Page 1 Carbon Pricing Mechanism Workshops Interim Emissions Numbers Jane Wardlaw Manager Registrations, Applications, Determinations and LEPID February

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Carbon Pricing Mechanism Workshops

Interim Emissions Numbers

Jane Wardlaw

Manager

Registrations, Applications, Determinations and LEPID

February 2013

Page 2

Disclaimer

The presentation provides general information only. It has been developed by the Clean Energy Regulator to help persons understand their responsibilities under the law. Persons should refer to the Clean Energy Act 2011 (Clean Energy Act), the National Greenhouse and Energy Reporting Act 2007 (NGER Act), and their supporting Regulations, in their current form at the time of reading. Changes to the legislation may affect the information in this presentation. Ultimately, liable entities are responsible for determining their liabilities and obligations under the law, and for applying the law to their individual circumstances. This presentation is not intended to provide legal advice and is not a substitute for independent professional advice.

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This presentation will cover:- overview of National Greenhouse and Energy Reporting (NGER)

structures

- identifying who is a liable entity

- what is an interim emissions number (IEN)

- who has an IEN

- IENs for direct emitters

- IENs for natural gas suppliers

- IENs for OTN holders

- reporting your IEN

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Recap – overview of NGER reporting structures


National Greenhouse and Energy Reporting (NGER) Act 2007

• The NGER Act, passed in 2007, introduced a national framework for the reporting and dissemination of information relating to greenhouse gas emissions, energy production and energy consumption

• The NGER Act created reporting obligations. These obligations attach to certain corporations under a framework that centers around a number of key concepts:

Controlling corporations

Group members

Operational control; and

Facilities

NGER Act – section 19 report – facility threshold

Controlling Corporation

Group Member(subsidiary)

Group Member(subsidiary of a

subsidiary )


Facility 125kt

Facility 210kt

Facility 35kt

Facility 45kt

This corporate group has total emissions of 45kt, so has not met the corporate group emissions threshold

But, its group member has operational control over a facility that meets a facility threshold

For the 2012-13 reporting year...

Register s19 Report:

Facility 1’s• Scope 1 emissions• Scope 2 emissions• Energy production• Energy consumption

NGER Act – section 19 report – corporate group threshold

Controlling Corporation


Group Member(subsidiary of a

subsidiary )


Facility 125kt

Facility 220kt

Facility 310kt

Facility 45kt

This corporate group has total emissions of 60kt, so has met the corporate group emissions threshold.

For the 2012-13 reporting year...

Registers19 Report:

All facilities’• Scope 1 emissions• Scope 2 emissions• Energy production• Energy consumption

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Clean Energy Act 2011/NGER Act


Clean Energy Act 2011

• Clean Energy Act introduces the concept of a ‘liable entity’

• A liable entity is not just limited to corporations, or controlling corporations. Any ‘person’ can be a liable entity

• A person is defined as being any of the following: An individual A body corporate (all companies will fall into this category) A trust A corporation sole A body politic A local governing body


• Liable entities either

are responsible for facilities that give rise to a liability (direct emitters), and/or

supply natural gas and/or are OTN holders and/or are a designated fuel opt in person (DOIP – applies from 2013-14 onwards)

• Some liable entities will be liable for a number of reasons listed above

• Liability is in relation to covered emissions only (subset of scope 1 emissions)

Clean Energy Act 2011 – liable entities

Direct Emitters

• Direct emitters will be liable for a facility if during a year from 2012-13 onwards, they are the person responsible for a facility, and:

operations of the facility released covered emissions of 25,000 tonnes of C02-e or more

the facility is a large gas consuming facility, or the facility is a landfill facility that released a total amount of

covered emissions plus legacy emissions of 25,000 tonnes of CO2-e or more

• Note: the 25,000 tonne threshold applies to covered emissions, while the NGER Act facility threshold applies to total scope 1 and scope 2 emissions


Default Position for liability – direct emitters

• The default position is that liability will rest with the person with operational control over a facility

the exception to this is where a mandatory designated joint venture (MDJV) exists (where liability is shared between each participant in the JV)

• This differs from a controlling corporation’s NGER obligations, where obligations attach to the controlling corporation, not its group members

• The Clean Energy Act allows for liability to be transferred (via a liability transfer certificate (LTC) or a declaration of a declared designated joint venture (DDJV).

• So, a person will be ‘responsible’ for a facility if they:

have operational control over it hold an LTC in relation to it, or are a participant in a designated joint venture that has it.

• All liable entities are required to apply under the NGER Act, for registration if they are not already registered – this includes members of a registered controlling corporation’s group

Carbon liability vs controlling corporation obligations

Presuming that all facilities are carbon liable facilities

Controlling Corporation A

Group Member Group Member Group Member

Facility Facility Facility Facility

Controlling corporation is NOT a liable entity, but will have to be registered under the NGER Act on the basis of all facilities’ scope 1 and scope 2 emissions and energy production and consumption

Each group member must also register on the basis that they are liable entities

Corporate group LTCs – liability consolidation

q


Group Member 1 Group Member 3 Group Member 2

Facility 1 Facility 2 Facility 3

operational control

operational control

s19 Report Facilities1, 2 and 3

s22A/22AAReport Facility 1

s22A/22AAReport Facilities2 and 3

LTC

s22A/22AAReport Facilities1, 2 and 3

LTC

Corporate group LTCs – liability and s19 consolidation

o

q Controlling Corporation A

Group Member 1 Group Member 3 Group Member 2

Facility 1 Facility 2 Facility 3

operational controloperational control

s19 Report Facilities1, 2 and 3


LTC

LTC



operational control

s22A/22AAReport Facilities1,2 and 3

LTC

Financial control LTCs

a


Group Member A

Group Member B

Facility

Controlling Corporation B

operational controlLTC

s19 Report• Scope 1 emissions• Scope 2 emissions• Energy production• Energy consumption

s22A/22AA Report• Covered emissions

Liable for emissions

s22A/22AA Report• Covered emissions

Liable for emissions

s22E Report• Scope 1 emissions• Scope 2 emissions• Energy production• Energy consumption

MDJV – liability and reporting

q

w


Group Member AGroup Member

B

Facility


Participants in JV

Controlling Corporation C

Group Member C

s22A/22AA 100% coveredemissions

And PPD


And PPD


And PPD

NGER Act – operational control – sections 11 – 11D

• A controlling corporation is responsible for reporting in relation to facilities under its operational control and under the operational control of its group members

• A controlling corporation or group member will have operational control over a facility if:

They have the authority to introduce and implement any or all of the following for the facility:

- operating policies

- health and safety policies

- environmental policies, OR

Where more than one person has the authority to introduce and implement any or all of the policies mentioned above, the person that has the greatest authority to introduce and implement operating policies and environmental policies for the facility, OR

They have been nominated as having operational control over the facility. Nominations of operational control are only permitted where more than one person has the authority to introduce and implement any or all of the policies mentioned above, and no one person has the greatest authority to introduce and implement operating policies and environmental policies, OR

The Clean Energy Regulator declares that a person has operational control of the facility.

Nominations of operational control (NGER Act) and liability (Clean

Energy Act 2011)

How do the two interact where a MDJV exists?

• Nominations of operational control in relation to JV facilities only apply to a controlling corporation’s s13 thresholds and s19 Reports

• Liability for a facility (and associated s22A/22AA reporting obligations) are dealt with under the Clean Energy Act 2011

• Where a MDJV exists, a nomination of operational control is required to resolve s19 reporting obligations

Nominations and MDJV

a



B

Facility


Participants in JV


Group Member C


And PPD

s22A/22AA

100% coveredemissions

And PPD

s22A/22AA

100% coveredemissions

And PPD

s19 Report

s19 Report

s19 Report

DDJV – liability vs s19 reporting obligations



B

Facility


Participants in JV


Group Member C


s19 Report

Operational Control


And PPD


And PPD

And PPD


Direct Emitters

• Note that the transfer mechanisms we have just looked at, apply to direct emitters only

• i.e they only transfer liability in relation to the covered emissions from a facility

• A natural gas supplier or OTN holder cannot transfer their liability using either type of LTC, or a declared designated joint venture.

• Any liable entity that is not already on the National Greenhouse and Energy Register (this is different from the LEPID), must apply for registration under the NGER Act.


If a liable entity is not already on the National Greenhouse and Energy Register:

• During the fixed charge years, a liable entity that, as at 1 April, has, or is likely to have, an IEN for the current fixed charge year, must have applied for registration by 1 May of that year

• All other liable entities must have applied for registration by 31 August following the financial year in which they first became a liable entity

Audit under the Carbon Pricing Mechanism

Any liable entity with an emissions number exceeding 125,000 must arrange to have a pre-submission audit performed. These audits must:

• be reasonable assurance engagements

• be conducted in accordance with the National Greenhouse and Energy (Audit) Determination 2009

• be undertaken by a Category 2 or 3 registered greenhouse and energy auditor

ENGAGE YOUR AUDITOR EARLY!!!

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What is an IEN?


What is an interim emissions number (IEN)?

• Broadly speaking, an IEN represents 75 per cent of a liable entity’s estimated liability for the relevant financial year

• This number is calculated differently, depending on the type of liability the liable entity has

• Only applies during the fixed charge years (2012-13, 2013-14 and 2014-15)

• This process of early surrender is called progressive surrender or provisional surrender

• Who has an IEN, and how IENs are to be calculated are set out in sections 126 and 127 of the Clean Energy Act 2011 (the Clean Energy Act)

• Acquisition and surrender of carbon units is also dealt with in Clean Energy Act

• Registration and reporting obligations for people with an IEN are dealt with under the National Greenhouse and Energy Reporting (NGER) Act 2007

What is an interim emissions number?

• During the fixed charge years, liable entities with an interim emissions number must:

by 1 May of the relevant year

- apply for registration under section 15AA of the NGER Act (if not already registered) by 15 June of the relevant year

- report to the Regulator on its IEN(s) under section 22AA of the NGER Act

- acquire and surrender eligible carbon units to the value of its IEN(s) (to avoid incurring a provisional unit shortfall charge)

Note: you will need an ANREU account to be able to acquire and surrender units

• Eg. a liable entity that has an IEN in the 2012-13 eligible financial year must have applied for registration by 1 May 2013, and must report its IEN and surrender units by 15 June 2013

• Note: in 2013, 15 June falls on a Saturday. This means that the deadline is taken to be the next working day – so the deadline for IENs will actually be 17 June 2013.

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Who has an IEN?


Who has an interim emissions number?

A person that is a liable entity during a fixed charge year, will have an IEN if they:

• are a direct emitter responsible for a facility that:

gave rise to a provisional emissions number or numbers in the previous eligible financial year; and

where the person is likely to have a provisional emissions number for the facility in the current eligible financial year, and/or

• Have supplied natural gas between 1 July and 31 March of the eligible financial year, where an Obligation Transfer Number (OTN) was not quoted in relation to that supply; and/or

• Have quoted their OTN in relation to the supply of natural gas between 1 July and 31 March of the eligible financial year, where that quotation has given rise to a liability for the OTN holder

• Will also include other gaseous fuels and liquid fuel opt-in persons in 2013-14

Who has an interim emissions number?

‘

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Who has an IEN – direct emitters


Who has an interim emissions number – direct emitters

g


Direct emitter responsible for a facility

• A direct emitter is a person that:

has operational control over holds a liability transfer certificate (LTC) in relation to, or is a participant in a designated joint venture (mandatory or

declared) that has, a facility.

• A direct emitter will be a liable entity if they are the person responsible for a facility that in an eligible financial year:

had operations that released covered emissions of 25,000 tonnes of C02-e or more

was a large gas consuming facility, or was a landfill facility that released a total amount of covered

emissions plus legacy emissions of 25,000 tonnes of CO2-e or more.

Am I the direct emitter responsible for a facility that will result in me having a provisional emissions number (PEN) this year?

Threshold for liability vs PEN for a facility

Threshold for liability in relation to a facility

• A direct emitter will be a liable entity if they are the person responsible for a facility that in an eligible financial year :

had operations that released covered emissions of 25,000 tonnes of C02-e or more, or

was a large gas consuming facility, or was a landfill facility that released covered emissions plus legacy

emissions of 25,000 tonnes of CO2-e or more.

Provisional Emissions Number (PEN)

• In relation to a each facility for which a person is responsible, the PEN is the total amount of covered emissions from the operation of the facility, during the whole or part of the year that the person was responsible for the facility, that the person is liable for

• Generally, a person’s PEN will = the total amount of covered emissions from the facility (ie the number that the threshold test is applied to), for the period that the person was responsible for the facility


Threshold for liability re a facility vs PENs

PENs continued

• For example, if Company A has operational control over a facility for all of 2012-13, and during the year, the facility gave rise to covered emissions of 27,000 tonnes of C02-e, the PEN for the facility would be 27,000

• However, the threshold test applied to a facility of a designated joint venture, is applied to the total covered emissions from the facility (for the time that the facility was the facility of the joint venture)

• The PEN of each participant in the designated joint venture, in relation to the facility, is their participating percentage of the total liable covered emissions from the facility

Threshold for liability re a facility vs PENs – designated joint ventures

• For example, Company A and Company B are both participants in a designated joint venture. Each participant’s participating percentage is 50 per cent.

• During 2012-13, Facility X is a facility of the joint venture for the whole year, and has covered emissions of 26,000 tonnes of CO2-e

Company A and B will both have a PEN in relation to the facility Each person’s PEN will = 50 per cent of 26,000 Therefore each company’s PEN in relation to the facility is 13,000

Note: in this case, the person’s PEN in relation to a facility, is different from the number that the threshold test is applied to

Even though each person’s PEN is less than 25,000, the facility still gives rise to a liability, because in total, its covered emissions are 25,000 or more

Threshold for liability re a facility vs PENs – natural gas and OTNs

• Another circumstance in which the threshold number is different to a person’s PEN for the facility, is where natural gas is consumed at the facility, and no OTN was quoted in relation to the supply of that natural gas.

Brief overview of natural gas and OTNs

Natural gas supply

• A natural gas supplier is liable for the ‘potential greenhouse gas emissions embodied’ in any natural gas they supply to another person (unless the person quotes an OTN in relation to the supply)

• The person ‘upstream’ (the gas supplier) is liable, rather than the individuals who actually use the natural gas


OTN holders

• OTNs are a way of transferring liability, from a gas supplier, to a person that consumes a large amount of natural gas (the OTN holder)

• When an OTN holder quotes their OTN, they take on the liability for the ‘potential emissions embodied’ in the natural gas that they are supplied

Note that in either case, the person is liable for the ‘potential greenhouse gas emissions embodied’ in the natural gas. This is because at this stage, the gas has not been combusted


Combustion of natural gas at a liable facility – no double counting – OTN quoted

• Where an OTN is quoted in relation to natural gas that is combusted at a facility that gives rise to a liability, the OTN holder does not include the potential emissions embodied in the natural gas in its liability as an OTN holder

• Instead, the direct emitter responsible for the facility, will include covered emissions from the combustion of natural gas at the facility, in its threshold assessment and PEN for the facility.

• Note, that the person who quoted the OTN may or may not be the direct emitter responsible for the facility


Combustion of natural gas at a liable facility – no double counting – NO OTN quoted

• Where no OTN is quoted in relation to the supply of natural gas that is combusted at a facility that gives rise to a liability, the natural gas supplier is liable for the potential emissions embodied in the natural gas (remember that natural gas suppliers are liable for all natural gas supplied where an OTN was not quoted)

• If the direct emitter was liable for the covered emissions from the combustion of this natural gas, the same amount of gas would give rise to two separate liabilities

• Where no OTN is quoted, the direct emitter responsible for the facility will include covered emissions from the combustion of natural gas at the facility in its threshold assessment but will not include these emissions in its PEN for the facility.


Combustion of natural gas at a liable facility – no ‘supply’ of natural gas

• Where natural gas is combusted at a facility, but the provision of the natural gas has not met the Clean Energy Act definition of ‘supply, the resulting covered emissions are included in the direct emitter’s PEN


Recap - PENs

• A PEN in relation to a facility is the amount of liable, covered emissions, from the operations of the facility, during the whole or part of the year that the direct emitter is responsible for the facility

• Generally, the PEN will be the same number that is used to determine whether the facility gives rise to a liability

• Exceptions to this include:

The facility is a facility of a designated joint venture (the threshold is applied to the total covered emissions from the facility, and the PEN is each participant’s participating percentage of this)

Covered emissions from the facility are attributable to the combustion of natural gas, where NO OTN was quoted (the threshold is applied to the total covered emissions from the facility, and the PEN does not include covered emissions from the combustion of natural gas at the facility)

Landfill facilities, where the threshold applies to legacy plus covered emissions, but the PEN will only be covered emissions


• If the answer is yes, can move to the next step in determining whether a person has an IEN

• If the answer is no, the facility does not give rise to an IEN




• The person that is responsible for the facility this year, does not have to be the same as the person that was responsible last year

• For example, if in 2011-12 the facility was under the operational control of Person A, but in 2012-13, Person B was issued with an LTC in relation to the facility, it may still be included in Person B’s IEN calculations (provided it meets the rest of the criteria)

• It is also possible that more than one person was responsible for the facility in the previous year (ie because of part year operational control)

• When answering this question in 2012-13, s126(6) of the Clean Energy Act tells us to assume that 2011-12 was an eligible financial year – so ask would anyone have had a PEN in relation to the facility in 2011-12

• If the answer is yes, you can move to the next step in determining whether a person has an IEN


Last year, did anyone have a PEN in relation to the facility I am responsible for this year?



• The person that is responsible for the facility this year, does not have to be the same person that was required to report on the facility in the previous year

Example

• In 2011-12 a facility was under the operational control of Company A, a member of Controlling Corporation A’s corporate group. The facility was included in Controlling Corporation A’s 2011-12 section19 report

• In 2012-13, the facility is still under Company A’s operational control. Therefore Company A is the liable entity responsible for the facility

• As a report was required under section 19, in relation to the facility in 2011-12, the facility is included in Company A’s IEN calculations (provided it meets the rest of the criteria)

Was a report under sections 19, 22G or 22X of the NGER Act required in relation to the facility last year?


• If a report was required in the previous year, but no report was submitted, the facility will also be included in the responsible person’s IEN calculation for the current year

• If the answer is yes, can move to the next step in determining whether a person has an IEN


Was a report under sections 19, 22G or 22X of the NGER Act required in relation to the facility last year?



• As noted earlier, the person that has a PEN for the facility this year, does not have to be the same person (or persons) that had a PEN in relation to the facility in the previous year

• If a facility had more than one PEN in the previous year, add together all of the PENs, and see whether the total PENs came to 35,000 or more

• Note that s127(1)(d) of the Clean Energy Act tells us to assume that 2011-12 was an eligible financial year. So, ask whether the facility would have had a PEN of 35,000 or more in 2011-12

Did the facility give rise to a PEN of 35,000 or more last year? (Note: if more than one person had a PEN in relation to the facility, is the total of these PENs 35,000 or more?)


Example – multiple PENs

• In 2011-12 a facility was under the operational control of Company A from 1 July 2011 – 31 December 2011. During this time, the facility would have given rise to a PEN of 25,000

• From 1 January 2012 – 30 June 2012, the facility was under the operational control of Company B, and would have given rise to a PEN of 25,000

• In 2012-13, Company C was granted an LTC in relation to the facility. Company C looks at the total PENs for the facility (25,000 plus 25,000), and determines that the total of the PENs in relation to the facility for the previous year, comes to 50,000

• The facility is included in Company C’s IEN calculations (total PEN of 35,000 or more)



Assume that 2011-12 was an eligible financial year - ask whether the facility would have had a PEN of 35,000 or more in 2011-12

• To assist liable entities in answering this question, the Clean Energy Regulator has developed the Scope 1 and Covered Emissions Reconciliation Report (SCER Report)

• The SCER Report uses facility data reported under section 19 of the NGER Act in 2011-12 to generate a list of covered and possibly covered emissions for all report facilities

• The SCER Report is unable to determine an exact PEN as, for some types of emissions, reported data under section 19 of the NGER Act is not enough to determine whether an emission is covered

• Issues exist with the first version of the SCER Report (released Sept 2012). The Clean Energy Regulator is working towards a release date of late February 2013, for the revised version. All primary contacts for 2011-12 will be notified when this release occurs


Assume that 2011-12 was an eligible financial year - ask whether the facility would have had a PEN of 35,000 or more in 2011-12

• Once the revised version of the SCER Report has been released, liable entities may use this as the basis of calculating what the PEN for a facility would have been in 2011-12

• However, liable entities will still have to correctly apply the Clean Energy Act to their own circumstances

• Liable entities should also note that the SCER Report relies on data reported under section 19 of the NGER Act in 2011-12. If this underlying data is incorrect, their resulting calculations will also be incorrect

• The SCER Report for a facility needs to be obtained from the Controlling Corporation that submitted its 2011-12 NGER Report


• If the answer is yes, the facility had a PEN of 35,000 or more, move to the next step in determining whether a person has an IEN





• This test is the same as the previous one, but here we are looking at the PEN or PENs for the facility in the current financial year

• If a facility will give rise to a PEN for more than one person, add together all of the PENs, and see whether the total PENs comes to 35,000 or more

• For example, a facility of a designated joint venture will = a PEN for each participant. When seeing whether the facility is included in each participants IEN calculation, they would add all the PENs for the facility together, and see whether in total the PENs = 35,000 or more

• Same would apply where multiple people have liability for a facility due to part year operational control or where an LTC is issued for part of a year only

Is the facility likely to give rise to a PEN of 35,000 or more this year? (Note: if more than one person will have a PEN in relation to the facility, is the total of these PENs 35,000 or more?)


• Follow the steps we have just looked at for each facility the direct emitter is responsible for

• All the facilities that get through each step, will be included in the person’s IEN calculations

• It may be the case that the person only has one facility that will be included

• If all the facilities are excluded (ie none of their facilities pass each step), then the person does not have an IEN as a direct emitter

• In this case, they should check to see if they have an IEN as a gas supplier and/or as an OTN holder (more about this later after we have looked at OTNs etc)

• If the person does not have an IEN as a direct emitter, a gas supplier or an OTN holder, then they do not have an IEN

• Not all liable entities will have an IEN

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Calculating an IEN – direct emitters



• Having followed the steps we have just looked at for each facility, the person will end up with a list of facilities (or might have just one facility) that it needs to calculate an IEN for.

• Direct emitters can calculate their IEN(s) in one of two ways. Either by:

taking 75 per cent of the sum of the relevant PENs from the previous financial year, or

providing a reasonable estimate of 75 per cent of the persons PEN, for a facility, for the current financial year.


Taking 75 per cent of the sum of the relevant PENs from the previous financial year

• This method of calculation can be used, regardless of whether the PEN(s) from the previous year were attributable to the person responsible for the facility in the current year

• If the facility gave rise to more than one PEN in the previous year, a person calculating their IEN using this method must take 75 per cent of the total of the PENs in relation to the facility

• If the person has more than one facility to include in its IEN calculation, and wants to use 75 per cent of the previous year’s PEN(s) for all of its facilities, it will have a single IEN

• I.e, it will add all the PENs for all the facilities (including all the PENs for individual facilities), and take 75 per cent of the total.

• The resulting number will be its IEN in relation to those facilities

• If a person chooses this method of calculating their IEN, and at the end of the year it turns out that 75 per cent of the PENs in 2012-13 is more than the person’s IEN, no unit shortfall charge will apply in relation to the difference


Providing a reasonable estimate of 75 per cent of the person’s PEN, for a facility, for the current financial year

• Not everyone will want to rely on 75 per cent of the previous year’s PEN

• Remember that the IEN is meant to represent 75 per cent of the person’s liability for the current financial year (using the previous year’s PENs is just one way of calculating this)

• Where it is known that the facility will have much lower emissions in 2012-13, or where liability will be split between liable entities, a liable entity may not wish to surrender at the progressive payment stage, more than 75 per cent of the current year’s emissions


Providing a reasonable estimate of 75 per cent of the person’s PEN, for a facility, for the current financial year

• Because of circumstances that we have just looked at, the Clean Energy Act allows for a person to provide a reasonable estimate of what 75 per cent of their PEN for a facility will be for the current financial year

• Persons that choose to use this method of calculation, will do so on a facility by facility basis

• This means they will have a number of IENs – one for each facility for which they are providing a reasonable estimate

• If, a person chooses this method of calculating their IEN, and at the end of the year it turns out that their estimate of 75 per cent of their PEN for the facility is less than 75 per cent of their actual PEN, an estimation error shortfall charge will apply in relation to the difference


Using both methods of calculating an IEN

• A person that has more than one facility to include in its IEN calculations, can use different methods of calculating it IENs, for different facilities.

Multiple IENs

• A person can have more than one IEN (as discussed above, this will depend on how they calculate their IEN(s) for their facilities).

• In addition, they might also have an IEN as a natural gas supplier and/or an IEN as an OTN holder

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Who has an IEN – natural gas suppliers


Who has an interim emissions number – natural gas supplier

a

Who has an interim emissions number – natural gas suppliers

• A natural gas supplier’s interim emissions number is the amount of potential greenhouse gas emissions embodied in natural gas supplied during the first three-quarters of the eligible financial year (ie from 1 July to 31 March)

• There is no threshold test when determining whether a natural gas supplier has an interim emissions number

• However, a natural gas supplier’s IEN excludes the amount of potential greenhouse gas emissions embodied in natural gas supplied to a person who quoted an OTN in relation to the supply of the gas

• If a natural gas supplier only supplies natural gas to a person or persons who quote their OTN, the natural gas supplier will not have a provisional emissions number and therefore will not have an interim emissions number

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Who has an IEN – OTN holders


Who has an interim emissions number – OTN holder

a


• An OTN holder’s interim emissions number reflects the potential greenhouse gas emissions embodied in the natural gas supply for which its OTN was quoted for the first three quarters of the eligible financial year (ie from 1 July to 31 March).

• This is subject to the exclusion that applies if natural gas is combusted at a large gas consuming facility, and the ability for the OTN holder to ‘net out’ amounts of gas

• There is no threshold test when determining whether an OTN holder has an interim emissions number.

• If the person is only a liable entity as an OTN holder, and have netted to zero, they will not have an IEN at all, and therefore will not have to report under section 22AA of the NGER Act

• Note: an OTN holder that nets their liability to zero, will still be a liable entity, and will therefore have to report under section 22A of the NGER Act, by 31 October and will be included on the LEPID


Large Gas Consuming Facilities

• Note that if the quotation of the OTN was for a supply of natural gas for the purpose of combustion in a large gas consuming facility, then the amount of potential greenhouse gas emissions embodied in the natural gas does not count towards the OTN holder’s provisional emissions number as an OTN holder, and therefore they won’t count towards their interim emissions number as an OTN holder.

• In this case, the direct emitter responsible for the facility will be liable for the emissions from the combustion of the natural gas.

• This means that if all the natural gas is received for the purpose of combustion in a large gas consuming facility (or facilities) then the OTN holder will not have a provisional emissions number or an interim emissions number in relation to the potential emissions embodied in the natural gas.

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Reporting an IEN/IENs



All liable entities that have an IEN/IENs, must report to the Regulator

• The IEN report is provided under section 22AA of the NGER Act

• It is required by 15 June of the financial year to which it relates (17 June in 2013, because the 15th is a Saturday)

• These reports are much less detailed than section 19 or 22A etc reports

• The reports will contain different information depending on the type of liable entity the person is (ie a direct emitter, OTN holder, natural gas supplier or combination of two or more)


• In addition to general identifying information, a direct emitter’s section 22AA report will contain:

list of the facilities included in the IEN calculations how the person is responsible for the facility (ie due to operational control,

LTC etc) the method(s) used to calculate the IEN

- if using 75 per cent of the previous year’s PEN(s), the report will state these PENs

- if providing a reasonable estimate, the report will include information about how the estimate was arrived at, and why the person is not

using the previous year’s PEN(s)


• In addition to general identifying information, a natural gas supplier and an OTN holder’s section 22AA report will contain:

The IEN in relation to the supply of natural gas, and/or the quotation of the OTN, and

The amount of natural gas (in gigajoules) that was supplied during the year from 1 July – 31 March

For an OTN holder – their OTN

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Page 1 Carbon Pricing Mechanism Workshops Interim Emissions Numbers Jane Wardlaw Manager Registrations, Applications, Determinations and LEPID February