They can increase awareness of the emissions and emissions-reducing actions of
corporations by government agencies, non-government organisations, financial
intermediaries and the general public. This is intended to enable organisations and
consumers to take greenhouse performance into account when dealing with
companies as customers or as investors.
`Reduction' programmes based on tradeable instruments do not necessarily require
programme and reduction reporting by all participants. For example, the creation of
RECs, NGACs and GECs can largely be determined through greenhouse and emissions
reporting by the entities creating the instruments.10 Similarly, if a `cap and trade'
emissions permit scheme were introduced, it could be enforced and monitored solely
through greenhouse and emissions reporting by participants.
Programmes which invite or require participants to undertake measures that they would
in theory not otherwise have undertaken, but without monetary incentive, generally
10
NGACs can also be created through reduction measures which do require considerable progam and
reduction reporting. Regulator registration and supervision is also necessary to ensure the integrity of the
markets in the instruments.
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require elaborate and extensive reporting to demonstrate to stakeholders that the
measures have indeed been implemented, and that they have been effective.
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Table 2 Summary of Commonwealth and State Programmes with Greenhouse and Energy Reporting Requirements
Program Type Data Requir- Reporting Entity Approx no. Historical GER Projected GER Historical PRR Projected PRR Pollu
me (a) ing Agency participants -tants
SF SE SO OS SF SE SO OS SF SE SO OS SF SE SO OS
FES D ABARE Selected large energy users 1300 * * * *
NGGI D AGO Selected electricity generators 20 *
Other large emitters 30 *
NPI D States Sites meeting trigger criteria 3600 * *
GHC+ R AGO Self-selecting energy users 800 * * * * * * * * * * * * * * * *
GES R AGO Self-selecting generators 17 * * * *
GHF R AGO Self-selecting, any company 8 * * * * * * * * * * * * * * * *
MRET R ORER Generators creating RECs 80 * *
EEOA R DITR Energy users >0.5PJ/yr 250 * * * * * * * *
LBL R NSW EPA Sites exceeding production limits 300 *
GGAS R NSW IPART `Category B' generators 9 * *
Generators creating NGACs 66 * *
Large users creating LUACs 2 * * *
Energy R NSW DEUS Largest electricity using sites 225 * * * * * *
Saving
Largest local governments 46 * * * * * *
13% Gas R QLD DOE Accredited power stations 5 * *
SEPP/ R VIC EPA `Scheduled premises' below 502 * *
AQM energy or GH thresholds
`Scheduled premises' exceeding 516 * * * * * * * *
energy or GH thresholds
ESIPC D SA ESIPC Generators in SA 12 * *
WAGGI R WA DOE Sites exceeding GH thresholds ? * * * * * * * * * * * * * * * *
proposed
Site below GH thresholds ? * * * * * * * * * * * * * * * *
Adapted from Appendix B, JWG (2005a). Excludes programmes which require only reporting of fuel or energy production, not fuel or energy use or emissions. Shading
indicates that participation, reporting and/or reduction actions are required by legislation. Participant numbers not additive, since many programmes cover same participants.
(a) D = data collection only; R = programme aims to reduce emissions. (b) GER = Greenhouse and Energy Reporting, PRR = Programme or Reduction Reporting, SF =
Quantity and/or emissions from fuel use on site, SE = Quantity and/or off-site emissions from electricity and other fuels used on site (for generators, may also include
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reporting of electricity sent out), SO = Quantity of other on-site emissions (mainly fugitive and industrial process), OS = Off-site emissions (mainly related to transport fuels
for entity-operated vehicles).
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In addition to the programmes listed in Table 2, which are run by government agencies,
there are a number of international reporting programmes in which Australian
companies, or global companies with Australian sites, choose to take part.
The largest of these is the Global Reporting Initiative (GRI), an organisation which
publishes on its internet site the list of participating companies with links to their
environment and sustainability reports. At present 39 of the 768 companies listed on the
GRI website are Australian.11 Several other companies headquartered in other countries
also report on their Australian operations.
There is no single specified format for reporting, although participant entities are to give
preference to reporting greenhouse gas emissions using the guidelines published by the
World Business Council for Sustainable Development and the World Resources
Institute (WBCSD 2005). It should be noted that the GRI reports many different
aspects of environment and sustainability, and not all of the Australian companies
which participate include greenhouse and energy within their GRI reporting.
Proliferation of reporting obligations
At present each of the existing and proposed programmes in Table 2 has its own unique
reporting obligations, formats and forms (whether paper-based or electronic). There
have been some efforts to streamline or harmonise reporting requirements, at least
within the same Data Requiring Agencies, and to standardise some of the input factors
common to many reports.
The AGO has progressively combined the reporting requirements for Greenhouse
Challenge Plus (GHC+) and Generator Efficiency Standards (GES), so that electricity
generators who are members of both programmes can make a combined report. A part
of this report is also used for the NGGI, although the compilers of the NGGI must still
approach about 20 generators each year (non-members of GHC+, or members who fail
to report).
Perhaps a more significant point of convergence is the use of common emissions factors
for electricity, natural gas and other fuels. Most programmes now refer reporting
entities to the AGO Factors and Methods workbook, which is updated from time to
time. The latest version (AGO 2005) publishes factors calculated using the `Scope 1, 2
and 3' guidelines of the World Business Council for Sustainable Development and the
World Resources Institute (WBCSD 2005). These factors have been incorporated into
the OSCAR on-line reporting tool for GHC+ participants.
Therefore there have been important steps towards streamlining reporting for
programmes operated by the AGO, and towards standardising some of the technical
inputs common to many programme reports. However, important differences remain.
11
http://www.globalreporting.org/guidelines/reports/search.asp accessed January 2006
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Scope of Participation and Reporting
All of the programmes in Table 2 involve a relationship between the Data Requiring
Agency and the legal entity (almost always a corporation) responsible for the site or
sites at which energy is used or emissions occur, and the off-site activities (eg transport)
associated with the on-site activities.
Most programmes require the participating corporation to produce greenhouse and
energy reports for every site under its control, or at least for every site exceeding certain
activity thresholds. There are different approaches to accounting for partially owned
sites in some cases site emissions must be attributed to one entity only (say on the
basis of operational responsibility), while in others it can be divided according to share
of ownership. The latter approach creates obvious difficulties in incomplete coverage
of sites and in tracking the performance for entities which acquire or dispose of sites.
The Greenhouse Challenge Plus (GHC+) has the greatest diversity of scope in
membership: industry associations, corporations, divisions of corporations, single sites
within larger corporations, single-site entities of all sizes (from power stations to
schools), government departments and sub-departmental agencies. Reporting is
generally at the aggregation level of the participant. Because of multiple layering the
emissions and the reduction activity at the one site can be (and have been) reported by
more than one GHC+ participant.
There is of course considerable overlap in participation many emitters participate in,
or are caught by, more than one programme. In these cases the emissions and/or
reduction activity are reported to more than one programme. The only Reduction type
programme which attempts to distinguish its own impact from that of other programmes
is the NSW Greenhouse Gas Abatement Scheme, which has elaborate rules to prevent
the same entities from creating NGACs, RECs and GECs from the same activity.
Participation Conditions and Thresholds
For programmes where participation is mandatory (shown shaded in Table 2) it is
necessary to define trigger points and thresholds. These are different for each
programme not just in terms of magnitude but in fundamental design.
For the NPI the trigger point is the quantity of site fuel use (TJ/annum) or the level of
emissions of scheduled substances (tonnes/annum, with different tonnages specified for
different pollutants). Electricity use above 60 GWh per year also triggers reporting.
The greenhouse emission thresholds corresponding to these triggers are shown in
Table 3.
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Table 3 Greenhouse emissions corresponding to NPI fuel and electricity triggers
Trigger TJ kt CO2-e
Biogas 400 t/yr 22.2 0.0
Nat Gas 400 t/yr 17.8 0.9
Fuel oil 400 t/yr 17.1 1.3
LPG 400 t/yr 19.8 1.2
Diesel 400 t/yr 18.2 1.3
Petrol 400 t/yr 18.6 1.3
Coal 400 t/yr 9.4 0.8
Wood 400 t/yr 6.5 0.0
Electricity 60 GWh/yr 216.0 54.0(a)
(a) Emission factor 0.9t CO2-e/MWh
The Energy Efficiency Opportunities Assessment (EEOA) programme captures
corporations (not individual sites) using more than 500 TJ/yr of energy (electricity
included) (DITR 2005). There is no emissions threshold, so the greenhouse emissions
associated with the trigger can vary from as low as 26 kt CO2-e/yr to as high as 125 kt.
This is illustrated in Table 7, which shows that an entity using 500 TJ of purchased
electricity would be responsible for the emission of 125 kt CO2-e, whereas an entity
using the same amount of natural gas would be responsible for only 26 kt. Participants
are required to develop and implement emissions reduction plans covering all their
energy uses.
The trigger for participation in the NSW Load-based licencing (LBL) scheme is
production capacity, eg maximum MWh of electricity that could be generated per
annum or tonnes that could be produced (different tonnages for different commodities).
The only greenhouse-emitting entities for which reporting under the NSW Greenhouse
Gas Abatement Scheme (GGAS) is mandatory are the so-called Category B generators
named in the Rules (reporting of electricity sales is mandatory for the electricity
retailers with liability under GGAS, but these are not energy using or emitting entities).
Otherwise, participation is voluntary.
The 225 corporate-owned sites listed for participation in the NSW Energy Saving Order
are the largest electricity using sites (Table 4). The smallest uses about 10,000
MWh/annum (36 TJ). Although electricity use is the sole trigger for participation,
participants are required to develop and implement emissions reduction plans covering
all their energy uses.
Table 4 Triggers and participants in NSW Energy Savings Order programme
Draft emissions reduction plan Electricity use `Bodies' Sites Sites/
required by: Body
MWh/yr TJ/yr kt CO2-e(a)
30 June 2006 >25,000 >90 >22.5 63 95 1.5
30 September 2006 16-25,000 58-90 14.4-22.5 60 82 1.4
31 December 2006 10-16,000 36-58 9.0-14.4 43 48 1.1
Total private sector participants 166 225 1.4
30 Sept 2006 metropolitan councils 34 NA NA
30 Sept 2006 regional councils 12 NA NA
(a) Emission factor 0.9t CO2-e/MWh, or 250 kt/PJ.
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The Victorian SEPP/AQM programme covers only the 1,024 sites which require EPA
emission licenses12. Of these sites, only those which meet EITHER the energy use OR
the emissions triggers in Table 5 are captured. Sites meeting the lower threshold but not
the higher (`Category B') are required to undertake energy audits to analyse energy
usage and to identify options for reducing energy usage. Sites meeting the higher
threshold (`Category C') are required to have a more detailed energy audit. There are
216 Category B and 306 Category C sites. The other 502 sites (`Category A') are not
required to take any action.
Table 5 Triggers for Victorian SEPP/AQM programme
Energy trigger All Elec(a) All Gas(b) All Coal(c) kt CO2-e All Elec All Gas All Coal
TJ/yr MWh/yr kt CO2-e kt CO2-e kt CO2-e Trigger (d) TJ TJ TJ
7 1944 2.5 0.36 0.6 1.4 4 27 16
0.5 139 0.2 0.03 0.05 0.1 0 2 1
(a) Emission factor 1.3 t CO2-e/MWh, or 361 kt/PJ. (b) Emission factor 52 kt/PJ (c) Emission factor 90
kt/PJ (d) Implied emission factor 200 kt/PJ
The parameters for the proposed Western Australian Greenhouse Gas Inventory
(WAGGI) are set out in the WA Greenhouse Strategy, released by the Premier in
September 200413. All corporations with emissions in excess of 100 kt CO2-e
(aggregated across sites, with adjustments for part-ownership) will be required to
participate, at staggered dates beginning with the largest emitters (Table 6). WA
Government agencies and trading enterprises will also be required to participate,
beginning in 2005/06. A government threshold is under consideration. Emissions
associated with electricity and transport, as well as all site emissions are to be included.
Table 6 Triggers for Proposed WAGGI Programme
Participation to begin in: kt CO2-e All Electric (a) All Gas(b) All Coal(c)
Trigger MWh TJ TJ TJ
2004-05 500 555556 2000 9615 5556
2005-06 250 277778 1000 4808 2778
2006-07 100 111111 400 1923 1111
(a) Emission factor 0.9t CO2-e/MWh, or 250 kt/PJ. (b) Emission factor 52 kt/PJ
(c) Emission factor 90 kt/PJ
Three trigger thresholds were suggested by the Policy Working Group to enable a cost-
benefit analysis of a proposed national greenhouse and energy reporting framework,
which is the subject of this report:
· 500 TJ energy OR 125 kt CO2-e per annum;
· 100 TJ energy OR 25 kt per annum; and
· 4 TJ energy OR 1 kt per annum.
12
This is a subset of all manufacturing sites in Victoria. For example, a factory site in Melbourne which
discharges wastewater to the sewer would not need a licence, whereas an identical factory without access
to the sewer and discharging to on-site treatment would. No commercial sites are covered.
13
Western Australian Greenhouse Strategy, WA Greenhouse Task Force, Government of Western
Australia September 2004. http://www.greenhouse.wa.gov.au/documents/greenhouse_strategy_001.pdf.
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Table 7 Triggers considered in this study
Energy trigger All Elec(a) All Gas(b) All Coal(c) kt CO2-e All Elec All Gas All Coal
TJ/yr MWh/yr kt CO2-e kt CO2-e kt CO2-e Trigger (d) TJ TJ TJ
500 138889 125.0 26.0 45.0 125.0 500 2404 1389
100 27778 25.0 5.2 9.0 25.0 100 481 278
4 1111 1.0 0.2 0.4 1.0 4 19 11
(a) Emission factor 0.9t CO2-e/MWh, or 250 kt/PJ. (b) ) Emission factor 52 kt/PJ (c) Emission factor 90
kt/PJ (d) Implied emission factor 250 kt/PJ
Because of the different threshold structures and the infinite possibilities for triggering
them through different combinations of on and off-site energy use, non-energy
emissions and the differences in electricity-intensity between States, it is difficult to
establish a direct correspondence between the thresholds in the different schemes.
Table 8 shows the lower emissions thresholds for each programme the critical factor
in determining the number of reporting entities that will be affected. Some programmes
also have additional thresholds which trigger more stringent reporting or action
requirements for higher emitters and energy users. The lower thresholds cover three
orders of magnitude: the highest (WA) is literally 1,000 times as great as the lowest
(VIC). Since the number of entities increases exponentially as consumption levels
reduce, the choice of threshold is a critical factor in the design of these programmes.
Table 8 Emissions levels corresponding to participation triggers for mandatory
programmes
Programme kt CO2-e/yr (a) Entity
NPI (b) 0 54 Site
NSW Energy Saving Order (c) 9.0 Site
VIC SEPP/AQM (d) 0.1 Site
EEOA (proposed) (e) 26 (b) Corporation
WAGGI (proposed) (f) 100 Corporation
(a) Energy and greenhouse triggers combine in different ways in different programmes (b) Table 3 (c)
Table 4 (d) Table 5 (e) Lowest possible threshold, assuming all site use natural gas (f) Table 6 (g) Table 7
Energy and Emissions Covered
Apart from the trigger thresholds, there are other important differences in the
programmes covered, with respect to:
· emission source categories covered: most reporting programmes cover on-site fuel
combustion and the off-site emissions associated with purchased electricity, but
there are differences in the treatment of on-site fugitive and industrial process
emissions and off-site transport;
· fuels covered: most programmes cover the only the main ones such as coal, natural
gas and the main transport fuels; others include all fossil fuels, or all energy forms
including renewable fuels;
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· greenhouse gases covered and modes of reporting: CO2 only, all 6 Kyoto Protocol
gases as CO2-e, all gases expressed as a single CO2-e value, etc;
· the emission factors used to derive emissions from energy used, their source,
whether they correspond to `Scope 1, 2 or 3' as defined by the WBCSD (2005), the
rules for non-standard factors etc;
· the treatment of `offsets' such as carbon take-up by forest biomass: some schemes
do not recognise offsets at all, some permit them to be separately reported and some
permit them to be netted from total emissions;
· reporting periods (whole calendar or financial year, or 6 month periods) and
frequencies (annual or other); and
· constraints on passing on data to third parties (even parties under contract to the data
requiring agency).
These factors are not left to the discretion of reporting entities, but are fully detailed in
the reporting forms and accompanying guidelines and manuals prepared by the
respective Data Requiring Agencies.
While some of the differences may appear minor, in effect they mean that at present no
report prepared by a Reporting Entity for one Agency would be accepted by any other
Agency. Even those Agencies with lesser or simpler data needs specify data
requirements in particular formats, so Entities participating in more than programme
must repackage the data for each.
Programme and Reduction Reporting
The preceding discussion was concerned solely with historical Greenhouse and Energy
Reporting. Entities which believe that their historical greenhouse gas emissions and
energy use are such as to trigger the participation thresholds must collect the necessary
data, process it according to the rules of the programmes concerned, and then if they
participate, must continue to report historical greenhouse and energy data in those
formats. As Table 2 illustrates, historical Greenhouse and Energy Reporting is common
to all the programmes listed.
Many of the programmes also require entities to report on the actions they propose to
take and have taken to reduce emissions from their sites or off-site activities, and on the
results achieved, ie Programme and Reduction Reporting.
Not all Reduction programmes have a Programme and Reduction Reporting
requirement. The MRET, GGAS and `13% Gas' schemes rely on encouraging the
development of new generating sites with low emissions, and are less concerned with
reductions in emissions at existing sites. Greenhouse and Energy Reporting alone is
sufficient to establish the effectiveness of the schemes. The GES scheme on the other
hand relies solely on documenting reductions in emissions at existing sites, and so has
an elaborate Programme and Reduction Reporting framework.
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Programme and Reduction Reporting formats are even more diverse than Greenhouse
and Energy Reporting formats, since companies are invited to put forward whatever
proposals suit them in fact innovation and novelty are encouraged. The format of
plans, the rules for estimating impacts of measures against `Business as Usual', the
standards for assessing and reporting actual impacts after the fact, and the sanctions (if
any) for failure to follow through with stated intentions, are not always clearly
specified.
Some programmes have rules for energy audits to be carried out according to certain
standards by qualified independent auditors, and an obligation for the entity to
implement projects which meet specified financial hurdle rates. In other cases,
participants volunteer a menu of proposals and undertake to make regular reports on
whether they have implemented them, and if so, their own estimates of greenhouse or
energy savings, which they calculate using the programme's guidelines.
The formats for Programme and Reduction reporting are less rigorously specified than
for Greenhouse and Energy Reporting, partly because the information is more difficult
to quantify and does not easily lend itself to standardisation.
Therefore although the diversity of reporting format and quality is very wide, there is
considerable latitude for the Reporting Entity to adopt a mode and a form which suits its
own interests. Even so, entities participating in more than one Reduction programme
incur the costs of reporting to different Data Requiring Agencies (even if only to report
the identical set of measures and savings projections to each of them).
With Greenhouse and Energy reporting, on the other hand, the Data Requiring Agencies
each have highly specified rules which Reporting Entities have to satisfy individually.
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Impacts on Stakeholders
There is obviously a considerable range and diversity of programmes requiring
companies and other entities to calculate their historical greenhouse gas emissions and
energy use (to determine whether they are obliged to participate), and if so to report
their greenhouse emissions and energy use, and (in most cases) the actions taken to
reduce it. The calculation methods, trigger points and reporting formats are different in
every case, and the full range of requirements covers a very wide spectrum.
This is not necessarily a problem on its own if the benefits outweigh the costs, and if the
situation represents the least costly way to meet the objectives of all programmes.
There is however a reasonable presumption that reducing the reporting burden would
reduce costs significantly, while preserving or even increasing the benefits.
In 2004 the Environment Protection and Heritage Council (EPHC), comprising
Australian, State and Territory Environment Ministers, and the Ministerial Council on
Energy (MCE), comprising Australian Government, State and Territory Energy
Ministers, established a working group to examine the costs and benefits associated
with implementation of a nationally consistent framework for greenhouse and energy
reporting from Australian companies to meet current and prospective needs of
government, business and the public.
The following sections examine the issues from the viewpoint of stakeholders within
the three main groups. It should be noted that the interests of stakeholders, even within
the groups, do not necessarily align. Also, the previous section illustrated the wide
range of different functions and technical approaches covered by the general term
`greenhouse and energy reporting', and the significance of apparently minor variations
between them. Given that there are as yet no details of how a `nationally consistent
framework for greenhouse and energy reporting' might operate (other than the range of
possible participation thresholds in Table 7), the assessment of its possible impacts,
costs and benefits for stakeholders can only be preliminary.
Business
Multiple Programme Participants
The corporations with the highest emissions are often caught by, or choose to
participate in, several programmes with Greenhouse and Energy Reporting and
Programme and Reduction Reporting elements.
Electricity generators are a special category in this respect, since their sites represent the
largest point source emitters of greenhouse gases in Australia, and among the largest
sources of the substances covered in the NPI. Depending on which State it is located in,
an electricity generator may be required to, or choose to, participate in up to 7 of the
programmes listed in Table 2. Some of these involve only data reporting and some also
involve undertakings to reduce emissions.
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Large mining, petroleum and manufacturing companies, especially those with high non-
energy greenhouse emissions as well as high energy use, may also participate in and
report to 5 or 6 programmes. The FES respondents with higher energy use are also
likely to take part in one or more greenhouse programmes.
Because they are such energy-intensive enterprises, these companies already monitor
their fuel and energy use and greenhouse gas emissions in considerable detail. The costs
of collecting, validating and maintaining the relevant data are part of their normal
business costs, and there are usually one or more staff members with permanent
responsibilities in this area. The marginal costs of producing an additional data report
in a given format are relatively low, and conversely the marginal savings from reducing
the number of formats are also low. The highest costs incurred tend to be the one-time
set-up costs whenever a new reporting format is introduced. The costs of producing data
reports in the same format in subsequent years is minimal.
Costs for the Reporting Entity are higher if the reporting process requires the data to be
manually entered on a form (whether paper-based or on-screen) rather than exported
automatically from the RE's database. Manual transcription can also introduce errors,
which if detected take time for both the RE and the DRA to correct, and if undetected
reduce the quality of the data.
Consequently, for multiple programme participants, the monetary benefits of
establishing a nationally consistent framework for greenhouse and energy reporting
depends on:
· whether the framework allows the use of one of the existing reporting formats, or
whether a new format is required; and
· the physical arrangements for reporting.
In any case, the potential monetary benefit for this group of users is minor.
Single Programme Participants
Many medium to smaller entities participate in only one programme requiring
estimation and reporting of energy consumption or greenhouse emissions. These would
most likely be one of the programmes with the largest number of participants: the NPI
(3600 participants) the Victorian SEPP/AQM (1018) or perhaps GHC+ (800). Those of
the 1300 FES respondents with lower energy use are also likely to participate in that
programme only.
For these entities, the impact of moving to a nationally consistent framework for
greenhouse and energy reporting will depend on the threshold, the design of the
programme and how smoothly the Data Requiring Agencies involved integrate the new
format into their reporting requirements.
If the greenhouse/energy threshold is higher than the one which triggers the RE's
present participation, then it will be excused from participation and so save the
associated reporting costs. If the one programme that the entity participates in was
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voluntary, it may wish to continue to report on a voluntary basis even if it falls below
the threshold.
Consequently, for single programme participants, the monetary benefits of establishing
a nationally consistent framework for greenhouse and energy reporting depend on:
· whether the Agency involved accepts reports meeting the national framework if
not, then the Entity's reporting burden would be increased;
· whether the framework matches the reporting format which the Entity currently
uses, or whether a new format is required if the latter, there will be a one-time
readjustment costs, but afterwards the annual cost will be the same;
· whether the Entity meets the threshold for the national framework if not, and the
Entity ceases reporting, its costs will obviously fall (if it chooses to keep reporting
in a new format even if it no longer has to, then its costs could increase, but that
would be a voluntary decision).
Therefore the effects of a national reporting framework on Reporting Entities who at
present participate in one programme only could be to increase, decrease, or have little
effect on costs all depending on the design of the new framework and its thresholds.
Non-participants and new participants
The number of entities not presently participating in Greenhouse and Energy Reporting
that would be drawn into a nationally consistent framework depends on the thresholds.
If these are set low (eg 1 kt/yr) then several thousand new entities would be drawn in
for the first time (the number at each given threshold is estimated in Chapter 3).
As Reporting Entities close to the threshold could not be certain whether or not they
meet it, they would have to go to the expense of determining whether they do. Some of
these would find they do not, and so would have no further involvement.
Therefore there may be three cost elements:
· Screening costs ie the costs of formulating a response to the advice (presumably
by the Data Requiring Agencies) of the existence of the nationally consistent
framework and its possible application to the Reporting Entity;
· Set-up cost for those required to participate ensuring that someone in the
organisation has administrative responsibility, setting up an internal data collection
process, creating spreadsheets etc;
· On-going annual report preparation costs to participants.
These costs would be much the same irrespective of the format of the national reporting
framework, since none of the Reporting Entities have invested in any existing formats.
The National Pollutant Inventory (NPI) provides an indication of the magnitude of on-
going reporting costs. NPI respondents are invited to indicate the costs of completing
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their reports, and over the course of the programme 43% have done so. Figure 1
summarises the average reported values. It would be expected that costs would be
highest in the first year, in which Reporting Entities establish their reporting systems,
and then decline, and this was indeed the case. The long term average reporting costs
appears to be converging to around $3,000 per year (these are skewed by a small
proportion of very high values the median reported values are significantly lower).
It is reasonable to assume that for an entity with no previous reason to collect and report
greenhouse and energy data, the task would be comparable in complexity and hence
cost with the NPI. For entities already reporting under the NPI, the additional cost of
expanding the report to include greenhouse and energy would probably be somewhat
less.
Figure 1 Annual reporting cost indicated by NPI respondents
$7,000
$6,000
$5,000
Average annual reporting costs
$4,000
$3,000
$2,000
$1,000
$0
1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05
Source: EPA Vic, personal communication
Summary of Cost Impacts
The potential impacts on business reporting costs are summarised qualitatively in Table
9. In general, a national reporting framework is not likely to have a significant cost
impact for larger entities which participate in and report to several programmes. It
could have a more significant proportional impact for single programme participants,
whose present reporting burdens could be either increased, decreased or eliminated
altogether.
The number of entities with present multi- and single-programme commitments is in
effect fixed (though difficult to estimate, without a census of participants in all
programmes). Therefore the number of existing participants is not a variable in the cost
impacts of transition to a new national reporting framework.
On the other hand, the number of potential new parties captured by a national reporting
framework is a critical factor in the total costs: although the costs per entity may be
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significantly less than for larger emitters, the numbers affected could be very high,
depending on the reporting threshold selected.
Table 9 Business reporting costs impacts of National Greenhouse and Energy
Reporting Requirement (NGERR)
Category Possible cost impacts (cf BAU) Outcome sensitive to:
Multiple programme participants Neutral Not sensitive same outcome
Slightly lower costs likely under all NGERR designs
Single programme participants Higher costs (if new format) Format of NGERR
Neutral (if same format) Participation threshold
Lower costs (if screened out)
Prospective new participants Higher costs (of addressing Participation threshold (numbers)
whether screened in or out screening criteria) Screening cost
Prospective new participants Higher costs (of reporting) Participation threshold (numbers)
screened in Setup costs
Annual reporting costs
Offsetting benefits: the value of energy savings
The previous section discussed reporting costs only. Of course, reporting entities also
derive benefits from their participation in greenhouse and energy reporting, including:
· the value to corporate image and reputation of participation in the reporting
programme;
· enhanced credibility of the entity's public statements regarding its emissions;
· a general interest in increasing the quality of national energy and greenhouse data;
and
· focussing the entity's attention on opportunities for increasing energy efficiency and
reducing greenhouse gas emissions that it would not otherwise be aware of.
The value of potential energy savings arising from programme participation can in
theory be quantified. Entities which participate in multiple programmes are likely to be
well aware of their opportunities for increasing energy efficiency and reducing
greenhouse gas emissions, whether they report or not. At the other end of the scale, the
value of any energy savings to smaller entities may actually be less than their reporting
and energy efficiency investment costs.
A recent review of the Victorian SEPP/AQM programme (Environment Link 2005a)
estimated the total value of the annual energy savings identified and `committed' by
programme participants, and the average costs of implementing those measures (Table
10). For the 216 Category B sites (less than 1.4 kt CO2-e/yr) average energy cost
savings per site were estimated at $2,800/yr. For these sites, the annual programme
reporting costs plus the annualised cost of energy-efficiency measures would have to be
less than $2,800 to make participation cost-effective on the basis of energy savings
alone.
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For the 306 Category C sites with emissions over 1.4 kt CO2-e, on the other hand,
annual energy savings are so much higher than reporting costs that there is little doubt
that participation is cost-effective, even if as is quite possible those Entities would
have identified and acted on many of its energy saving opportunities irrespective of the
VIC SEPP/AQM programme.
Table 10 Estimate energy savings to participants in the VIC SEPP/AQM
programme
Number TJ/yr kt CO2-e Total kt Total Total Average Average Average
of Sites energy /yr CO2-e/yr $M/yr $M cost kt/yr/site $/yr/site $/site cost
saved saved saved saved of measures
A 502 <0.5 <0.1 NA NA NA NA NA NA
B 216 0.5-7 0.1-1.4 20 0.6 2.3 0.09 2,800 10,650
C 306 >7 >1.4 1070 33.8 47.2 3.50 110,500 154,250
1024 1090 34.4 49.5 33,600 48,340
Source: Derived from Environment Link (2005a), Table 4
Government
Policymakers
Commonwealth, State and Territory government all have interests in increasing the
quality of the information about greenhouse gas production and energy use in the
economy that they can access. This information is necessary for:
· compiling national energy statistics in order to supply Commonwealth and State
governments, and industry, with vital data;
· meeting Australia's reporting obligations as a member of the International Energy
Agency, reporting to the United Nations and participating in APEC energy
programmes;
· compiling the NGGI on order to meet Australia's reporting obligations under the
UN Framework Convention on Climate Change;
· general economic and trade forecasting and planning;
· planning, implementing and monitoring national level greenhouse gas reduction and
energy efficiency programmes; and
· planning, implementing and monitoring State-level greenhouse gas reduction and
energy efficiency programmes.
The range of data needs is relatively wide, partly because of the differing policy
approaches to greenhouse gas reduction taken by the various governments. Some of the
more complex reporting requirements come out of the structuring of programmes to fit
jurisdictional boundaries, both regulatory and geographical. For example, the
accounting needs of a State-based baseline-and-credit scheme such as the NSW GGAS
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are far more complex than would be the case for, say, a national emissions permit
trading scheme.
The reliability of the NGGI is underpinned by three main elements:
· the quality and timeliness of the FES;
· direct reporting by large fuel users, and large emitters of fugitive and industrial
process emissions; and
· the methodology and underlying data for the sectors where emissions are estimated
by statistical techniques (eg fugitive emissions from coal mines, agriculture, land
use change and forestry, waste and some industrial processes).
Direct reporting of emissions by smaller energy users and smaller emitters would not
contribute to the quality of the NGGI.
Over the past decade there has been some deterioration in the quality of the greenhouse
and energy data available to governments, whether collected by the FES or directly
reported. For example, the share of power generation energy use covered by direct
reports has fallen from near 100% in the early 1990s (when most generators were
publicly owned) to about 80%. The balance of fuel use (and emissions) is now
indirectly inferred from other data sources. Similarly, the methodology for estimating
coal mine emissions is now based on analyses carried out in the early 1990s. Since then
many mines have closed and new mines opened. Consequently the probability of
significant divergence of estimates from actual emissions is increasing.
While data for the NGGI and for economic forecasting purposes is more or less
adequate, effective energy efficiency and greenhouse reduction programme planning
relies on more detailed information, including how the energy delivered to customers is
actually used. For residential and smaller business users, this information can be
gathered by random survey and statistical methods. The wider variability of energy use
in medium to large manufacturing businesses, however, requires more direct survey and
reporting.
Many policymaking agencies spend considerable resources in commissioning special
studies, trying to access data from other agencies in the face of jurisdictional and
confidentiality barriers, and making comparisons across data sets which are often
inconsistent. It is likely that they would be in a better position to develop informed
policies if they could access the same, high quality data set. Greater co-ordination of
data collection would also provide a better base for assessing the impacts of energy
efficiency programmes.
Improved data availability and quality would also enhance the ability of policymakers
to assess, implement and monitor a range of other potential measures for addressing
greenhouse gas emissions which current greenhouse and energy reporting programmes
could not support
Data Requiring Agencies
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The Data Requiring Agencies are those which are directly responsible for collecting and
storing the greenhouse and energy data from the Reporting Entities. The Agency for
each programme is listed in Table 2. Agencies may publish data as received (eg NPI),
produce and publish their data analyses but not the base data (eg ABARE), use the data
to verify compliance with mandatory requirements (eg IPART), or pass on the data or
extracts from it to other agencies or other users, some of which may be within the same
department (eg AGO).
The objectives of the DRAs are usually more limited than those of policy agencies.
Their tasks are defined by the programmes requirements, which may be specified in
regulations, and they need to develop management and data systems to satisfy those
requirements, usually within budgetary constraints.
There is only limited information on the costs to DRAs of operating greenhouse and
energy reporting programmes, which would be expected to fall into the following
categories:
· The initial human and IT resource costs for setting up the reporting systems (fixed).
· The initial costs of identifying, contacting and negotiating with prospective
programme participants (largely fixed, but some variation with number of
prospective Reporting Entities).
· The on-going costs of maintaining the reporting system: eg server costs, maintaining
and improving software, developing and updating emissions factors, producing data
summaries. These costs are largely independent of the number of reporting entities.
· On-going variable costs related to number of reporting entities, eg liaison with
participants, checking and correcting returns.
· For programmes involving undertakings to increase energy efficiency or otherwise
to reduce emissions, working with participants to help them identify opportunities,
possibly to fund or subsidise audits and studies and to follow up impacts (largely
variable).
There are no published disaggregations of these cost elements, but there are some
estimates of total costs. A recent review of the Victorian SEPP/AQM programme states:
Under the Victorian Greenhouse Strategy Action Plan Update 2005, an
additional $600,000 is being provided in 2005/06 to allow EPA to complete the
current Programme and develop future GHG programmes for industry.
(Environment Link 2005a, 22).
It is understood that about half of this is the annual recurrent cost of SEPP
implementation, and only about 20% of this half ($ 60,000) should be attributed to the
costs of processing data reports, and the rest on managing broader compliance issues
and monitoring abatement actions. Since there are now just over 1,000 participants, this
represents about $60 per reporting entity per year.
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The NPI represents a `purer' reporting programme in that participation is mandatory for
entities meeting the criteria so there is no need to spend on publicity and recruitment
beyond alerting all likely parties to their obligations and it requires data reporting
only, without programme and reduction reporting.
Table 11 summarises the cost to government of operating the NPI since its
establishment in 1997/98 (reporting commenced the following year). These are
reported to be about $640 per reporting entity per year (Environment Link 2005; this
value appears to be inconsistent with the costs tabulated in the same report (Table 11),
which indicate a total annual cost of $694 per Entity). However, some of the costs
presumably cover the inclusion of diffuse emissions such as transport which are
calculated and reported by state agencies, so the actual effective cost per reporting
business may be lower.
Table 11 Summary of NPI costs
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05
$M $M $M $M $M $M $M $M
Commonwealt NA NA NA 3.2 1.2 1.5 1.5 1.5
h
States (c) NA NA NA 0.0 0.8 0.8 0.8 0.8
Total 2.8(a) 2.8(a) 2.8(a) 3.2 2.2(b) 2.3 2.5(b) 2.5(b)
Source: Environment Link 2005, 52. (a) Inferred (b) Totals given in source exceed apparent sum of
contributions. (c) Source states: `A number of jurisdictions believe that this underestimates state
contributions significantly.'
The cost of administering the NSW GGAS programme is not directly reported by
IPART. However, the programme was designed to be more or less self-funding from
accreditation fees and NGAC registration fees. Revenues from these sources are
currently around $1.1.m per year, so this may be an indirect indicator of the
programme's costs. As there are so many different types of REs reporting different
classes of information (four categories of power station, NGAC creators, LUAC
creators, energy utilities) and operating the NGAC register would account for a
significant part of the expenditure, any estimate of average DRA costs per participant
would be misleading.
The annual costs of operating the GHC+ reporting platform OSCAR, are estimated at
about $0.83m per year. This excludes the higher initial costs of development, and also
the additional staff costs of liaison with programme participants, which are directed
more to Programme and Reduction Reporting aspects than Greenhouse and Energy
Reporting.14
Table 12 summarises the authors' estimates, based on the available data, of the costs to
government of three of the largest greenhouse and energy reporting programmes (no
data were available for FES). The estimates in Table 12 nominally cover only the
annual cost of running the greenhouse and energy reporting elements, and exclude the
higher start-up costs and the additional costs (in the VIC SEPP/AQM and GHC+) of
Programme and Reduction Reporting.
14
Author's estimates based on discussions with Mr Lee Hopson, DEH.
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The costs to government appear to range from about $63 to about $830 per reporting
site per year, with an average of about $610. Discussions with stakeholders suggest that
some part of this is a fixed cost of maintaining a data receiving and storage capability,
and part is a variable cost associated with processing (and often querying) data returns.
In the absence of more detail, it is assumed that about half the average cost say $300
site - is the variable cost that agencies would save if they no longer collected
greenhouse and energy data directly, but were able to access it from a central database.
The agency which operates the central database would still incur these variable costs.
Table 12 Estimated annual costs of greenhouse and energy reporting elements of
major programmes
Total costs Reporting Sites (b) $ per RE $ per site
$m/yr(a) Entities per yr per year
NPI 2.50 1577 3600 1585 694
VIC SEPP/AQM 0.06 642 959 93 63
GHC (GRE only) 0.83 780 1000 1064 830
All of above 3.39 2999 5559 1130 610
Estimated variable cost per site report received 300
Source: author estimates based on available data (a) Nominally for greenhouse, energy or pollutant data
collection, processing and storage only, not for other programme expenditures. (b) See Chapter 3 for
discussion of sites per RE
However, the non-collecting agencies would still incur the fixed costs of maintaining
their own databases and processing capabilities. If half the reporting-related costs of the
programmes listed in Table 12 are variable, the other half (averaging $0.57m per
programme per year) are fixed. These costs are likely to continue, since each agency
will probably want to maintain its own distinct database, analytic capability and, for
some, the links to its other programme and reduction activities.
The Public
Many companies are aware of public and investor interest in their energy use and
emissions. `Triple bottom line' reporting (on financial, social and environmental
indicators) is becoming widespread among global and national companies.
Companies, and their industry associations, also wish to publicise their efforts to reduce
emissions and to increase the efficiency of their resource use, including energy and
water. Gaining recognition for such efforts is the main incentive for participation in
voluntary programmes such as GHC+.
This creates some tension between the perceived value of public disclosure of
greenhouse and energy data which can be seen in a positive light and the instinct to
withhold data which can be interpreted to mean that the company is underperforming or
which could reveal information of use to competitors. Some companies resolve this
tension by publicising the efforts they have made to reduce emissions and their
estimates of kt CO2-e saved, while not revealing the absolute level of emissions or the
trend over time. Some report total emissions (in CO2-e), and sometimes emissions per
unit of output, but do not report energy use, emissions broken down by source or
separate fuel, or the level of output.
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Some companies try to follow one or more of the guidelines for calculating emissions,
such as those of the GHC+(AGO 2005) or the World Business Council for Sustainable
Development (WBSCD 2005). However, there is no standard format for publicly
reporting emissions, which for complex entities means combining data from a large
number of disparate sites and operating entities and presenting them in a way that is
both internally consistent and comparable with other companies.
Those trying to provide data in good faith have to develop their own reporting formats
(or select from a wide range of possible formats) and convince data users that (a) the
method of data collection is itself valid, and (b) it has been rigorously applied. This is
sometimes done by engaging `auditors' who are themselves uncertain about methods
and have limited expertise.
Users of data are rarely in a position to compare different companies' emissions or
emissions-reduction performance because of inconsistency of data formats, legitimate
doubts about consistency of method and quality and the lack of sufficient
disaggregation of reported results to allow users to check at least some of the
assumptions.
The situation is analogous to the disclosure of appliance energy efficiency information
before the implementation of mandatory energy labelling: no single appliance (data)
supplier, even if able to supply energy efficient appliances (demonstrate low emissions)
is in a position to establish an energy labelling (greenhouse reporting) regime to the
level of public confidence where it will be accepted by data users and not be liable to
criticism by competitors. Only government is in a position to do this.
However, the analogy should not be taken too far. While members of the public, as
consumers, have a direct economic interest in preferring a more efficient appliance or
motor vehicle to another, and can be reasonably confident of the link between the
product's performance and its resource consumption, the relevance, meaning and indeed
accuracy of public greenhouse and energy use comparisons between corporations is far
more problematic.
`Professional' Data Users
`Professional' users of greenhouse and energy data include those with business interests
(eg corporate advisors, competing companies, investment fund managers, and
consultants), participants in public policy debates (eg journalists, environmental NGOs)
and academics.
These data users are already able to infer or estimate the greenhouse gas emissions of
major corporations using public data, sometimes combining information from different
sources. For example, NGOs have from time to time compiled rankings of the largest
emitting power stations in Australia by combining electricity output data published by
NEMMCO with State fuel use estimates published by ESAA and emissions factors
published by AGO. The estimates for each power station have been close to the values
reported to the NGGI. Data for large emitters outside the electricity sector is more
difficult to come by, but it can be and has been done. Those professional users who do
not have the skills to do this themselves can and do employ consultants.
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Rigorous comparison of the present emissions, likely emissions trajectories and carbon
price exposure of different corporations requires a significant level of analysis beyond
the raw energy and greenhouse data product mix, production levels, technology used
and regulatory environment.
Many companies will have an interest, which is likely to increase over time, in ensuring
that such analyses are well informed and accurate, especially if they are seeking to
demonstrate low or declining carbon exposure and increasing energy efficiency. The
ability to start with a standard set of energy use and emissions data, as reported to
government under a consistent national reporting framework, would assist these
companies. In turn it is likely that professional data users would increasingly request
this data from companies directly, and would draw their own conclusions if it were
withheld.
For professional users, then:
· The present level of data availability is workable, but data users' costs would be
considerably lower if more data were made public by more companies, whether
through mandatory disclosure provisions or through response to the demands of
informed data users. This would also increase the reliability of their assessments.
· The more difficult (and arguably more important) need to combine greenhouse and
energy data with a wide range of other information to make useful comparisons and
projections will still remain.
The above applies to companies with large emissions footprints typically those in the
mining, energy, metals and other materials processing sectors (bulk chemicals, pulp and
paper, cement, ceramics, glass). For medium to small energy users, especially those in
the service sector with electricity as their sole or main energy source, energy usually
accounts for such a small share of business costs that professional data users and
business analysts are not particularly concerned with it.
General Public
There is a high level of public interest in the climate change issue, in government
policies and programmes to address it and in the efforts that public and private entities
are making to reduce their emission levels.
However, the extent to which public access to the actual greenhouse gas emissions
and/or energy use of specific facilities is necessary to serve this public interest is not so
clear. Two arguments in favour of mandatory public disclosure frequently raised in
recent reports (eg Rae 2005, Environment Link 2005a, EEOA 2005) are:
· the `public right to know'; and
· the proposition that the greater the level of mandatory disclosure, the greater the
attention paid by corporate managers especially those choosing not to participate
in voluntary programmes at present to increasing energy efficiency and reducing
emissions.
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The `public right to know' is based on precedents such as the NPI. However, unlike the
substances covered by the NPI, greenhouse gas emissions do not represent direct and
immediate hazards to public heath and safety, and so do not fit the principles which
underlie the NPI:
The reasons for establishing the NPI were to:
· provide information to enhance and facilitate policy formulation and decision
making for environmental planning and management;
· satisfy community needs by providing publicly accessible and available
information on a geographic basis, about specified emissions being released to
the environment, especially those of a hazardous nature or involving significant
impact; and
· promote and facilitate waste minimisation and cleaner production programmes
for industry, government and the community (Rae 2004,8).
There has been little argument that the substances on the NPI reporting list are aptly
described as 'pollutants' (Rae 2004,8). In contrast, there is considerable controversy
whether non-hazardous substances such as CO2, in particular, are pollutants in the same
sense as the substances scheduled in the NPI.
Public disclosure is also a spur to improving performance. The Discussion Paper on
reporting procedures for the Energy Efficiency Opportunities Assessment programme
stated:
During consultation, some businesses communicated a reluctance to publicly
report total energy use as this is considered commercially sensitive information.
Others have indicated a willingness to provide this information, and have
indicated that it is already reported voluntarily.
The intent behind the provision of total energy use is to ensure that information
reported in relation to assessments is meaningful to stakeholders. Provision of
total energy use data in some form will provide context to reporting potential
energy saved from opportunities identified. In responding, businesses should
bear in mind that the intent of the programme is to improve the uptake of energy
efficiency through raising the profile of energy within a business, and that the
possibility of increased public scrutiny is one way by which the profile of
energy use can be raised (EEOA 2005, 23).
However, the publication of total energy use for all entities reporting energy and
emissions (as could be mandated under a national framework) without a parallel
mandatory obligation to report `potential energy saved from opportunities identified'
(which is outside the present terms of reference) would not necessarily provide any
more incentive than at present. Less scrupulous companies could publish optimistic or
entirely fanciful statements about their emission reduction plans along with their
(rigorously calculated) historical emissions.
In summary, the publication of historical energy and emissions data, in the absence of
equally rigorous information on reductions planned and achieved, may be of little value
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to non-specialised data users, and may not of itself increase the pressure on companies
to reduce emissions.
Commercial Confidentiality
Commercial confidentiality is often cited by business as a reason for non-disclosure of
data, even to government agencies who are under regulatory obligation to maintain
confidentiality. The fact that some entities with very high emissions voluntarily publish
data in more detail than their competitors are prepared to disclose to government is
beside the point. The assessment of commercial confidentiality is essentially a
subjective one for each business to make.
There are different ways in which this discretion may be exercised. The ABS for
example has a statutory obligation not to reveal information that could enable the
identification of individual respondents. ABARE has chosen to adopt similar levels of
confidentiality for the FES. For the NPI, on the other hand, the default is public
disclosure, because the purpose of the NPI is to allow individuals to make their own
assessments about `the locality or region in which concerned members of the public
live, work or seek recreation'. Even so, data reported to the NPI may be held in
confidence at the request of the submitter, but no such instances have arisen (Rae 2004).
Summary
There is no necessary link between the obligation to report data to a national reporting
framework and the obligation (or choice) to disclose the data publicly.
However, establishing a national framework would provide the capability for the
following levels of disclosure (in order of increasing commercial sensitivity):
· Entities could choose to publicly report their own emissions as submitted to and
verified by the national framework. This would carry no commercial sensitivity
implications since disclosure would be entirely voluntary.
· The national framework could report on the number of corporate entities reporting,
number of sites covered and aggregated emissions. As the number of entities
reporting and/or the actual sites covered would most likely change from year to
year, it would be necessary to publish `like for like' estimates to give any
meaningful trends.
· The national framework could report on the number of corporate entities reporting,
number of sites covered and aggregated emissions within each jurisdiction.
· The national framework could publicly report total emissions by named corporate
entities (without disclosing sites).
· The national framework could publicly report total emissions at each site (ie the
same level of disclosure as in the National Pollutant Inventory).
Once the data are compiled for the purposes of reporting to government there are no
additional monetary costs associated with public disclosure, whether by the reporting
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entity or by the data requiring agency. The qualitative costs and benefits appear to
accrue as follows.
From the viewpoint of government policymakers, the establishment of a nationally
consistent framework for greenhouse and energy reporting to government would
probably increase the level of voluntary public reporting of greenhouse emissions and
energy use, because more entities would be compiling the data in the same standard
format, and there would be public pressure (mainly from professional data users) to
disclose it. Also, the existence of a single standard method for calculating emissions
would reduce (but not eliminate) one of the uncertainties surrounding public disclosure
that companies could select a different method of calculation (even among the range
currently used by various Data Requiring Agencies) to publish the values that are most
favourable to them.
Mandating public disclosure of all or part of the reported data requires government to
balance the interests of reporting entities with those of data users, and with the general
public interest in reducing greenhouse gas emissions.
Mandating minimal data disclosure of greenhouse and energy data (eg total corporate
energy use and emissions) would be of limited use to professional data users, who
generally seek detailed information, and of limited value to the general public, who
would be in no position to judge whether an entity is efficient in its resource use,
(without additional information on its production of goods or services), or whether the
entity is making adequate efforts to reduce emissions (without detailed disclosure of its
programme and reduction reports as well).
Mandating full data disclosure at the site level would benefit professional data users
considerably, but may be of limited value to the general public without additional
analysis and mediation (by professional data users, the government or the reporting
entity itself). If only historic energy use and emissions were disclosed, the additional
pressure on corporations to undertake emissions reduction or to increase energy
efficiency may be limited.
If the public disclosure of all reported data were to be made mandatory under a national
greenhouse and energy reporting framework, there may be a risk that reporting entities
would withhold greenhouse and energy data, or seek to narrow the range of data
reported to government in order to limit what is publicly disclosed.
To sum up:
· The implementation of a nationally consistent reporting framework would enable
government to increase the quality of aggregated public reporting on greenhouse gas
emissions and energy use.
· The implementation of a nationally consistent reporting framework is itself likely to
increase the quality and extent of voluntary public reporting of greenhouse gas
emissions and energy use by the businesses affected.
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· The cost and benefits of public disclosure can be treated separately from the costs
and benefits to governments and other stakeholders of measures to improve the
quantity and quality of greenhouse and energy data.
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Efforts to address the issues
The Joint Working Group on Greenhouse and Energy Reporting
The Australian Government recognised the issue of increasing greenhouse and energy
reporting burdens in its 2004 Energy White Paper, Securing Australia's Energy Future.
State and Territory governments also recognised the need to examine greenhouse and
energy reporting. The Environment Protection and Heritage Council (EPHC) and the
Ministerial Council on Energy (MCE) agreed to set up an inter-jurisdictional
Joint Working Group (JWG) of officials to develop options for a national approach to
business reporting of greenhouse and energy to meet a range of government, industry
and community information needs.
The terms of reference for the JWG were `to examine the costs and benefits associated
with the implementation of a nationally consistent framework for greenhouse and
energy reporting from Australian industry to meet government and public reporting
needs. Specifically to:
· identify and, as appropriate, develop a national greenhouse and energy reporting
framework suitable for Australian industry, taking into account emerging
international reporting frameworks;
· identify the extent of data collected by or on behalf of government;
· explore cost-effective mechanisms, including the NPI, for implementing the
national reporting framework, and assess the relative costs and benefits of these
options;
· identify options for the ownership, collection, analysis and dissemination of energy
and greenhouse data; and
· evaluate potential instruments for national greenhouse and energy reporting.
During 2005, the JWG held five meetings (in Melbourne and Adelaide), engaged a
consultant to identify types of reporting requirements and conduct an analysis
of current and prospective greenhouse and energy programmes (ACG 2005), and
developed a paper as a basis for consultation with business, industry and government
stakeholders (JWG 2005a).
The JWG consulted over 50 stakeholders through a series of targeted workshops held in
Perth, Canberra and Melbourne in late May and June 2005, and provided progress
reports to both the EPHC and MCE. In its August 2005 report (JWG 2005b) the Joint
Working Group concluded that:
A nationally consistent and well-designed approach to greenhouse and energy
reporting could:
1) minimise and streamline the administrative burden on business and
government;
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2) deliver greater consistency in greenhouse and energy reporting;
3) be flexible so as to accommodate future policy settings and reporting
requirements;
4) facilitate Australian company participation in international reporting
initiatives; and
5) identify a core minimum common data set for use by jurisdictions to meet
respective policy and programme objectives for greenhouse and energy.
On the basis of consultation with industry and feedback from participating jurisdictions,
the JWG found clear support for a nationally consistent approach to streamline
greenhouse and energy reporting, but it also reported considerable differences in
opinion among stakeholders about the preferred options to achieve this.
The EPHC/MCE JWG recommended that the MCE and the EPHC agree that:
1. States, Territories and the Australian Government will work together to develop and
implement ways to:
a. rationalise greenhouse and energy data that is currently or in prospect collected
by companies or business and reported by them to governments and/or
international institutions including through development of a minimum common
data set;
b. report and collect data in the form of a secure online tool mechanism that could
function as a single entry point for greenhouse and energy data reporting by
business to government; and
c. progress this work with a view to having a new streamlined data collection and
reporting system for greenhouse and energy in place by 30 June 2006.
2. States, Territories and the Australian Government will also work together to examine
whether there is a need, among other options, for a new national requirement for
companies and businesses above a certain threshold to report their greenhouse and
energy data to deliver jurisdictions' policy objectives. This work will:
d. include costs and benefits of possible options, thresholds, treatment of company
boundaries, and approaches that could be used to meet public reporting
objectives, while ensuring that commercially sensitive information is
safeguarded, and the compliance burden is minimised; and
e. be developed with a view to incorporating the outcomes from 1 ( a-c) above and
being in place by 30 June 2006.
Two working groups have been established to implement these recommendations:
· A Policy Working Group On Greenhouse and Energy Reporting: `...with relevant
policy, programme and legal expertise representing all jurisdictions...to advise on
the policy issues associated with mandatory reporting and public disclosure and
efforts to streamline data collection and reporting for greenhouse and energy by
business to governments. This group will aim to build on Joint Working Group
findings to further identify and resolve policy issues which remain to be addressed'.
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· A Technical Working Group On Greenhouse and Energy Reporting: `...with
technical expertise and representation from each jurisdiction...to advise on the
development and implementation of ways to streamline data collection and
reporting for greenhouse and energy by business to governments. This group will
aim to build on Joint Working Group findings to reduce the reporting burden for
business and industry through streamlining by further resolving and identifying
commonalities in greenhouse energy and similar data currently collected or likely to
be required in the near future with a view to minimising duplication of reporting
requirements'.
This document
This report was commissioned by the DEH on behalf of the EPHC/MCE Working
Group on Greenhouse and energy Reporting. Its objective is `to analyse and report on
the costs and benefits associated with a national mandatory measure requiring
Australian companies to report greenhouse and energy data, with public disclosure; and
to inform the work of the Policy Working Group on Greenhouse and Energy
Reporting.'
Terms of Reference
The summary of the terms of reference (included in full in Appendix 1) are as follows:
A Cost-Benefit Analysis (CBA) of a new mandatory reporting requirement and
alternatives to mandatory reporting is the central task of this consultancy. The CBA
should outline the costs and benefits of mandatory reporting, including direct and
indirect economic, environmental and social costs and benefits, and an analysis of
distinct alternatives (including the `do nothing' or status quo option) to mandatory
reporting. This assessment should take into account both effectiveness and efficiency.
It is envisaged that the analytical framework underpinning a regulatory impact
statement (RIS) will be used throughout the Policy Working Group's work, and the
CBA will comply with the requirements set out in the Council of Australian
Government's (COAG) Principles and Guidelines for National Standard Setting and
Regulatory Action by Ministerial Councils and Standard-Setting Bodies.
This means the CBA would include the elements outlined below. The focus of the
consultancy services will be on impact analysis.
The assessment of impacts should include:
· Identification of stakeholder groups likely to be significantly affected by the
options. These groups should be broken down into sub-groups, eg specific industry
sectors, where options will have different effects on those sub-groups.
· Assessment of costs and benefits to government, businesses, consumers, and the
community as a whole.
· Effects on competition, eg whether options would raise barriers to market entry, exit
or innovation.
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· Effects on small business. The report should include a sub-section that assesses the
impact of each option on small business compliance costs and paperwork burden.
· Effects on trade, eg whether options would create unnecessary obstacles to
international trade, such as discrimination between domestic and imported products.
Factors that will have a significant impact on the costs and benefits of mandatory
reporting and other alternatives are the:
· threshold for reporting (eg reporting is required where entities consume over a
certain amount of energy or emit a certain amount of greenhouse gas emissions);
· whether reporting must be disaggregated down to facility/site level or aggregated up
to the company level;
· sectors/industries that would be covered by mandatory reporting; and
· a level of public or other disclosure (if any) ensuring that commercially sensitive
information is safeguarded while "community right to know" objectives are met.
The CBA should assess the impact of these factors.
Levels of public disclosure suggested for analysis are:
· maintain the status quo (i.e. no new public disclosure);
· partial public disclosure; and
· full public disclosure (as in the National Pollutant Inventory).
Thresholds suggested for analysis were:
· 500 terajoules of energy, or 125,000 tonnes of carbon dioxide equivalent (t CO2-e)
per annum;
· 100 terajoules of energy, or 25,000 t CO2-e per annum; and
· 4 terajoules of energy, or 1000 t CO2-e per annum.
In the event, two additional thresholds have been analysed as well: 10 kt and 5 kt.
Structure of this Report
The structure of this report roughly follows the structure and order of a Regulation
Impact Statement (RIS), as described in COAG (2004), the key headings from which
are italicised below. However, this paper is not a full RIS, since there is no actual
regulatory proposal to consider, but rather a preliminary regulation impact assessment.
Statement of the problem: why is government action being considered in the
first place? What is the problem being addressed? For example, this should
state the market failure that the proposal seeks to remedy (COAG 2004).
This is covered in Chapter 1 of this document.
Objective: the objective which the regulation is intended to fulfil must be stated
in relation to the problem. The objectives of a regulation are the outcomes,
goals, standards or targets which governments seek to attain to correct the
problem.
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Statement of the proposed regulation and alternatives: this should describe the
proposed regulation and distinct alternatives in sufficient detail to allow
comparative assessment and evaluation in the rest of the RIS.
These are covered in Chapter 2.
Costs and benefits: there should be an outline of the costs and benefits of the
proposal(s) being considered. This should include direct and indirect economic
and social costs and benefits. There should also be analysis of distinct
alternatives (including `do nothing') to the proposed regulation.
The direct monetary costs and benefits are calculated in Chapter 3 and the indirect cost
and benefits are identified in Chapter 1. The overall assessment of costs and benefits is
in Chapter 4. Only the costs to Reporting Entities and Data Requiring Agencies can be
quantified. The costs and benefits of factors such as the extent of public disclosure are
matters of judgement for governments.
Consultation: a RIS must outline who has been or will be consulted, and who
will be affected by the proposed action. On a case by case basis, this may
involve consultation between departments, with interest groups, with other
levels of government and with the community generally.
In preparing this report we have drawn on the reports of consultations undertaken by
others for the Joint Working Group during 2005. We have also held some limited
discussions with representatives of large reporting entities, with the Victorian EPA and
the AGO.
We understand that the material in this report will be used as an input into further
consultations between the PWG and stakeholders.
Review: there should be consideration of how the regulation will be monitored
for amendment or removal. Increasingly, sunset provisions are regarded as an
appropriate way of ensuring regulatory action remains justified in changing
circumstances.
This applies to actual regulatory proposals, so cannot be addressed in the present report.
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2. Objectives and Options
Objectives
General Objectives
The Policy Working Group has identified the following objectives for mandatory
reporting:
1. reduce the overall burden on industry and business in reporting greenhouse gas
emission and energy data;
2. provide appropriate and consistent information on the greenhouse and energy
related performance of companies for:
a. investors and business planners - to improve the flow of market information and
thereby facilitate sound market decisions;
b. the general public - to inform public debate on greenhouse and energy issues;
and
1. ensure that data provided by companies to governments is nationally consistent,
robust and comparable across programmes that may be located in different
jurisdictions to inform government policy making.
The criterion used in this report for testing options against Objective 1 is a monetary
one. The existing arrangements impose a range of quantifiable costs on Reporting
Entities, whether those are privately owned `industry and business' or public agencies,
as many participants are. They also impose costs on the Data Requiring Agencies.
To the extent that a proposal is likely to reduce overall monetary costs to Reporting
Entities, it would satisfy Objective 1. However, the distribution of cost and benefits
between different groups of Reporting Entities and any changes in the pattern of costs to
Data Requiring Agencies also need to be taken into account.
The criteria for assessing proposals against Objective 2 are essentially qualitative and in
large measure subjective. There is no objective measure of the `soundness of market
decisions' with regard to the value which investors attach to the energy use or
greenhouse gas emissions of a company's operations.
Nor is there a measure of the extent to which `public debate on greenhouse and energy
issues' may be inhibited by limitations in the quantity and quality of data publicly
available on the performance of individual companies.
Objective 3 could possibly be met by adopting a completely new common greenhouse
and energy reporting requirement without abandoning or modifying any of the existing
requirements, or designating one of the existing programmes as the data collection point
and ensuring that all Reporting Entities join it, but without withdrawing from other
programmes. This would achieve Objective 3, a `nationally consistent, robust and
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comparable' data collection, and most probably advance Objective 2 as well, but at the
expense of increasing the reporting burden and so failing Objective 1.
A National Greenhouse Energy and Reporting Framework
The purpose of this study is to consider how a national greenhouse and energy reporting
framework could meet, or contribute to meeting, the three Objectives above.
Participation in the framework could be either voluntary or mandatory (ie required by
law) for all Reporting Entities meeting the specified conditions or thresholds, or
voluntary for some subgroups and mandatory for others. If mandatory, the framework
would become a national greenhouse and energy reporting requirement.
The involvement in the framework of Data Requiring Agencies could take different
forms. Some could abandon their separate data requests entirely in favour of data
collected through the national framework, others may participate but still choose (or be
forced by their programme requirements) to seek additional data, while others may not
modify or reduce their data requests at all. Thus the response of Agencies is as
important in assessing overall impacts as the response of Reporting Entities.
Although it is premature to specify the nature of a national greenhouse and energy
reporting framework, it is necessary to make some assumptions in order to assess the
likely responses of interested parties, since those responses will have a bearing on total
costs and benefits.
For example, the criteria or thresholds for an Entity's participation in the framework
could be based on the characteristics of individual sites, or on the aggregation of energy
use or emissions across all sites, irrespective of which State or Territory they are in.
However, one factor affecting the likelihood that State Agencies would voluntarily
remove or reduce their separate data requirements is the availability of site-level data
for their jurisdictions. This does not necessarily mean that the participation threshold
must be site-based (some alternative calculation options are discussed in Chapter 3), but
that participant data should be collected, stored and accessible down to the site level.
This report deals only with the reporting of historical greenhouse and energy data. Even
if all jurisdictions and Agencies agree (or are obliged) to accept data reported via the
national framework as definitive, some may still require additional reports from those
entities participating in (or caught by) their separate programmes, eg:
· Submissions of plans for increasing energy efficiency and/or reducing emissions.
Such submissions are voluntary for participants in the GHC+, and mandatory under
the Commonwealth EEOA legislation (when passed), the Water and Energy Savings
Amendments to the NSW Energy Administration Act and Victoria's SEPP/AQM.
Indeed, many entities may still be required to prepare energy efficiency plans for
both Commonwealth and State agencies.
· Submission of estimates of energy and greenhouse savings actually achieved by
projects implemented under each of the above programmes.
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· Data on production of goods or services, to enable the tracking of `greenhouse
intensities'.
· Additional `Scope 3' greenhouse data for some programmes, eg fugitive emissions
from the mining of coal used by generators reporting to IPART under the NSW
Greenhouse Gas Abatement Scheme. Scope 3 reporting is also generally required
for GHC+ `Leaders'.
· Data unrelated to the energy use or greenhouse gas emissions of the reporting entity
itself, eg electricity sales to others are to be reported to IPART by parties with
liability under the NSW Greenhouse Gas Abatement Scheme in fact many of these
parties may not otherwise be involved in a national greenhouse and energy reporting
framework at all, since their actual energy use and emissions would be below the
threshold.
· Projections of energy use (eg for FES).
The present study focuses on the reporting of historical energy use and greenhouse gas
emissions, and not on the above factors. However, if a consistent national framework
for greenhouse and energy data reporting were established, it would most likely
facilitate the harmonisation of reporting of progress on energy efficiency and
greenhouse reduction programmes, and possibly, the harmonisation of the programmes
themselves in due course.
Although it is not listed as an objective, a key benefit of a national greenhouse and
energy reporting framework is the capability of supporting new programme initiatives
and approaches, should these be introduced at some stage.
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Proposed Regulation and Alternatives
Alternative Approaches
The range of options default to four main alternatives, summarised in Table 13.
The first option is the status quo, which means accepting the continuation of the present
range of reporting requirements and the possibility that more will be added, while
endeavouring to streamline and harmonise them to the extent possible.
The second option is the establishment of a consistent national greenhouse and energy
reporting framework, but without regulation. This would require agreement between
Data Requesting Agencies to harmonise their existing data requirements and to forego
the future imposition of new requirements. The incentive for them to agree to this
would presumably be access to better data than they get now, or lower-cost ways to
obtain data. Alternatively, governments could direct their Agencies to participate.
The third option is a mandatory requirement that obliges Reporting Entities to
participate, but does not force Agencies and jurisdictions to abandon their current or
future data demands. It would however create a strong incentive for them to do so, if
that were a condition of access to what would become be the most comprehensive
greenhouse and energy data set available.
The fourth option is a mandatory requirement which obliges both Reporting Entities and
Data Requesting Agencies to participate.
The extension of the NPI or a new National Environment Protection Measure (NEPM)
could all be the means of implementing Option 3, albeit with differences in detail and
timing that could affect costs and benefits to some extent. The distinctive aspect of
Option 4 is that it would prevent Agencies from requesting greenhouse and energy data
outside the national reporting framework. It is doubtful that this can be achieved within
the structure of the NPI or a NEPM, so Option 4 is likely to require new specific
legislation.
Table 13 Summary of Options
Option Reporting Entities Data Requiring Corresponding option
Agencies in TOR
1. BAU As at present Each free to set own a. Status Quo
rules
2. Establish NGERR, Voluntary participation Some incentive to b. Harmonisation
without new accept NGERR reports without additional
regulation legislation
3. Establish NGERR, Mandatory participation Strong incentive to c. extend NPI
with new regulation accept NGERR reports d. new NEPM
4. Establish NGERR, Mandatory participation Obligation to accept e. New specific
with new regulation NGERR reports legislation
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The technical mode of reporting is a secondary consideration. In theory, the
development of a convenient mode of reporting such as a web-based reporting tool
could help to play a part in Option 2, especially if the establishment and operating costs
were borne by a `sponsoring Agency' such as the Commonwealth. It would reduce
costs for those Data Requesting Agencies prepared to abandon or modify their current
or future data demands (otherwise they would not depart from the status quo) but would
only reduce cost for reporting entities if enough Agencies were persuaded to participate.
Alternatively, a web-based reporting tool or any other alternative - could simply be
the mechanism for administratively implementing Option 2, 3 or 4.
Non-Regulatory Options
1. BAU
The `Business as Usual' option would achieve little progress towards the Objectives.
The number of reporting requirements are not likely to fall, and may well continue to
increase, as evidenced by the WA government's announced intention to introduce
mandatory reporting for a WA Greenhouse Gas Inventory. The reporting burden on
business will probably continue to increase.
There may be some further rationalisation of the technical aspects of reporting
requirements, although the opportunities for further rationalisation seem to be limited -
most programmes already refer to the AGO Factors and Methods Workbook, and
harmonisation of requirements within the same agencies appears to have proceeded as
far as possible.
2. Establish a National Framework Without Regulations
It is open to the Commonwealth, State and Territory governments to establish a national
greenhouse and energy reporting framework through agreement and negotiation.
Environment and Energy Ministers could direct the Data Requesting Agencies within
their jurisdictions to work together to agree on a reporting format and reporting
framework that would satisfy their requirements. There have been some tentative
efforts along these lines in the past, but success has been limited, even within the same
jurisdictions.
Alternatively, one `sponsoring jurisdiction' (probably the Commonwealth) could create
the conditions favourable for development of a national reporting framework by:
· Altering its reporting requirements to ensure that the data collected potentially
covers the needs of all other Data Requesting Agencies; this would probably require
a `highest common denominator' approach, to capture the widest scope of data;
· Securing the agreement of Agencies to accept data from the national reporting
framework in lieu of making separate data requests; this would probably require the
`sponsoring agency' to enter legal agreements with both Data Requesting Agencies
(to satisfy them regarding their access to data) and with recruited Reporting Entities
(advising them that the reported data will be passed on); and
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· Once the above agreements are in place, recruit Reporting Entities by offering
assurances that a single report would be made available to, and accepted by, other
participating Agencies. Other incentives, such as public recognition or free
technical assistance could also be offered.
This process carries risks to all parties, and may not succeed until a `critical mass' of
both Agencies and Reporting Entities is achieved. Considerable time and effort could
be expended without outcome, so the probability that any Agency would agree to
sponsor the process, and see it to completion, may be low.
Some Agencies may need to seek changes in their own regulations, which oblige them
to obtain certain data as part of administering mandatory programmes, before being able
to forego direct data and receive data reports from another Agency other parties. Some
Agencies may also wish to retain the right to independently verify or audit data
collected by the `sponsoring Agency', especially if they need to use the data to
determine an Entity's compliance with mandatory greenhouse reduction requirements.
It is understood that the PWG will commission a study of these legal issues.
There is also a risk that partial implementation could increase the reporting burden and
cost to both Reporting Entities and Agencies, by adding a further reporting layer
without removing enough of the existing ones to compensate.
Nevertheless, Agencies could continue to explore the possibility of harmonisation of
reporting requirements by agreement, within the framework of the EPHC/MCE
Working Group on Greenhouse and Energy Reporting while also considering the
advantages and disadvantages of regulatory approaches.
Regulatory Options
A regulatory approach would oblige those reporting entities meeting the criteria in the
regulations to submit greenhouse and energy reports in specified formats to a designated
agency or agencies either existing or set up for the purpose. A regulatory approach
may have a greater chance of success in implementing a national reporting framework,
since it would remove many of the risks facing any single agency, and avoid the delays
and uncertainties of agencies negotiating an agreed framework.
Regulations which define and possibly restrict the information seeking powers of Data
Requesting Agencies, as well as define the obligations of reporting entities, reduce risks
to a greater degree than regulations which place obligations on Reporting Entities only.
Some of the existing reporting programmes listed in Table 2 are supported by
regulations which empower the relevant Data Requesting Agencies to require entities to
report, but these are all based on different State legislation or on special Commonwealth
legislation, and the relevant powers are limited to the programmes in question.
Elements Required in the Regulation
The following elements would be required in the regulation which supports a mandatory
greenhouse and energy reporting requirement, whichever form the regulation may take:
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· The designation of a department or agency (existing or new) to administer the
regulation, and its structure and funding arrangements.
· Powers for the agency to make agreements with, and delegate functions to, other
agencies (ie the existing Data Requesting Agencies).
· Powers for the agency to require entities meeting certain criteria to supply
information.
· Powers to set the criteria (trigger thresholds and other conditions).
· Powers to specify the scope, form, mode and frequency of reporting.
· Powers to monitor and enforce compliance, including the power to request data
from third parties (eg energy suppliers), and fines for non-compliance.
· Rules for dealing with data confidentiality and disclosure.
· Disputes resolution procedures.
Extension of National Pollutant Inventory
The NPI, established in 1998, was the first NEPM created by the National Environment
Protection Council (NEPC), now the executive arm of the Environment Protection and
Heritage Council (EPHC).
The proposal to include reporting of greenhouse gas emissions in the NPI was one of
the recommendations of a 2001 review of the NPI. In 2004 the Victorian Government
commissioned a consultancy to explore the options in more detail (Rae 2004). After
consideration of this report, EPHC requested a further review of the NPI programme,
which was completed in April 2005 (Environment Link 2005). In July 2005 EPHC
decided to begin a variation process of the NPI NEPM which will consider, among
other recommendations, the addition of greenhouse gas emission reporting.
EPA Victoria is currently investigating the matter further, and conducting a pilot study
of the practicalities of adding greenhouse reporting to the requirements on NPI
respondents (EPA 2005). That investigation is running in parallel with the present
study. The two approaches are different in that the EPA investigation is not required to
address the issue of whether the NPI would be the only, the most effective or the most
cost-effective way to integrate all greenhouse and energy reporting requirements on
business, but is limited to determining whether the NPI could accommodate the addition
of greenhouse and energy reporting elements.
The great advantage of using the NPI as the regulatory basis for a national greenhouse
and energy reporting framework is that it already exists, at the Commonwealth, State
and Territory levels.
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There are also major issues to be addressed, eg:
· The fact that the major greenhouse gases are not pollutants in the same sense as the
substances presently scheduled.
· The imperfect coverage of industry sectors the NPI only applies to activities for
which emission estimation techniques have been published.
· The task of integrating greenhouse reporting rules with the already complex content
of the emission estimation technique manuals.
· The task of including off-site (Scope 2 and 3) emissions, particularly for electricity
use.
· The presupposition of public disclosure, which may not be appropriate or necessary
for greenhouse and energy data.
· The NPI does not necessarily restrict the ability of Data Requesting Agencies to
continue to seek additional greenhouse and energy data, so including greenhouse
and energy reporting elements without reducing them elsewhere could actually add
to the reporting burden.
· The apparent conflicts between the emissions corresponding to the current energy
use triggers in the NPI (Table 3) and the optimum thresholds identified in Chapter 3
(ie a very low fuel use trigger and a very high electricity use trigger).
If a separate new regulatory vehicle is selected as the basis for a national greenhouse
and energy reporting framework, it would be necessary to modify the NPI to avoid
multiple reporting. For example, all fuel combustion-related emissions could be
reported under the new national framework, and the data on the pollutant emissions (but
not necessarily on the CO2, CH4 and N2O emissions) transferred to the NPI for
publication on its public database.
Alternatively, the NPI could become the main portal for all pollutant, greenhouse and
energy reporting, and Reporting Entities could be directed via screening questions to fill
in a NPI report only, a Greenhouse and Energy Report only, or both reports, using
common fuel and electricity data.
Given the high level of Reporting Entity and Agency investment in the NPI, it is
possible that there could be resistance to modifying it, so there is some risk that the NPI
could continue as the last DRA outside a mandated greenhouse and energy reporting
framework based on other legislation.
New Legislation
Any new legislation for greenhouse and energy reporting would presumably be
designed to avoid the apparent limitations of using the NPI for this purpose. Whether it
can be achieved within the NEPM or outside it is a matter for legal experts, but is not
likely to have a major bearing on the achievement of the objectives of a national
reporting framework.
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An advantage of using the NEPM framework is that it provides a pre-existing matrix for
the involvement and agreement of all jurisdictions. At the same time, a national
greenhouse and energy reporting framework implemented under NEPM may not
become fully operational, or achieve its full potential, until all jurisdictions enact the
necessary legislation, and the stability of the framework could be subject to disruption
by differences in jurisdictional interpretations, compliance effort and effectiveness, or in
the `sunset' periods for regulations. Problems of this type occur in the national energy
labelling programme from time to time.
A Commonwealth measure would have some advantages in ensuring uniformity, but
jurisdictions would not accede to such a regime without very strong assurances about
access to data and a continuing role in managing the framework.
Conclusions
There is no existing regulation capable of supporting a national greenhouse and energy
reporting framework without extensive modification. The only possibility so far
identified the NPI would need extensive modification, or new legislation would be
required either within the NEPM framework or outside it.
All three of these options would take some time. Further investigation by legal experts
would be required to establish which option could be implemented most rapidly and
could best meet the technical requirements of the framework once those are defined.
In any case, the form of regulation eventually selected is not likely to have a significant
impact on the cost of the framework. Chapter 3 demonstrates that the `adjustment'
costs of changing to a new framework are small in relation to the on-going costs, and
the adjustment costs to government including the costs of developing legislation are
small in comparison with those incurred by Reporting Entities.
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3. Costs, Benefits and Other Impacts
Factors Affecting Cost-Benefit Analysis
Number of Business Entities Potentially Affected
Number of Business Entities in Australia
The ABS publishes a count of the number of businesses in Australia, broken down by
State and by industry sector, and distinguishing `employing' from `non-employing'
businesses (ie those which are solely legal entities). `Employing businesses' are further
disaggregated by number of employees. It is assumed that each `employing business'
represents at least one site, however small, at which some business-related energy use
takes place and/or greenhouse gas emissions may be produced, or (in the case of
businesses dominated by mobile energy use), there is point of contact to which a request
for information could be sent.
In June 2004 there were 837,078 employing businesses in Australia (Table 14), 821,102
operating in one state or territory only, and 15,976 with operations in more than one (an
average of 3.1 operating jurisdictions for this group, or 1.08 for all employing
businesses). While this number of businesses may appear high, it is reasonably
consistent with the number of business customers reported by the Electricity Supply
Association of Australia: 1.1 million at 30 June 2004 (Electricity in Australia).15
About a quarter of all employing businesses were in the Agriculture, Forestry and
Fishing, Construction, and Transport and Storage sectors, which are dominated by
petroleum fuels and mobile sources. The remainder of this analysis does not address
these in detail, but focuses on businesses in the Mining, Manufacturing, Energy and
Water Supply and Commercial & Services sectors, because:
· businesses in the Agriculture, Construction and Transport sectors are very poorly
represented in existing greenhouse and energy reporting programmes, so little is
known about the reporting characteristics of these businesses;
· for the transport sector, it is very difficult to separate the fuel consumption, and
hence the emissions, of business transport users from private vehicle fuel
consumption; and
· the sectors covered in detail account for the great majority of business emissions
(Figure 2; note that electricity generation emissions are not additive, since they are
also counted in the electricity use of business sites within each sector).
15
Recognising that electricity retailers generally count each billing account as a separate customer, and
many business premises have more than one meter with its own account.
Page 120
Table 14 Employing businesses in Australia and estimated number of sites
ANZSIC Total Adjusted for Estimated
employing multi-state number of
businesses ops (a) sites (b)
DIV A Agriculture, forestry & fishing 74,111 NA NA
DIV B Mining 2,731 3,181 3,181
21 Food, beverages, tobacco 4,543 4,885 5,374
22 Textile, clothing, footwear and leather 5,881 6,324 6,957
23-24 Wood, paper and printing 12,067 12,976 14,274
25 Petroleum, coal and chemical 4,085 4,393 4,832
26 Non-metallic mineral products 2,502 2,691 2,960
27 Metal products 11,065 11,899 13,089
28 Machinery and equipment 13,003 13,983 15,381
29 Other manufacturing 8,742 9,401 10,341
Div C Manufacturing 61,888 66,551 73,206
Electricity & Gas Supply 304 327 654
Water Supply & Drainage 295 317 634
Construction 113426 NA NA
Transport & Storage 37,374 NA NA
Commercial & Services 546,949 569,442 626,387
Total Employing Businesses 837,078 870,833 NA
Covered in this analysis 611,658 639,819 704,062
Source: Derived by authors from ABS 8161055001, June 2004 (a) Assuming all sectors have the same
proportion of entities operating in more than one jurisdiction. (b) Assuming 1.0 sites per jurisdiction of
operation for Mining, 2.0 for Electricity, Gas, Water Supply & Drainage and 1.1 for Manufacturing and
Services
Figure 2 Estimated emissions from each sector
200
180
160
140
Industrial process
120 Fugitive
Mt CO2-e
Natural Gas
100
Petroleum
80 Coal
Electricity
60
40
20
0
Agriculture,
Transport (mainly
Commercial &
Other
Mining
Manufacturing
generation
Electricity
Forestry &
Fishing
Services
private)
Business Entities by Emission Levels
Page 121
A critical factor determining the reporting burden on business is the number of sites and
businesses at each emissions threshold. We have estimated this by the following
method:
1. Establish the total electricity, coal, petroleum and natural gas consumption in 2003-
04 for each of the sectors listed in Table 14 (published on the ABARE website).
2. Estimate fugitive emissions in the Mining sector and industrial process emissions in
each Manufacturing sub-sector (from the 2003 NGGI).
3. Estimate the number of sites falling into each of the emissions categories and the
average annual electricity, coal, petroleum and natural gas consumption at each site.
4. Apply the Scope 2 emission factor for electricity (250 kt CO2-e/PJ) and Scope 1
emissions factors for coal, petroleum products and natural gas (90, 75 and 52 kt
CO2-e respectively) to calculate the average energy-related emissions per site).
5. Estimate the average fugitive emissions per site (in Mining) and average industrial
process emissions per site (in Manufacturing).
6. Ensure that average emissions per site remain within the constraints for that
category (eg the sum of average electricity, fuel and other emissions for sites in the
25-125 kt category obviously cannot exceed 125 kt, and should preferably be near
the midpoint of the category, which in this case is about 75 kt).
The process is reiterated until the emissions from all sites add to the known total for that
subsector. There is obviously a measure of subjectivity in this method of distribution,
but it is internally consistent, in that it must remain within the constraints of total energy
use, emissions and sites and the emissions boundaries of each category. A valuable
source of external verification is the reported number of sites meeting each electricity
consumption threshold, published by the ESAA (Figure 3). For Electricity Generation,
41 sites where emissions exceed 125 kt CO2-e per year were identified from the
(unpublished) data collected for the NGGI. The distribution of the other sites is the
authors' estimate. The results are summarised in Table 15 and detailed in Appendix 2.
Table 15 Estimated number of business sites in each emissions category, Australia
Category Mining Manufacturing Commercial Generation All Cumulative
kt CO2-e/yr Number
>125 80 65 0 41 186 186
25-125 150 138 50 52 390 576
10-25 300 435 400 39 1174 1,750
5-10 400 670 900 55 2025 3,775
1-5 500 1840 6,000 40 8380 12,155
<1 1,751 70,064 619,037 0 690852
Total 3,181 73,206 626,387 227 703,007 703,007(a)
Source: Author estimates; includes Scope 2 emissions for supplied electricity, Scope 1 for other fossil
fuels, plus fugitive and industrial process emissions. (a) Difference from the 704,062 sites estimated in
Table 15 made up by Water Supply and Drainage and Gas Supply sites.
Figure 3 Number of sites exceeding electricity use thresholds
Page 122
25000
20000
Number of sites exceeding threshold
15000
10000
5000
0
40000 MWh (36 kt) 4000 MWh (3.6 kt) 750 MWh (0.7 kt) 160 MWh (0.14 kt)
Threshold and corresponding emissions
Source: Electricity Australia 2004
The number of sites increases rapidly as the emission threshold falls. For the three
thresholds proposed in the terms of reference of this study, it is estimated that about 186
sites exceed 125 kt CO2-e/yr, 576 exceed 25 kt and 12,155 exceed 1 kt. Below 25 kt the
number of sites covered is very sensitive to the choices of threshold in general,
halving the threshold approximately doubles the number of sites.
Over two thirds of the sites in the smallest category are in the Commercial and Services
sector, but none in the largest (Table 15, Figure 4). The smaller the emissions, the
greater the proportion be made up by electricity. Figure 5 shows that about 16% of sites
passing 125 kt would do so on electricity use alone (mainly aluminium and other metal
smelters), but about two thirds of sites in the 1-5 kt category would pass on electricity
use alone for the other third, natural gas use gets them over the 1 kt threshold.
The makeup of average site emissions is illustrated in Figure 6 and Figure 7. Electricity
accounts for about 30% of average emissions for sites above 25 kt, but over 80% for
sites less than 10 kt. Collecting data on just two energy forms electricity and natural
gas would account for over 90% of average emissions for sites below 10 kt. For sites
above 25 kt, however it is necessary to collect data on the full range of emissions,
including non-energy emissions.
The share of each sector's emissions covered by each category is shown in Figure 8.
Sites above 125 kt account for over 97% of Electricity Generation emissions, 52% for
Mining and 82% for Manufacturing (note that electricity generation emissions are
double counted in the Scope 2 emissions at electricity-using sites). However, even the
inclusion of sites down to 1 kt only accounts for 47% of emissions in the Commercial
and Service sector.
Figure 4 Estimated number of sites exceeding emissions thresholds
Page 123
14000
12000
Number of sites exceeding threshold
10000
8000 Commercial
Manufacturing
Mining
6000 Generation
4000
2000
0
>125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Source: Table 15 Percentage of sector emissions covered at each threshold is shown in Figure 8
Figure 5 Estimated number of sites exceeding emissions thresholds on all
emissions and on electricity use alone
14000
12000
Number of sites exceeding threshold
10000
8000 All emissions
6000
Electricity alone
4000
2000
0
>125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Figure 6 Composition of emissions by energy type and other (Mt)
Page 124
180
160
140
120
Industrial process
Fugitive
Mt CO2-e
100
Natural Gas
Petroleum
80
Coal
Electricity
60
40
20
0
>125 kt 25-125 kt 10-25 kt 5-10 kt 1-5 kt <1 kt
Emissions Category
Excludes electricity generation
Figure 7 Composition of emissions by energy type and other (%)
100%
90%
80%
70%
Industrial process
60%
Fugitive
Natural Gas
50%
Petroleum
Coal
40%
Electricity
30%
20%
10%
0%
>125 kt 25-125 kt 10-25 kt 5-10 kt 1-5 kt <1 kt
Emissions Category
Excludes electricity generation
Figure 8 Percentage of sectoral emissions covered
Page 125
100%
90%
Generation
80%
cumulative % of sectoral emissions
70% Manufacturing
60%
Mining
50%
40% 3 sectors combined (sub-
threshold voluntary
reporting continues)
30%
3 sectors combined
20% (mandatory reporting
only)
10%
Commercial
0%
>125 >25 >10 >5 >1 All
Site emissions thresholds (kt CO2-e)
Entities and Sites in Existing Reporting Programmes
The greenhouse and energy reporting programmes listed in Table 2 cover only a
fraction of the business sites in Australia. The authors have attempted to estimate the
number of business entities and sites actually covered by the main programmes. This is
obviously fewer than 7,788, the simple sum of `participants' in all programmes, because
many entities participate in more than one, and some of the entities listed in Table 2 are
multi-site corporations while others are individual sites.
Assessing the overlap in participation, and hence the number of reporting obligations
per participant, is an important factor in determining the extent to which a national
reporting framework would reduce reporting costs. The authors have attempted this,
with the assistance of the Victorian EPA.16 The number of corporations participating
uniquely in each programme, in any two programmes or in any three programmes are
can be illustrated by a set diagram (Figure 9); it is not possible to plot the 21
corporations participating in both the NSW and the SEPP/AQM programmes, nor the
subset of this number participating in all four programmes.
The analysis should be taken with some reservations, because the potential pool of
participants in each programme is quite different. For example, the participants in the
NSW programme are (in theory) all corporations operating a site in NSW with an
electricity consumption greater than 10 GWh per year (plus 46 named local government
authorities). The potential pool for SEPP/AQM is a subset of corporations operating
any site within Victoria that is subject to EPA licensing. The NPI participation pool is
national, and the criteria are regulated. The GHC+ pool is national and voluntary, and
16
The EPA kindly provided a list of the `corporate' entities in the NPI (fewer than the number of sites),
compared it with the public list of Greenhouse Challenge Plus participants, and developed a list of
corporations common to both. The EPA also provide a list of Category A, B and C sites covered by the
SEPP/AQM measures. Form this the authors developed a list of corporations, and detetmined whether
the same corporations were also members of GHC+ and covered by the NPI.
Page 126
highly variable in scale of emissions, although it has very high coverage of sites in the
electricity generation, oil and gas extraction, aluminium, and cement sectors.17 Most of
the corporations included in Figure 9 are private sector businesses, but a significant
number are publicly owned utilities, Commonwealth and State government departments
and local government authorities.
The overlaps with the other large programmes in Table 2 could not be analysed because
the ABARE FES respondent list is confidential, and the list of participants meeting the
EEOA threshold has yet to be determined.
Figure 9 Overlap of corporate participation in four main reporting programmes
780
GHC+
96 212 NSW
12
615 18
86
87
10 38
1101
347 247
1577
NPI
642
SEPP/AQM
About 81% of the 2657 entities represented in Figure 9 participate in only one of the
four programmes shown. The other 19% account for all of the overlaps. The
programme with the highest ratio of `unique' members is the GHC+, and the one with
the lowest is the NSW programme, which is also the most recent to be implemented.
About 55% of the entities required to participate in the NSW programme already
reported energy and/or greenhouse emissions under other programmes (70%, if local
government authorities are excluded; of course, the sites covered may well be
different).18 The average number of programmes in which each entity participates is
1.21 (3211 participations/2657 entities).
17
The GHC+ members that are industry and professional associations have been excluded from the
analysis, although some of these may have agreements which cover the energy use of their own premises,
as well as the operations or professional activities of their members.
18
Many local government authorities, particularly the larger ones included in the NSW programme, are
also within the Cities for Climate Protection programme, which is yet another reporting channel with
some overlap in reporting requirements.
Page 127
From the 1 July 2006, changes to the Fuel Tax Act will require businesses wanting to
receive fuel tax credits of more than $3m per year to become members of the GHC+
Programme. Participant numbers are expected to increase by approximately 150
businesses as a result of these changes. In addition, the overlap between GHC+ and NPI
reporters should increase by the same figure as those eligible for the Fuel Tax Credits
would be large users of fuel and the NPI captures facilities that burn more than 400
tonnes of fuel per annum.
Table 16 Analysis of overlap between four main reporting programmes
Programme Entity Only in this In other Sites Sites/entity
participations programme(a) programmes covered (f)
also
NSW 212 45% 55% 271(b) 1.28
NPI 1,577 70% 30% 3,600 (c) 2.28
GHC+ 780 79% 21% 1,000(d) 1.28
SEPP/AQM 642 54% 46% 959(e) 1.49
Total 3,211 67% 33% 5,830 1.82
(a) % of entities not members of other 3 programmes (b) Author analysis accounts for multiple
corporation sites, assumes single site per local government participant. (c) Table 2 (d) Reported in The
Challenge, May 2005. (e) Author analysis. (f) Before allowing for overlap.
Most entities have more than one site; the average for the programmes analysed is 1.82
(Table 16). It has not been possible to differentiate the averages for multi- and single-
programme participants, so it is assumed hat the same average holds for all. On this
basis, the number of unique sites covered by the 4 programmes is 4,824 (Table 17).
This does not take into account the sites covered by the FES (or the EEOA, which is
likely to be contained entirely within the FES group). Assuming that a third of the sites
covered by the FES are owned by corporations which do not participate in any of the
programmes in Figure 9, this would add about another 800 sites.
Page 128
Table 17 Estimate of sites covered by four main reporting programmes
Programmes Entities Entity Sites/entity Unique sites
joined participations covered
1 only 2,159 2,159 1.82 3,920
2 only 442 884 1.82 803
3 only 56 168 1.82 102
1.21 average 2,657 3,211 1.82 4,824
Therefore the total number of sites presently contributing greenhouse and energy data to
one or more reporting programme is estimated at about 5,600. The great majority of
these would be in the Manufacturing, Mining and Electricity, Gas and Water sectors,
which account for about 77,000 of the more than 700,000 business sites in Australia.
While the number of sites currently covered by greenhouse and energy reporting
programmes may represent only 6 to 7% of mining, manufacturing and utilities sites,
and only a fraction of a percent of commercial and services sites, the proportion of
emissions covered is of course much higher, since most programmes try to include the
largest sites.
Page 129
Business Reporting Costs
Existing Participants
The annual costs to business are assumed to be made up of the following elements (the
estimated values for which are summarised in Table 18).
· An annual fixed administrative cost to the Reporting Entity of participating in
greenhouse and energy reporting programmes this is assumed to be constant
irrespective of the number of programmes or the number of sites involved, once
staff resources are assigned to this area;
· An annual fixed cost per site this is the cost of collecting the data for that site,
without formatting it for reports; and
· Annual variable cost per site this is the cost of preparing different reports from the
same base data, and so is sensitive to the number of different reports required.
Table 19 summarises the existing costs in each category, based on the estimated number
of Reporting Entities (about 3,100) and sites (5,600) currently participating. Because of
reporting to multiple programmes for the larger emitting sites, it is estimated that about
7,500 site reports are produced each year, averaging 1.33 for all sites. The costs to
business total $13.0 m. About $9.55 m (73% of the total) is fixed, and $3.45 m (27%) is
variable.
Table 18 Estimated Entity reporting costs
Emissions category Fixed costs Fixed sites cost Variable cost
kt CO2-e/yr $/Entity $/site $/site report
>125 10,000 1200 900
25-125 10,000 1200 900
10-25 5,000 800 600
5-10 2,000 600 400
1-5 500 500 300
<1 0 500 200
Source: Author estimates
New Participants
Mandating the participation of entities would change the number of participants, sites
and annual costs as indicated in Table 20. It is assumed that the average number of sites
per new entity is lower than the present average, since the highest emitting firms are
already likely to be participants. Each new participant is faced with the same fixed and
variable costs as in Table 19, but only one report is required per site.
Adjustment and Compliance Costs
It is assumed that all new participants in the programme incur an additional adjustment
cost in the first year, equivalent to the entity's annual fixed administrative costs (ie
these are doubled in the first year). This assumption is consistent with the declining
trend in annual reporting costs indicated by participants in the NPI (Figure 1).
Page 130
For existing participants, there may some adjustment cost if the mode of reporting for
the new national framework requires additional or different internal procedures from the
ones previously used. The total adjustment burden would be minimised by adopting the
most prevalent form of reporting (possibly the FES, NPI or OSCAR), provided it meets
the needs of all Data Requiring Agencies. In any case, adjustment costs are assumed to
be lower than for new participants because the entity would already have some
familiarity and expertise in greenhouse and energy reporting. Therefore it is assumed
that the adjustment cost per entity already participating is one third as great as for new
participants (ie one third the annual fixed administrative cost).
There would also be a one-time cost to those non-participants who took steps to
determine whether their energy and/or other emissions met the threshold, and
ascertained that it did not. This cost could be imposed on hundreds or even thousands
of entities if a low threshold (1 kt) is adopted. Conversely there is likely to be a degree
of non-compliance by entities unaware of the mandatory requirement, or aware but
choosing to ignore it. These entities avoid all compliance costs (unless detected and
fined, if there is such a regulatory provision).
A recent review of the NPI suggests surprisingly high non-compliance rates, with
between 55% and 75% of companies that should be reporting not doing so
(Environment Link 2005, 35). It is likely that non-compliance rates will be
significantly lower for greenhouse and energy reporting, since the identities and details
of a large number of Reporting Entities, including the largest emitters, are already
known to Data Requesting Agencies. However, given the uncertainty about the extent
of both over-compliance and non-compliance, it is assumed that the two cancel out, and
have no bearing on the cost-benefit analysis.
Government Costs
The current costs to government of operating greenhouse and energy reporting
programmes comprise initial and annual fixed costs, which are independent of the
number of reports received and processed, and variable costs related to the number of
reports; these are estimated at about $300 per report (Table 12).
The recurrent fixed costs of running the national greenhouse and reporting framework
database are estimated at $1 m per year. It is assumed that reducing the number of
reports without reducing the number of distinct programmes will reduce the variable
data costs to other Agencies, but not their fixed costs. It is also estimated Agencies
would face a total of $1 m in one-time adjustment costs to change IT systems to be
compatible with the reports conforming to the national framework, irrespective of
whether the framework is optional or mandatory. For mandatory options, it is assumed
that $0.5 m is spent on developing and implementing the legislation (or on amending
existing NPI legislation if that were to be the option) and a further $0.5 m on
publicising the requirement and on contacting potential participants.
These estimates are approximate only, but as these cost elements are small in
comparison with business costs, varying them will have only a minor effect on the cost-
benefit analysis.
Page 131
Table 19 Estimated Annual Costs to Business of current Greenhouse and Energy Reporting Arrangements
Emissio Number Number Sites/ Particip- % of Fixed Total Fixed Total Variable Reports/ Total Variable Total Total Total Reduce Total Variabl
n of Sites of entity ating sites cost/ fixed costs/ fixed cost/ site Site site cost $/ $/site d Site e
Categor Entities Sites particip- entity costs site site report Reports costs $M entity reports Report site
y ating $/yr $M $ costs $ $M per site s costs
$M $M
>125 186 75 2.0 150 81% 10000 0.75 1200 0.18 900 3.0 450 0.41 1.34 17800 8900 1.0 150 0.14
25-125 390 125 2.0 250 64% 10000 1.25 1200 0.30 900 2.5 625 0.56 2.11 16900 8450 1.0 250 0.23
10-25 1174 409 2.2 900 77% 5000 2.05 800 0.72 600 1.8 1620 0.97 3.74 9136 4153 1.0 900 0.54
5-10 2025 750 2.0 1500 74% 2000 1.50 600 0.90 400 1.2 1800 0.72 3.12 4160 2080 1.0 1500 0.60
1-5 8380 1003 1.8 1800 21% 500 0.50 500 0.90 300 1.1 1980 0.59 2.00 1989 1109 1.0 1800 0.54
<1 690852 714 1.4 1000 0.1% 0 0.00 500 0.50 200 1.0 1000 0.20 0.70 980 700 1.0 1000 0.20
All 703007 3077 1.82 5600 0.8% 6.05 3.50 1.33 7475 3.45 13.00 4225 2322 1.0 5600 2.24
All >1 12155 2362 4600 37.8% 6.05 3.00 6475 3.25 12.30 2674 4600
Note excludes first year adjustment costs
Table 20 Estimated Annual Costs to Business of Mandatory Greenhouse and Energy Reporting Arrangements
Emissio Number Number Sites/ Particip- % of Fixed Total Fixed Total Variable Reports/ Total Variable Total Change Total $/ Change Total Change
n of Sites of entity ating sites cost/ fixed costs/ fixed cost/ site Site site cost from entity from $/site from
Categor Entities Sites particip- entity costs site site report Reports costs $ M present present present
y ating $/yr $M $ costs $ $M $M $ $
$M
>125 186 93 2.0 186 100% 10000 0.93 1200 0.22 900 1.0 186 0.22 1.38 0.04 14800 -3000 7400 -1500
25-125 390 260 1.5 390 100% 10000 2.60 1200 0.47 900 1.0 390 0.47 3.54 1.42 13600 -3300 9067 617
10-25 1174 839 1.4 1174 100% 5000 4.19 800 0.94 600 1.0 1174 0.94 6.07 2.33 7240 -1896 5171 1019
5-10 2025 1558 1.3 2025 100% 2000 3.12 600 1.22 400 1.0 2025 1.22 5.55 2.43 3560 -600 2738 658
1-5 8380 7618 1.1 8380 100% 500 3.81 500 4.19 300 1.0 8380 4.19 12.19 10.19 1600 -389 1455 346
All >1 12155 10367 1.17 12155 100.0% 14.65 7.04 1.0 12155 7.04 28.72 16.42 2770 -1455 2363 -311
Note excludes first year adjustment costs
Page 132
Table 21 Summary of Estimated costs and Benefits of Options, Base Scenario
Reporting Entity (RE) Costs $M/yr Govt Total Yr 1 adjustment costs $M NPV of 12-yr total costs $M
costs annual
costs
$M $M
Entities Sites Reports Fixed Fixed Variable Total RE Exg RE New RE Govt Total RE Govt Total Change
costs/ costs/site costs/site costs $M $M $M $M $M $M $M cf BAU
entity
BAU 3077 5600 7475 6.0 3.5 3.5 13.0 3.2 16.2 0.0 0.0 0.0 0.0 88.6 22.1 110.7
Adjust voluntarily 3077 5600 5600 6.0 3.5 2.2 11.8 2.7 14.5 2.0 0.0 1.0 3.0 82.3 19.3 101.6
cf BAU 0 0 -1875 -1.2 -0.6 -1.8 2.0 0.0 1.0 3.0 -6.3 -2.8 -9.1 -8%
>125 Mandatory 93 186 186 0.9 0.2 0.2 1.4 1.1 2.4
Other 3002 5450 5450 5.3 3.3 2.1 10.7 2.6 13.4
Total 3095 5636 5636 6.2 3.5 2.3 12.1 3.7 15.8 0.2 0.2 1.0 1.4 82.9 26.1 109.0
cf BAU 18 36 -1839 -0.9 0.4 -0.5 0.2 0.2 1.0 1.4 -5.7 4.1 -1.7 -2%
>25 Mandatory 353 576 576 3.5 0.7 0.7 4.9 1.2 6.1
Other 2877 5200 5200 4.0 3.0 1.9 8.9 2.6 11.5
Total 3230 5776 5776 7.6 3.7 2.6 13.9 3.7 17.6 0.7 1.5 2.0 4.2 96.6 27.4 124.1
cf BAU 153 176 -1699 0.9 0.5 1.3 0.7 1.5 2.0 4.2 8.0 5.3 13.4 12%
>10 Mandatory 1192 1750 1750 7.7 1.6 1.6 11.0 1.5 12.5
Other 2468 4300 4300 2.0 2.3 1.3 5.6 2.3 7.9
Total 3659 6050 6050 9.7 3.9 3.0 16.6 3.8 20.4 1.3 3.7 2.0 7.0 118.3 28.0 146.3
cf BAU 582 450 -1425 3.6 0.6 4.2 1.3 3.7 2.0 7.0 29.7 5.9 35.6 32%
>5 Mandatory 2749 3775 3775 10.8 2.8 2.8 16.5 2.1 18.7
Other 1718 2800 2800 0.5 1.4 0.7 2.6 1.8 4.5
Total 4467 6575 6575 11.3 4.2 3.6 19.2 4.0 23.1 1.8 5.3 2.0 9.1 137.7 29.1 166.8
cf BAU 1390 975 -900 6.2 0.7 6.9 1.8 5.3 2.0 9.1 49.2 7.0 56.1 51%
>1 Mandatory 10367 12155 12155 14.6 7.0 7.0 28.7 4.6 33.4
Other 714 1000 1000 0.0 0.5 0.2 0.7 1.3 2.0
Page 133
Total 11082 13155 13155 14.6 7.5 7.2 29.4 5.9 35.4 2.0 8.6 2.0 12.6 211.0 42.5 253.6
cf BAU 8005 7555 5680 16.4 2.7 19.1 2.0 8.6 2.0 12.6 122.5 20.4 142.9 129%
Page 134
Aggregated Costs and Benefits
The Options
The cost elements included in the analysis of each of the main options identified are
summarised quantitatively in Table 21 and qualitatively in Table 22. Obviously, some
options will result in initial adjustment costs to business and to government, but lower
annual costs thereafter, so the following assumptions have been adopted to compare all
options:
· All adjustment costs (business and government) are incurred in year 1 of the change
to the new regime (nominally 2006/07), and these are not discounted.
· A 10% discount rate is used to calculate the net present value of future year costs
(2007/08 onward);
· A 12 year projection period is used; ie all costs incurred between 2006/07 and
2017/18 inclusive are counted.
Table 22 Summary of Options
Option Corresponding Existing RE New RE DRA Government
option in TOR costs costs behaviour costs
1. BAU, no a. Status Quo Existing costs None As now Existing costs
new regs only only
2. Establish b. Harmonisation Adjustment + None Some fall in IT adjustment
NGERR, no without additional new (lower) multiple report costs only
new regs legislation annual costs demands
3. Establish c. extend NPI Adjustment + Adopt new Large fall in IT adjustment
NGERR, d. new NEPM new (lower) reporting multiple report costs + publicity
with regs annual costs framework demands + regulatory
4. Establish e. New specific Adjustment + Adopt new Elimination of IT adjustment
NGERR, legislation new (lower) reporting multiple report costs + publicity
with regs annual costs framework demands + regulatory
BAU Case
The total annual costs of the existing greenhouse and energy reporting arrangements are
estimated at $16.2 m. Of this, $13.0 m is borne be Reporting Entities, and $3.2 m by
Data Requiring Agencies. The net present value (NPV) of the projected 12-year
operating costs is estimated at $110.7 m, four fifths borne by Reporting Entities and one
fifth by Data Requesting Agencies.
This excludes the costs of conducting or reporting on emission reduction or energy
efficiency programmes in which some of the Reporting Entities participate. It also
excludes the fixed cost to Agencies. It is assumed that these latter categories of costs
are unaffected by changes in the reporting of historical greenhouse emissions and
energy use, so they have not been included in the analysis.
Page 135
No-Regulation Option
If the introduction of a national greenhouse and energy reporting requirement could
reduce the number of reports to one per site, without changing the number or
composition of participants, the variable reporting costs to Reporting Entities would fall
from about $3.5 m to $2.2 m per annum.
The first year adjustment costs are estimated at $3.0 m (two thirds borne by Reporting
Entities and one third by Agencies). The savings in operating costs are projected to
rapidly exceed the initial adjustment costs, giving a NPV of $101.6, or 8% less than
under the BAU scenario.
The realisation of these savings assumes that Agencies relinquish their separate
reporting requirements. If there is no reduction in these requirements, then the only
effect would be to increase the total costs by the amount of the adjustment costs.
In a non-regulatory scenario, Reporting Entities would need some incentive to make the
adjustments necessary to adopt the national reporting framework or be given no
choice. This would occur if the Agencies all changed their data requests and reporting
formats to the agreed format, which would mean that they too incur an up-front
adjustment cost.
Regulatory Options
The regulatory options are examined in descending order of site emissions thresholds.
For simplicity, it is assumed that where Entities own more than one site, all of them
meet the same emission threshold the effects of corporate vs site-based thresholds are
discussed later.
When a threshold is mandated, it is assumed that all entities with sites meeting that
threshold participate, and that they submit a single report only. Entities meeting the
threshold who already participate voluntarily also benefit, because the imposition of a
mandatory requirement is accompanied by the implementation of a single report.
Entities falling below the threshold also benefit, because it is assumed that Agencies
will require the same standard reporting format from all participants, even those who
continue to participate voluntarily. If some of these were to withdraw to avoid the
adjustment costs of switching to the new format, the overall reporting cost would fall
(albeit with some small reduction in overall coverage of emissions).
As the threshold reduces, the number of entities captured increases. More sites also
change their status from voluntary participation to mandatory and move from multiple
to single reports, but that in itself does not add to the number of entities or sites. About
1,000 sites continue to report greenhouse gas emissions or energy use even though they
fall below the lowest mandatory threshold examined (1 kt), because they are part of
GHC+ or VIC SEPP/AQM. It is assumed these would continue to participate in
greenhouse and energy reporting because of their continued involvement (voluntary or
mandatory) in Programme and Reduction Reporting.
Page 136
For the cohort of largest sites (>125 kt CO2-e) the effect of mandating participation is
more or less cost-neutral. The savings from a lower reporting burden per site match the
costs to the new participants. For all other cohorts, however, total Entity costs would
rise due to the larger number of entities with reporting obligations. The greatest increase
is for entities with sites between 1 and 5 kt, which would incur the largest increase in
coverage (from 21% to 100% of sites) and the largest increase in costs ($10.2 m). The
average cost per new entity ranges from about $14,800 for those with sites of >125 kt
and with no previous involvement in any greenhouse and energy reporting programme
(there are very few of these) to $1,600 for newly participating entities with sites
between of 1 to 5 kt, of which there are nearly 7,000.
As the threshold falls, the pattern of costs change as shown in Figure 10:
· Total Reporting Entity costs fall below BAU initially, but then increase as the costs
to new participants exceed the savings to existing ones. The increases above BAU
are fairly modest down to a 10 kt threshold, but then increase rapidly.
· Total Data Requiring Agency costs keep falling past the point at which Reporting
Entity costs increase, but then rise steeply as the threshold falls below 5 kt.
· The NPV of total costs does not significantly exceed BAU until the threshold falls
below 25 kt.
Figure 10 Summary of Estimated Costs of Options
300
250
200
$M Net Present Value
DRA recurrent costs
DRA adjustment costs
150
RE recurrent costs
RE adjustment costs
100
50
0
Business Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
as usual >125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Source: Table 21
Page 137
Sensitivity Factors
Multiple Data Requests
The monetary savings to existing Reporting Entities are projected to come from the
substitution of a single reporting requirement for multiple requirements, which are
estimated to average 1.33 requests per site at present. For new participants, the costs of
participation are partially offset by the fact that only one report will be required.
These are clearly best-case assumptions. Table 23 and Figure 11 illustrate what
happens if some Data Requiring Agencies continue to demand multiple reports from
existing Reporting Entities or, in an unlikely worst case, demand the same level of
multiple reporting from all new participants as they demand from present Entities.
If multiple reporting for existing Entities persists at the present level, there are no
monetary gains from implementation of a single national reporting framework at all.
However, the cost increase from the Base Scenario is relatively small, indicating that
the potential monetary benefits of moving to single reporting are minor, compared with
the potential costs of including large numbers of new entities.
Table 23 Effects of continuation of multiple data request
Option NPV of 12-yr total cost $M Change cf Base
Base Multiple Multiple Multiple Multiple
Scenario (a) reporting: reporting: reporting: reporting:
existing REs new R Es existing REs new R Es
BAU 110.7 110.7 110.7 0.0 0.0
Voluntary 101.6 110.5 110.5 8.9 8.9
Mandatory 109.0 117.5 118.2 8.5 9.2
>125
Mandatory >25 124.1 131.9 133.9 7.8 9.8
Mandatory >10 146.3 152.3 157.2 6.0 10.9
Mandatory >5 166.8 170.4 179.5 3.6 12.7
Mandatory >1 253.6 254.7 279.1 1.1 25.5
(a) Table 21 assumes single reporting by all participating Entities
Cost Assumptions
The programme cost projections are obviously sensitive to assumptions about the costs
to Reporting Entities and, to a much lesser extent, to the Data Requesting Agencies. It
is relatively straightforward to model different cost levels, and different assumptions
about the ratios of fixed to variable costs. However, while absolute costs change
appreciably under different assumptions, the ranking of options does not.
Table 24 summarises the NPV of projected cost with all Reporting Entity annual costs
halved, with one-time adjustment costs set to zero, and with the cost of producing
different reports for the one site doubled. While absolute costs change, the cost ranking
of options remains more or less the same, with the `voluntary' and 125 kt mandatory
thresholds indicating the least cost (Figure 11).
Page 138
However, the lower the costs the smaller the absolute monetary differences between
scenarios. For example, if the NPV of the cost of moving from a 10 kt threshold to a 5
kt threshold, which is $20.5m in the Base Scenario, would fall to $10.8m under the
lowest of the cost assumptions illustrated. This would increase the potential for non-
monetary factors to influence policy choices.
If the estimate of the cost of producing reports for each site were doubled, the benefit of
moving to a single reporting framework would be greater for the largest entities, which
have the highest multiple reporting burden at present. This is evident from Table 24.
The transition to a single report by voluntary means which would not force additional
Reporting Entities to report - reduces overall cost by $9.1 m (8%) compared with BAU
in the Base Scenario, but if the estimated reporting cost per site is doubled, the
reduction in total cost (ie benefit to participants) increases to $17.4 m, a 13% reduction
from BAU.
Table 24 Effect of changes in reporting cost assumptions
Option NPV of 12-yr total cost $M Change from Base Scenario
Base $/RE annual Zero $/site report $/RE annual Zero $/site report
scenario(a) costs halved adjustment costs costs halved adjustment costs
costs doubled costs doubled
BAU 110.7 66.4 110.7 134.2 -44.3 0.0 23.5
Voluntary 101.6 60.4 99.6 116.8 -41.2 -2.0 15.3
Mandatory 109.0 67.6 108.6 123.4 -41.4 -0.4 14.3
>125
Mandatory >25 124.1 75.7 121.9 136.9 -48.3 -2.2 12.8
Mandatory >10 146.3 87.1 141.3 155.4 -59.1 -5.0 9.1
Mandatory >5 166.8 97.9 159.7 171.9 -68.9 -7.1 5.0
Mandatory >1 253.6 148.0 243.0 254.9 -105.5 -10.6 1.4
(a) Table 21
Figure 11 Summary of sensitivities
300
250
Reporting costs
200 per site doubled
$M Npet Present Value
Multiple reporting
persists, exg REs
150
Multiple reporting
for new REs
100 Base Scenario
All RE costs
50 halved
0
BAU Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
>125 >25 >10 >5 >1
Site emissions thresholds (kt CO2-e)
Page 139
Source: Table 23 and Table 24
Options to Reduce Costs
One possible regulatory option is have a tiered compliance obligation. Participation
could be mandatory for sites above, say, 10 kt but optional for those with emissions
below that threshold. The advantage of this approach is that smaller energy users would
decide their participation from their own assessment of costs and benefits, and would
only do so if they judged their own benefits to exceed their costs.
Another way to minimise cost is to tailor the reporting requirement to the quantity of
energy used or other site characteristics, eg:
· Only sites consuming large quantities of coal (say >1 PJ per year) would need to
report actual CO2 emissions factors based on analysis of the coal used. This would
primarily apply to power stations. All other Entities could use default emissions
factors.
· A breakdown of the proportion of fuel or electricity used by equipment type (which
is an element of the data collection in the FES, and so presumably an essential
element of a national framework) might only be required for sites where fuel use
and/or electricity use is above a given threshold.
Site and Corporate Thresholds
The number of reporting entities at each threshold is subject to significant uncertainties.
Some of these uncertainties relate to the actual number of business, public facility and
other sites in Australia, and the number falling into each category of energy
consumption and non-energy emissions. However, there is not much latitude to depart
from the assumptions illustrated in Figure 4 without violating the external data
constraints discussed earlier.
Another layer of uncertainty is added by the many ways in which thresholds and other
participation triggers could be given effect under a regulatory regime. The cost-benefit
analysis has been carried out using the following simplifying assumptions:
· an entity must participate if it has at least one site meeting the threshold, and for
multi-site entities, all sites are on the same emissions category;
· site emissions include Scope 1 emissions from fossil fuel combustion on site, Scope
2 emissions from purchased electricity and fugitive and industrial process
emissions; and
· the same Scope 2 electricity emission factor is used throughout Australia; this is
close enough for most jurisdictions, but not for Victoria and Tasmania, which have
emissions factors that are, respectively, far higher and far lower than the national
average.
Page 140
Defining an entity's `interest' in a site is not necessary for the overall cost-benefit
analysis, but is obviously an unavoidable part of any regulations. It would also be
necessary to define the conditions for participation, which could be framed in any one
of several ways, eg:
· An entity must participate if it has an interest in (fully owns, part-owns, controls,
manages or some other definition) at least one site exceeding the threshold (in a
defined period only eg latest financial year, average of specified years, or a period
of the Reporting Entitie's own choosing).
· If so, does the entity have to prepare reports for its other sites, which may fall short
of the threshold, as well as the `trigger' site/s?
· Alternatively, the trigger could apply at the corporate level only, to the sum of
emissions of all sites `owned' or `controlled'. Compliance would be more difficult
to enforce at corporate that at site level, since it would be much harder to detect
whether an entity has indeed `declared' all it sites (especially if emissions are to be
weighted by part-interest) than to track down the entity responsible for an
identifiable site.
It is not essential to have the same conditions for participation as for reporting. For
example, the entity participation trigger could be the site, but once caught, the entity
could report for all its sites. Also, there could be dual triggers entities with any one
single site exceeding the threshold, or with a corporate emissions above the same (or a
higher) threshold.
The design of the trigger could have a significant impact on the number of entities
caught at any given threshold. If site emissions were aggregated, the number of entities
caught at each threshold would be higher. For example, an entity with 3 sites at 9 kt
each would not be caught at all at a `site' threshold of 10 kt, but would be caught at a
`corporate' threshold of 10 kt indeed it would be caught even at the higher corporate
threshold of 25 kt.
Another option is to have a different (and lower) threshold for inclusion of a site in an
entity's report, once the entity has been `caught' by exceeding the threshold at its
largest site. This sort of approach is adopted in the new GHC+ guidelines. Several
manufacturing entities have a few large manufacturing sites and dozens of distribution
sites, some of which would have very small energy use.
The more entities captured at each given threshold the higher the total monetary costs.
This means that the costs to Reporting Entities and Data Requiring Agencies illustrated
in Figure 10 would be higher at each threshold. The costs at the lowest threshold may
well increase the most, since a 1 kt corporate threshold would bring in a large number
(perhaps thousands) of commercial and service sector entities with many small outlets,
stores or branches. It is difficult to estimate the magnitude of these effects, since little is
known about average site ownerships and emissions levels of Commercial and Service
sector entities, which are greatly under-represented in the existing reporting
programmes.
Page 141
4. Ranking of Options
Quantifiable Criteria
The costs of the options examined in Chapter 3 are summarised in Table 25. The
voluntary implementation scenario assumes the introduction of a new single report for
all existing Reporting Entities, without the addition of any new Entities. There are
some initial adjustment costs to both Reporting Entities and Data Requiring Agencies,
but these are rapidly offset by lower annual costs (even assuming that the new
framework carries recurrent fixed administrative costs of $1m per year, plus $300
variable cost per data report processed).
The only valid basis for differentiating the cost of the regulatory options as a group is
by participation threshold. Whatever regulation is used, it would need to satisfy certain
characteristics if it is to support the successful implementation of the framework (see
Chapter 2). The costs of amending legislation or implementing new legislation are low
in comparison with other costs, and these cost differences between alternative
regulatory approaches would be negligible.
Table 25 also indicates the proportion of the emissions of end user entities in the
mining, manufacturing, commercial and services sectors that would be covered by
mandatory reporting at each successive threshold, ranging from 66% at present up to
88% if all sites above 1kt report. There would also be a major increase in data
consistency, quality and useability in moving from the present regime to a mandatory
regime, but the value of this cannot be quantified.
Table 25 Summary of costs and emissions coverage
Options (a) NPV of 12-yr Coverage of $M per % Comparison with BAU Coverage
total cost end user emissions of
$M(b) emissions (c) covered electricit
y sector
emissions
Cost Increment in $m per
increment % of additiona
$M emissions l % of
covered coverage
Non- 1 BAU $110.7 66.0% $ 1.7 80.0%
regulatory
2 Voluntary $101.6 66.0% $ 1.5 -$9.1(d) 0% 80.0%
Regulator 3 Mandatory >125 $109.0 78.2% $ 1.4 -$1.7 12% -$0.1 97.1%
y o
r
4
Mandatory >25 $124.1 81.6% $ 1.5 $13.4 16% $0.9 99.3%
Mandatory >10 $146.3 83.0% $ 1.8 $35.6 17% $2.1 99.7%
Mandatory >5 $166.8 84.3% $ 2.0 $56.1 18% $3.1 99.9%
Mandatory >1 $253.6 88.2% $ 2.9 $142.9 22% $6.4 100.0%
(a) Table 13. (b) Table 21; 10% discount rate over 12 year projection period. (c) % of estimated sum of
emissions from end user energy consumption, fugitive and industrial process emissions from mining,
manufacturing, commercial and services sites. (d) Saving from elimination of multiple reporting.
Page 142
The cost per percentage of emissions covered is a rough indicator of the cost-
effectiveness of each threshold level.
100%
% of Mining, Manufacturing and Commercial Sector Emissions
90%
80%
70%
All reporting
entities
60%
50%
Reporting
entities caught
40%
by mandatory
thresholds
30%
20%
10%
0%
BAU Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
>125 >25 >10 >5 >1
Figure 12 illustrates the total share of sectoral emissions by all entities covered under
the present arrangements. It should be noted that this coverage is not available to any
one Data Requesting Agency, since at present each Agency only has access to a subset
of the reported data.
100%
% of Mining, Manufacturing and Commercial Sector Emissions
90%
80%
70%
All reporting
entities
60%
50%
Reporting
entities caught
40%
by mandatory
thresholds
30%
20%
10%
0%
BAU Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
>125 >25 >10 >5 >1
Figure 12 also shows the estimated coverage if Reporting Entities were obliged to
participate, at successively declining thresholds. The coverage by `All Reporting
Entities' would still be higher, because sub-threshold entities who already report are
assumed to continues reporting.
Figure 13 illustrates the ratio of reporting costs to coverage, by tracking the indicator
`$M NPV per percentage point emissions covered'.
Page 143
Figure 12 Percentage of emissions covered under current and potential reporting
arrangements
100%
% of Mining, Manufacturing and Commercial Sector Emissions
90%
80%
70%
All reporting
entities
60%
50%
Reporting
entities caught
40%
by mandatory
thresholds
30%
20%
10%
0%
BAU Voluntary Mandatory Mandatory Mandatory Mandatory Mandatory
>125 >25 >10 >5 >1
Figure 13 Total greenhouse and energy reporting costs per percentage point of
emissions covered
3.5
3.0
$M NPV per Percentage Point Emisssions Coverage
2.5
2.0
1.5
1.0
0.5
0.0
BAU Voluntary Mandatory >125 Mandatory >25 Mandatory >10 Mandatory >5 Mandatory >1
Site emissions thresholds (kt CO2-e)
The cost of a regime with a 125 kt threshold is slightly lower than the BAU case, with a
higher coverage of emissions. The cost of a regime with a 25 kt threshold is higher
than the BAU case but with appreciably higher coverage, and represents the point of
highest emissions coverage per cost. The cost of a regime with a 10 kt threshold is
about 25% more than the BAU case, but it also offers a similar increase in coverage, so
the cost per percent of coverage is actually slightly lower. In fact, a threshold as low as
5 kt might be justifiable on this indicator, when improvements in data quality are taken
into account. The average cost of coverage at the 1 kt threshold, however, is about 70%
higher than the BAU (Figure 13). The electricity sector coverage is shown separately
Page 144
(noting that the emissions are double counted with end users). A 25 kt threshold would
capture over 99% of emissions.
The above conclusions are based on mandatory participation. If voluntary participation
of sub-threshold entities increased (and assuming all existing sub-threshold participants
were retained) then both coverage and costs would be slightly higher.
Other Considerations
Effects on Competition
The Terms of Reference require consideration of whether options would raise barriers
to market entry, exit or innovation. As energy and greenhouse reporting is a relatively
straightforward (if time-consuming) process, we would not expect any significant
effects at that level. However, the degree of public disclosure, which can and should be
decided independently of the structure of the reporting framework, could have some
effects on competition.
Effects on Small Business
The proportion of reporting entities captured at each emission threshold that would be
`small business' (having fewer than 20 employees, according to the conventional ABS
definition) cannot be determined directly, but may be estimated indirectly.
Small businesses comprise 82% of employing businesses in each of the mining and
manufacturing sectors, and 90% in the commercial and services sector. There are about
78,000 `Other' (medium plus large) businesses (Table 26). There is likely to be high
correlation between number of employees and energy use, so it is unlikely that any
significant number of small businesses will be captured down to a threshold of 5 kt.
Table 27 shows that at this level, there would be about 6575 sites captured, which
would be equivalent to 8.4% of the number of `non-small' business sites. At 1 kt,
however, the number of sites is nearly twice the number at 5 kt, so the probability that
some of the sites captured will be small business is much higher.
Table 26 Number of small and other business sites by sector
Small Other
Mining 2615 566
Manufacturing 59894 13312
Commercial & Service 562313 64074
Total 624822 77952
Derived by authors from ABS 8161055001, June 2004
Table 27 Estimated number of reporting entities and sites
Entities(a) Sites(a) As % of
`Other'
sites (b)
BAU 3077 5600 7.2%
Voluntary 3077 5600 7.2%
Mandatory 3095 5636 7.2%
>125
Page 145
Mandatory >25 3230 5776 7.4%
Mandatory >10 3659 6050 7.8%
Mandatory >5 4467 6575 8.4%
Mandatory >1 11082 13155 16.9%
(a) Table 21 (b) Table 26
Another way to approach the issue is via average tonnes CO2-e per employee. Table 30
in Appendix 2 indicates that average emissions per employee in 2004 were 7 tonnes in
the Commercial and Services sector, 564 tonnes in the Mining sector and 159 tonnes in
the Manufacturing sector (ranging from 2 tonnes in Other Manufacturing up to 604
tonnes in Metal Products).
If it is assumed that the same average applies to businesses of all emission categories
within an industry group, then it is possible to calculate an average number of
employees per site from the site emissions. For example, the average number of
employees at a Mining sector site emitting 125 kt would be 222 (125,000/564). The
lower the intensity of an industry sector, the higher the implied number of employees
per site. A 10 kt site in the Commercial and Service sector, for example (typically a
large retail centre or a 20-floor office building) corresponds to 1,465 employees
whereas a 10 kt site in the Mining sector corresponds to only 18 employees bringing it
under the `small business' threshold if it were an independent business.
However, it is probable that intensity is not constant across all sites within a sector. The
highest emitting sites (>25 kt) will have the most emissions-intensive processes, and so
will have higher emissions per worker than the sector average. The less emitting sites
will have lower than average emissions per worker. Applying these assumptions to the
number of sites in each Sector (see Table 30) suggests that over 1,100 sites of the
12,155 that could be caught by a mandatory threshold of 1 kt could have fewer than 20
workers, and so are potentially `small business'.
Table 28 Estimated number of sites with fewer than 20 workers, by threshold
Emissions Estimated Estimated % of sites
threshold number of number with with
kt CO2-e sites <20 workers <20 workers
>125 186 0 0%
>25 576 0 0%
>10 1750 233 13%
>5 3775 633 17%
>1 12155 1133 9%
Source: Author estimates (see Table 30)
About half the potential `potential small business' sites are in the Mining sector and the
other half in the Manufacturing sector. The number of Commercial and Services Sector
small businesses with emissions of greater than or equal to 1 kt (representing about
1,111,000 kWh of electricity per year, and corresponding to 147 workers at the sector
average) is considered negligible.
In the Mining sector, many businesses operate multiple sites, so the actual number of
small businesses will probably be well below the number of sites with fewer than 20
employees. The number of actual `small businesses' caught by a mandatory greenhouse
Page 146
and energy reporting requirement, even at a the minimum threshold of 1 kt, is likely to
be well below 1,000.
The Department of Industry, Tourism and Resources has developed a `Costing Model'
to `assist officers formulate policy and, for each policy option, estimate the compliance
costs on business.'19 The model is a guide to systematically estimating the labour and
other costs involved in the nine `cost categories' listed in Table 29, only three of which
apply in the case of greenhouse and energy reporting.
The rigorous application of the costing model would require actual cost estimates
against each of the cost categories, presumably based on interviews with a sample of
potentially affected businesses, and giving them a draft reporting form reflecting the
proposed reporting procedures. This would allow the survey respondents to check the
requirements against their record keeping practices and staff skills, and so estimate the
time and hence costs for the various grades of staff that would need to be involved.
As there is not yet a concrete proposal that can be researched in this way, it is not
possible to apply the costing model. However, it is possible to calculate the number of
staff hours implied by the reporting cost assumptions in the present study. These are
shown in Table 29.
Table 29 Application of DITR `Costing Model' to greenhouse and energy reporting
costs for entities with emissions below 10 kt CO2-e
Cost category (a) Application to 5 to 10 kt CO2-e 1 to 5 kt CO2-e
Greenhouse and
Energy
Reporting
Reporting Approx- Reporting Approx-
cost imate cost imate
allowance, working allowance, working
$ (b) hours (c) $ (b) hours (c)
Notification No
Education Yes (Year 1) $2600 104 $1000 20
Permission No
Purchase Cost No
Record Keeping Yes (annual) $2600 104 $1000 52
Enforcement No
Publication & Documentation Yes (annual) $400 16 $300 12
Procedural No
Other No
(a) From `Costing Model: Cost Category Guide' at www.industry.gov.au/costingmodel (b) From Table
18, with adjustment (`education') costs in first year assumed to be same as recurrent fixed costs. (c) At
gross average labour cost of $25 per hour
The implied costs appear to be realistic. For example, an entity site emitting 5 to 10 kt
CO2-e is likely to do so on the basis of its electricity, natural gas and perhaps LPG or
ADO use alone. An entity of this size may well have several sites, and several utility
accounts serving each site, and monthly energy billing. Maintaining a database of
utility and fuel supplier accounts and hence energy purchases is a clerical rather than a
19
The information on the Costing Model is taken from www.industry.gov.au/costingmodel and from
presentation by Charles Rankin, Office of Small Business, DITR, at AGO on 17 March 2006.
Page 147
technical task. The cost estimates in Table 29 would cover 104 hours (about 14
working days) of clerical time each year for record keeping (assuming this is not
already done as a matter of course) and 16 hours (about 2 working days) per year to
submit a greenhouse and energy report on each site. These time budgets appear
appropriate for the tasks, with the allowance in the present study for an additional
`adjustment' or `education' cost in the first year of participation.
Effects on Trade
The greenhouse and energy reporting framework under consideration would cover
actual energy use and emissions only. The information could be combined with other
data to produce, say, values for greenhouse gas intensity per quantity of product, and if
so it would be open to interested parties to compare such intensities with similar
products produced in other countries. It is not possible to predict whether this would
show differences between local and imported products, whether those differences would
be valid or what if any impact this would have on consumer preference or trade.
Other trade might be related to whether there are measures to differentiate between
goods, services and financial instruments (eg carbon emission permits) traded between
participants and non-participants in the current Kyoto arrangements or in some possible
post-Kyoto arrangement. If so, the adequacy and reliability of the base emissions data
supporting such considerations could have important commercial and trade
consequences. Again, this is entirely speculative, and whether the data would be
capable of being used in these ways depends on whatever public disclosure
arrangements might be made.
Page 148
Overall Ranking of options
The Policy Working Group identified the following objectives for mandatory reporting:
1. reduce the overall burden on industry and business in reporting greenhouse gas
emission and energy data;
2. provide appropriate and consistent information on the greenhouse and energy
related performance of companies for:
a. investors and business planners - to improve the flow of market information and
thereby facilitate sound market decisions;
b. the general public - to inform public debate on greenhouse and energy issues;
and
1. ensure that data provided by companies to governments is nationally consistent,
robust and comparable across programmes that may be located in different
jurisdictions to inform government policy making.
If objective 1 were the sole or over-riding criterion, the preferred option would be a
voluntary framework or a mandatory framework with a 125 kt threshold, since these
appear to have lower costs than the present arrangements.
However, objective 3 requires factors such as coverage and data quality to be taken into
account. This places the optimum threshold at 10 kt, or arguably even 5 kt.
The 1 kt threshold has much higher costs than other options, and the increases in
emissions coverage beyond a 5 kt threshold are small.
All options have a similar capability to support the provision of `appropriate and
consistent information on the greenhouse and energy related performance of
companies', so there is no basis to differentiate between them with regard to objective
2.
*****
Page 149
References
ACG (2005) A Nationally Consistent Framework for Greenhouse and Energy
Reporting: Issues and Options, The Allen Consulting Group, April 2005
AGO (2005) AGO Factors and Methods Workbook 2005, for use in Australian
greenhouse emissions reporting, Australian Greenhouse Office, December 2005
COAG (2004) Principles and Guidelines for National Standard Setting and Regulatory
Action by Ministerial Councils and Standard-Setting Bodies, Council of Australian
Governments (endorsed April 1995, amended November 1997 and June 2004).
DITR (2005) Energy Efficiency Opportunities: Reporting Procedure Discussion Paper,
Department of Industry, Tourism and Resources, October/November 2005
Environment Link (2005) Final Report: Review of the National Pollutant Inventory,
Environment Link in conjunction with CH Environmental and JD Court and Associates,
for the Department of the Environment and Heritage, April 2005
Environment Link (2005a) The EPA Victoria Industry Greenhouse Programme
- the story so far. A report evaluating the commitments made and the expected
achievements of the programme, Environment Link Pty Ltd for the Environment
Protection Authority Victoria, December 2005.
EPA (2005) Greenhouse Gas Emissions; Reporting and Disclosure Pilot, Issues Paper.
Environment Protection Authority Victoria, December 2005 (Draft)
JWG (2005a) Greenhouse and Energy Reporting Consultation Paper, Joint
Environment Protection Heritage Council/Ministerial Council on Energy Officials
Working Group, May 2005
JWG (2005b) Joint Working Group Report on Greenhouse and Energy Reporting
for the Environment Protection and Heritage Council and Ministerial Council on
Energy, August 2005
Rae (2004) Options For And Legitimacy Of Incorporating Greenhouse Gas (GHG)
Emissions Into The National Pollutant Inventory Professor Ian D. Rae, August 2004
WADOE (2005) Western Australian Greenhouse Gas Inventory Briefing Paper
Department of the Environment, Western Australia, September 2005
WBCSD (2005) The Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard, World Business Council for Sustainable Development and World Resources
Institute, Revised Edition March 2004
Page 150
Appendix 1 Terms of Reference
Statement Of Requirement For Consultancy to Undertake Analysis of Costs and
Benefits Associated With Adopting a National Mandatory Requirement for Companies
and Businesses to Report Greenhouse and Energy Data
Context
Consultancy services are required to provide analysis to support current work by the
Australian, State and Territory Governments to streamline greenhouse and energy
reporting by business.
Data collection and reporting requirements of industry and business in relation to
energy use and greenhouse gas emissions are increasing both domestically and
internationally. The Australian, State and Territory Governments have introduced, or
are planning to introduce, a wide range of programmes and initiatives that require
greenhouse or energy reporting from business. In addition, many companies,
particularly global enterprises, are electing to report publicly on these matters as part of
their approach to governance and corporate social responsibility. International standards
and protocols for reporting by businesses have also emerged.
The Environment Protection and Heritage Council (EPHC), comprising Australian,
State and Territory Environment Ministers, and the Ministerial Council on Energy
(MCE), comprising Australian Government, State and Territory Energy Ministers, are
working together to examine the costs and benefits associated with implementation of a
nationally consistent framework for greenhouse and energy reporting from Australian
companies to meet current and prospective needs of government, business and the
public.
The first phase of the work was completed in August 20051 and presented to Ministers
in October/November 2005. During this process, some jurisdictions and stakeholders
proposed a national mandatory requirement for reporting from companies, on the basis
that such a measure could help: create a level playing field where all companies would
be subject to the reporting requirements regardless of location; reduce the reporting
burden and red tape for business; address information gaps for investors; build an
information base for future policy responses; and ensure that publicly reported data is
nationally consistent, robust and comparable across programmes and across
jurisdictions.
Work on the issue of mandatory reporting will continue through the Policy Working
Group on Greenhouse and Energy Reporting, established jointly under the EPHC and
MCE in line with the Terms of Reference at Attachment A.
The Working Group will provide its initial reports to the MCE and EPHC in April 2006
and final report by June 2006.
Related to this process, the EPHC decided in July 2005 to include greenhouse gases in
the scope of a process to consider a variation to the National Pollutant Inventory (NPI),
noting that there are other mechanisms that could be used. The variation process is to be
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informed by the outcomes of the EPHC/MCE process. The EPHC is expected to
consider this variation in October 2006.
Consultancy Objective
To analyse and report on the costs and benefits associated with a national mandatory
measure requiring Australian companies to report greenhouse and energy data, with
public disclosure.
The report will inform the work of the Policy Working Group on Greenhouse and
Energy Reporting, established under the Ministerial Council on Energy and the
Environment Protection and Heritage Council.
Scope of Consultancy Services
A Cost-Benefit Analysis (CBA) of a new mandatory reporting requirement and
alternatives to mandatory reporting is the central task of this consultancy. The CBA
should outline the costs and benefits of mandatory reporting, including direct and
indirect economic, environmental and social costs and benefits, and an analysis of
distinct alternatives (including the `do nothing' or status quo option) to mandatory
reporting. This assessment should take into account both effectiveness and efficiency.
It is envisaged that the analytical framework underpinning a regulatory impact
statement (RIS) will be used throughout the Policy Working Group's work, and the
CBA will comply with the requirements set out in the Council of Australian
Government's (COAG) Principles and Guidelines for National Standard Setting and
Regulatory Action by Ministerial Councils and Standard-Setting Bodies.
This means the CBA would include the elements outlined below. Specific guidance
from the Policy Working Group will be provided to the successful tenderer at the
commencement of the consultancy on: the statement of the problem, statement of
objectives for mandatory reporting, and identification of regulatory and non-regulatory
alternatives. The focus of the consultancy services will be on impact analysis.
1. Statement of the problem
The Policy Working Group has identified the following problems that might be
addressed by mandatory reporting. They are:
· an onerous reporting burden for industry and business, created by different reporting
requirements for greenhouse and energy data in different jurisdictions;
· inconsistent or inappropriate information on greenhouse and energy related
performance of companies in the public domain resulting in:
a. market decisions on issues such as carbon risks and energy consumption and
costs that may not be fully informed;
b. public debate that may not be fully informed; and
· lack of national consistency, robustness and/or comparability in greenhouse and
energy data reported by business making it difficult for governments to develop
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new, or enhance existing, measures to reduce emissions and energy from
companies.
2. Statement of objectives for mandatory reporting
The Policy Working Group has identified possible objectives for mandatory reporting.
They are to:
· reduce the overall burden on industry and business in reporting greenhouse gas
emission and energy data;
· provide appropriate and consistent information on the greenhouse and energy
related performance of companies for:
c. investors and business planners - to improve the flow of market information and
thereby facilitate sound market decisions;
d. the general public - to inform public debate on greenhouse and energy issues;
and
· ensure that data provided by companies to governments is nationally consistent,
robust and comparable across programmes that may be located in different
jurisdictions to inform government policy making.
3. Identification of constraints
The successful tenderer will identify and document practical constraints on the
feasibility of alternative options for greenhouse and energy reporting.
4. Identification of regulatory and non-regulatory alternatives
In line with the requirements for regulatory impact assessment as agreed by COAG, the
successful tenderer will identify feasible options for reporting of greenhouse gas
emissions and energy data. In conducting the analysis the consultant will consider the
capacity of alternatives to address issues raised in sections 1 and 2 above. Additional
guidance for the identification of options is contained in A Guide to Regulation,
published by the (Australian) Office of Regulation Review.
The Policy Working Group has identified the following feasible options to be
investigated in the cost benefit analysis:
· the extension of the National Pollutant Inventory;
· a new National Environment Protection Measure;
· development of new specific legislation or amendments to other existing legislation,
with harmonisation of existing reporting requirements;
· harmonisation of existing reporting requirements through a web-based reporting
tool without additional national legislation; and
· the status quo or `do nothing' option i.e. all current voluntary and mandatory
reporting requirements and prospective requirements for which there are firm
government commitments and reporting requirements (e.g. mandatory membership
of Greenhouse Challenge Plus for fuel tax credit recipients).
5. Assessment of impacts (costs and benefits) of each option
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Economic, environmental and social impacts should be considered. Where possible,
quantitative analysis and measures such as financial and economic costs and benefits
should be identified and compared. However, the analysis should also include
intangible, non-monetary costs and benefits. Where it is not possible to prepare a
quantitative estimate, a qualitative assessment of costs and benefits should be
undertaken.
The assessment of impacts should include:
· Identification of stakeholder groups likely to be significantly affected by the
options. These groups should be broken down into sub-groups, eg specific industry
sectors, where options will have different effects on those sub-groups.
· Assessment of costs and benefits to government, businesses, consumers, and the
community as a whole.
· Effects on competition, eg whether options would raise barriers to market entry, exit
or innovation.
· Effects on small business. The report should include a sub-section that assesses the
impact of each option on small business compliance costs and paperwork burden.
· Effects on trade, eg whether options would create unnecessary obstacles to
international trade, such as discrimination between domestic and imported products.
Factors that will have a significant impact on the costs and benefits of mandatory
reporting and other alternatives are the:
· threshold for reporting (eg reporting is required where entities consume over a
certain amount of energy or emit a certain amount of greenhouse gas emissions);
· whether reporting must be disaggregated down to facility/site level or aggregated up
to the company level;
· sectors/industries that would be covered by mandatory reporting; and e level of
public or other disclosure (if any) ensuring that commercially sensitive information
is safeguarded while "community right to know" objectives are met.
The CBA should assess the impact of these factors.
Levels of public disclosure suggested for analysis are:
· maintain the status quo (i.e. no new public disclosure);
· partial public disclosure; and
· full public disclosure (as in the National Pollutant Inventory).
Thresholds suggested for analysis are:
· 500 terajoules of energy, or 125,000 tonnes of carbon dioxide equivalent (t CO2-e)2
per annum;
· 100 terajoules of energy, or 25,000 t CO2-e per annum; and
· 4 terajoule of energy, or 1000 t CO2-e per annum.
Sensitivity analysis may also be needed to assess the impact of estimation errors on the
quantification of costs and benefits.
*****
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Appendix 2 Sites in Emissions Categories by Sub-sector
Sites >125 kt Sites 25-125 kt Sites 10-25 kt Sites 5-10 kt Sites 1-5 kt Sites <1 kt All sites
Number Avg kt Number Avg kt Number Avg kt Number Avg kt Number Avg kt Number Avg kt Number Avg kt
CO2-e CO2-e CO2-e CO2-e CO2-e CO2-e CO2-e
MINING 80 368 150 99 300 19 400 8.2 500 3.3 1751 0.83 3181 17.7
Food, beverages, tobacco 0 0 50 61 100 12 200 6.8 400 1.5 4624 0.36 5374 1.5
Textile, clothing, footwear 0 0 8 42 10 17 20 8.7 40 2.1 6879 0.07 6957 0.2
Wood, paper and printing 10 531 5 28 5 12 10 6.3 50 1.5 14194 0.01 14274 0.4
Petroleum, coal and chemical 18 1433 25 120 50 18 100 7.2 200 2.5 4439 0.04 4832 6.4
Non-metallic mineral products 25 457 25 37 200 12 200 2.8 200 1.1 2310 0.05 2960 5.3
Metal products 12 8230 15 100 50 17 100 6.8 600 1.5 12316 0.21 13093 8.0
Machinery and equipment 0 0 10 33 20 15 40 7.4 300 2.1 15011 0.07 15381 0.2
Other manufacturing 0 0 0 0 0 0 0 0.0 50 2.0 10291 0.00 10341 0.0
MANUFACTURING 65 2174 138 67 435 13 670 5.7 1840 1.7 70064 0.09 73212 1.3
COMMERCIAL AND SERVICES 0 368 50 36 400 12 900 6.6 6000 1.5 619037 0.04 626387 0.1
ELECTRICITY GENERATION 41 4513 52 80 39 20 55 8.7 40 4.1 0 0 227 839.7
Source: Author estimates
Table 30 Total Emissions by Sub-Sector and Emissions Source, and
kt CO2-e Employ t CO2-e Employees if at average t CO2-e/wotker Est number 'small' business
-ment per
(`000) worker
Electric Coal Pet Nat Gas Fug- Process Total 125 kt 25 kt 10 kt 5 kt 1 kt 10-25 5-10 1-5 Total
ity Prods itive (a) (b) (c)
MINING 15950 1539 6930 7673 24268 0 56360 99.9 564 222 44 18 9 2 200 200 167 567
Food, beverages, tobacco 5273 810 180 1560 0 0 7823 190 41 3042 608 243 122 24 0 0 0 0
Textile, clothing, footwear and leather 775 90 30 338 0 0 1233 62 20 6328 1266 506 253 51 0 0 0 0
Wood, paper and printing 3900 756 143 967 0 0 5766 193 30 4182 836 335 167 33 0 0 0 0
Petroleum, coal and chemical 4050 765 12413 6646 0 7214 31087 93 335 373 75 30 15 3 0 50 67 117
Non-metallic mineral products 3426 2385 510 3861 0 5384 15566 36 433 289 58 23 12 2 0 100 67 167
Metal products 44750 31635 4043 9376 0 15399 105202 174 604 207 41 17 8 2 33 50 200 283
Machinery and equipment 2325 0 60 265 0 0 2650 251 11 11854 2371 948 474 95 0 0 0 0
Other manufacturing 125 0 0 16 0 0 141 69 2 61271 12254 4902 2451 490 0 0 0 0
MANUFACTURING 64624 36441 17378 23029 0 27997 169468 1068.8 159 788 158 63 32 6 33 200 333 567
COMMERCIAL AND SERVICES 41650 351 1530 2272 0 0 45803 6708.8 7 18309 3662 1465 732 146 0 0 0 0
ELECTRICITY GENERATION NA 190606 0 0 0 0
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Total 233 400 500 1133
Source: Author estimates : Shaded cells represent categories where `small' businesses (fewer than 20 employees) are likely to be represented (a) Assumes emissions per worker
intensity is 2/3 of sector average (b) Assumes intensity is ½ of sector average (c) Assumes intensity is 1/3 of sector average.
Page 156
Attachment B: Company Level Cost Benefit Analysis George Wilkenfeld &
Associates (June 2006) Costs and Benefits of a National Greenhouse and Energy
Reporting Framework Additional Analysis.
Costs and Benefits
of a
National Greenhouse and Energy Reporting
Framework Additional Analyses
George Wilkenfeld and Associates
for
Department of the Environment and Heritage
June 2006
GEORGE WILKENFELD AND ASSOCIATES Pty Ltd
ABN 78 003 846 848
ENERGY AND WATER POLICY AND PLANNING CONSULTANTS
PO Box 934 Newtown NSW 2042 Sydney Australia
Tel (+61 2) 9565 2041 e-mail: geosanna@ozemail.com.au
Page 157
Contents
1. BACKGROUND ..................................................................................................................................159
BACKGROUND 159
THIS STUDY 159
THRESHOLDS AND TRIGGERS ................................................................................................................161
Triggers in this Analysis ..................................................................................................................161
BAU............................................................................................................................................................ 161
Scenario A .................................................................................................................................................. 161
Scenario B................................................................................................................................................... 162
Simplification of Threshold Assumptions.........................................................................................162
Details to be defined in regulation...................................................................................................163
ENERGY, SECTORAL AND EMISSIONS COVERAGE.................................................................................165
Agriculture .......................................................................................................................................165
Mining ..............................................................................................................................................166
Manufacturing..................................................................................................................................166
Transport..........................................................................................................................................166
Commercial and Services.................................................................................................................167
Generation .......................................................................................................................................168
Construction.....................................................................................................................................168
Water, sewerage and gas .................................................................................................................168
Waste ................................................................................................................................................168
2. METHOD OF ANALYSIS .................................................................................................................170
METHOD 170
Single Factor Site Anlysis ................................................................................................................170
Dual Factor Site Analysis ................................................................................................................171
THE RELATIONSHIP BETWEEN COMPANIES AND SITES .........................................................................173
Scenarios ..........................................................................................................................................174
3. FINDINGS............................................................................................................................................176
References ........................................................................................................................................181
Page 158
1. Background
Background
A report analysing the costs and benefits associated with adopting a national mandatory
requirement for companies and businesses to report greenhouse and energy data was
prepared by George Wilkenfeld and Associates and published by the Australian
Greenhouse Office in March 2006 (GWA 2006). That document is referred to as the
`original CBA'.
A consultation paper, A Streamlined National Reporting Framework for Greenhouse
and Energy Data: Reducing the Burden, which includes information drawn from the
cost benefit analysis, was used as the basis for a national consultation process during
April 2006.
The Environment Protection and Heritage Council (EPHC) and Ministerial Council on
Energy (MCE) Working Groups on Greenhouse and Energy Reporting will provide
their final report to the Councils for consideration in June 2006. The EPHC has also
initiated a process to consider a variation to the National Pollutant Inventory (NPI), with
a decision expected in April 2007.
This study
The present study was commissioned by the AGO to provide additional analysis of the
costs and benefits of adopting a national mandatory requirement for companies and
businesses to report greenhouse and energy data. It builds on the original CBA in the
following ways:
· The thresholds for inclusion in the mandatory obligation are calculated at the
`business' level rather than the individual site or facility level as in the original
CBA;20
· The thresholds can be triggered by a range of criteria: greenhouse gases emitted,
energy used, energy produced and electricity generation capacity installed. The
original CBA focused solely on the criterion of greenhouse gases emitted;
· A slightly wider range of emissions sources is also taken into account. The original
CBA considered energy-related emissions: natural gas, coal and petroleum (Scope 1
emissions) and electricity imported from off-site (Scope 2 emissions) as well as
fugitive emissions and industrial process emissions. The present study has added
emissions from biofuels and emissions from waste, but excludes emissions from the
IPCC-defined sectors Agriculture and Land Use, Land Use Change and Forestry;
20
The estimates of business numbers in this analysis are taken from ABS (2004). The method of
enumeration is explained at length in that publication. The register of Australian Business Numbers
(ABNs) is only one of the sources the ABS draws on. The final ABS estimate of businesses is lower than
the total number of ABNs. Many ABNs attach to entities which are `out of scope' and not enumerated as
operating businesses.
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· The original CBA focussed on three main `energy consuming' sectors of the
economy: Mining (ANZSIC Division B), Manufacturing (Division C) and
Commercial & Services, as well as on the Electricity Generation sector. The present
analysis also covers energy-related emissions in the Agriculture, Forestry and
Fishing sector (Division A) and Transport.
The original CBA was a detailed stand-alone document that covered a range of issues
such as regulatory frameworks and modes and options of public disclosure. The present
analysis focuses on the quantifiable monetary costs to business and government. It is
intended as a technical input into a wider Regulation Impact Statement and should be
read in association with the accompanying spreadsheet. The tables in the present
document are cross-referred to named data regions in the spreadsheet (eg ).
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Thresholds and Triggers
The original CBA assumed that a business would be required to submit reports of its
annual energy use and greenhouse gas emissions only if it owned or controlled at least
one facility or site at which total greenhouse gas emissions met or exceeded a given
threshold level. A range of declining thresholds was investigated: 125, 25, 10, 5 and 1
kt CO2-e per annum.
If the threshold were set at 10 kt CO2-e, for example, a business with one site emitting
30kt would be required to report, another with two sites at 11 kt each would be required
to report but a third with 4 sites at 8 kt each would be exempt, even though its aggregate
emissions were higher than the other two businesses. Also, where on-site emissions
came solely from energy use, as would be the case in the great majority of cases, the
quantity of energy use could vary widely from 40 TJ for a site using only electricity
(with a nominal emission factor of 250 t CO2-e/TJ) to 192 TJ for a site using natural gas
(with a nominal emission factor of 52 t CO2-e/TJ).
Triggers in this Analysis
Four scenarios are compared in the present analysis:
BAU
In the `Business as Usual' (BAU) scenario reporting businesses continue to be subject
to a range of mandatory reporting requirements (eg NPI), and/or choose to voluntarily
participate in others (eg Greenhouse Challenge Plus (GCP)), and continue to prepare
different reports in different formats for each of those programs. The Data Requiring
Entities (DREs) continue to independently receive, process and store the data as they do
now.
Scenario A
Annual reporting of greenhouse gas emissions and energy use is mandatory for any
reporting business which meets one or more the following criteria (collectively termed
`Trigger A' in this analysis).21
a. The combined greenhouse gas emissions from all facilities for which the
business is responsible are equal to or greater than 50,000 (50 kt) tonnes of
CO2-e per annum, OR
b. The combined energy consumption of all facilities for which the business is
responsible is equal to or greater than 200 TJ per year; OR
21
A `Trigger A' site meets the criteria on its own. A `Trigger A business' may have none, one or more
Trigger A sites, none, one or more Trigger B sites and none, one or more `sub-B' sites. The category `B
not A' applies to businesses or entities which would meet Trigger A but not Trigger B.
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c. The combined energy production of all facilities for which the business is
responsible is equal to or greater than 200 TJ per year; OR
d. The total installed electricity generation capacity at all facilities for which
the business is responsible is equal to or greater than 30 MW.
Businesses which currently report but are not caught by Trigger A continue to report.
Scenario B
Annual reporting of greenhouse gas emissions and energy use is mandatory for any RB
which meets one or more the following criteria (collectively termed `Trigger B' in this
analysis).
e. The combined greenhouse gas emissions from all facilities for which the
business is responsible are equal to or greater than 25,000 (25 kt) tonnes of
CO2-e per annum, OR
f. The combined energy consumption of all facilities for which the business is
responsible is equal to or greater than 100 TJ per year; OR
g. The combined energy production of all facilities for which the business is
responsible is equal to or greater than 100 TJ per year; OR
h. The total installed electricity generation capacity at all facilities for which
the business is responsible is equal to or greater than 30 MW.
Businesses which currently report but are not caught by Trigger B continue to report.
Scenario C
As for Scenario A, plus any businesses with one or more sites meeting Trigger B on
their own must report for those sites only. This adds fewer businesses and sites than
Scenario B, because:
· Businesses that would be have met Trigger B due to the accumulated emissions or
energy use of sub-B sites are excluded; and
· Businesses that are caught are only required to report on their B site/s, not on their
smaller sites.
Some of the businesses caught under Scenario C already report voluntarily. It is
assumed that these companies continue to report voluntarily for their non-B sites as
well.
Simplification of Threshold Assumptions
The analysis quantifies the number of sites and businesses in each sector caught by
trigger criteria (a) and (b), ie the greenhouse and energy thresholds.
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It is not necessary to separately analyse criteria (c) and (d) for the following reasons:
· Nearly all businesses which produce more than 100 or 200 TJ of energy per year are
likely to consume at least as much energy, and so will be caught by criteria (a) or (b)
in any case (eg average emissions per site in the electricity generation sector are
nearly 300 kt CO2-e, and average company emissions are much higher);
· For companies where energy is supplied for own use rather than for sale, if 30 MW
or more of capacity is used at all, then the fuel consumption (typically natural gas)
will trigger the energy threshold at any load factor higher than about 0.05 (ie if the
capacity is used for an average of more than one hour per day see Figure 14).
Biofuel generation is less efficient, so the fuel use criterion would be triggered at
even lower load factors.
The only class of business for which the `energy produced' criterion is likely to make
the difference between participation and non-participation will be smaller renewable
energy generators, who consume no fuel and produce less than 100TJ (28 GWh) per
year. At a load factor of 25% (typical for wind), companies with more than 12MW of
plant would be captured. Larger renewable generators would be covered in any case by
the 30 MW criterion.
Since nearly all renewable electricity generators already report to the Office of the
Renewable Energy Regulator in order to create Renewable Electricity Certificates
(RECs), the cost of submitting the same data to a national reporting framework would
be negligible.
Therefore, the `30MW' and `energy produced' criteria will have no significant bearing
on the analysis and do not need to be considered further.
It was stated in the terms of reference that `companies' does not include government
departments and agencies and the facilities they operate (eg schools, hospitals) but
should include government business enterprises such as power generators. The quality
of the data do not allow such distinctions to be made, so in the analysis `businesses'
nominally cover publicly as well as privately owned enterprises.
Details to be defined in regulation
A wide range of issues would need to be defined in regulations before any mandatory
reporting regime could be operationalised. These include:
· Definition of eligible `businesses' for aggregation purposes whether companies,
local divisions of companies, collectives, public sector corporations etc.
· Definition of what constitutes a business's `responsibility' for a facility (eg
ownership, tenancy, management responsibility or some other criterion) would
determine the facilities which a company would need to take into account in
assessing its liability. There will be enormous scope for double-counting, especially
in the commercial sector eg would Westfield (with 50 shopping centres in
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Australia) be required to report energy use from its 22,500 tenants, when many of
those eg Woolworths, Coles Myer would be required to report on their own?
· The actual emission factors to be used by businesses to initially screen for their
eligibility to participate and, if so, the factors for reporting. The present study uses
uniform national average factors, but if state-based factors were used, especially for
electricity, the coverage of businesses would be different. In particular, commercial
and service businesses with electricity-only sites in Victoria would trigger the CO2-e
criteria at much lower energy use than in other States.
· Rules for enumeration and retention of data at the state level for businesses which
operate in more than one state. The original CBA identified this as a minimum
requirement before the states would consider abandoning their own data requests.
The analysis assumes that these issues are adequately addressed in the regulation,
design and administration of the reporting scheme. It makes no allowance for the
possible continuation of multiple reporting or the potentially high costs to government
of cleaning and reconciling data and removing double counts and overlaps. However,
all such uncertainties are within the overall uncertainty of the analysis.
Page 164
Energy, Sectoral and Emissions Coverage
The sectors and emissions sources covered in the analysis are summarised in Table 31.
The number of business and sites or facilities are summarised in Table 32. The number
of sites and companies meeting the trigger criteria is discussed in Section 2.
Table 31 Energy and emissions by Sector
PJ Energy Fugitive Process Total
kt CO2-e kt CO2-e kt CO2-e kt CO2-e
Agriculture, forestry & 94.4 8,250 8,250
fishing
Mining 327.0 30,433 24,413 54,847
Manufacturing 1084.2 112,327 25,951 138,277
Transport businesses (a) 582.9 44,955 44,955
Commercial and Services 234.6 45,661 45,661
Above sectors combined 2323 241,627 24,413 25,951 291,990
Generation 2233 195,205 195,205
Water, sewerage and gas 38.5 1,578 1,578
Construction 27.5 1,980 1,980
(a) Excludes private transport fuel use
Table 32 Business entities by Sector
Business Sites or Average Number of Avg Number of Avg
kt/site sites sites
Entities(a) Facilities(b) Making up Making up
50kt 25kt
Agriculture, forestry & fishing 74,111 77,065 0.1 467 234
Mining 2,731 3,768 8.1 6 3
Manufacturing 61,888 71,044 1.6 32 16
Transport businesses 30,281 30,281 1.5 34 17
Commercial and Services 546,949 687,238 0.1 753 376
Above sectors combined 715,960 869,396 0.3 180 90
Generation 66 228 856 0.06 0.03
Water, sewerage and gas NA NA NA NA NA
Construction 113,426 115,666 0.02 2921 1460
(a) Employing entities only, from ABS 8181.0 (b) Author estimate
The number of businesses corresponds to the number of `employing businesses'
reported by ABS (2004). There are also nearly 2.2 million `non-employing businesses'
(mostly sole traders or very small family businesses). Of these, nearly 1.5 m are based
in households, so their energy use is essentially indistinguishable from general
residential sector energy use. The other 0.7m are `based' elsewhere in many cases a
vehicle rather than a site. It is assumed that non-employing businesses will play no part
in any national greenhouse and energy reporting framework.
Agriculture
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Nearly all the energy used in this sector is petroleum. The average emissions per site
are very low, so that 234 average sites would be needed to trip Trigger B (Table 32).
Consequently, only those few agricultural businesses will be caught that have one or
more very large energy-using sites or an unusually large number of smaller sites.
Mining
Because fugitive emissions are of comparable magnitude to energy-related emissions,
and a high proportion of energy is electricity, average emissions per site are the highest
of the end-use sectors. There is a high probability that a mining business will meet the
trigger criteria.
Manufacturing
Although average emissions per site are comparable to transport, there is a very wide
range within the sector, from an average of 0.01 kt/site for `Other Manufacturing' to 5.0
kt/site for `Metal Products'.
Transport
Each transport business is treated as a single reporting facility irrespective of the
number of sites or states of operation.
There are three main categories of transport energy use:
a. Fuel used in private motor vehicles (this is generally divided by trip purpose: to and
from work, in the course of business and private);
b. Fuel used in vehicles offering a transport service on the open market (generally
called `hire and reward' transport businesses); and
c. Fuel used in vehicle fleets operated by businesses whose main operations are not
transport: eg truck fleets operated by miners or manufacturers, and car and van
fleets operated by large service businesses such as banks or telecommunications
companies.
The ABARE fuel use data only distinguish fuel use by mode (road, rail etc). The NGGI
further divides road vehicle fuel use and emissions by vehicle type. The following
assumptions have been used to allocate transport fuel and emissions to businesses:
· All car fuel is allocated to private users, except for the fuel used by taxis (which
accounts for just over 1% of car fuel).22
· All light truck fuel is allocated to the `hire and reward' transport sector, even though
a significant share of light trucks are now bought for private use.
22
Taxi statistics from Australian Taxi Industry Association, www.atia.com.au/statistics.php
Page 166
· All transport fuel use reported for trucks, railways, aircraft and shipping is allocated
to the `hire and reward' transport sector.
· It is assumed that fuel used by ancillary transport is allocated to the sector of the
company's principal business. For example, banks would report fleet fuel use in
their total energy use (as indeed they do for the Greenhouse Challenge).
There are bound to be overlaps and double counting. For example, many large service
and retail companies now contract out their fleet operations to `hire and reward'
operators, who reserve part of their fleet for the exclusive use of that customer. Who
should report the energy? Also, many companies cover the costs of cars as part of
employee remuneration packages. The cars are essentially used as private vehicles,
even though the company pays for and records fuel purchases.
Table 33 shows the average annual fuel use and emissions for various vehicle types. It
indicates that a heavy trucking business with more than 52 trucks, each using the
national average amount of fuel annually, would trip Trigger B. ACIL (2004) reports
42 businesses in the road freight `hire and reward' sector with 50-99 trucks, and 30 with
more than 100 trucks, which are likely to trip Trigger A.
In fact, the number of large fleets reported for ancillary operators is far higher: about
200 fleets of 50-99 trucks and 60 fleets of more than 100. It is not clear whether
ABARE would include the fuel used by these `ancillary' fleets under transport or under
the industry concerned, but in any case it is likely that nearly all of those companies
would meet the reporting triggers solely on their stationary fuel use and emissions plus
their fugitive or process emissions.
Table 33 Average energy and emissions by type of road vehicle
Average Average Veh/ Veh/
TJ/veh kt/veh 200TJ 100TJ
Cars - private 0.06 0.004 3458 1729
Cars - business (taxis, hire cars) 0.42 0.031 471 235
Light trucks - business 0.09 0.006 2325 1163
Med trucks - business 0.25 0.017 814 407
Heavy trucks - business 1.92 0.134 104 52
Buses - business 0.31 0.021 649 325
Commercial and Services
The estimates of sites numbers in this sector are largely unchanged from the original
CBA. However, as many service sector businesses are multi-site, additional research
was undertaken to better understand the relationship between site and company
emissions. Table 34 summarises data for a sample of 10 companies, together
accounting for 6.2% of sector emissions and 4.8% of sector energy (excluding their
transport fleets).
This analysis indicates that 9 of the 10 businesses would meet both Trigger A and
Trigger B because of their large number of sites, even though average fuel use and
Page 167
emissions per site are low (averaging 0.15-0.2 kt CO2-e per site for financial services
businesses). The four Greenhouse Challenge members listed in Table 34 which report
site numbers account for 2,784 sites between them. This conflicts with published
statements that the 780 businesses already participating in the Challenge `represent
over 1000 operating sites of facilities in Australia' (most recently reported in The
Challenge, May 2005, p4). Consequently, the estimate of the number of sites covered
by existing reporting entities in the `BAU' case has been increased by 3,000.
Generation
The data for this sector are largely unchanged from the original CBA, although there
has been some refinement of the estimate of number of businesses. Emissions from
electricity generation should not be added to those for the end use sectors, because they
are already captured in end use through the use of Scope 2 emission factors.
Construction
Average emissions per facility in the construction sector are an order of magnitude
lower than the next lowest (commercial and services). It is likely that the data for the
sector are distorted by the large number of small contractors in the industry, and
possibly by undercounting of vehicle emissions. The energy use of large construction
businesses is dominated by petroleum, and resembles that of large transport businesses,
and for the time being is treated within the transport business sector. As total fuel use in
the construction sector is less than 5% of transport business fuel use, this assumption is
not likely to make any material difference to the analysis.
Water, sewerage and gas
This sector is not separately analysed. As most water and gas utilities already
participate in existing greenhouse and energy reporting arrangements, their participation
in any national framework is unlikely to add to reporting costs.
Waste
It is assumed that ABARE includes energy use in the Waste sector in Commercial and
Services. Much of the landfill emissions captured for generation will be covered by
electricity businesses. Only one business is known to report fugitive emissions from its
landfills that are not captured (Table 34).
Page 168
Table 34 Sample of commercial and service companies participating in Global Reporting Initiative
kt CO2-e TJ kt CO2-e TJ Trigger A Trigger B Sites TJ/site Stationary kt GHP
CO2-e/ members
Stationary Stationary total Total facility May 05 list
Westpac (Financial services) 107 270 125 691 Yes Yes 810 0.33 0.13 Yes
ANZ (Financial services)) 118 478 121 526 Yes Yes 756 0.63 0.16 Yes
IAG Insurance (Financial services) 43 173 52 295 Yes Yes 280 0.62 0.15 No
NAB (Financial services) 186 746 242 1491 Yes Yes 1218 0.61 0.15 Yes
Telstra (Communications) 1161 4668 1302 6559 Yes Yes NA NA NA Yes
Singtel Optus (Communications) 154 620 164 749 Yes Yes NA NA NA No
Transfield Services (excludes generation) 6 22 28 327 Yes Yes NA NA NA No
Vic Super (Financial services) 0.3 1 0.3 1 No No 3 0.41 0.10 No
Woolworths (Retail) excludes vehicles 999 3995 998.6 3995 Yes Yes 1600 2.50 0.62 No
WSN Environment Solutions (Waste)(a) 39 364 377 396 Yes Yes NA NA NA No
Total of above 2812 11336 3411.3 15031 4667 (b) 2.43 (c) 0.60 (c)
Derived by author from Sustainability Reports posted on http://www.globalreporting.org/ (a) Excludes 1,598 kt CO2-e fugitive emissions from landfills that are
not captured. (b) Minimum value does not include NAs (c) Maximum value addition of NA sites would drive average down
Table 35 Summary of sites meeting Triggers A and B, 5 End Use sectors
>50 kt 25-50 kt <25 kt
All Sites, 363 Total kt 157766 Avg kt 434.6 515 Total kt 20245 Avg kt 39.3 868517 Total kt 113979 Avg kt 0.1
this column Sites Total TJ 1071570 Avg TJ 2952.0 Sites Total TJ 199829 Avg TJ 388.0 Sites Total TJ 1052009 Avg TJ 1.2
363 Total kt 157766 Avg kt 435 421 Total kt 17352 Avg kt 41 120 Total kt 2500 Avg kt 21
>200 TJ
Sites Total TJ 1071570 Avg TJ 2952 Sites Total TJ 185195 Avg TJ 440 Sites Total TJ 29500 Avg TJ 246
100-200 TJ 0 Total kt 0 Avg kt 0 94 Total kt 2893 Avg kt 31 300 Total kt 5693 Avg kt 19
Sites Total TJ 0 Avg TJ 0 Sites Total TJ 14634 Avg TJ 156 Sites Total TJ 41000 Avg TJ 137
<100 TJ 0 Total kt 0 Avg kt 0 0 Total kt 0 Avg kt 0 868097 Total kt 105787 Avg kt 0.1
Sites Total TJ 0 Avg TJ 0 Sites Total TJ 0 Avg TJ 0 Sites Total TJ 981509 Avg TJ 9107
kt/PJ 147.2 Fug+Proc 44.7 Energy 102.6 101.3 Fug+Proc 12.5 Energy 88.8 108.3 Fug+Proc - Energy 108.3
Page 169
2. Method of Analysis
Method
Single Factor Site Analysis
The Original CBA described the process by which the energy use and emissions in each
sector were allocated to categories of sites, classified by emissions. That analysis was
modified in the following way:
· The Agriculture and Transport sectors were added, to make five `End Use' sectors in
all (the original CBA covered only Mining, Manufacturing and Commercial &
Services); and
· The 25-125 kt category was split into two: 50-125 and 25-50, to better align with
Triggers A and B (noting that the triggers apply at the business level rather than the
site level).
The analysis of number of sites by emissions alone is summarised in Table 36. The share
of the total emissions from the 5 end use sectors is also indicated, by way of comparison
with the Original CBA.
The number of end use sites covered has increased from about 700,000 to about 870,000
due to the addition of the Agriculture and Transport sectors, but the share of the
emissions of included sectors has fallen from 66.0% to 60.6%, due to the relatively low
coverage of Agriculture and Transport businesses by the current greenhouse reporting
regimes. Figure 15 illustrates the coverage for each sector, and what the coverage would
be if reporting thresholds were determined by the single factor of site emissions. This
diagram has been included as a link with the original CBA, and to indicate the level of
BAU emissions coverage to which Scenarios A and B must be compared (ie 60.6%).
However, the current study does not rely on single factor analysis but on the `dual factor'
analysis described below.
Table 36 Estimated number of sites by emissions category, 5 End Use sectors
Category Number of Average Mt this Share of Cumulative Share of emissions
kt/yr sites kt/site category emissions share covered by sites
covered, this covered currently reporting
category
>125 106 1264 134.0 45.9% 45.9% 40.7%
50-125 257 92.7 23.8 8.2% 54.0% 6.5%
25-50 515 39.3 20.2 6.9% 61.0% 5.4%
10-25 1102 15.2 16.7 5.7% 66.7% 3.4%
5-10 2420 7.1 17.2 5.9% 72.6% 3.7%
1-5 8615 2.1 17.9 6.1% 78.7% 0.9%
<1 856381 0.1 62.1 21.3% 100.0% 0.1%
Total 869396(a) 0.3 292.0 100.0% 60.6%
Horizontal bands correspond to Trigger A and B emission categories (a) Does not match
Table 35 total exactly due to rounding error
Page 170
Dual Factor Site Analysis
Sites can be classified by energy use as well as by emissions. This was done in the
following way (for each End Use sector and for Electricity Generation separately):
· Consolidate sites according to the three categories of emissions defined by Triggers A
and B: >50 kt, 25-50kt and <25 kt. These are indicated as columns in Table 35.
· Estimate the number of sites in the three categories of energy use defined by Triggers
A and B: >200TJ, 100-200 TJ and <100TJ. These are indicated as rows in Table 35.
· Estimate the number of potential sites in each of the 9 cells of the table using the
following rules:
Average emissions for the sites in each cell must remain within the emissions
constraints (eg the 94 sites in the centre cell average 31 kt/site, which is within the
25-50 kt range);
Average emissions for the sites in each cell must remain within the energy use
constraints (eg the 94 sites in the centre cell average 156 TJ/site, which is within
the 100-200 range);
Average kt/PJ emission factors must remain within bounds (ie not more than 250
kt/PJ, which would represent and all-electric site, and not less than 52 kt/PJ,
which would represent an all-gas site), and preferably close to the weighted
average emission factor for that group (indicated in the bottom row of Table 35).
These constraints make it impossible to have a site emitting more than 50kt with energy
use of less than 200 TJ, and limit the maximum number of 25-50 kt/100-200 kt sites to 94
(note that these totals exclude Electricity Generation, which was analysed separately).
In the <25kt category, which is dominated by Commercial and Services, Transport and
Agriculture Sites, the number of >200TJ sites is limited to large fuel-dominated facilities
(the emissions from electric-intensive sites exceeding 200 TJ would exceed 25 kt and so
violate the constraint). The number of 100-200TJ sites in this emission category is
estimated at 300, but could potentially be much higher. If this estimate were increased,
the residual average consumption of the remaining 868,097 sites shown at the bottom
right cell of Table 35 would have to fall.
Once this table is solved, the number of sites meeting Trigger A and B can be read off.
The 904 sites in the red cells meet either the energy or the emissions criterion for Trigger
A the sites in the `intersection cell' (top left) meet both. The 394 sites in the orange
cells meet the criteria for Trigger B but not A. The 868,097 cells in the green cell do not
meet the criteria for either trigger. Figure 16 illustrates the estimated number of sites
meeting Trigger A and B in each sector.
There are (904+394) =1298 end use sites meeting Trigger B, since all sites meeting
Trigger A automatically meet Trigger B as well. About 42% of Trigger A and 66% of
Page 171
Trigger B sites meet both emission and energy criteria factors. Of the sites which meet
one criterion only, more meet the energy than the emissions criterion (Table 37).
Table 37 Sites meeting energy and emissions criteria
Sites meeting trigger by TJ Sites meeting trigger by kt
>200 TJ 100-200 TJ >100TJ >50kt 25-50 kt >25kt
Agriculture 1 54 55 0 5 5
Mining 370 50 420 160 200 360
Manufacturing 316 90 406 136 150 286
Transport 107 30 137 37 60 97
Comm & Services 110 170 280 30 100 130
End Use Sectors 904 394 1298 363 515 878
Generation 67 50 117 67 27 94
Total sites 971 444 1415 430 542 972
It is possible to get some external verification of these estimates. ABARE reports that for
the businesses covered by the FES (mainly Agriculture, Mining, Manufacturing,
Transport and Generation, but not Commercial and Services) there are 777 sites with
energy use exceeding 100 TJ per annum.23 Table 37 indicates 1415 sites exceeding 100
TJ. This would imply that there are about 640 sites or facilities with >100TJ energy use
not presently covered by reporting to the FES, and up to 280 of these are in the
Commercial and Services sector alone.
23
From ABARE FES, conveyed to author by PWG. Apparently 705 of these sites also exceed 250 TJ.
Page 172
The Relationship between Companies and Sites
For single-site businesses there is a direct relationship between the number of sites
meeting a given trigger and the number of businesses: if 75 sites meet Trigger A then so
do 75 businesses. For any group of businesses having two or more sites, however, and
where the sites differ in their energy and emission characteristics, three different outcome
are possible:
· The number of businesses meeting a given trigger could be lower than the number of
sites meeting the same trigger. This would occur if some businesses had more than
one above-trigger site;
· The number of businesses meeting a given trigger could be higher than the number of
sites meeting the same trigger. This is possible because a business could have enough
sub-trigger sites to add to the trigger; or
· The number of businesses meeting a given trigger could be equal to the number of
sites meeting the same trigger. This is the least probable outcome.
Therefore, there is no necessary relationship between the number of sites meeting each
trigger and the number of businesses. The best guidance would be a survey and analysis
of a statistically significant number of firms in each end use sector. In the absence of
such information, the number of businesses meeting each threshold can be estimated
within the known constraints of total businesses, total sites meeting each trigger and total
energy and emissions. This is the approach taken in this study.24 All end use businesses
are combined for this part of the analysis, because there is no real data basis to
differentiate sectors, and many large companies will have sites across sectors.
In the solution illustrated in Table 38, 71% of businesses have one site, 15% have two
and 14% have more than two (the average for this group is 3.0). In the end use sectors,
the overall average of sites per business is 1.2 (in Electricity Generation it is 3.6). Sites
not meeting trigger B (`sub-B') were split into Larger and Smaller, such that two Larger
sub-B sites would be enough for a business to trip Trigger B. Of course, many sub-B
sites are owned by businesses that also have A or B sites, and so do not change the
compliance status of the business, and many B sites are owned by businesses that also
have A sites. Many businesses, especially in the Commercial sector, will meet Trigger A
trigger solely through having many Smaller sub-B sites (eg 5 of the 10 businesses in
Table 34).
24
Even within these constraints, there is an infinite number of solutions, and if high confidence were
required a Monte Carlo type probability program would need to be set up to identify the region where the
solutions converge. However, given the uncertainty surrounding reporting costs and other values critical to
the cost-benefit analysis, and the relatively modest cost of the reporting regime as a whole, this does not
seem necessary for the present.
Page 173
Table 38 indicates that 504 businesses in Australia are estimated to meet Trigger A and a
further 382 businesses would meet Trigger B.25 The number of businesses and sites
caught by Trigger C lies between the totals for Trigger A and Trigger B.
Table 38 Estimated number of businesses meeting proposed trigger criteria
Category of business in relation to trigger Number of Sites Sites only Larger Smaller Total Average
criteria businesses meeting meeting sub-B sites sub-B sites reportable reportable
Trigger A Trigger B (a) (a) sites sites per
(a) (a) (a) business
Businesses meeting Trigger A 504 1018 250 1185 2560 5013 9.9
Additional businesses meeting Trigger B 382 0 194 583 1177 1954 5.1
Total businesses meeting Trigger B 886 1018 444 1768 3737 6967 7.9
Additional businesses meeting Trigger C 194 0 194 0 0 194 1.1
Total businesses meeting Trigger C (b) 698 1018 444 1185 2560 5207 7.6
Businesses not meeting any Trigger 722233 0 0 2006 861223 863229 1.2
Total all businesses 723119 1018 444 3774 864960 870196(a) 1.2
Includes Electricity Generation businesses (a) Number of sites which need to be covered
in reporting. (b) In Scenario C, reporting on sub-B sites is only required for Trigger A companies. Only.
(c) Does not match Table 35 total exactly due to rounding error.
Scenarios
To compare Scenarios A, B and C with the existing reporting requirements it is necessary
to convert estimates of numbers of sites captured under the current regime (which in the
Original CBA were based on emissions alone) to the dual factor classification used in
Scenarios A and B. The conversion, illustrated in Table 39, suggests that about sixty per
cent (300/504) of the businesses that would be caught by Trigger A (Table 38) are
covered by existing reporting arrangements, and about fifty five per cent (490/886) of the
sites that would be caught by Trigger B are already covered.
It is estimated that about 85% of the companies currently participating in greenhouse and
energy reporting (some voluntarily, and some by obligation) would fall below Trigger B.
In Scenario C, all 504 of the businesses meeting Trigger A would have to report.
However, only those of the 370 companies in the `A to B' group which have one B site
would need to report. It is estimated that there are 194 businesses in this category, with
194 B sites between them.26 It is estimated that about half these businesses would
already participate in existing reporting arrangements, so Scenario C would only bring in
about 97 businesses and 97 B sites beyond Scenario A. (It is assumed that the businesses
in this category which already report voluntarily report on all their sites and continue to
do so, but businesses reporting mandatorily, report only on their B sites and not any other
sites).
25
Although the estimates are subject to some uncertainty the values are presented as they are produced by
the spreadsheet rather than rounded to the nearest 10 or 100, which would be a more accurate reflection of
their degree of approximation.
26
Logically, a business in this category can only have one B site, because if it had more than one it would
meet Trigger A.
Page 174
Table 39 Estimated number of currently reporting businesses meeting proposed
trigger criteria
Business businesses Eligible % eligible Sites Sites Below Below Total Sites per
Category reporting businesses companies Meeting Meeting Trigger B Trigger B sites business
now Trigger A B not A Larger Smaller
A only 300 504 60% 605 200 100 300 1205 4.0
A to B 190 382 50% 0 80 150 500 730 3.8
Below B 2776 722233 0.4% 0 0 350 6424 6774 2.4
Total reporting 3266 723119 0.5% 605 280 600 7224 8709 2.7
Total sites 1018 444 3774 864960 870196
% of sites covered 59% 61% 16% 0.8%
Page 175
3. Findings
Once the numbers of companies and sites is estimated, it is relatively straightforward to
calculate annual costs of the reporting framework, based on the cost assumptions in Table
40. The cost categories follow those used in the Original CBA:
· Annual `entity costs' represent the fixed cost to the business of participating in the
reporting regime (whether mandatory or voluntary), and of collecting and submitting
data, irrespective of the number of sites. The costs are estimated at $10,000 per
annum for businesses meeting Trigger A, $5,000 for businesses meeting Trigger B
but not A and report on all their sites, $4,000 for businesses that meet Trigger B but
not A and report only on their B sites (for Scenario C), and $1,000 for those
businesses which only have sub-B sites but report voluntarily.
· Sites costs: these represent record keeping costs per site, and the estimate ranges from
$2,000 for a site which meets Trigger A on its own to $ 200 for a small sub-B site (eg
a branch owned by a national bank, a shop owned by a national retailer). In the BAU
scenario, site costs are increased by the estimated multiple reporting factor (1.25).
· Administrative costs borne by the Data Requiring Agencies. The annual processing
costs are estimated at $500 per report from each Trigger A business, $400 per report
from each business meeting Trigger B but not A and $300 per report for residual sub-
B reporter. In the BAU scenario, processing costs are increased by the estimated
multiple reporting factor (1.25).
· The recurrent fixed administrative costs of running the national greenhouse and
reporting framework database are estimated at $1 m per year.
As in the Original CBA, it is assumed that if a mandatory framework is established, those
currently reporting businesses which fall below the threshold will continue to report, but
gain some cost savings from reporting once only rather than making multiple reports as at
present. These continuing sub-threshold businesses are termed `residual reporters'. As
thresholds are lowered, the number of residuals falls, since some will become mandatory
reporters. The elimination of multiple reporting also lowers the administrative costs to
Data Requiring Agencies, since fewer reports need to be processed.
The principal cost findings are summarised in Table 41. The main points are:
· The cost of the existing reporting regime is about $M 13.2 annually; about 83% of
this is business costs, and the rest administrative costs.
· The annual cost would increase to $M 16.1 under Scenario A (the 50kt/200TJ trigger,
applied at the business level) and $M 17.6 under Scenario B (the 25kt/100TJ trigger).
· The current reporting regime covers 60.6% of the total emissions from the 5 main end
use sectors (ie excluding Electricity Generation, which must be analysed separately to
avoid double counting). The coverage increases to 69.6% for Scenario A , 74.2% for
Scenario B and 71.2% for Scenario C.
Page 176
· The annual cost for Scenario C would be $M 16.7. This represents a $M 0.9 per year
saving compared with Scenario B, but also a 3.0 percentage point reduction in end
use emissions coverage.
· The cost per percentage point of sector emissions covered (the measure of
effectiveness used in the Original CBA) is about $M 1.48 per annum for the existing
regime, and in the narrow range $M 1.58-1.62 for Scenarios A, B and C. (The
emissions coverage for the Electricity Generation sector is already over 98% under
the current regime and would approach 100% under Trigger A, so the potential for
increased coverage is negligible. However, `single-report' mandatory reporting
would result in a major reduction in the multiple reporting burden, which is highest in
the Generation sector.
· The value to government, the public and to business users themselves of the
significant increases in data quality, reliability and timeliness that a mandatory
regime would bring about have not been estimated. If the value of these quality
improvements were greater than $M 4.8 per year as is highly likely - even the most
costly scenario (Scenario B) would be cost-effective.
· The Net Present Value of the costs of the reporting regime (at 10% discount rate over
a 12 year reporting period) would be about 22% higher than BAU for Scenario A,
34% higher for Scenario B and 27% higher for Scenario C.
· Costs per participating business are $3,323 per annum under BAU, $4,016 per annum
under Scenario A, $4,201 per annum under Scenario B and $4,054 per annum under
Scenario C.
*****
Table 40 Cost Assumptions
$/year
Gentility cost per reporter (Trigger A) $ 10,000
Gentility cost per reporter (Trigger B not A) $ 5,000
Gentility cost per B site reporter (Trigger C) $ 4,000
Entity cost per smaller voluntary reporter $ 1,000
Site cost per A site $ 2,000
Site cost per B not A site $ 1,200
Site cost per Larger sub-B site $ 500
Site cost per Smaller sub-B site $ 200
Administration costs A entity $ 500
Administration costs per B not A entity $ 400
Administration costs per sub-B entity $ 300
Weighted average all sites, BAU $ 324
Page 177
Table 41 Summary of Findings
Number of Number M/yr $M/yr $M/yr Average $M/yr $M/yr $M NPV % of end $M NPV
reporting of sites $entity site business $/yr per admin total total use per % of
businesses (b) covered costs costs costs entity costs costs Costs(a) kt CO2-e CO2-e
BAU (Existing) 3266 8709 6.7 4.1 10.9 3,323 2.3 13.2 89.8 60.6% 1.48
Scenario A: Meeting Trigger A 3470 12517 8.8 5.2 13.9 4,016 2.2 16.1 109.7 69.6% 1.58
Scenario B: Meeting Trigger B 3662 13741 9.7 5.7 15.4 4,201 2.2 17.6 120.1 74.2% 1.62
Scenario C 3584 12631 9.2 5.3 14.5 4,054 2.2 16.7 114.0 71.2% 1.60
(a) Net Present Value at 10% discount rate of annual business and administrative costs over a 12 year period (b) Note that the estimates embody assumptions about
the behaviour of existing reporters under changes in regime. This accounts for apparent differences between tables.
Table 42 Comparisons with BAU (a)
Number of Number of Number of Number of Total costs Total Total $M/yr Total $M/yr
reporting reporting sites sites beyond $M/yr business costs costs, costs,
businesses businesses (total) BAU $M/yr averaged over averaged over
(total) beyond BAU reporting covered sites
businesses
BAU (Existing) 3266 NA 8709 NA 13.2 10.9 4035 1513
Scenario A: All businesses meeting Trigger A 3470 204 12517 3808 16.1 13.9 4639 1286
Scenario B: All businesses meeting Trigger B 3662 396 13741 5032 17.6 15.4 4812 1283
Scenario C: As for A, plus businesses with a B site 3584 318 12631 3922 16.7 14.5 4667 1324
(a) Note that the estimates embody assumptions about the behaviour of existing reporters under changes in regime. This accounts for apparent differences
between tables.
Page 178
Figure 14 Relationship between 30MW generation capacity and Natural Gas use
2500
2000
TJ Natural Gas Used
1500
>50 kt CO2-e 25-50 kt CO2-e <25 kt CO2-e
1000
500
> 200 TJ
100 - 200 TJ
Exempt
0
0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.10
Load factor
Figure 15 Estimated coverage of sector emissions by facility (NOT business)
emission thresholds
100% Generation
90%
Mining
80%
Manufacturing
70%
60%
Transport
50%
Commercial
40%
30% Agriculture
20%
End use sectors combined
(sub-threshold voluntary
10% reporting continues)
End use sectors combined
0% (mandatory reporting only)
>125 > 50 >25 >10 >5 >1 All
Page 179
Figure 16 Number of sites meeting Triggers A and B by sector
1600
1400
1200
Number of sites or facilities
1000
Meets B
800
Meets A
600
400
200
0
Ag Mining Mfr Trans Services Generation All
Figure 17 Number of business meeting Triggers A, B and C and sites covered
6000
5000
4000
Number of
businesses
Number
Number of Sub-
3000
B sites
Number of
Trigger B sites
2000
Number of
Trigger A sites
1000
0
Businesses Businesses Businesses Businesses Businesses Businesses
meeting meeting meeting meeting meeting meeting
Trigger A Trigger A Trigger B (not Trigger B (not Trigger C Trigger C
A) A)
Page 180
References
ABS (2004) Australian Bureau Of Statistics Business Register: Counts Of Businesses -
Summary Tables ABS 8161.0.55.001, ABS October 2005
ACIL (2004) Trucking Driving Australia's Growth and Prosperity. ACIL Tasman, for
the Australian Trucking Association, August 2004
GWA (2006), Costs and Benefits of a National Greenhouse and Energy Reporting
Framework, George Wilkenfeld and Associates with Energy Strategies, for Department
of the Environment and Heritage, March 2006
Page 181
Attachment C: List of stakeholders that provided written submissions on the April
2006 Consultation Paper - A Streamlined National Reporting Framework for
Greenhouse and Energy Data: Reducing the Burden.
1. Australia Post 41. NSW Minerals Council
2. ORICA 42. SA Water
3. Infraserv on behalf of Department of 43. Australian Lot Feeders Association
Corrective services and Department 44. Australian Business Council for
of the Attorney General WA. Sustainable Energy
4. WA Department of Health 45. Shell
5. De Bortoli Wines 46. TRU Energy
6. Northlink/NIETL, School of 47. Australian Business Limited
Aerospace Mechanical and 48. CEC Constructions Pty Ltd
Manufacturing and Engineering, 49. Australian Chamber of
RMIT. Commerce and Industry
7. WA Chamber of Commerce and
Industry
8. Greenbase
9. WA Water Corporation
10. WA Dept of Environment
11. Australian Vinyls
12. Carter Holt Harvey
13. School of Physics, Uni of Sydney
14. Australasian Railway Association
15. National Generators Forum
16. National Association of Forrest
Industries
17. Energy Development
18. Anglo Coal
19. Verve Energy WA
20. Goldfields Esperance Development
Committee
21. Alberfield
22. QLD Rail
23. Rio Tinto
24. Energetics
25. Australian Gas Light Company
26. WA Chamber of Minerals and
Energy
27. Cement Industry Federation
28. Telstra
29. Fosters
30. NFF
31. ABS
32. Australian Sugar Milling Council
33. WA Department of Industry and
Resources
34. AEBN
35. Alinta
36. APPEA
37. EcoCarbon
38. AIGN
39. Environment Business Australia
40. Alcoa
Page 182
Attachment D: List of stakeholders that provided written submissions on the October
2006 draft Regulation Impact Statement - A National system for Streamlined
Greenhouse and Energy Reporting by Business.
1. David Collen (private citizen)
2. Hydro Tasmania
3. Telstra
4. CSR
5. A3P
6. The Griffin Group
7. Monash Sustainability Enterprises
8. Shell Australia
9. Tim Kelly (private citizen)
10. Arup
11. APPEA
12. Tomago Aluminium
13. AGL Energy
14. Queensland Resources Council
15. Australian Aluminium Council
16. National Generators Forum
17. NSW Minerals Council
18. Alcoa
19. Alinta
20. TRUenergy
21. WA Chamber of Minerals and Energy
22. Stanwell Corporation
23. WA Department of Health
24. Cement Industry Federation
25. Quenos
26. Australian Industry Greenhouse Network
27. The Water Corporation
28. Ben Rose (private citizen)
29. Australian Business Council for Sustainable Energy
30. Virgin Blue
31. Australian Lot Feeders Association
32. Greenbase
33. Australian Food and Grocery Council
34. South Australian Water Corporation
35. WA Chamber of Commerce and Industry
36. Plastics and Chemicals Industries Association
37. Australian Environment Business Network
38. Energy Australia
39. Australian Chamber of Commerce and Industry
Page 183
NOTES ON INDIVIDUAL CLAUSES
PART 1 INTRODUCTION
Division 1 Preliminary
Clause 1 Short Title
1. This clause provides that the short title by which the Act may be cited is the National
Greenhouse and Energy Reporting Act 2007.
Clause 2 Commencement
2. Paragraph 1 of the table in subclause (1) provides that the commencement date for
clauses 1 and 2 and anything in the Bill not covered elsewhere by the table in
subclause (1) is the day on which the Bill receives the Royal Assent.
3. Paragraph 2 of the table in subclause (1) provides that the commencement date for
the clauses 3 to 77 will be the day after the day the Bill receives the Royal Assent.
Clause 3 Object
4. This clause sets out the objects of the Bill. The Bill requires mandatory reporting and
dissemination of information related to greenhouse gas emissions, energy production
and consumption by corporations, and reporting on greenhouse gas projects.
5. Greenhouse gas emissions reporting under this Bill will be used to underpin a future
Australian Emissions Trading Scheme. The creation of a central, comprehensive data
collection will facilitate policy formulation by governments (including State and
Territory Governments) and assist in meeting international reporting obligations.
Public disclosure of information under this Bill will inform the Australian public on
greenhouse gas emissions and energy production and consumption by corporations
operating in Australia. The Bill is also intended to streamline duplicative reporting
requirements.
Clause 4 Constitutional basis for Act
6. This clause sets out the Commonwealth Constitutional powers upon which this Bill
is based.
Clause 5 Act excludes some State and Territory laws
7. This clause supports streamlining of greenhouse and energy reporting by enabling
corporations to meet the reporting requirements of multiple programmes through a
single system, consistent with the government's commitment in the 2004 Energy
White Paper Securing Australia's Energy Future.
8. This clause provides for the exclusion of specific State or Territory laws (or part
thereof) applying to constitutional corporations if they provide for the reporting or
disclosure of information relating to greenhouse gas emissions, greenhouse gas
projects, energy consumption or energy production and are listed in the regulations
as a law, or part of a law, to which this clause applies.
9. The Government's intention is to work cooperatively with State and Territory
governments to transition towards a single reporting system across all jurisdictions.
The Government will seek the views of States and Territories to ensure that laws not
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intended to be excluded by this Bill (for example, State and Territory laws relating to
national energy legislation reporting and information requirements) will not be
affected.
Clause 6 Application to external Territories, Exclusive Economic Zone and
innocent passage
10. This clause provides that the Bill will apply to all of the external Territories of
Australia and will apply to Australia's exclusive economic zone. However, subclause
6(2) clarifies that the Bill will not apply to the extent that its application would be
inconsistent with a right of innocent passage that is being exercised by a ship within
the limits of the territorial sea.
Division 2 Interpretation
Clause 7 Definitions
11. This clause defines key terms that are used throughout the Bill. Where possible,
definitions mirror existing legislation and standards for greenhouse and energy
reporting.
12. A key definition in this clause is the controlling corporation, which determines the
entity responsible for reporting under this Bill. The controlling corporation is defined
so that the corporation at the top of the corporate hierarchy is the corporation
responsible for reporting. The definition includes all constitutional corporations, that
is foreign corporations and trading and financial corporations formed within the
limits of the Commonwealth. A controlling corporation will either have subsidiaries
or be a single corporation, but in either case will not have a holding company
incorporated in Australia.
Clause 8 Group and members of a group
13. This clause defines the group and members of that group. The definition of the group
is important under the Bill as the reporting thresholds applicable for the reporting
requirements are applied to the controlling corporation's group.
14. Subclause (1) defines a controlling corporation's group, although the definition has a
limited application if the controlling corporation is not incorporated in Australia. The
effect of this limitation is that a corporation not incorporated in Australia would not
need to report on its subsidiaries. This is intended to address the situation where a
corporation is incorporated in Australia and its foreign holding corporation could be
considered the controlling corporation for a subsidiary. In this instance the
controlling corporation in Australia is required to report on its subsidiaries, not the
foreign holding corporation. This avoids a possible doubling up of reporting.
15. Subclause (3) deals with situations in which more than one holding company holds a
controlling interest in a subsidiary according to the rules outlined in the
Corporations Act 2001. In such a case, if another the company either (i) controls the
composition of the subsidiary's board; or (ii) is in a position to cast, or control the
casting of, more than one half of the maximum number of votes that might be cast at
a general meeting of the subsidiary, they would be considered to be the holding
company in precedence over the company which (iii) holds more than one half of the
issued share capital of the first body (excluding any part of that issued share capital
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that carries no right to participate beyond a specified amount in a distribution of
either profits or capital).
16. Subclause (4) makes provision for the situation where a controlling corporation's
group is a joint venture. It requires a group member participating in a joint venture to
include that joint venture in their group if they have been nominated by the
participants in the joint venture as the entity responsible for the joint venture. A
group member participating in a joint venture would also be required to include that
joint venture in their group if the joint venture participants have not nominated
anyone as the entity responsible for the joint venture.
17. Subclause (5) makes provision for the situation where a controlling corporation's
group is a partnership and takes the same approach to nominating an entity for
reporting as subclause (4) on joint ventures, discussed above.
18. Subclause (6) allows regulations to be made to establish further rules regarding how
a joint venture or partnership should make or revoke nominations for the purposes of
subclauses (4) and (5).
Clause 9 Facilities
19. This clause defines a facility for the purposes of the Bill. Subclause (1) establishes
that a facility is an activity or series of activities (including ancillary activities) that
involve the production of greenhouse gas emissions, production of energy or
consumption of energy.
20. Paragraph (1)(a) highlights that the activity, or series of activities of a facility must
only form one undertaking or enterprise as well as meeting requirements that will be
outlined in the regulations. Paragraph (1)(b) also clarifies that the Greenhouse and
Energy Data Officer (GEDO) may declare a facility under clause 54.
21. Subclause (2) clarifies that if the GEDO declares an activity or activities to be a
facility this will take precedence over any interpretation of the clause by a registered
corporation.
22. Subclause (3) clarifies that the activity/activities carried out within a facility must not
fall into more than one industry sector. Regulations made for the purposes of
paragraph (1)(a) will specify what activities are attributable to a particular industry
sector.
23. The definition of a facility as outlined in this clause is critical to what companies will
or will not be required to report. The definition is deliberately broad to allow for
further detail on determining the boundaries of facilities in different industry sectors
to be provided in the regulations. Regulations on determining boundaries around
facilities will need to be very detailed to ensure that corporations have clarity on
their reporting obligations. The Australia New Zealand Standard Industrial
Classifications will be used to guide development of the regulations for industry
sectors.
Clause 10 Emissions, energy production and energy consumption etc.
1. Subclause (1) enables regulations to be made to define the key terms referred to in
this subclause. Subclause (2) clarifies that regulations made for the purposes of
defining emissions of greenhouse gas may specify a meaning of emissions of
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greenhouse gas that includes emissions related to the consumption of specified kinds
of energy.
2. Subclause (3) enables the Minister to determine, by legislative instrument, methods,
or criteria for methods, by which the value of the emissions, reduction, removal,
offsets, production or consumption are to be measured.
Clause 11 Operational control
3. Subclause (1) defines operational control for the purposes of a facility. The definition
is based on definitions in the World Business Council for Sustainable
Development/World Resources Institute Greenhouse Gas Protocol Corporate
Accounting and Reporting Standard and the International Standards Organisation's
International Standard 14064-1. The definition has been modified to promote legal
certainty in regard to which corporation has operational control over a facility.
4. Subclause (2) clarifies that if the GEDO declares a corporation to have operational
control over a facility this will take precedence over any interpretation of the clause
by a registered corporation.
5. Subclause (3) also clarifies that only one corporation can have operational control
over a facility at any one time. This is important to avoid duplication of reporting.
6. Subclause (4) outlines how to determine which corporation has operational control in
a case where more than one corporation could meet the criteria outlined in subclause
(1). In this case the corporation with the greatest control over the operating policies
and environmental policies of the facility would take precedence over the
corporation with lesser control. The corporation with control over the operating
policies and environmental policies of the facility would also take precedence over a
corporation with control of the health and safety policies only. This is because
control of operating policies and environmental policies is more analogous to control
over emissions and energy than control of health and safety policies.
PART 2 REGISTRATION
Division 1 Applying for Registration
Clause 12 Obligation to apply to register
7. This clause outlines the period in which a corporation must apply to be registered for
reporting under this Bill. A corporation can apply to register anytime from the
beginning of the financial year for which they will be required to report, until two
months after the end of that financial year. A civil penalty of 2000 penalty units
applies to corporations which have not submitted an application to register by the
due date and which have triggered a threshold. The penalty is designed to deter
corporations from avoiding any reporting obligation by failing to register. In addition
clause 30 allows a continuing penalty to be applied for each day that a corporation
remains unregistered. This is intended to deter corporations from not registering once
they have been penalised.
Clause 13 Thresholds
8. This clause outlines the thresholds at which corporations are required to register and
report their greenhouse gas emissions, energy production and consumption under this
Bill. The thresholds at paragraphs (1)(a), (1)(b) and (1)(c) apply to entire corporate
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groups as defined in clause 8. Each set of thresholds decreases over the first three
years of the Bill. The majority of corporate groups which trigger the highest
threshold will already be reporting through existing programmes. As the thresholds
decrease, more corporate groups which may not be participating in, or complying
with, existing requirements will trigger the thresholds. The staged thresholds will
alert corporations to their future obligations and allow them time to put the systems
in place to meet these obligations.
9. The facility threshold outlined at paragraph (1)(d) is intended to ensure that large
facilities operated by corporations which do not trigger the corporation-level
threshold, are covered by reporting obligations. This is necessary for the
maintenance of existing national data collections and to ensure that all facilities
likely to be included in the future Australian Emissions Trading System are covered
by this Bill.
10. Subclause (2) allows corporations that only control a facility for part of a financial
year to apply a pro-rated threshold to determining whether they are required to report
on that facility.
Clause 14 Applying to register in relation to greenhouse gas projects
11. This clause allows corporations to apply to be registered under this Bill in order to
report on greenhouse gas projects. It is envisaged that this will facilitate smaller
companies providing offsets into the pre-emissions trading voluntary offsets market
and potentially into a future Australian Emissions Trading Scheme.
Clause 15 Requirements for applications
12. This clause outlines the matters that must be addressed in a controlling corporation's
application to register under clauses 12 and 14.
Division 2 The Register
Clause 16 The Register
13. This clause establishes a register called the National Greenhouse and Energy
Register and outlines the information that will be kept on the register. The register
will be used to record and inform the public as to the corporations that have
registered under this Bill. The register can make public information related to the
identity of registered corporations, their registration status and aggregated company
data as provided for in clause 24 of the Bill.
Division 3 Registration and deregistration of corporations
Clause 17 Registration of corporations
14. This clause outlines the GEDO's obligations with regards to registering a
corporation. If a corporation, which is likely to trigger a threshold (specified in
clause 13) has applied for registration and has met the requirement specified under
clause 15, the GEDO must register the corporation. Alternatively if a corporation has
elected to register in order to report on greenhouse gas projects under clause 14 and
has met the requirements specified under clause 15, then the GEDO may register the
corporation. Once the GEDO has registered a corporation, the GEDO must notify the
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corporation of its decision in writing, and registration would take effect when the
GEDO has entered the name of the corporation on the register.
Clause 18 Deregistration of corporations
15. If a registered corporation has not met the thresholds for reporting and can
demonstrate that they are unlikely to meet the thresholds for the next two financial
years, they can apply to be deregistered. This clause sets out what an application for
deregistration must contain and what matters the GEDO must take into account when
making a decision to deregister a corporation. The two year conditionality is to
prevent corporations registering and deregistering on a regular basis.
PART 3 OBLIGATIONS OF REGISTERED CORPORATIONS
Clause 19 Report to be given to Greenhouse and Energy Data Officer
16. This clause requires a registered corporation to provide the GEDO with a report each
financial year relating to the greenhouse gas emissions, energy production and
energy consumption of the corporation from the operation of facilities under the
operational control of the corporation during that financial year.
17. A civil penalty of 2000 applies to not providing a report in relation to this clause by
the due date. This provision is also subject to a continuing penalty provision under
clause 30, which allows a penalty to be applied for each day that a corporation has
not submitted a report. These penalties are intended to deter corporations from
reporting late or failing to report in accordance with this clause.
18. The clause also clarifies the reporting requirements for corporations which control a
facility for only part of a financial year. In this case the corporation is only required
to report on the greenhouse gas emissions and energy production and consumption
for the period during which it had operational control of the facility.
19. Subclause (4) allows a member of the controlling corporation's group to report data
directly to the GEDO where data relates to facilities for which the member has
operational control. The practical effect of this to enable flexibility with regard to the
internal data collation and reporting systems within the controlling corporation's
group.
20. Subclause (6) specifies the information that must be provided in the report and the
date by which the report is to be provided to the GEDO.
21. Subclause (8) enables regulations to be made specifying different reporting
requirements for registered corporations. The regulations are intended to allow
controlling corporations which are registered but do not meet any thresholds for a
year to submit a simple report stating that they have not met the thresholds. It also
allows regulations to specify different requirements for corporations which to not
trigger certain thresholds (for example, the regulations may specify different
requirements for corporations that meet a facility-level threshold and/or a corporate-
level energy threshold, but do not meet a corporate-level greenhouse gas threshold).
22. Subclause (9) clarifies that regulations made for the purposes of paragraph (6)(c)
may specify information that a state or territory has requested the GEDO to collect.
The intention is to enable data required by relevant state and territory programmes to
be reported through the national reporting framework, consistent with clause 3,
where programme needs cannot be fully met by data otherwise reported under this
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clause. The Government's intention is to apply this subclause judiciously and to
work cooperatively with states and territories to ensure that programme needs can be
met in the most efficient way.
Clause 20 Liability of other persons to provide certain information
23. Subclause (1) clarifies that a registered corporation is not required to include
information in a report if the GEDO has determined under subclause (3) that the
information is to be provided by another person. Either the registered corporation or
the other person may apply for a determination. The effect of a determination is that
the other person must provide the information to the GEDO, rather than providing
the information to the registered corporation. This clause is intended only to apply in
cases where the other person is unable to disclose this information to the registered
corporation for commercial reasons.
24. Subclause (3) sets out the matters to which the GEDO must have regard when
making a determination under subclause (1). The determination of the GEDO must
be made in writing, but is not a legislative instrument for the purposes of the
Legislative Instruments Act 2003 as the GEDO will be performing an administrative
function and will not be determining or altering the content of the law.
25. Once the GEDO has made a determination under subclause (3) requiring the other
person to provide the information, the other person must provide the information to
the GEDO on or before the day specified in the regulations, in accordance with
requirements specified in the regulations. Failure to do so will attract a maximum
civil penalty of 2,000 penalty units. This penalty is also subject to a continuing
penalty provision under clause 30, which allows a penalty to be applied for each day
that a corporation has not submitted a report.
Clause 21 - Reports relating to greenhouse gas projects
26. This clause enables a registered corporation to report to the GEDO on greenhouse
gas projects relating to the reduction of greenhouse gas emissions, removal of
greenhouse gases and offsets of greenhouse gas emissions. It also clarifies that if a
registered corporation, or a member of its group, undertakes greenhouse gas projects
for part of a financial year, the report need only relate to that part of the financial
year. Subclause (3) clarifies the circumstances in which a report must be provided.
27. Subclauses (4), (5) and (6) clarify the matters that must be addressed in the report
and the time by which the report must be provided to the GEDO. A maximum civil
penalty of 1,000 penalty units will apply if the corporation submits a report that fails
to meet the requirements of subclause (4).
Clause 22 Records to be kept
28. This clause imposes a requirement of a registered corporation (or a person or
corporation required to provide information under clause 20) to keep sufficient
records of the activities of the members of the group to facilitate its reporting
obligations. A contravention of this requirement will be a civil penalty, with a
maximum penalty of 1,000 penalty units. The penalty for a contravention of the
record keeping requirements is relatively high, as it is important to deter companies
from hiding inaccurate reporting by not keeping records. Records must be retained
for 7 years (consistent with the Energy Efficiency Opportunities Act 2006).
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PART 4 - DISCLOSURE OF INFORMATION
Clause 23 Secrecy
29. This clause creates an offence for persons identified in subclause (2) to disclose
greenhouse and energy information legitimately obtained in their capacity as a
Commonwealth officer other than in accordance with the provisions of this Bill.
30. The clause sets out a maximum criminal penalty for unauthorised disclosure of such
information of 2 years imprisonment. A note to subclause (1) also clarifies that the
conduct under this clause may also constitute an offence of section 70 of the Crimes
Act 1914.
Clause 24 Publishing of Information
31. This clause sets out the type of information that the GEDO may make publicly
available. The GEDO is required to publish on a website, for each corporate group
that is required to report and that meets the corporate-level greenhouse gas emissions
threshold, the totals of greenhouse gas emissions and energy produced and consumed
as specified by the regulations.
32. If a corporation meets the corporate level energy use or production threshold but not
the corporate level greenhouse gas emissions threshold, data for that corporation will
not be published on the website.
33. Subclause (2) provides for regulations to set out further requirements for publishing
website information relating to a corporation's greenhouse gas reductions and
removals, where that information has been reported.
34. Subclause (3) provides that the GEDO may allow data to be made public for each
corporation in the corporate group. This subclause also allows the GEDO to publish
information within a particular range of greenhouse gas emission or energy values
where the corporation's application under clause 25 has been assessed as being valid.
35. Subclause (5) provides for the GEDO to agree to a state or territory publishing
information disclosed to it if required by a state or territory law.
36. Subclause (6) allows Commonwealth Departments and Agencies outlined in clause
26 to publish aggregated data with the proviso that it does not disclose specific
information about a controlling corporation, a controlling corporation's group or a
facility. This means that data collected under this Bill will not need to be collected a
second time by departments and agencies which publish greenhouse and energy
statistics. Examples of where the data would be used include for Australia's National
Greenhouse Gas Inventory which is submitted to the United Nations Framework
Convention on Climate Change, the Australian Bureau of Agriculture and Resource
Economics Fuel and Electricity Survey, from which data is also submitted to the
International Energy Agency, and for statistical analysis published by the Australian
Bureau of Statistics.
Clause 25 Requests for information not to be published
37. This clause provides for a corporation to make an application to the GEDO for
information not to be publicly disclosed and sets out the requirements for the
application. This allows data to be available to the public for information and
analysis while maintaining the confidentiality of sensitive information.
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38. The GEDO may accept or refuse the application and must notify the applicant in
writing of the outcome.
Clause 26 Information may be disclosed to specified persons or bodies
39. This clause provides for the GEDO, or a person authorised by the GEDO, to disclose
greenhouse and energy information to specified persons or bodies. Paragraph
23(2)(g) provides that all persons to whom information is provided under clause 26
are covered by the secrecy provisions under clause 23, which carry a criminal
penalty of 2 years imprisonment.
40. Subclause (1) provides for the disclosure of greenhouse and energy information to
Commonwealth Ministers and departments and authorities with a specific need for
greenhouse or energy information.
41. Subclause (2) provides for the disclosure of greenhouse and energy information to a
person providing services to the Commonwealth, or an authority of the
Commonwealth, in relation to the administration of programmes or the collection of
statistics. This will enable use of the data by third parties, including consultants, in
undertaking work on behalf of the Commonwealth, such as contributing to the
development of Australia's National Greenhouse Gas Inventory or projections of
Australia's future national greenhouse gas emissions. Subclause (5) enables the
GEDO to make disclosure of information under subclause (2) subject to conditions
including restrictions on the disclosure of the information to other persons and
security measures in relation to the confidentiality of the information.
42. Subclause (3) provides for the disclosure of greenhouse and energy information to a
court or the Administrative Appeals Tribunal for the purposes of, or in connection
with, proceedings or possible proceedings under this Bill.
43. Subclause (4) provides for the disclosure of greenhouse and energy information to
another person for the purposes of facilitating reviews of Australia's compliance
with its international obligations relating to greenhouse and energy reporting. These
reviews will include reviews of Australia's National Greenhouse Gas Inventory
under the United Nations Framework Convention on Climate Change.
Clause 27 Information may be disclosed to states and territories
44. This clause provides that the GEDO must disclose greenhouse and energy
information to states and territories collected on their behalf, or where a facility is
located within that state or territory, including where the facility crosses a state or
territory border. States and territories will be able to use this information to
understand greenhouse gas emissions and energy production and consumption in
their jurisdiction. This will assist in developing effective and complementary policies
in these areas.
45. The Bill allows the GEDO to make disclosure of information to states and territories
conditional on certain criteria. These could include, restricting disclosure to certain
other persons (can be applied to further protect confidentiality where necessary),
requiring specific security measures (to ensure that data and IT security is handled
appropriately) and removing any duplicative reporting requirements.
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Clause 28 Corporation may request information be disclosed
46. This clause provides for corporations to request the GEDO to disclose specified
greenhouse and energy information related to the corporation and for the GEDO to
disclose this information to the party nominated by the corporation in its request.
PART 5 ENFORCEMENT
Division 1 Civil penalties
Subdivision A Civil penalty orders
Clause 29 Civil penalty provisions
47. The purpose of this clause is to clarify which provisions of the Bill are civil penalty
provisions.
Clause 30 Continuing contraventions
48. Subclause (1) clarifies that a requirement in the Bill to comply with an obligation
under a civil penalty provision, the obligation to comply with that requirement is a
continuing obligation, notwithstanding the fact that the date for compliance with that
obligation has passed.
49. Subclause (2) provides that a failure to comply with requirements to register, report
or complete an external audit (clauses 12, 19, 20 or 73) by the date specified in those
provisions will attract a penalty for each day of non-compliance. The penalty for
failure to register or report (clauses 12, 19 or 20) will attract a civil penalty of 100
penalty units for each day of non-compliance following the date specified in those
clauses. This will be in addition to the initial penalty applied for breach under those
clauses. The penalty for failure to complete an external audit (clause 73) will attract a
civil penalty of 10 penalty units for each day of non-compliance following the date
specified in those clauses. This will be in addition to the initial penalty applied for
breach under clause 73.
Clause 31 Court may order person to pay pecuniary penalty for contravening civil
penalty provision
50. This clause enables a Court to order a person to pay a pecuniary penalty to the
Commonwealth for each contravention of a civil penalty provision. The Court may
only do so if the GEDO makes an application to the Court, on behalf of the
Commonwealth, within 6 years of a person contravening a civil penalty provision.
51. Subclause (3) clarifies that the maximum penalty must not exceed the relevant
amount specified in the civil penalty provision and the amount that the person is
liable under clause 30 for the continuing contravention of the civil penalty provision.
This amount is to be determined at the time the Court makes the order.
52. Subclause (4) sets out the matters that the Court must have regard to when
determining the pecuniary penalty for a civil penalty provision.
53. Subclause (5) clarifies that if the more than one civil penalty provision has been
contravened, a person cannot be liable to more than one pecuniary penalty in respect
of the same conduct, regardless of whether proceedings have commenced in respect
of more than one civil penalty provision.
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Clause 32 Contravening a civil penalty provision is not an offence
54. This clause clarifies that contravention of a civil penalty provision is not an offence.
Clause 33 Persons involved in contravening a civil penalty provision
55. This clause provides that a person must not knowingly contribute to the
contravention of a civil penalty provision by another person. Where this occurs, the
person will be treated as though they themselves had contravened the civil penalty
provision.
Clause 34 Recovery of a pecuniary penalty
56. This clause outlines that a pecuniary penalty is owed to the Commonwealth and may
be enforced by the Commonwealth as if it were a judgment of the Court.
Subdivision B Civil penalty proceedings and criminal proceedings
Clause 35 Civil proceedings after criminal proceedings
57. This clause prevents a Court making a pecuniary penalty order against a person
where the person has been convicted of a criminal offence for substantially the same
conduct.
Clause 36 Criminal proceedings during civil proceedings
58. This clause clarifies that any proceedings that have commenced for a pecuniary
penalty order against a person for a contravention of a civil penalty provision will be
stayed if criminal proceedings are started against a person for substantially the same
conduct. The civil proceedings will be dismissed if the person is convicted of the
offence but may be resumed if the person is not convicted of the offence.
Clause 37 Criminal proceedings after civil proceedings
59. This clause provides that a pecuniary penalty order against a person does not prevent
criminal proceedings being started against the person for substantially the same
conduct.
Clause 38 Evidence given in proceedings for penalty not admissible in criminal
proceedings
60. Where criminal proceedings are commenced against a person who has already given
evidence or produced documents in proceedings for a pecuniary penalty order arising
from substantially the same conduct, this clause clarifies that evidence of this type is
inadmissible in the criminal proceedings. However, this restriction does not apply
where the criminal proceedings relating to the falsity of the evidence in the civil
proceedings.
Division 2 Infringement notices
Clause 39 When an infringement notice can be given
61. This clause enables the GEDO to issue an infringement notice for a civil penalty
provision in circumstances where the GEDO reasonably believes that the person has
contravened a civil penalty provision.
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62. An infringement notice may only be issued within 12 months of the alleged
contravention taking place.
63. This clause also clarifies that an infringement notice can be issued for contravention
of multiple civil penalty provisions. However, no person can be obliged to pay more
than one penalty for the same conduct.
Clause 40 Matters to be included in an infringement notice
64. This clause outlines the information that an infringement notice must contain. The
details of the contravention must be set out and the party exempted from proceedings
if the fine is paid. Details would include the date, time and place of the alleged
contravention, and details of which civil penalty provision was allegedly
contravened.
Clause 41 Amount of penalty
65. This clause clarifies that a penalty specified in an infringement notice relating to an
alleged contravention of a civil penalty provision must be a pecuniary penalty equal
to one fifth of the maximum penalty that could be imposed on the person for that
contravention.
Clause 42 Withdrawal of an infringement notice
66. This clause allows the GEDO to withdraw an infringement notice. If the
infringement notice is withdrawn after the penalty has been paid, the Commonwealth
is obliged to refund the penalty.
Clause 43 Paying the penalty in accordance with the notice
67. If a penalty on an infringement notice is paid the person's liability is discharged.
However, a payment by a person would not constitute admission of liability for the
alleged contravention. Criminal or civil proceedings cannot be brought for the
alleged contravention once an infringement notice penalty has been paid.
Clause 44 Effect of this Division on civil proceedings
68. This clause allows for an infringement notice to be used as an alternative to civil
penalty proceedings. If the circumstances warrant doing so, civil penalty proceedings
may be brought against a person instead of an infringement notice being issued. If an
infringement notice is issued, and is withdrawn or not complied with, civil penalty
proceedings may still be brought against the person. In civil penalty proceedings a
court is not limited to the infringement notice penalty and may impose any penalty
allowed the civil penalty provision.
Division 3 Enforceable undertakings
Clause 45 Acceptance of undertakings relating to contraventions
69. This clause enables the GEDO to accept a written undertaking by a person in the
circumstances set out in subclause (1). The GEDO will have the ability to seek such
undertakings as an alternative to other enforcement measures.
70. Subclause (1) sets out the undertakings that the GEDO may accept. These include the
person taking specified action to comply with the Bill and regulations; refraining
from taking a specified action in order to comply with this Bill and regulations; or
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taking action to ensure that they do not contravene or are unlikely to contravene the
Bill and regulations in the future.
71. Subclause (2) provides that the written undertaking must state that it is an
undertaking under this clause.
72. Subclause (3) provides that a person may withdraw or vary the undertaking at any
time with the consent of the GEDO.
73. Subclause (4) provides that the GEDO may cancel the undertaking.
74. Subclause (5) gives the GEDO power to publish undertakings on an appropriate
website to ensure transparency in the process, by making other regulated entities
aware of the undertakings made by competitors.
Clause 46 Enforcement of undertakings
75. This clause enables the GEDO to apply for an order of the Court in circumstances
where the GEDO considers that a person has breached an undertaken given under
clause 45.
76. Subclause (2) sets out the orders that a court may make it if is satisfied that the
undertaking has been breached.
Division 4 Liability of chief executive officers of corporations
Clause 47 Civil penalties for chief executive officers of bodies corporate
77. This clause sets out the circumstances under which an executive officer for a body
corporate will be taken to have contravened a civil penalty provision.
78. Subclause (2) makes it a civil penalty provision in circumstances where a corporation
has contravened a civil penalty provision, and the chief executive officer either had
knowledge of, or was reckless or negligent as to whether the contravention would
take place and the officer was in a position to influence the conduct in question and
failed to take all reasonable steps to prevent the contravention.
79. Subclause (3) specifies the pecuniary penalty that a Court may order a person to pay
where the officer is taken to have contravened the civil penalty provision in
subclause (1).
Clause 48 Did a chief executive officer take reasonable steps to prevent
contravention?
80. This clause sets out the matters to which a Court must have regard in determining
whether the chief executive officer has failed to take all reasonable steps to prevent a
contravention of a civil penalty provision. These include whether the officer has
arranged reviews of the corporation' compliance; steps they have taken to ensure the
corporation's employees are aware of requirements under the provisions of the Bill;
and any review actions they took on becoming aware that the corporation was
contravening the Bill or the regulations.
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PART 6 ADMINISTRATION
Division 1 The Greenhouse and Energy Data Officer
Clause 49 Establishment
81. This clause creates the position of the GEDO.
Clause 50 Functions
82. This clause outlines the functions of the GEDO. The functions of the GEDO are to
undertake any functions conferred by this Bill, regulations made for the purposes of
this Bill or any other law of the Commonwealth, and to do anything incidental to, or
conductive to, the performance of these functions. This may include, for example,
preparing capacity building and education campaigns for industry to assist
compliance with this Bill.
Clause 51 Appointment
83. This clause provides that the GEDO is to be engaged under the Public Service Act
1999.
Clause 52 Staff
84. This clause enables persons who are employed by the Department, and are made
available by the Secretary of the Department to be engaged under the Public Service
Act 1999 to be appointed to assist the GEDO.
Clause 53 Delegation
85. This clause enables the GEDO to delegate powers under this Bill to an employee of
the Department at the Senior Executive Officer or acting Senior Executive Officer
level.
Division 2 Decisions by Greenhouse and Energy Data Officer
Clause 54 Greenhouse and Energy Data Officer may declare facility
86. Subclause (1) provides for the GEDO to declare an activity or series of activities to
be a facility under this Bill.
87. Paragraphs (a) and (b) provide that the declaration of a facility may result either from
an application by the corporation that has operational control over the facility or on
the volition of the GEDO (operational control is defined in clause 11 of the Bill and
the notes for clause 55 below explain the purpose of declaring operational control).
88. A declaration of the GEDO under subclause (1) is not a legislative instrument for the
purposes of the Legislative Instruments Act 2003 as the GEDO is performing an
administrative function and is not determining or altering the law in this context.
89. Subclause (2) outlines the matters that must be addressed in an application by a
controlling corporation to the GEDO for a declaration of a facility. Paragraphs (a),
(b), (c) and (d) require that an application must identify the controlling corporation,
identify the facility for which an application for which a declaration is being sought,
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and include other information required by the regulations. An application should be
given in a form to be specified by the GEDO.
90. Subclause (3) provides that facility declaration decisions must have regard to the
matters set out in the regulations made under paragraph 9(1)(a). The GEDO should
ensure that facilities declared under this clause are consistent with the definitions of
facility set out in this Bill and regulations. Subclause (3) also requires the GEDO to
ensure that there is no overlap or double counting of greenhouse and energy
information reported from different facilities.
91. Subclause (4) requires the GEDO to notify applicants in writing of the outcome of
their application.
92. Subclause (5) requires that where the GEDO declares a facility without an
application having been made (i.e. a declaration under the provisions of subclause
(1)(b)), then the corporation which the GEDO reasonably determines has control
over the facility will be notified in writing of this declaration.
Clause 55 Greenhouse and Energy Data Officer may declare corporation has
operational control
1. Subclause (1) provides for the GEDO to make declarations that a corporation has
operational control over a facility (a facility is defined in clause 9 of the Bill and the
notes for clause 54 above explain the purpose of declaring a facility).
2. The obligation for reporting greenhouse gas emissions as well as energy consumed
and energy produced from a facility is established through declaring operational
control (defined in clause 11). Paragraphs (a) and (b) provide that the declaration of
operational control may result either from an application by the corporation claiming
operational control over the facility or through a decision of the GEDO.
3. A declaration of the GEDO under subclause (1) is not a legislative instrument for the
purposes of the Legislative Instruments Act 2003 as the GEDO is performing an
administrative function and is not determining or altering the law in this context.
4. Subclause (2) outlines the matters that must be addressed in an application to the
GEDO to declare operational control. Paragraphs (a), (b), (c) and (d) require that an
application must identify the controlling corporation, identify the facility for which
an application for which a declaration of operational control is being sought, and
include other information required by the regulations. An application should be
given in a form to be specified by the GEDO.
5. Subclause (3) outlines the matters to which the GEDO must have regard when
making a declaration under paragraph (1)(a). In this regard, the GEDO must have
regard to the matters set out in the regulations made under paragraph 10(1)(a), and
should also ensure that declarations of operational control under this clause are
consistent with the definitions set out elsewhere in this Bill and regulations.
6. Subclause (4) requires the GEDO to notify applicants in writing of the outcome of
their application.
7. Subclause (5) requires that where the GEDO declares operational control without an
application having been made (i.e. a declaration under the provisions of paragraph
(1)(b)), then the corporation which the GEDO reasonably determines has operational
control of a facility will be notified in writing of this declaration.
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Division 3 Review of decisions
Clause 56 AAT review of decisions
8. This clause sets out the decisions made by the GEDO for which an application for
review may be made to the Administrative Appeals Tribunal.
Division 4 Compliance and gathering evidence
Subdivision A Authorised officers
Clause 57 Appointment of authorised officers
9. Subclause (1) enables the GEDO to appoint a person as an authorised officer to carry
out the powers as set out in this Division. Paragraphs (a) and (b) require that a person
must either be an APS employee, or an employee of a State or Territory, or of an
authority of a State or Territory.
10. Subclause (2) provides that authorised officers exercising powers or performing
functions under this clause must comply with any directions of the GEDO. For
example, this may include a requirement to follow all occupational, health and safety
policies of premises they inspect.
Clause 58 Identity cards
11. Subclauses (1) and (3) require that authorised officers be issued with and carry an
identity card when performing functions under this Part.
12. Subclause (2) makes it an offence for a person who has been issued with an identity
card ceases to be an inspector, not to return the identity card to the GEDO. The
maximum penalty for a contravention of this provision is 1 penalty unit.
Subdivision B Powers of authorised officers
Clause 59 Entering premises to monitor compliance
13. This clause enables an authorised officer to enter premises to monitor compliance
with the Bill with the consent of the occupier or in accordance with the terms of a
monitoring warrant issued by a magistrate (clause 70 provides for the issue of
monitoring warrants by a magistrate).
14. Subclause (1) sets out the circumstances under which an authorised officer can enter
premises and exercise monitoring powers to substantiate information, or to determine
whether the Bill has been complied with.
15. Subclause (2) prohibits an authorised officer from entering business premises unless
the occupier has consented to the entry, or the entry is made under a monitoring
warrant.
16. Subclause (3) clarifies that if an occupier of premises has consented to the entry by
the authorised officer, the authorised officer must leave the premises when asked to
do so by the occupier.
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Clause 60 Powers of authorised officers in monitoring compliance
17. Subclause (1) sets out the powers that an authorised officer may exercise when the
authorised officer has entered premises to monitor compliance with this Bill. These
include powers to search, examine, photograph, inspect, copy, and to secure such
things as the authorised officer reasonably believes to be evidence of a contravention
of the Bill or an offence under the Crimes Act 1914.
18. Subclause (2) clarifies that an authorised officer may operate equipment at the
premises to assess the correctness of information provided by the occupier under the
Bill.
19. Subclause (3) clarifies that an authorised officer may use facilities at the premises to
put information into documentary form, to copy the documents (e.g. photocopy,
transfer electronic files to computer memory stick, disk, tape and so on) and to
remove those copies from the premises.
Clause 61 Authorised officer may request persons to answer questions
20. Subclause (1) provides that an authorised officer, who has been given permission by
the occupier to enter premises, may ask the occupier to answer questions and
produce documents related to the operation of the Bill.
21. Subclauses (2) and (4) provide that where an authorised officer has been issued with
a warrant the occupier must answer questions put and produce documents requested
by the authorised officer, unless the answer to the question or production of the
document may incriminate the person or expose the person to a penalty.
22. Subclause (3) makes it is an offence for a person to refuse or fail to comply with a
requirement under subclause (2). The maximum penalty for a contravention of a
requirement of subclause (2) is 10 penalty units.
Subdivision C Obligations and incidental powers of authorised officers
Clause 62 Authorised officer must produce identity card on request
23. This clause prevents an authorised officer from exercising any powers under the Bill
in relation to premises if he or she does not show his or her identity card at the
request of the occupier of premises.
Clause 63 Consent
24. This clause provides that an authorised officer can only lawfully enter premises
without a warrant if the authorised officer has informed the occupier that he or she is
entitled to refuse consent and the occupier has then voluntarily given the consent.
Clause 64 Announcement before entry
25. This clause provides that before an authorised officer can enter premises under a
warrant, he or she must announce that the entry is authorised by the Bill, and give
any person at the premises the opportunity to allow the authorised entry.
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Clause 65 Details of warrant to be given to occupier etc. before entry
26. This clause sets out the requirements for an authorised officer to execute a
monitoring warrant, including making a copy of the warrant available to the person
at the premises and identifying him or herself to that person.
Clause 66 Use of electronic equipment in exercising monitoring powers
27. Subclause (1) allows an authorised officer to operate electronic equipment, such as a
computer, on the premises in order to exercise monitoring powers, in circumstances
where the authorised officer reasonably believes that he or she is able to do so
without causing damage to the equipment.
28. Subclause (2) provides that the authorised officer may secure the electronic
equipment in certain circumstances where he or she requires expert assistance to
operate the equipment.
29. Subclauses (3) to (8) set out certain requirements for, and limitations on, securing
equipment for the purposes of executing monitoring powers under this Bill.
30. Subclause (9) defines premises for the purposes of this clause.
Clause 67 Compensation for damage to electronic equipment
31. This clause enables compensation to be payable by the Commonwealth to the owner
of electronic equipment (such as information technology systems) operated under
clause 66 in circumstances where the equipment is affected by damage or data
corruption due to an authorised officer or other person exercising insufficient care in
operating the equipment, or in selecting a person to operate the equipment.
Subdivision D Occupier's rights and responsibilities
Clause 68 Occupier entitled to be present during execution of warrant
32. Subclauses (1) and (2) provide that if the occupier of the premises is present then that
person is entitled to observe the execution of a warrant, provided that the person does
not impede the execution of the warrant.
33. Subclause (3) allows for the execution of the warrant in two or more areas of the
premises at the same time.
Clause 69 Occupier to provide authorised officer with all facilities and assistance
34. This clause requires an occupier of premises (or a person who apparently represents
the occupier) to assist an authorised officer executing a monitoring warrant and
makes it an offence to not provide any reasonable assistance required to enable the
authorised officer's powers to be effectively exercised. A person commits an offence
if the person fails to comply with this obligation, which attracts a maximum penalty
of 10 penalty units.
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Subdivision E Warrants
Clause 70 Monitoring warrants
35. This clause enables an authorised officer to apply to a magistrate for a monitoring
warrant, and sets out the procedures to be followed and requirements to be met for an
authorised officer to seek and a magistrate to issue a monitoring warrant for the
purposes of this Bill. It also outlines the information that must be included in the
monitoring warrant.
Subdivision F Information gathering
Clause 71 Power to request information
36. This clause provides the GEDO with powers to require information to be provided
relating to a person's compliance with the provisions of the Bill. This clause applies
to a person the GEDO has reasonable to believe has information relating to
compliance with this in their possession, custody or control, either electronically or
in other form. The GEDO can require a person to provide specified compellable
information in a specified period of time and in a specified form.
37. A civil penalty of 50 penalty units applies to a person who fails to comply with a
requirement of this clause. In addition, a civil penalty of 60 penalty units will apply
in circumstances when a person provides false or misleading information in
purported compliance with this clause.
38. The penalty for failing to provide specified information does not apply if person has
a reasonable excuse. However, such an excuse would not include claims that the
information is of a commercial nature, commercial in confidence, or commercially
sensitive. A person is also not obliged to provide information if the provision of the
information might tend to incriminate the person or expose the person to a penalty.
Clause 72 Prohibitions on disclosure of information do not apply
39. This clause clarifies that the provisions of this Division have effect despite any law
of the Commonwealth, a State or Territory prohibiting disclosure of information.
Subdivision G - External audits
Clause 73 External audits compliance
40. Subclause (1) enables the GEDO to require, by written notice, a registered
corporation to arrange for an external auditor to carry out an external audit on one or
more aspects of the corporation's compliance with the Bill or regulations made for
the purposes of this Bill. The GEDO may only take such action if the GEDO has
reasonable grounds to suspect a registered corporation has not complied with, or is
proposing to not comply with, the provisions of this Bill or regulations made for the
purposes of this Bill.
41. The requirements for the audit, of the GEDO notice and for the external auditor are
set out in subclauses (2), (3) and (4) respectively.
42. A civil penalty of 1,000 penalty units will apply if a registered corporation fails to
comply with the requirements of the notice issued by the GEDO and with the
provisions of this clause.
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Clause 74 External auditors other
43. This clause allows the GEDO to appoint an external auditor to carry out an external
audit on one or more aspects of a corporation's compliance with the provisions of
this Bill or regulations made for the purposes of this Bill.
44. A civil penalty of 1,000 penalty units will apply if a corporation fails to comply with
the requirements in relation to the audit.
Clause 75 Requirements for external auditors
45. The GEDO will determine guidelines in relation to how an external auditor must
conduct an audit and prepare a report. This will ensure that audits are conducted
consistent with international standards and are of sufficient quality and rigour to
provide a meaningful assessment of the accuracy of reported data.
PART 7 MISCELLANEOUS
Clause 76 Modification of National Environment Protection (National Pollutant
Inventory) Measure
46. This clause clarifies the application of a national environment protection measure,
made under section 14 of the National Environment Protection Council Act 1994,
with respect to the reporting or disclosure of information relating to greenhouse gas
emissions or greenhouse gas projects. The intent is to prevent the reporting or
disclosure of information relating to greenhouse gas emissions or greenhouse gas
projects through any national environment protection measure made under section 14
of the National Environment Protection Council Act 1994 in order to avoid the
duplication of the reporting requirements.
Clause 77 Regulations
47. This clause provides that regulations may be made under the Bill.
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