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Focus: Climate Change – August 2007

National Greenhouse and Energy Reporting Bill introduced

In brief: The Federal Government has taken an important step towards a national emissions trading scheme with the introduction of the National Greenhouse and Energy Reporting Bill 2007. Partner Ben Zillmann (view CV), Special Counsel Philip Murray (view CV) and Lawyer Simon Batten report.

How does it affect you?

If you cannot determine the total:

  • greenhouse gas emissions; and
  • energy consumption and energy production

of your company or corporate group in a financial year, you will need to be able to do so by mid-2008.

First step towards emissions trading scheme

The National Greenhouse and Energy Reporting Bill 2007 creates:

  • a single national reporting scheme for greenhouse gas emissions and energy consumption and production from corporations; and
  • a framework for the reporting and auditing of greenhouse gas reduction and offset projects.

The reported data will inform decisions about permit allocation under a future trading scheme and incentives for early abatement action.

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Who has to register?

Each foreign or Australian company that exceeds the greenhouse or energy thresholds must register and report under the proposed regime.

The controlling company at the top of the corporate hierarchy must register and is responsible for reporting and compliance for its entire corporate group.

For these purposes, a group can include joint ventures or partnerships in which the controlling company or a subsidiary is involved.

Companies will first have to determine the scope of their group and all relevant facilities under the operational control of group members.

Operational control of group facilities

The group will have to calculate its emissions and energy consumption and production for all facilities over which any member has operational control.

Offshore oil and gas extraction activities within Australia's exclusive economic zone are also included.

Adapting concepts from the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, the Bill introduces a new test to determine operational control of a facility – authority to introduce and implement operating, health and safety or environmental policies for the facility.

Where several companies might each have operational control, the one with the greatest control over operating and environmental policies is taken to have overall operational control.

The yet to be developed regulations will have further details clarifying the scope of groups, facilities and operational control.

In addition, a newly created Greenhouse and Energy Data Officer will be able to declare the extent to which activities or series of activities are a facility and declare that a particular group member has operational control of a facility.

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Thresholds

There will be a staggered introduction of the thresholds as shown in this table:

Group threshold 2008-09 2009-10 2010-11 onwards
GHG emissions 125,000 tonnes 87,500 tonnes 50,000 tonnes
Energy produced 500 terajoules 350 terajoules 200 terajoules
Energy consumed 500terajoules 350 terajoules 200 terajoules

It is expected groups above the initial thresholds will already have reporting obligations and the necessary systems in place to comply with the new regime. The transition is designed to allow groups that do not currently report to implement systems to meet the obligations. 

Registration will also be required if a single facility has greenhouse gas emissions of 25,000 tonnes or more or energy production or consumption of 100 terajoules or more.

Although the precise details will be set out in the regulations, current information suggests reportable greenhouse gas emissions will be the combined total of:

  • gross scope one emissions (fuel and energy produced or consumed and greenhouse gas emissions produced directly by the company); and
  • gross scope two emissions (greenhouse gas emissions from consumption of electricity, heat or steam imported from sources outside the company boundaries).

Scope three emissions (all other indirect emissions other than scope two from sources not owned or controlled by the company) and emissions offsets would not be considered in applying the threshold, but could be voluntarily reported by registered companies. 

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Reporting

Reporting obligations under the legislation will start in the financial year commencing 1 July 2008.

An online reporting tool will be used to submit data.

Reported information will be placed on a publicly available website, unless the regulator accepts that disclosure would result in the revelation of trade secrets or the reduction in commercial value of another matter.

Standard data terminology and format are intended to enable a single report under this regime to eventually replace the myriad of other reporting requirements across all jurisdictions.

Executive officer liability

Executive officers can be liable to civil penalties for contraventions by their companies. There is a due diligence defence.

No greenhouse gas emissions reporting through the National Pollutant Inventory

The Bill spells the death knell for greenhouse gas emissions reporting through the National Pollutant Inventory by expressly providing that any national environmental protection measure requiring the reporting of greenhouse gas emissions or projects does not apply.

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What's next ?

The Australian Greenhouse Office will be holding information sessions on the Bill in capital cities in late August.

The Senate Environment, Communications, Information, Technology and the Arts Committee will hold an inquiry into the Bill and report by 6 September 2007. Submissions should be made by 27 August 2007.

The crucial detail will be in the regulation and it will be important to follow its development closely.

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For further information, please contact:

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