Safeguard mechanism has commenced
The safeguard mechanism under Emissions Reduction Fund commenced on 1 July 2016 and by now your company will have been notified by the Clean Energy Regulator of its reported-emissions baseline for each covered facility. This was set using your company’s highest level of annual reported National Greenhouse and Energy Reporting (NGER) scheme data for the five year period between 2009/10 and 2013/14 (see Figure 1).
But what if your company has exceeded – or expects to exceed – its reported-emissions baseline for 2016/17? The good news is that the safeguard mechanism offers a ‘get-out-of-jail-free card’ for the first year in the form of a temporary adjustment to the baseline (referred to as an initial calculated-emissions baseline).
The not-so-good news is that there are several complicated application deadlines for making an application to the Clean Energy Regulator for an initial calculated-emissions baseline and the first one has already passed. For some companies that have missed this first deadline, the impact of this is that it may mean that you’re better off sticking with your original baseline.
This article explains how each of these application deadlines operate and what they mean for calculating a revised baseline. It also outlines the steps you need to take to apply for a calculated-emissions baseline.
Setting the calculated baseline
For a calculated-emissions baseline that commences 1 July 2016, the baseline is calculated by multiplying the highest expected annual production level of a primary production over the three-year period 2016/17 to 2018/19 by the estimated emissions-intensity of that production (t CO2-e per unit of production).
Facility X currently has a reported-emissions baseline of 140 kt CO2-e, which was set using its highest level of annual reported NGER data for the five year period between 2009/10 and 2013/14 (see Figure 1).
The Company X with operational control of the facility expects to exceed this baseline by 60,000 t CO2-e in the first operating year of the safeguard mechanism, based on the variables in Table 1.
Company X did not apply by 30 July 2016, meaning that it missed the opportunity to have the initial calculated-emissions baseline be set at the highest possible annual threshold of 200,000 t CO2-e.
Fortunately, Company X has not missed out altogether on the safeguard mechanism ‘get-out-of-jail-free card’ because estimated annual emissions for 2017/18 and 2018/19 are both higher than the reported-emissions baseline.
However, as Figure 2 illustrates, it is critical that Company X applies for an initial calculated-emissions baseline by the 30 July 2017 deadline to avoid having the baseline set using 2018/19, which has the lowest levels of production.
Applying for an initial calculated-emissions baseline
An application must be completed by the ‘responsible emitter’ (the person with operational control of the facility at the time of application) using the form approved by the Clean Energy Regulator. The application must be signed by the executive officer of the responsible emitter.
Importantly, each application must be accompanied by an audit report undertaken by a Registered Category 2 NGER auditor.
Application forms for calculated-emissions baselines are not currently available on the Clean Energy Regulator’s website so you will need to contact the Clean Energy Regulator on 1300 553 542 or email firstname.lastname@example.org for a copy of the form.
If you would like to find out more about how CO2 Australia can help you navigate the complexities of complying with the safeguard mechanism, contact Rebecca Enright on +61 7 3248 0200 or send an email to email@example.com.
Rebecca Enright is the Senior Manager, Environmental Services at CO2 Australia. Rebecca has over 16 years’ experience working in the areas of carbon management, climate change adaptation and biodiversity offsets. Rebecca is CO2 Australia’s key client relationship manager on a series of landmark carbon project services contracts with a combined value exceeding $100 million.