NGER, Safeguard, GHG, Carbon Reporting, Energy Accounting, Climate Change… or whatever you would like to call it continues to be a political football.

This year we anticipate a consultation to address concerns from business on the NGER Safeguard Mechanism, along with the release of the NPI review which is likely to initiate changes in scope and a reduction in complexity.

Many of our clients – and business in general – are tired of the uncertainty and are taking their own steps to de-risk, based on either an internal price on carbon, science-based emission targets, offsets, energy efficiency programs or some combination thereof.

NGER Scheme (National Greenhouse & Energy Reporting Scheme)

Given the current environment, we see little change to the NGER Scheme this year but the recently completed Review on Climate Change Policy indicates that there will be consultation to address some of the concerns from business on the Safeguard Mechanism. Excerpt below:

“The current rules allow baselines to be increased under certain circumstances. For example, a facility can increase its baseline if it expands production capacity by more than 20 per cent, its emissions grow while its emissions-intensity is continuously improving, or there is natural variability in resource grades at mining, oil and gas facilities.

One option would be to broaden access to baseline increases, so all facilities have an up-to date baseline that reflects their individual circumstances.

In addition, baselines could be regularly updated to reflect actual production. This would see baselines increase with production, supporting business growth. Conversely, if production falls, the baseline would automatically fall in proportion. This would stop baselines becoming out of date in the future. Together with broadening access to baseline increases, historical baselines could be progressively phased-out and replaced by calculated baselines which use more up-to-date data (as by then many will be more than a decade out of date).

To reduce the administrative and auditing costs of applying for a baseline increase, the Government could introduce an option for businesses to use default values reflecting median or average emissions outcomes. This is similar to the availability of lower order methods under the National Greenhouse and Energy Reporting Act 2007.

For example, default values could be calculated and published by the Government, based on independent advice. Avoiding audited, site-specific emissions and production forecasts would simplify applications for baseline increases and lower administrative costs for facilities that elect to use them.

Together, these changes would simplify the operation and administration of the scheme. Businesses would need to report production each year (around 60 per cent already do this under existing legislative obligations), but the overall framework would be simpler.

Other mechanisms for increasing baselines – such as the emissions-intensity test – may become redundant as baselines would automatically accommodate business growth. The Government will consult closely with industry on this. Current flexibility provisions set out in the rules to address the inherent variability of emissions from natural resources would remain unchanged.

The Government will consult with businesses on all these options in the coming months, with the view to have any changes take effect for the 2018-19 compliance years. Through this consultation the Government will consider how new entrant baselines fit with the updated approach for existing facilities.

The Government recognises the importance of providing industry with clear and predictable policy review processes and sufficient lead times for policy adjustments. Beyond 2018, the next Safeguard Mechanism review will be by 2020 (to align with the long-term strategy discussed below) and then as part of the five-yearly review and refine cycle (outlined above). The review by 2020 will consider the role of the Safeguard Mechanism, including consideration of any updates to rules and regulations in the context of progress towards the 2030 Paris target, in particular, when and how international units can be used and under what conditions, and appropriate lead times.”

NPI (National Pollutant Inventory)

The review of the NPI is due to be tabled at the Environment Ministers meeting 2018 and will probably be released mid to late 2018. We expect changes in scope and some reduction in complexity if the terms of reference are adhered to. The “options for cost recovery” in point 4 is a key driver.

There is increasing interest in selected NPI numbers from most sectors so a bit more focus is probably warranted.

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