Introduction

Norton Rose has published a series of legal updates outlining various aspects of the greenhouse gas emissions and energy reporting scheme established under the National Greenhouse and Energy Reporting Act (2007) (NGER Act). Links to our previous updates are here.

In this update, we review the results of the first year’s reports, which were recently published by the Department of Climate Change (DCC). We also report on new guidelines issued by the DCC which bring welcome clarity to the treatment of joint ventures under the NGER reporting regime.

First Reporting Year Data Published

Data on the greenhouse gas emissions and energy consumption/production of 234 corporations was published by the DCC on 26 February 2010, following the conclusion of the first year of mandatory emissions and energy data reporting under the NGER Act.

The DCC publication summarises the emissions and energy data contained in the reports of ‘controlling corporations’, submitted to the Greenhouse and Energy Data Officer (GEDO). The GEDO is required to publish a summary of the scope 1 emissions, scope 2 emissions and energy data for corporations exceeding a certain threshold, by 28 February each year, for the previous reporting year. The threshold for the 2008 – 2009 year was 125,000 tonnes of CO2-e.

Four corporations applied to have their energy and/or emissions data exempt from publication on the basis of ‘commercial sensitivity’ or ‘trade secrets’. Whilst the names of these corporations are included in the DCC publication, the sensitive data is not included.

The NGER Act requires that all controlling corporations register with the GEDO and submit an annual report on emissions and energy data at the end of each reporting year, if either ‘corporate thresholds’ or ‘facility thresholds’ are triggered.

It is important to note that the ‘corporate threshold’ will decrease in the 2009 – 2010 reporting year, and as a result, more corporations will be required to register and report, as compared to the first reporting year. The thresholds for the 2009 - 2010 reporting year are 87,500 tonnes of CO2-e, or 350 TJ of energy consumed or produced. The facility threshold level will remain the same at 25,000 tonnes (or 100TJ).

Corporations that will exceed the corporate threshold for 2009 – 2010, and are not yet registered with the GEDO, will need to register by 31 August 2010.

Following recent amendments to the NGERS Regulations 2008, registered corporations will also need to include the amount of uncertainty associated with estimating scope 1 emissions in their reports to the GEDO for the 2010 – 2011 reporting year and onwards.

In the event that the proposed Carbon Pollution Reduction Scheme (CPRS) is introduced, the data reported under the NGER Act will assist in identifying those entities which will be liable entities under the CPRS. For more information on the proposed CPRS, see our legal updates.

New Guidelines on Joint Ventures

In determining the extent of a controlling corporation’s reporting obligations, it is necessary to identify which entities are within the “controlling corporation’s group”. Section 8(1) of the NGER Act defines a controlling corporation’s group widely, and in certain cases it will include not only the controlling corporation but also subsidiaries of the controlling corporation, joint ventures and partnerships.

Under section 8(4) of the NGER Act, a ‘joint venture’ (as defined in the NGER Act) is included in a controlling corporation’s group if a member of the group is a participant in the joint venture and either:

  • the participants in the joint venture have nominated that member as the responsible reporting entity for the joint venture, or
  • the participants have not nominated an entity as the responsible entity for the joint venture - in which case each participant in the joint venture will be required to report the joint venture’s emissions and energy data where a relevant threshold is triggered.

There has been significant uncertainty to date as to the manner in which incorporated joint ventures should be treated. The NGER Act definition of joint venture is very broad, and the initial view expressed by the DCC was that the definition would apply to both incorporated and unincorporated joint ventures.1 This created uncertainty as to when an incorporated joint venture was to be treated as a “subsidiary”, and when it was to be treated as a “joint venture” (and thus subject to the nomination requirements in section 8(4)).

The NGER Supplementary Guidelines on joint ventures and defining a corporate group, dated January 2010, resolve this uncertainty. The Guidelines confirm that only unincorporated joint ventures fall within the definition of “joint venture” for the purposes of the NGER Act. This in turn clarifies that the joint venture nomination provisions in section 8(4) do not apply to incorporated joint ventures.

Accordingly, an incorporated joint venture will be considered to be part of the corporate group of a controlling corporation only if the incorporated joint venture satisfies the ‘subsidiary’ definition in section 8(1) of the NGER Act. If the incorporated joint venture does not meet the definition of ‘subsidiary’ then it should be considered as its own controlling corporation2, with reporting obligations in its own right where the relevant threshold is met.