Emissions Reporting

The National Greenhouse and Energy Reporting Act 2007 (Cth) establishes a national system requiring certain companies to report on the levels of their greenhouse gas emissions and energy consumption and production for each reporting year (1 July to 30 June). Companies that meet any one of the following thresholds are required to register with the Clean Energy Regulator and to report under the National Greenhouse and Energy Reporting Scheme (NGER Scheme):

  1. the entity emits 50 kilotonnes or more of greenhouse gases or produces or uses 200 terajoules or more of energy each year; or
  2. the entity has operational control of facilities that emit 25 kilotonnes or more of greenhouse gases or use or produce 100 terajoules or more of energy per year.

Clean Energy Legislation

The Federal Government has recently implemented a carbon pricing mechanism (CPM) to help to reduce carbon pollution in Australia and to move to a clean energy future. The CPM applies to entities which:

  1. operate facilities that emit more than 25,000 tonnes of CO2 or equivalent gases (CO2-e) per year; or
  2. supply or use large amounts of natural gas

Such entities must satisfy their liabilities under the CPM by 15 June and 1 February of each reporting year by:

  1. purchasing 'eligible emission units' from the Clean Energy Regulator, at the carbon price (or for free for entities that participate in certain prescribed 'emission intensive trade exposed' programs);
  2. surrendering those eligible emission units, at a rate of 1 unit for each tonne of CO2-e emitted (or deemed to have been emitted) by the relevant entity for the relevant reporting period;2 and
  3. paying a unit shortfall charge – at a rate of 130% of the carbon price during the 'fixed price period' (1 July 2012 – 30 June 2015) and 200% of the benchmark price during the 'flexible price period' (1 July 2015 onwards) – in respect of that part of a relevant entity's liability under the CPM that is not satisfied in full by the relevant dates.

Currently, the carbon price is prescribed at $23.00 for each tonne of CO2-e emissions emitted by a relevant entity. The carbon price will be indexed at the commencement of the next two reporting years at a rate of 2.5% per annum plus an expected inflation rate of 2.5% per annum.

The Climate Change Authority is responsible for reviewing the operation of the carbon price, tracking the country's progress towards pollution reduction targets and recommending other climate change mitigation initiatives.

From 1 July 2015, emissions units will be auctioned by the Clean Energy Regulator for purchase on the market. As such, the 'benchmark average auction charge' will be determined by market forces. Depending on the type of 'eligible emission unit' held, a holder may be able to trade in its emission units or 'bank' them for future use.

The NGER Scheme and CPM are both administered by the Clean Energy Regulator.

Foonotes

2 To surrender emissions units, an entity must have an account with the Australian National Registry of Emissions Units.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.