Archives for posts with tag: Compliance

Last week we mentioned the DCCEE were looking at introducing a materiality threshold for the NGER legislation. We have since spoken to the Department who informed us any amended legislation is still some way off. Their policy team is currently working furiously on the Clean Energy subordinate legislation, and materiality threshold is not part of this package. Our thoughts are that it is very unlikely to be applied to the current reporting year and may not apply until 2012/13 or beyond. With this in mind emissions and energy managers must continue to capture small sources, and use incidental provisions where appropriate to minimise your compliance costs. We will let you know when any consultation is undertaken by the Department so your input is considered.

To save you some time and effort, we have put together a timeline showing you the key dates for NGER and Clean Energy for the next two years or so:

(click on image for full-size)

In the coming months we will be working closely with our friends at the respected international law firm DLA Piper, to deliver to clients a complete picture of their carbon liabilities and risks – both direct and indirect. We believe effective carbon accounting and management is a multi-disciplinary field. With this in mind we have put together a team that can provide end-to-end advice in a systematic and comprehensive manner. We analyse and quantify the real risks across key aspects of the business, from legal, technical, data systems and financial aspects, and present findings that you can use immediately. Our methodology drills-down into five main areas:

Feel free to contact us if you would like more information or to arrange a meeting.

On Wednesday 14 December Ndevr Environmental Consulting’s Principal Consultant Matt Drum took part in the DCCEE run stakeholder reference group to discuss the Regulations that will sit under the Clean Energy Act 2011.

There is still a lot of detail to be finalised under the Act, however one thing is clear – all businesses whether directly or indirectly liable will face increased energy and compliance costs. Some other less thought of factors such as solid waste removal and waste water services will also have a carbon cost applied.

Trying to calculate exactly what this means to your bottom line is a complex exercise, but some issues organisations will need to consider are:

Direct Liability – where the Clean Energy thresholds are triggered

  • Is your company directly liable?
    • Facility level thresholds apply on covered sources.
  • The cost of purchasing permits and cash-flow concerns.
    • Permits or ‘units’ have to be acquired in two ‘tranches’ – an interim purchase (75% of projected emissions), and a ‘true-up’ where the remainder of reported liable units must be acquitted
  • The cost of other compliance obligations
    • Additional reporting and assurance requirements
    • Improving measurement and reporting accuracy and audibility

 Indirect Liability – where carbon costs occurring elsewhere will be passed to you from common energy sources and waste services

  • Grid  electricity
    • Each generator will face different carbon costs depending on their generation mix
    • Some emissions intensive generators in Victoria will receive some free permits which may limit the pass through cost
    • Competitive forces will come into play in Australia’s complex electricity markets as generators and retailers decide the amount of cost to pass on the amounts to absorb
    • Pass-through of the carbon cost associated with transmission/distribution line losses may or may not be applied
    • It may be time to re-evaluate procurement strategies and request the ‘itemised’ carbon cost to be applied by your retailer when the Act comes into play
  • Natural Gas
    • A carbon cost will be applied to natural gas – this may shift slightly due to the energy value embodied in the gas
    • Large users can apply for an Obligation Transfer Number (OTN) that allows them to manage their own carbon liability – effectively they have a direct liability
  • Liquid Fuels
    • Depending on when a liquid fuel is used for stationary or transport purposes will have an effect on how the carbon cost is applied and the net cost to business
  • Waste removal
    • As solid waste breaks down in landfills methane is released and this is a covered source under the Act. Landfill operators are currently working out their liabilities going forward, which will be passed back to your business via waste services contractors
    • Waste water also emits Kyoto gases covered under the Act. Similarly to solid waste, water service providers will be looking to pass this cost back to the consumers

The legislation is extremely complex, and just as business is grappling with how it will affect them, government is grappling with exactly how they will administer it from the start date, which is only six months away.

There is however some strategies you should consider as soon as possible to reduce your risk:

  1. Supply chain analysis: Understand the costs you can reasonably expect to be passed through. Your NGER report and procurement team can be key sources of information here.
  2. IT systems: Ensure your current system appropriate. IT implementations do not happen overnight, your system should have; change control, password protection, links to source data such as invoices or higher order emissions and energy content data.
  3. Funding opportunities: Investigate your eligibility for funding such as that administered under the Clean Energy Finance Corporation (CEFC)?
  4. Audit and compliance: Confirm whether or not you will be required to undergo mandatory audits. Consider a voluntary audit of your 2011/12 NGER report as this will be your last ‘free-hit’ before the Act takes affect
  5. Procurement: Arm yourself with the knowledge you need to negotiate with suppliers (step 1 above is the basis for this).
  6. Brief the Executive and/or Board: Ensure the leaders understand the impact the Act will have on your business and make sure budgets reflect the risk
  7. Opportunities under Carbon Farming Initiative: Your business may have opportunities to generate credits under the CFI – which can be used internally or sold on a market.

If you have any questions on the issues raised above, or would like to analyse these issues in more detail, please contact us.

The second-cycle of the Energy Efficiency Opportunities (EEO) program has recently commenced. The second cycle reporting requirements remain largely the same, although some criteria have been amended following the EEO review. Assuming participants triggered the first cycle in 2005/06, the following key dates apply:

  • Submit second-cycle Assessment Plan by 31 December 2012
  • First assessments complete by 30 June 2013
  • First public & government report by 31 December 2013
  • Complete remaining assessments* by 31 December 2016

Corporations registered for the first reporting cycle need not re-register for the second cycle.

*Participants of the second-cycle are required to assess a minimum of 90% of the group’s total energy consumption as compared to the 80% required in the first cycle.

Deciding which areas of the business should be assessed to get new starters to 80% coverage, or second time participants to 90% energy coverage is a key consideration.

Please contact us if you would like any last minute assistance in submitting your assessment plan. We also have strong engineering capabilities you will need to complete your additional assessments during the second cycle.

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