Corporations which are required to register for reporting under the National Greenhouse and Energy Reporting Act 2007 must urgently consider their obligations under the National Greenhouse Energy Reporting Framework.
Corporations which are required to register for reporting under the National Greenhouse and Energy Reporting Act 2007 (NGERA) by 31 August 2009 and fail to do so could be hit with a penalty of up to $220,000. Additional civil penalties will apply for each additional day after the deadline the company fails to register. Similar penalty levels apply for those companies which register on time but fail to report appropriately by 31 October 2009. In addition, chief executive officers and other company officers who fail to take responsible steps or who act recklessly or negligently in a manner which leads to contravention of obligations under the Act could also find themselves vicariously liable. The message is clear: companies which have not already done so must urgently consider their obligations under the National Greenhouse Energy Reporting Framework.
Step One – Know your corporate group
The task of collecting data to determine if a corporation will meet the threshold requiring it to register and report under the NGERA is not necessarily straightforward. It requires consideration of what entities might constitute a larger corporate group. This will determine which entity is deemed the “controlling corporation” required to register on behalf of the group and which emissions must be counted towards triggering the corporate group’s threshold.
The NGERA and Regulations need careful consideration, as they contain detailed rules for who is to report. For example, if the threshold is met, a partnership or joint venture will need to nominate one of their number as the “responsible entity” for reporting, otherwise each member of the partnership or joint venture will be required to register and report on the whole of the partnership’s or joint venture’s emissions.
Step Two – Know your facilities
The second consideration is what “facilities” are under the “operational control” of this corporate group. Understanding which group of activities constitutes a “facility” may be critical because there is a lower single facility threshold which could independently trigger reporting obligations for the whole group. “Facilities” are also the primary unit against which any reporting occurs.
What activities constitute a facility can look very different depending on the industry and business model. The rule of thumb is, does it create emissions or consume or produce energy and is it a single site, a single industry or part of a single production process?
Step Three – Know what data counts
Only once these two basic premises have been considered can the process of collecting data on emissions and energy consumption or production commence in earnest. This will be easier for some industries over others. Certain industries that have previously been required to undertake some type of emissions reporting will already be familiar with the emissions terminology used in the NGERA. It is corporations which have not previously been exposed to any emissions reporting requirements which need to be most diligent.
Environmental consultants working in the sector have indicated their alarm at the lack of preparedness of many corporate groups to register and accurately report on their emissions. Companies needing external expertise to gather and organise their internal emissions data for registration and reporting may already have some trouble finding suitably experienced and skilled professionals to assist prior to the registration and reporting deadlines.
Step Four – Understand the threshold
The reporting threshold for a whole corporate group for the 2008-2009 financial year is either emitting 125 kilotonnes of greenhouse gases (measured in carbon equivalent units), or producing 500 terajoules of energy, or consuming 500 terajoules of energy. Alternatively, if a single facility under the operational control of the corporation either emits 25 kilotonnes of carbon equivalent units or produces 100 terajoules of energy or consumes 100 terajoules of energy, the corporation will also be required to register for reporting their total emissions.
Step Five – Start thinking about the future
Companies which know they will trigger the threshold this year (or in the coming three years as the threshold level decreases) must have in place organisational strategies for collecting relevant data. With the CPRS (Carbon Pollution Reduction Scheme) pending, it is relevant to think about employing more sophisticated measuring techniques now or in the future.
OSCAR (Online System for Comprehensive Activity Report) is the emissions modelling calculator on the Department of Climate Change website forming part of the Australian Greenhouse Emissions Information System (AGEIS). This system is essentially the default mechanism for estimating emissions under the NGERA. Out of the 4 methods available for estimating emissions proscribed in the Regulations under the NGERA, it is likely to be the most generous in estimating emissions.
The three other measuring techniques available under the NGERA are more accurate but involve a greater level of complexity, measuring effort and expense. All are based on international recording standards but will involve sampling and other specialised analysis to generate emissions calculations. Specialised assistance will also assist in the critical decision as to whether it will be more efficient in the medium to long term to make emission reductions or to offset or purchase permits (when a CPRS becomes a reality).
Step Six – Registering now
There is no doubt the Department of Climate Change still has a significant task ahead of it in preparing for this first year of reporting. Once an application to register is received, registration is currently taking between 2 weeks and 2 months and is likely to get longer as the deadline draws near.
At the time of writing, certain key forms, like those for nominating a responsible entity for registration and reporting on behalf of a partnership or joint venture were still not available. However, the Department was still encouraging all joint ventures or partnerships to make the election of a responsible entity and for that responsible entity to submit their application with notice of their special status.
The Department of Climate Change currently estimates around 700 medium to large corporations will be required to register for emissions reporting under the NGERA. Of these 700 corporations, around 300 will not have had previous experience with any reporting mechanisms. For these 300 corporations, the need to get on top of these reporting requirements is critical with substantial civil penalties applying for non- compliance.
The message is clear: the debate over the emissions trading scheme may still be raging in the Senate, and other quarters might be arguing about whether climate change exists at all but don’t let this distract you from preparing to meet your existing obligations under the emissions reporting framework.