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Safeguard mechanism guidance

Calculated baselines

Version 3.1 June 2018

Content

GPO Box 621 Canberra ACT 2601 1300 553 542 [email protected] www.cleanenergyregulator.gov.au 1

http://www.cleanenergyregulator.gov.au/

mailto:[email protected]

s

Revision history..................................................................................................................................................4

Purpose of the guidance....................................................................................................................................4

1 Calculated baselines background and overview.........................................................................................5

1.1 Background.........................................................................................................................................5

1.2 Calculated baselines overview............................................................................................................5

1.3 Structure of guidance document........................................................................................................6

2 Eligibility.....................................................................................................................................................7

2.1 Initial calculated baseline criteria.......................................................................................................7

2.1.1 Facility’s emissions will exceed baseline.....................................................................................7

2.1.2 Primary purpose test..................................................................................................................8

2.2 New facility criteria...........................................................................................................................10

2.2.1 Large new facility......................................................................................................................10

2.3 Significant expansion criteria............................................................................................................11

2.3.1 Significant expansion during relevant expansion period..........................................................11

2.4 Inherent emissions variability criteria..............................................................................................14

2.4.1 Eligible facility type...................................................................................................................15

2.4.2 Direct effect of properties of natural resource or natural gas reserve.....................................15

2.4.3 Limited cost-effective ability to control emissions....................................................................16

2.4.4 Primary reason for excess.........................................................................................................16

3 Setting the calculated baseline: production variables..............................................................................17

3.1 Identifying outputs, inputs, waste products, intermediate products and output variables.............17

3.1.1 Identifying outputs...................................................................................................................17

3.1.2 Identifying inputs......................................................................................................................18

3.1.3 Identifying intermediate products............................................................................................18

3.1.4 Identifying by-products and waste products............................................................................19

3.1.5 Identifying multiple outputs.....................................................................................................19

3.1.6 Transport and electricity outputs.............................................................................................20

3.1.7 Identifying output variables......................................................................................................21

3.2 Identifying production variables: default approach..........................................................................23

3.3 Identifying production variables: exceptions to default approach...................................................23

3.3.1 Combining similar variables as a single production variable.....................................................23

3.3.2 Using inputs or intermediate products as production variables...............................................24

3.3.3 Using inputs where there is no discernible output variable.....................................................26




3.3.4 Production variables where there is an emissions-intensive trade-exposed activity................27

3.4 Primary production variable.............................................................................................................27

3.5 Evidence requirements for identification of production variables...................................................28

4 Setting the calculated baseline: forecasting.............................................................................................29

4.1 Forecasting production variable quantities......................................................................................29

4.2 Forecasting covered emissions.........................................................................................................30

4.3 Calculating emissions intensity.........................................................................................................30

4.3.1 Calculating emissions intensity—general requirements and principles....................................31

4.3.2 Apportioning covered emissions to individual production variables........................................32

4.3.3 Evidence requirements for calculating emissions intensity......................................................32

4.4 Additional information requirements for forecasts..........................................................................32

4.4.1 Measures to reduce greenhouse gas emissions intensity.........................................................32

4.4.2 Environmental impact assessments..........................................................................................33

4.4.3 Relevant earlier estimates........................................................................................................33

4.4.4 Historical emissions and production data.................................................................................34

5 The application process............................................................................................................................35

5.1 Application form and requirements.................................................................................................35

5.1.1 Responsible emitter..................................................................................................................35

5.1.2 Executive officer.......................................................................................................................36

5.2 Application deadlines.......................................................................................................................36

5.3 Application processing and decision-making....................................................................................37

5.3.1 Application receipt and processing timeframes.......................................................................37

5.3.2 Requests for information..........................................................................................................38

5.3.3 Withdrawal of application........................................................................................................38

5.3.4 Decision to make a calculated baseline....................................................................................39

5.3.5 Decision to refuse to make calculated baseline........................................................................40

5.3.6 Variation and remaking of calculated baseline.........................................................................40

5.3.7 Review rights............................................................................................................................40




Revision historyVersion Date Details

1.0 30 June 2016

2.0 22 July 2016 The guidance on greenhouse gas reduction measures on pages 30 and 31 has been updated to clarify that it relates to measures to reduce emissions intensity.

2.1 12 August 2016 The guidance has been updated post the 31 July 2016 deadline. A deadline of 1 August 2016 (as 30 July 2016 fell on a weekend) applied if a responsible emitter wished to use the 2016-17 year as the baseline setting year (where the production level of the facility’s primary production variable was expected to be at its highest in 2016-17).

3.0 September 2017

The guidance has been updated to include more detailed explanation of the significant expansion criteria and inherent emissions variability criteria.

3.1 June 2018 The guidance has been updated to inform responsible emitters that the initial calculated baseline criteria is no longer available and provide further information about the inherent emissions variability criteria.

Purpose of the guidanceThis document provides guidance on calculated baselines under the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (the Safeguard Rule) to assist responsible emitters to apply to the Clean Energy Regulator for a calculated baseline for a facility under the Safeguard Rule. The term ‘responsible emitter’ is defined in section 22XH of the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) as the person with operational control of the facility.

This guidance is also intended for use by auditors in conducting an audit and preparing an audit report to accompany an application for a calculated baseline. Additional guidance to auditors is provided in the Clean Energy Regulator audit determination handbook.

This guidance document should be read in conjunction with the Safeguard Rule, the NGER Act and the National Greenhouse and Energy Reporting Regulations 2008 (the NGER Regulations), as in force at the time. All references in this guidance document to legislative provisions relate to the Safeguard Rule unless otherwise indicated.




https://www.legislation.gov.au/Series/F2008L02230

http://www.cleanenergyregulator.gov.au/NGER/For-auditors/Audit-determination-handbook

https://www.legislation.gov.au/Series/C2007A00175

https://www.legislation.gov.au/Series/F2015L01637/Amendments

https://www.legislation.gov.au/Series/F2015L01637/Amendments

Note

Changes to the legislation may affect the information in this document. It is intended that this document will be updated in light of any legislative changes or if further clarity on a particular issue is required. The information contained in this document is provided as guidance only.

This document is general in nature, and does not cover every situation that may arise in relation to the safeguard mechanism.

Responsible emitters are responsible for determining their obligations under the NGER legislation and for applying the legislation to their individual circumstances. They should seek professional advice if they have any concerns. This document does not contain legal advice.

1 Calculated baselines background and overview

1.1 Background

The safeguard mechanism is designed to ensure that emissions reductions purchased by the Australian Government through the Emissions Reduction Fund are not offset by significant increases in emissions above

business-as-usual levels elsewhere in the economy. It does this by encouraging large businesses not to increase their emissions above historical levels.

The safeguard mechanism commenced on 1 July 2016 and applies to facilities with direct scope 1 emissions of more than 100,000 tonnes of carbon dioxide equivalent (t CO2-e). It extends to a range of businesses across the Australian economy. Collectively these facilities account for about half of Australia’s emissions. Facilities that exceed the 100,000 t CO2-e threshold must keep their emissions at or below a baseline set by the Clean Energy Regulator.

The safeguard baselines are set in different ways depending on whether the facility is new or well established, how much historical data the facility has reported under the National Greenhouse and Energy Reporting (NGER) scheme and, in some instances, what type of facility it is. A baseline may be adjusted to accommodate production growth, natural emissions variability or other circumstances where historical emissions are not representative of future business-as-usual emissions performance for the facility. The primary way to allow for this is through a calculated baseline.

1.2 Calculated baselines overview

Calculated baselines are intended for facilities that do not have sufficient historical emissions data to make a reported baseline, or for which historical emissions may be a poor indicator of future emissions.

A calculated baseline replaces the facility’s pre-existing baseline (typically a reported baseline, but could also be a default baseline), for a given duration. The duration is typically three years, but is extended to five years for a large new facility.




http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/Baselines/Reported-baseline/making-a-reported-baseline-determination

http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/Baselines/Reported-baseline/making-a-reported-baseline-determination

http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/Baselines/Calculated-baseline

http://www.cleanenergyregulator.gov.au/NGER/About-the-National-Greenhouse-and-Energy-Reporting-scheme/Greenhouse-gases-and-energy#n2

http://www.cleanenergyregulator.gov.au/NGER/Reporting-cycle/Assess-your-obligations/Facilities-and-operational-control

http://www.cleanenergyregulator.gov.au/ERF/About-the-Emissions-Reduction-Fund

A responsible emitter may apply for a calculated baseline for a facility if it meets one or more of the specified eligibility criteria:

The new facility criteria for facilities that are new and have exceeded or are reasonably expected to exceed 100,000 t CO2-e in the first year of the proposed calculated baseline.

The inherent emissions variability criteria for facilities that extract a natural resource or process or liquefy natural gas, and whose emissions are affected by the variability of the natural resource or natural gas.

The significant expansion criteria for facilities that have significantly expanded.

Note: Responsible emitters, with facilities that exceeded their baselines in the first year of the safeguard mechanism (2016–17), were able to apply for a calculated baseline under the initial calculated baseline criteria. The final date applications under this criteria could be made was 31 October 2017.

Calculated baselines are set using independently audited forecasts for production and emissions intensity. The baseline is calculated by multiplying forecast production by the forecast emissions intensity of that production (t CO2-e per unit of production).

Once a calculated baseline expires, the facility reverts to its pre-existing baseline (reported or default). At that time, the responsible emitter may be eligible to apply for a production-adjusted baseline to succeed the calculated baseline.

1.3 Structure of guidance document

The remainder of this guidance document is structured as follows:

Chapter 2 – Eligibility

» describes the criteria under which a responsible emitter is eligible to make an application for a calculated baseline.

Chapter 3 – Setting the calculated baseline: production variables

» describes the requirements for identifying the facility’s production variables as used in the calculation of the calculated baseline.

Chapter 4 – Setting the calculated baseline: forecasting

» provides guidance on forecasting production variable quantities and emissions intensities.

Chapter 5 – Applying for a calculated baseline

» explains the process of applying for a calculated baseline including the applicable deadlines.




http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/Baselines/Production-adjusted-baseline

2 Eligibility

2.1 Initial calculated baseline criteria (no longer available)

Note

Applications for a calculated baseline under the initial calculated baseline criteria can no longer be made. The final deadline for applications under this criteria was 31 October 2017.

A responsible emitter was previously able to apply for a calculated baseline under the initial calculated baseline criteria if the covered emissions from its facility had exceeded, or was reasonably expected to exceed, the facility’s baseline in the first year of the safeguard mechanism. This provided flexibility in circumstances where historical emissions did not represent a facility’s normal business operations.

Information about the initial calculated baseline criteria has been kept in this document for reference only. Several of the concepts discussed under this criteria are also used by the other criteria and this information remains valid.

To apply under the initial calculated baseline criteria, all of the following requirements must be met (as set out in section 26):

Either a reported baseline has been made in relation to the facility or scope 1 emissions from the facility were included in NGER reports made in every year of the five year period from 2009–10 to 2013–14.

The facility’s covered emissions in 2016–17 have exceeded, or are reasonably expected to exceed, the baseline which applies to the facility in that year (see 2.1.1 Facility’s emissions will exceed baseline).

The responsible emitter must not change the way emissions are calculated or reported, or cause emissions for the primary purpose of exceeding the baseline (see 2.1.2 Primary purpose test).

The facility is not a grid-connected electricity generator (as defined in section 4).

The proposed commencement date for the calculated baseline is 1 July 2016.

2.1.1 Facility’s emissions will exceed baseline

To ensure calculated baselines are only sought in circumstances where historical emissions do not accurately reflect the current operations of a facility, responsible emitters must demonstrate that emissions from the facility have exceeded, or are reasonably expected to exceed, the baseline which applies to the facility, in the financial year beginning 1 July 2016.

The baseline which applies to the facility (the facility’s baseline) is either the:

facility’s reported baseline, or

default baseline of 100,000 t CO2-e if the facility does not have a reported baseline.

The requirement that a facility’s covered emissions have exceeded, or are reasonably expected to exceed, the facility’s baseline is a reasonable assurance matter for auditors.

Demonstrating that covered emissions have exceeded the facility’s baseline

If the facility’s covered emissions for 2016–17 have already exceeded the facility’s baseline, this should be evidenced using data that has been collected and stored through the responsible emitter’s usual emissions accounting systems (i.e. as used for the NGER reporting process).




Demonstrating that covered emissions are reasonably expected to exceed the facility’s baseline

Reasonable assurance over the requirement that the facility’s covered emissions are reasonably expected to exceed the facility’s baseline does not mean that an auditor must be reasonably assured that a specific number of tonnes of covered emissions will be produced, or that the facility’s covered emissions will exceed the facility’s baseline. Rather, the test to be applied is—does the evidence provided give rise to a reasonable expectation that the facility’s covered emissions will exceed the facility’s baseline?

If the mid-point of a forecasted range of emissions falls beneath the facility’s baseline, then it may be concluded that there is not a reasonable expectation that the facility’s covered emissions will exceed the facility’s baseline.

If, at the time that the decision on the application is made, actual emissions from the facility are available, the Clean Energy Regulator will use this information when determining whether the facility has exceeded the baseline that would otherwise apply.

Evidence requirements for demonstrating reasonable expectation

In the application for a calculated baseline, a responsible emitter will need to provide information demonstrating the facility’s covered emissions are reasonably expected to exceed the facility’s baseline, in the form of a forecasted range of emissions and a summary of the material assumptions on which the forecast is based.

Auditors will, among other things, assess that the forecasted range of emissions is based on robust assumptions, calculations (or modelling) and evidence. This might include:

assessing the range of results from the calculations or modelling

ensuring that the calculations or modelling have been performed correctly and apply the material assumptions made by the responsible emitter, and

ensuring that the material assumptions made by the responsible emitter are reasonable and based on robust evidence.

The evidence that could underpin the application and be made available to auditors could include:

relevant past production

» Emissions and emissions intensity data—historical data may be a good predictor of future production and emissions levels if the facility is expected to operate in materially the same way as in previous years. Alternatively, future emissions levels may be explained by extrapolating trends from historical data or by describing planned departures from past levels.

actual production and covered emissions for 2016–17 to the time of application

forecasted range of production for the remainder of 2016–17 (refer to 4.1 Forecasting production variable quantities for factors that may need to be considered) and supporting calculations or modelling

forecasted range of covered emissions for the remainder of 2016–17, including supporting calculations or modelling, or

any further evidence considered necessary by the auditor.

2.1.2 Primary purpose test

A facility will not be eligible for a calculated baseline, under the initial calculated baseline criteria, if the facility has:

changed, or expects to change, the way scope 1 emissions are reported or calculated under the NGER Act, for the primary purpose of exceeding its baseline, or

caused, or is expecting to cause, scope 1 emissions for the primary purpose of exceeding its baseline.




Applying a primary purpose test ensures calculated baselines are sought in situations where emissions are expected to exceed the baseline because of the business-as-usual operation of the facility, and not any deliberate attempts to increase (or give the appearance of an increase of) emissions at the facility.

This requirement is a reasonable assurance matter for auditors.

Changing manner of reporting or calculation

If there has been a change (or there is intended to be a change) to the manner in which scope 1 emissions are reported or calculated under the NGER Act, the change must not have been made for the primary purpose of exceeding the baseline. If the change results in (or is expected to result in) the baseline being exceeded, this exceedance must be incidental to the purpose of the change.

In assessing an application, the Clean Energy Regulator will consider any change to the manner of reporting or calculation, and in particular a change to the method used to estimate emissions from an occurrence of a source.

It is expected that the method under the National Greenhouse and Energy Reporting (Measurement) Determination 2008 (the NGER Measurement Determination) used to demonstrate an exceedance (or expected exceedance) for 2016–17 will be the same as the method used (or intended to be used) for that year’s NGER reporting.

In most cases this will also be the same method used in the most recent NGER report made in relation to the facility.

If a facility has changed (or intends to change) from using a higher method to a lower method (defined in subsections 1.18(5) and (6) of the NGER Measurement Determination, respectively), the move must be compliant with the restrictions contained in Division 1.2.2 of the NGER Measurement Determination in relation to method switching.

If the change to using a lower method is compliant with the NGER Measurement Determination, and it can be demonstrated this change is not occurring for the primary purpose of exceeding the facility’s baseline, then refer to 4.3.1 Calculating emissions intensity—general requirements and principles on how to reflect the change of method in the emissions forecast.

Causing scope 1 emissions to exceed the baseline

A responsible emitter must not cause (or expect to cause) scope 1 emissions at a facility for the primary purpose of exceeding its baseline.

The Clean Energy Regulator will scrutinise instances where increased emissions result from activities that represent a change in environmental controls at the facility (i.e. halting an activity that has previously occurred, or occurred on a larger scale, such as the capture and combustion of methane emissions). Any changes in environmental controls resulting in increased emissions must not have taken place for the primary purpose of exceeding the baseline.

Evidence requirements for primary purpose test

In the application for a calculated baseline, a responsible emitter will need to provide:

an explanation of the changes and the purpose for which they were made (if there have been changes, or there are intended changes) to the manner in which scope 1 emissions are reported or calculated under the NGER Act, and

an outline of the reasons for the increase in the facility’s emissions that underlie the exceedance (or expected exceedance).

Auditors will, among other things:




consider the evidence of the reasons for the changes when providing assurance over this matter (if there have been changes or there are intended changes) to the way scope 1 emissions are reported or calculated under the NGER Act and explicitly address this in the audit report

consider the reasons for the increase in the facility’s emissions when providing assurance over this matter, and

if the increase is due to any changes in environmental controls, this should be explicitly addressed in the audit report.

2.2 New facility criteria

A responsible emitter may apply for a calculated baseline under the new facility criteria where there is insufficient historical data for the Clean Energy Regulator to make a reported baseline. These facilities are likely to be new facilities building up to full production, when historical emissions are often a poor guide to future emissions levels.

An application for a calculated baseline under the new facility criteria can be made for a baseline to commence before 1 July 2020. From 1 July 2020, new facilities can only apply for a benchmark baseline.

To be eligible for a calculated baseline on the basis of the new facility criteria, all of the following requirements must be met (as set out in section 23):

The facility does not have a reported emissions baseline determination.

The facility must not have reported scope 1 emissions in all of the five years from 1 July 2009.

The facility must have emitted, or be reasonably expected to emit, more than 100,000 t CO2-e of covered emissions in the first year of the proposed calculated emissions baseline determination (see 2.1.1 Facility’s emissions will exceed baseline—noting that for the purpose of the new facility criteria, references to ‘2016–17’ would instead refer to the first year of the calculated baseline).

The responsible emitter must not change the way emissions are calculated or reported, or cause emissions, for the primary purpose of exceeding the 100,000 t CO2-e threshold (see 2.1.2 Primary purpose test—noting that for the purpose of the new facility criteria, references to the ‘facility’s baseline’ would instead refer to the 100,000 t CO2-e threshold).

A calculated baseline has never been made in relation to the facility.

The calculated emissions baseline for a new facility must commence no later than 1 July 2019.

» A benchmark emissions baseline will apply to new facilities that exceed 100 000 t CO2-e after 1 July 2020 (as outlined in section 33).

2.2.1 Large new facility

Note that if the facility is a large new facility, the duration of the calculated baseline is up to five years from the requested start date of the calculated baseline.

A large new facility is defined as a facility that:

meets the new facility criteria

has, or is likely to have, a baseline of more than two million tonnes of carbon dioxide equivalence (t CO2-e) (assuming a five year baseline determination), and

is not, or will not be, a grid-connected electricity generator.




2.3 Significant expansion criteria

To support business growth, a responsible emitter may apply for a calculated baseline if the facility has undertaken a significant expansion. To be eligible for a calculated baseline on the basis of the significant expansion criteria, all of the following requirements must be met (as set out in section 24):

The facility has completed a significant expansion during a relevant expansion period (see 2.3.1 Significant expansion during relevant expansion period).

The facility has previously emitted more than 100,000 t CO2-e of covered emissions in a financial year, or is reasonably expected to emit more than 100,000 t CO2-e of covered emissions in the first financial year to be covered by the calculated baseline (see 2.1.1 Facility’s emissions will exceed baseline regarding ‘reasonable expectation’).

The facility’s covered emissions have exceeded, or are reasonably expected to exceed, the baseline that would otherwise apply to the facility, in at least one financial year of the three-year period to be covered by the calculated baseline (see 1.1.1 Facility’s emissions will exceed baseline regarding ‘reasonable expectation’).

Either a calculated baseline has never been made in relation to the facility, or a calculated baseline was made in relation to the facility but has expired, or will expire, before the start of the proposed period of the calculated baseline.

The calculated baseline must commence no later than 1 July 2019. Baselines commencing from 1 July 2020 for significantly expanded facilities will be determined using the benchmark baseline criteria.

2.3.1 Significant expansion during relevant expansion period

Significant expansion of landfill facilities

For a landfill facility, a significant expansion is defined as a 20 per cent increase in the facility’s licensed capacity which must have occurred within a relevant expansion period.

Significant expansion of facilities that are not landfill facilities

For facilities other than landfill facilities, new equipment must have been installed and used within a relevant expansion period and must be used to produce or process a production variable.

The installation of the new equipment at the facility must result in either:

an increase of more than 20 per cent in the maximum productive capacity of the equipment used to produce one or more significant production variables, when compared to the equipment that existed before the installation, or

the production of one or more significant production variables that were not produced before the relevant expansion period, and are not a replacement for other production variables produced before the relevant expansion period.

For transport facilities, the installation of new equipment is taken to include the addition of new or used equipment, such as trucks or planes, to carry out the activities which constitute the facility.




Relevant expansion period

The start and end dates for relevant expansion periods for calculated baselines are determined in accordance with subsection 24(5). The relevant expansion periods are as follows:

Is there a previous calculated baseline?

Duration of baseline under significant expansion criteria

Relevant expansion period

No 1 July 2016 to 30 June 2019 1 July 2014 to 30 June 2016 or

1 July 2014 to 30 June 2017


1 July 2015 to 1 June 2018


1 July 2016 to 30 June 2019


1 July 2017 to 30 June 2020

Yes—1 July 2016 to 30 June 2019 1 July 2019 to 30 June 2022 1 July 2018 to 30 June 2019 or

1 July 2018 to 30 June 2020

Some pre-installation activity such as equipment design or procurement, or other preparatory work may occur before the beginning of the relevant expansion period.

Increase in maximum productive capacity by more than 20 per cent

In assessing whether the maximum productive capacity of equipment has increased by more than 20 per cent, the responsible emitter should compare the productive capacity of the equipment that produces the relevant production variables prior to installation with the productive capacity of the equipment that produces the same variables after the installation. Post-expansion productive capacity must exclude any production from equipment to be decommissioned.

The method used to determine productive capacity before the installation took place must be the same method used to determine productive capacity after the installation.

New production variable being produced

If the installation of new equipment has resulted in a ‘new’ production variable being produced, it must:

have not been produced at the facility before the relevant expansion period, and

not be a replacement for other production variables produced before the relevant expansion period.

The concept of a replacement product is intended to be interpreted broadly to include changed products which, in substance, replace a product produced earlier. For example, this may include an output with a higher purity and different composition to an output previously produced at the facility.




Significant production variables

The production variables being produced or processed by the new equipment must be significant to the operation of the facility. A production variable will be considered significant if, in accordance with paragraph 24(2)(c):

it is the primary production variable for the facility (see 3.4 Primary production variable)

more than 20 per cent of the revenue expected from the facility (based upon prices at the time of application) in the financial year with the highest expected production variable over the period covered by the calculated baseline will come from the new or expanded production variables, or

where the production variable is the quantity of electricity generated onsite, the electricity will supply more than 30 per cent of the electricity needs of the facility over the period to be covered by the calculated baseline.

The production variables selected for the purposes of meeting the significant expansion criteria do not need to be the same as the production variables identified for the purpose of forecasting and calculating covered emissions for the facility. For example, if the quantity of natural gas input has been identified for the purposes of forecasting for a liquefied natural gas (LNG) facility, the output of LNG may be identified as the production variable for the purpose of meeting the significant expansion criteria. Production variables identified for either purpose still need to be identified in accordance with section 5 of the Rule.

If a production variable for a facility is the quantity of an input, the input is taken to be produced at a facility if it is used to produce the outputs of the facility.

Example—significant expansion of a mining facility

A mining facility has a reported baseline of 250,000 t CO2-e and no calculated baseline. It produces two outputs—around 20,000 tonnes of mineral A and 5,000 tonnes of mineral B each year. The quantities of each mineral produced are the production variables. The primary production variable is mineral A, as it accounts for 75 per cent of the revenue and the majority of emissions from the facility.

The facility undergoes a major expansion from September 2017 to April 2018, involving the installation of new equipment to double production of mineral B. Emissions from the facility are projected to exceed the baseline during the financial year 2017–18.

The responsible emitter applies for a calculated baseline on the basis that:

the proposed duration of the baseline is 1 July 2017 to 30 June 2020

the relevant expansion period is 1 July 2017 to 30 June 2018

the maximum productive capacity of equipment used to produce mineral ore B is increased by more than 20 per cent, and

mineral B is significant to the operation of the facility, as revenue from mineral B is 25 per cent of total revenue.

Example—significant expansion of a manufacturing facility

A manufacturing facility has a reported baseline of 120,000 t CO2-e and no calculated baseline. Prior to the expansion, it produces one output—around 100,000 tonnes of output A. The quantity of output A is the single production variable.

The facility installs a new plant from Feb 2016 to July 2016, to utilise what had previously been a waste product from the facility. It then produces two additional products – output B and output C. Emissions from the facility are projected to exceed the baseline during the financial year 2016/17.




The responsible emitter applies for a calculated baseline on the basis that:

the proposed duration of the baseline is 1 July 2016 to 30 June 2019

the relevant expansion period is 1 July 2014 to 30 June 2017

neither output B nor output C had been produced by the facility prior to the relevant expansion period, and

output B and output C are significant to the operation of the facility, as the combined revenue from the two outputs is 22 per cent of total revenue (output B is 15 per cent and output C is 7 per cent).

2.4 Inherent emissions variability criteria

Facilities in certain natural resource sectors can apply to have their baselines adjusted to account for inherent emissions variability associated with the extraction of a natural resource or reserve, such as minerals, oil and gas.

Some operations in the mining, oil and gas sectors can have highly variable resource grades and emissions intensity, particularly the fugitive emissions associated with resource extraction. For example, mines tend to move from higher to lower grade ores in the natural progression of operations, so that emissions may rise even while production remains constant. To accommodate this variability, affected facilities may apply for a calculated baseline under the inherent emissions variability criteria.

To be eligible for a calculated baseline on the basis of the inherent emissions variability criteria all of the following requirements must be met (as set out in section 25):

The facility must have had either a reported baseline or a calculated baseline, but no more than one calculated baseline.

The principal activity of the facility must be the extraction of a natural resource, or the facility must be a natural gas processing or liquefaction facility that is associated with the extraction of natural gas from a natural gas reserve (see 2.4.1 Eligible facility type).

The properties of the natural resource or natural gas reserve must have a direct effect on the covered emissions or covered emissions intensity of the facility (see 2.4.2 Direct effect of properties of natural resource or natural gas reserve).

The facility must have limited cost-effective ability to control for the covered emissions related to the natural resource or natural gas reserve (see 2.4.3 Limited cost-effective ability to control emissions).

The facility’s covered emissions in the first year of the calculated baseline have exceeded, or are reasonably expected to exceed, the baseline which would otherwise apply to the facility in that financial year (see 2.1.1 Facility’s emissions will exceed baseline noting that for the purpose of the inherent emissions variability criteria, references to ‘2016–17’ would instead refer to the first year of the calculated baseline).

The properties of the natural resource or natural gas reserve must be the primary reason for the facility’s covered emissions, in the first year of the calculated baseline, exceeding its baseline (see 2.4.4 Primary reason for excess).

A benchmark baseline must not have been made in relation to the facility.

The facility is not a grid-connected electricity generator (as defined in section 4).

The proposed commencement date for the calculated baseline is no later than 1 July 2024.




2.4.1 Eligible facility type

To be eligible to make an application under the inherent emissions variability criteria, either the extraction of a natural resource must be the principal activity of the facility, or the facility must be a natural gas processing or liquefaction facility that is associated with the extraction of natural gas from a natural gas reserve. The application for a calculated baseline must indicate which requirement is met.

If a facility’s principal activity is the processing of a natural resource (other than natural gas), such as a minerals processing plant or oil refinery, the facility does not meet the criteria.

Extraction of a natural resource

If the responsible emitter indicates that the extraction of a natural resource is the principal activity of the facility, no further evidence will be required in the application.

In assessing an application in this regard, the Clean Energy Regulator will rely on the Australian and New Zealand Standard Industrial Classification (ANZSIC) code correctly identified for the facility in its most recent NGER report.

The NGER Act requires that the activity or activities that make up the facility are attributed to a single industry sector and reported accordingly. If there is a series of activities that make up the facility, the NGER Regulations set out a requirement to identify the principal activity for the facility and attribute the other activities to the same ANZSIC code as the principal activity. That is, the ANZSIC code identified for the facility should reflect the industry sector of the facility’s principal activity.

ANZIC codes 060, 070, 080, 091 and 099 under Division B of ANZSIC (Mining) reflect natural resource extraction activities.

Natural gas processing or liquefaction facility

If the responsible emitter indicates that the facility is a natural gas processing or liquefaction facility that is associated with the extraction of natural gas from a natural gas reserve, the application will need to include a brief explanation of how the facility is associated with the extraction of natural gas from one or more natural gas reserves—either directly (as part of the facility), or through a pipeline network which is not part of the facility.

2.4.2 Direct effect of properties of natural resource or natural gas reserve

The application must include an explanation of how the properties of the natural resource or natural gas reserve have a direct effect on the covered emissions or covered emissions intensity of the facility.

Some properties of a natural resource or natural gas reserve include:

grade

depth

distance from a processing plant

greenhouse gas content, and

other similar properties.




Other similar properties could include, but are not limited to:

rock hardness

permeability (the ability of gas to move through rock)

pressure of the resource, and

ore to waste ratio.

2.4.3 Limited cost-effective ability to control emissions

The application must include information demonstrating that the facility has limited cost-effective ability to control the covered emissions relating to the natural resource or natural gas reserve.

If there are emissions controls which are not being undertaken at the facility and are ‘business-as-usual’ for the industry, or were assessed by the responsible emitter or its parent company (in relation to the facility) in corporate plans or reports made to government (such as environmental impact statements or environmental management plans), the information could include either:

financial analysis to demonstrate why the emissions controls are not cost-effective (possibly with reference to the average price per tonne of abatement under the Emissions Reduction Fund), or

an explanation of why the facility is limited in its ability to implement emission controls (for instance, due to health and safety limitations, severe financial limitations or lack of available technologies).

Emissions controls which have previously been undertaken at the facility but have now ceased should be identified and an explanation of why they have ceased included.

Alternatively, the facility’s audit report should clearly set out how the auditors reached a reasonable assurance conclusion in relation to this criteria, addressing the matters outlined above.

2.4.4 Primary reason for excess

The application must include information demonstrating that the properties of the natural resource or natural gas reserve are the primary reason for the facility’s covered emissions in the first year of the calculated baseline exceeding its baseline. The properties of a natural resource or natural gas reserve are described above in 2.4.2 Direct effect of properties of natural resource or natural gas reserve.

Reasons for the facility’s covered emissions exceeding its baseline, which are not related to the properties of the natural resource or natural gas reserve, may include (but are not limited to) the following changes from the baseline setting year:

increasing production above the baseline year level

the cessation of an abatement activity (such as methane flaring and catalytic destruction of nitrous oxide)

switching from a less emissions-intensive fuel to a more emissions-intensive fuel, and

changing from a scope 2 energy source to a scope 1 energy source.

The properties of the natural resource are considered to be the primary reason for the excess if the increase in emissions due to the properties (aggregated) is larger than any of the other reasons.

In determining the primary reason for the excess, the application should compare the properties of the natural resource, production levels and emissions from the first year of the calculated baseline period with the same characteristics from the year used to set the current baseline. If the facility currently has a reported baseline, this is a simple matter of comparing these characteristics from the historical year used to set the reported baseline with the first year of the calculated baseline period..




If a facility already has a calculated baseline (and is applying for a new calculated baseline, superseding the previous one), the year that was used to set the current baseline, is considered the forecast year in the previous calculated baseline application. The relevant characteristics, such as the properties of the natural resource, production and emissions, will therefore be the forecast characteristics assumed in the calculation of production and emissions intensity in the application form.

3 Setting the calculated baseline: production variablesThis chapter provides guidance on identifying production variables for calculated baselines. Production variables represent the productive output of the facility. The forecast quantity of each production variable multiplied by its forecast emissions intensity forms the basis of setting the baseline emissions number for a calculated baseline.

Calculated baseline

Formula: forecast production × forecast emissions intensity

Production variables must be identified in accordance with the requirements of section 5 and relevant definitions in section 4. These sections define a number of concepts including outputs, output variables, inputs, by-products and intermediate products. These concepts are detailed below and are used to identify the production variables that are appropriate for a facility.

It is important that production variables are identified correctly in the first instance, to avoid investing time and resources into forecasting quantities and emissions intensities for incorrect production variables, only for the application to be refused.

Note

Applicants are encouraged to contact the Clean Energy Regulator at an early stage to discuss the selection of the production variable.

3.1 Identifying outputs, inputs, waste products, intermediate products and output variables

3.1.1 Identifying outputs

Note

An output is the last product resulting from a chemical or physical process undertaken by a facility using one or more inputs or intermediate products. (See 3.1.6 Transport and electricity outputs where the facility is a transport facility or the output is electricity generated.)

Different steps or processes in production may result in intermediate products, but an output is the last product of a process carried out at a facility.

The last product of a process will generally be a product that will leave the facility boundary without any further processing (apart from minor finishing and packaging).




Outputs are identified on a facility-specific basis. For example, a product that is an intermediate product in one facility may be the output of another, and an output of one facility may be an input of another.

Outputs may include:

last products such as washed coal, iron ore, cement, aluminium, or liquefied natural gas

for a transport facility—a transport service measured by service units (see 3.1.6 Transport and electricity outputs)

electricity generated (see 3.1.6 Transport and electricity outputs)

by-products, and

waste products.

3.1.2 Identifying inputs

Note

An input is anything that undergoes a physical or chemical process to produce an intermediate product or an output.

An input is a broad concept, and facilities may use multiple inputs at different stages of the production process, which may include:

an ore body or coal seam that is mined at the facility

subsurface petroleum or natural gas that is extracted at the facility

a fuel (for example, diesel or natural gas) that is used to produce energy at the facility

a substance (for example, a mineral ore) that is imported to the facility and subsequently undergoes transformation (or is used to change the properties of another product or input), and

if the input relates to a landfill facility—a tonne of waste received by the facility.

3.1.3 Identifying intermediate products

Note

An intermediate product is a product that:

results from a chemical or physical process undertaken by a facility using one or more inputs, and

is then used as an input for the production of an output at the same facility.




3.1.4 Identifying by-products and waste products

A by-product is a saleable output or other product that:

results from a chemical or physical process undertaken by a facility other than for the purpose of producing the output, and

will be disposed of, by sale or gift, without any further processing by the facility (other than further processing in accordance with standard industry practice).

A waste product is an output or other product that:

results from a chemical or physical process undertaken by a facility other than for the purpose of producing the output

will be disposed of without any further processing by the facility (other than further processing in accordance with standard industry practice), and

is not a by-product.

A key distinction between a by-product and a waste product is that a by-product is saleable, and a waste product is not.

Not all by-products or waste products will be outputs. Some products may meet the definition of a by-product or a waste product but not meet the definition of an output (for example, due to not being the last product of a chemical or physical process undertaken by the facility).

3.1.5 Identifying multiple outputs

A facility may undertake a number of distinct chemical or physical processes. This can result in multiple outputs being identified for that facility (as illustrated in the examples below).

Differentiating final products by reference to the chemical or physical processes that produce them ensures that outputs (and any consequent output variables) are an accurate reflection of the covered emissions produced by the facility.

Example—lime and cement plant

A facility consists of both a lime plant and a cement plant. In the lime plant, inputs of calcium carbonate and magnesium carbonate are calcined in a kiln, to produce lime. The lime is an output of the facility. In the cement plant, inputs of limestone, clay and other feed stocks are fused together in a cement kiln to produce clinker (an intermediate product). All of the clinker is then combined with gypsum and ground into Portland cement. The Portland cement is another output of the facility.

The facility has two outputs: lime, and Portland cement.

This example illustrates that a facility may conduct two (or more) different processes that use different inputs and produce separate outputs

Example—recycled steel plant

Inputs such as ferrous scrap, pig iron and flat iron are fed to an electric arc furnace where they are heated and melted into liquid steel. The liquid steel is then cast into billets of carbon steel, some of which are exported from the facility without any further processing and are therefore an output of the facility. The remaining billets of carbon steel (an intermediate product) are hot-rolled into long products of carbon steel. The long products of carbon steel are another output of the facility.




The facility has two outputs: the billets of carbon steel that are exported from the facility, and the long products of carbon steel.

This example illustrates that a product of a chemical or physical process at a facility may be divided into an output stream that leaves the facility, and an intermediate product stream which undergoes a further chemical or physical process at the facility to result in a different composition or quality compared to the first product. In this case, there will be two last products, both of which are outputs.

Example—oil refinery

An input of crude petroleum oil is separated into streams of varying density, which are then processed in separate equipment to produce unleaded petrol, diesel and liquid petroleum gas.

The facility has multiple outputs: the unleaded petrol, the diesel, and the liquid petroleum gas.

This example illustrates that quantities of an input may undergo different chemical or physical processes in separate equipment (or in different batches in the same equipment), which results in different last products that are separate outputs.

Example—glass container manufacturing

A facility produces glass bottles on multiple separate production lines, using separate equipment. In each production line, inputs of silica and other raw and recycled materials undergo substantively the same process of being melted in a glass furnace, and the molten glass then passing through forming machines and annealing furnaces to produce glass bottles.

The facility has a single output: glass bottles.

This example illustrates that the last products from processes conducted in different physical locations at a facility (such as in separate equipment or production lines) are only considered the same output if they result from the same inputs or intermediate products undergoing substantively the same chemical or physical process (i.e. the outputs are actually the same product, produced in two different locations).

3.1.6 Transport and electricity outputs

If the facility is a transport facility, the output for the facility is a transport service measured by service units:

A service unit is defined in section 4 and includes units of measure such as available seat kilometres (askm), dead weight tonne nautical miles (dwtnmi), meters cubed kilometres (m3km), passenger kilometres (pkm), passenger nautical miles (pnmi), tonne kilometres (tkm), tonne nautical miles (tnmi) or vehicle kilometres travelled (vkt).

A responsible emitter must take into account standard industry practice and its existing measurement systems when identifying its service units for a transport service.

If a unit of measure is used which is not listed above, the unit should be of the same nature as those units listed above (i.e. a physical measure of the carrying capacity or quantity carried by the transport service by distance travelled), and reflect standard industry practice. The responsible emitter should liaise with the Clean Energy Regulator before proceeding with an application using a unit of measure not listed above.




If more than 25,000 megawatt hours of electricity is, or is to be, generated at a facility in a financial year, electricity is one of the facility’s outputs. Where facilities produce less than 25,000 megawatt hours of electricity in a financial year, this production is not considered to be an output if none of the electricity is exported from the facility. If a portion of the electricity is exported, that portion is considered to be a ‘last product’ which is not used to produce other outputs at the facility, and is therefore an output.

3.1.7 Identifying output variables

Generally, an output variable is the quantity of an output that is produced or processed by a facility. Output variables may include:

the quantity of products that are produced or processed by a facility, such as washed coal, iron ore, cement, aluminium, or liquefied natural gas

for a transport facility—the quantity of service units of that facility (see Transport and electricity output variables), and

the quantity of electricity generated or exported (see Transport and electricity output variables).

Requirements for output variables

A quantity of a product is only an output variable if it meets the criteria below (not applicable where an output is electricity generation or relates to a transport facility). If a facility has no discernible output that meets the requirements for being an output variable, see 3.3.3 Identify production variables—no discernible output.

(i) Must not be a product that is not an output variable

The following types of products cannot be output variables:

intermediate products

by-products, and

waste products.

(ii) Must be measurable

For a product to be an output variable, the quantity of the product must be able to be expressed in a unit of measurement that complies with the National Measurement Act 1960.

(iii) Must be the last saleable output

A last saleable output is an output that is in its final form at the end of a chemical or physical process carried out by the facility, and is saleable when it leaves the facility boundary. Some saleable products will undergo further processing at the facility and are therefore not the last saleable output.

An output is saleable when it is subject to or suitable for sale into a market. An output will be considered saleable irrespective of whether the output is actually sold by the facility. For example, a saleable output may not actually be sold, but may instead be transferred to another facility under the same ownership for further processing.

It is possible that an output does not have an output variable on the basis that it is not saleable, for example an output that does not meet minimum quality requirements and is recycled for further processing or disposed of as waste.




https://www.legislation.gov.au/Series/C1960A00064

(iv) Increased or decreased quantity of the product must cause an increase or decrease in emissions

This test requires that:

an increase in the quantity of the product produced or processed by the facility would result in an increase in the quantity of covered emissions from the facility, and

a decrease in the quantity of the product produced or processed by the facility would result in a decrease in the quantity of covered emissions from the facility.

Note that these tests are specific to covered emissions. Scope 2 emissions (such as emissions relating to electricity or steam imported to, and used by the facility, to produce or process the product) are not relevant for the purpose of these tests.

It is recognised that some production processes, particularly extractive processes involving natural resources (such as coal and natural gas) are inherently variable in terms of emissions. Accordingly, there will not always be a consistent or proportional correlation between production and overall (covered) emissions at these facilities.

A causative relationship must be demonstrated between a change in the quantity of the product produced or processed, and the covered emissions from the facility. Basic theoretical information regarding the production or processing of the product can be used to demonstrate a causative relationship. An applicant will only need to provide empirical data showing correlation between production and covered emissions if the theoretical basis for the causative relationship is uncertain.

The information could also include a relevant NGER Measurement Determination equation that shows a positive relationship between production or processing of the product and scope 1 emissions.

Example – Coal mine

Coal is extracted at a facility using machinery fuelled by diesel. An increase in the quantity of coal produced will result in an increase in emissions from diesel combustion, and a decrease in the quantity of coal produced will result in a decrease in emissions from diesel combustion.

Example – Lime kiln

Lime is produced at a facility from a calcination process in a gas-fired kiln that generates process emissions and fuel combustion emissions. An increase in the quantity of lime produced will result in an increase in emissions, and a decrease in the quantity of lime produced will result in a decrease in emissions.

Transport and electricity output variables

If the only output for a facility is electricity generation, the output variable is the quantity of electricity exported from the facility, as measured in megawatt hours. This will generally be the sent-out electricity, as measured at the facility’s revenue metering point.

If electricity generation is one of two or more outputs for a facility, the output variable is the quantity of electricity generated at the facility as measured in megawatt hours. This will be the electricity as measured at the generator terminals.

If the facility is a transport facility, the output variable is the quantity of service units of that facility.




3.2 Identifying production variables: default approach

A facility’s production variables are by default its output variables:

If the facility has only one output that has an output variable, that output variable must be the production variable.

If the facility has more than one output that has an output variable, each of those output variables must be a separate production variable, unless an exception applies.

Exceptions are contained in subsections 5(4), (5), (6), (7), (9) or (10), and are described in detail in 3.3 Identifying production variables: exceptions to default approach.

3.3 Identifying production variables: exceptions to default approach

3.3.1 Combining similar variables as a single production variable

Responsible emitters may choose to count multiple output variables together as a single production variable if all of the following requirements are met:

The output variables are measured in the same unit of measurement.

For a physical quantity this must be the same Australian legal unit of measurement contained in the National Measurement Regulations 1999 Schedule 1—Australian legal units of measurement.

For a transport service, this must be the same service units.

The resulting covered emissions are materially similar.

Materially similar

The covered emissions of two or more output variables will be considered materially similar if the average covered emissions per unit of production of the similar variables differs, or is expected to differ, by no more than five per cent over the first three years of the calculated baseline [the ‘relevant comparison period’, as defined in paragraph 5(13)(a)].

If more than two output variables are intended to be combined into a single production variable, all of these output variables must be materially similar to each other. The materially similar test is illustrated in examples below.

Example two—output variables

A responsible emitter applies for a calculated baseline to commence in 2016–17, for a facility with forecasted production of 2,000 tonnes of output variable X and 2,000 tonnes of output variable Y in the baseline setting year. Average covered emissions per unit of production are calculated to be 1.6 t CO2-e/t of output variable X and 2.3 t CO2-e/t of output variable Y.

Output variables X and Y are not materially similar (as 1.6 is not within ±5% of 2.3). The responsible emitter is therefore not able to sum the quantities to treat the output variables as a single production variable.

Example three—output variables

A responsible emitter applies for a calculated baseline to commence in 2016–17, for a facility with forecasted production of 2000 tonnes of output variable A, 500 tonnes of output variable B and 1000 tonnes of output variable C in the baseline setting year. Covered emissions per unit of production are:




Outputvariables

2016–17(t CO2-e/t)

2017–18 (t CO2-e/t)

2018–19 (t CO2-e/t)

Average (t CO2-e/t)

A 1.00 1.20 1.10 1.10

B 1.50 0.90 0.95 1.12

C 1.20 0.80 1.20 1.07

It can be demonstrated that output variables:

A and B are materially similar (as 1.10 is within ±5% of 1.12)

C and B are materially similar (as 1.07 is within ±5% of 1.12), and

C and A are materially similar (as 1.07 is within ±5% of 1.10).

As a result, the responsible emitter may choose to count output variables A, B and C together as a single production variable. The production variable quantity would be 3,500 tonnes (the sum of the quantities of the individual output variables).

3.3.2 Using inputs or intermediate products as production variables

For some facilities, such as oil refineries and natural gas processing facilities, inputs or intermediate products may be better measures of the facility’s production than its output variables. A responsible emitter may therefore choose an input or intermediate product to be the production variable for the facility instead of the facility’s output variables.

The production variable can be based on a single input or intermediate product, multiple inputs or intermediate products, or similar inputs or intermediate products.

Using a single input or intermediate product

Where a single input or single intermediate product is used to produce all of a facility’s output, no other input or intermediate product is used to produce any of the facility’s outputs, and it meets the requirements of subsection 5(8). The responsible emitter may choose the quantity of the input or intermediate product to be a production variable for the facility.

Example—a single input or intermediate product

If a petroleum refinery produces multiple products but the only input is crude oil, then the quantity of crude oil used to make the facility’s products can be the facility’s production variable.

Where multiple inputs or multiple intermediate products are used to produce all of a facility’s outputs, are used in a fixed proportion to each other and meet the requirements of subsection 5(8). The responsible emitter may choose the quantity of one of the inputs or intermediate products to be a production variable for the facility.

Example—multiple inputs or intermediate products (and one input or intermediate product chosen as the production variable)

If a steel mill produces multiple products from iron ore and other inputs, and the iron ore and other inputs are used in a fixed proportion to one another, then the quantity of iron ore used to make the facility’s products can be the facility’s production variable.

Using multiple similar inputs or intermediate products




Where similar multiple inputs or similar multiple intermediate products are used to produce all of the facility’s outputs, can be quantified using the same unit of measurement, the covered emissions produced by the facility per unit of each similar input or similar intermediate product used are materially similar, and they meet the requirements of subsection 5(8). The responsible emitter may choose the quantity of the similar inputs or quantity of the similar intermediate products to be a single production variable for the facility.

Example—similar inputs or intermediate products (and sum of multiple inputs or intermediate products chosen as the production variable)

A steel mill produces multiple stainless steel products from iron ore, scrap steel and nickel. The iron ore and scrap steel can be quantified using the same unit of measurement and the covered emissions per unit of input are materially similar.

The sum of the quantities of iron ore and scrap steel used to make the facility’s products can be the facility’s production variable. Nickel cannot be included in the production variable because it is likely to have a much higher emissions intensity.

Requirements of subsection 5(8)

For a facility to use inputs or intermediate products as the production variable, a number of requirements must be met [subsection 5(8)]. These include at least one of the following:

The facility’s outputs are produced in a fixed proportion to the input or intermediate product. A ‘fixed proportion’ means a proportion that varies by less than five per cent.

Each output can be quantified using the same unit of measurement, and the covered emissions per unit of each output are materially similar. The covered emissions produced by a facility for each unit of the facility’s similar inputs or intermediate products are ‘materially similar’ if the average covered emissions per unit of one of the similar inputs or intermediate products used during the relevant comparison period is not more than five per cent greater than or less than the average covered emissions per unit of any other similar input or intermediate product used in the relevant comparison period (the first three years of a calculated baseline). See 3.3.1 combining similar variables as a single production variable for further detail.

The facility is a petroleum refinery, or a natural gas processing or liquefaction facility.

Additionally, all of the following must apply for a facility to use inputs or intermediate products as the production variable:

An increase in the quantity of the input or intermediate product used by the facility to produce the outputs would result in an increase in covered emissions, and a decrease in the quantity of the input or intermediate product would result in a decrease in covered emissions.

Omitting the input or intermediate product from the production process would either prevent the outputs from being produced or change the covered emissions of a facility by five per cent or more.

The quantity of the input or intermediate product can be expressed in a unit of measurement that complies with the National Measurement Act 1960.

If the facility is a petroleum refinery or a natural gas processing or liquefaction facility, then the input or intermediate product is primarily used as an input to a production process, which may also be a fuel that produces energy at the facility.

A ‘fuel that produces energy’ at the facility is considered to be a fuel that is being converted to energy at the facility as part of production of an output, such as mechanical, chemical or thermal energy, as opposed to it being transformed into another fuel or energy commodity.

For a facility that is not a petroleum refinery or a natural gas processing or liquefaction facility, the input or intermediate product must not be a fuel that is used for producing energy at the facility. For example,




a quantity of diesel used in machinery and vehicles to extract and transport coal or minerals is considered to be a ‘fuel that produces energy’ and is not a production variable.

Note

A production variable can be based on either inputs or intermediate products, not a combination of both.

Unless the facility is a petroleum refinery or natural gas processing or liquefaction facility, it is recommended that responsible emitters liaise with the Clean Energy Regulator before proceeding with an application using inputs or intermediate products as production variables.

3.3.3 Using inputs where there is no discernible output variable

If a facility has no discernible output that meets the definition for being an output variable then the quantity of one or more inputs, intermediate products or non-saleable outputs may be identified as a production variable for the facility, providing that:

an increase in the quantity of the input, intermediate product or non-saleable output that is used, produced or processed by the facility would result in an increase in covered emissions, and a decrease in the quantity of the input, intermediate product or output would result in a decrease in covered emissions

the quantity of the input, intermediate product or non-saleable output can be expressed in a unit of measurement that complies with the National Measurement Act 1960, and

the input, intermediate product or non-saleable output is not a by-product or waste product.

As long as the above requirements are satisfied, the responsible emitter may choose to use the quantities of those inputs, intermediate products or non-saleable outputs as production variables for the facility as if they were output variables.

Example—no discernible output

Landfill facilities have no discernible output as defined. They instead use a tonne of waste received at the landfill as their production variable.

Note

It is recommended that responsible emitters liaise with the Clean Energy Regulator before proceeding with an application on this basis.

3.3.4 Production variables where there is an emissions-intensive trade-exposed activity

If a facility carries out one or more emissions-intensive trade-exposed (EITE) activities (within the meaning of the Renewable Energy (Electricity) Act 2000), the responsible emitter may choose the quantities of all relevant products associated with the facility to be production variables instead of the facility’s output variables (other than electricity). Requirements include:

The relevant products intended to be used as production variables must meet the requirements of Part 3A of the Renewable Energy (Electricity) Regulations 2001 (including that they must be produced by the EITE activity or activities at the facility).




If electricity is an output variable for the facility (under either paragraph (a) or (b) of the output variable definition in section 4), the relevant products do not replace electricity as a production variable. That is, the production variables will be the relevant products as well as electricity.

An EITE relevant product cannot be selected for a facility if the facility has only one output variable and the one output variable is not an EITE relevant product.

A facility does not need to be generating exemption certificates under the EITEs scheme, in order to use an EITE activity or activities as its production variable. Conversely, if exemption certificates are being claimed in relation to a facility, the responsible emitter is not required to use its EITE activity or activities as the facility’s production variables for the purposes of its calculated baseline application.

Example—EITE relevant product

A cement facility produces clinker. The facility uses the clinker to make Portland cement, which is the only product sold by the facility. Clinker is an EITE relevant product, while cement is not. The production variable is therefore cement, in accordance with subsection 5(2). The responsible emitter cannot select clinker as the production variable. The production variable is therefore cement, in accordance with subsection 5(2). The responsible emitter cannot select clinker as the production variable.

3.4 Primary production variable

If the facility has only one production variable, that production variable is the primary production variable.

If the facility has more than one production variable, the primary production variable is the production variable that is most significant to the operation of the facility. In determining which production variable is most significant for the operation of the facility, primary regard is to be given to the share of revenue and covered emissions directly or indirectly attributable to each production variable. Other aspects to consider when determining the primary production variable include:

The Clean Energy Regulator is likely to only consider a production variable to be significant to the operation of the facility in terms of its revenue if it contributes 20 per cent or more of the revenue expected from the facility in the relevant financial year (the baseline setting year).

Revenue should be determined using recognised standards.

Regard must also be given to the covered emissions directly or indirectly attributable to the production variables.

If one production variable is attributed a greater share of revenue, but a different production variable is attributed a greater share of covered emissions, then secondary factors relevant to determining which is the most significant production variable for the operation of the facility can be taken into account.

In some circumstances, it will be clear which production variable is most significant to the operation of the facility because the principal reason for the facility’s operation is to produce that production variable, and the other production variables are incidental to, or contribute to production of, that production variable.

Example—primary production variable

An alumina refinery has two production variables, alumina and electricity. The electricity is not exported from the facility and does not generate a separate stream of revenue. Alumina is the primary production variable.

The concept of the primary production variable is important for defining significant production variables for the significant expansion criteria (see 2.3 Significant expansion criteria) and in determining which year must be used to forecast the calculated baseline (see 4 Setting the calculated baseline: forecasting).




3.5 Evidence requirements for identification of production variables

In the application for a calculated baseline, a responsible emitter will need to provide an explanation demonstrating that the production variables have been identified in accordance with section 5 and the relevant definitions in section 4. Details of the explanation should include:

Enough detail to demonstrate compliance with the legislation. Where any of the provisions contained in subsections 5(4) to 5(10) have been utilised, these provisions should be addressed specifically.

Description of any outputs that were identified but later found not to have an output variable.

If there are multiple valid choices of production variables, it is not necessary to demonstrate why one type of production variable was chosen over another, as long as the production variable(s) chosen are in compliance with the legislation.

The basis for identifying the primary production variable.

A simplified process map of production at the facility to support the explanation included in the application.

Auditors will, among other things, assess whether production variables were identified in compliance with the legislation as part of their reasonable and limited assurance procedures.

Evidence that could underpin the application and be made available to auditors could include:

A simplified process map of production at the facility.

Any further evidence considered necessary by the auditor.




4 Setting the calculated baseline: forecastingA responsible emitter must provide the estimated quantity of all production variables that are reasonably likely to be produced by the facility in the year with the highest production level of the primary production variable (over the period to be covered by the calculated baseline that the responsible emitter is able to use) see paragraph 27(1)(c).

This requires the responsible emitter to forecast the:

financial year in which the primary production variable is at its highest out of all available years (this will be the baseline setting year), and

quantity of all production variables that are reasonably likely to be produced at the facility in the baseline setting year.

For paragraph 27(1)(d), a responsible emitter must provide the expected emissions intensity per unit of production for each production variable. This requires the responsible emitter to forecast the total covered emissions of the facility.

Paragraph 28(2)(c) specifies that the estimated quantity and emissions intensity of each production variable are limited assurance matters. The matters to be audited and covered by the audit report are whether, in all material respects the:

responsible emitter’s assumptions provide a reasonable basis for the estimates

estimates are calculated using the responsible emitter’s assumptions and any historical data that is:

» fairly stated, or

» if related to emissions intensity—reasonably reflect the emissions intensity of the financial year of highest production of the primary production variable, and

estimates are reasonable.

4.1 Forecasting production variable quantities

It is expected that responsible emitters will typically forecast a range of production variable quantities, representing the possible variance (after excluding outliers). The estimated quantity included in the application must be the mid-point of the range. If not, the responsible emitter must demonstrate why an estimate higher in the range has been chosen.

Aspirational estimates representing the high-point of the range are not considered to be reasonable.

Calculations and modelling used to derive the forecasts should be transparent and repeatable.

Evidence requirements for forecasting production variable quantities

In the application for a calculated baseline, a responsible emitter will need to provide basis of preparation for its forecasts. The basis of preparation document should include a summary of the material assumptions that provide a reasonable basis for the forecast production variable quantities and the actual calculations that show how the production variable and emissions forecasts were developed (at a high level).

Auditors will (among other things):

check the calculations or modelling (and test repeatability)

undertake statistical analysis of the accuracy of the forecast production variable quantities, and

seek evidence of the assumptions that have been used in forecasting production variable quantities.




Evidence that could underpin the forecast production variable quantities and be made available to auditors could include:

the maximum productive capacity of the facility (either technical maximum, licenced or approved)

standard production ratios—based on technical design parameters and theoretical mass balance calculations, and supplemented by actual data from the facility (if available)

the facility’s budgeted and actual performance

an assessment of factors that would stop or delay the conduct of the facility’s activities (e.g. planned maintenance and outages)

for new facilities or significant expansions, the schedule for installation and commissioning of equipment and ramp-up of production (as relevant) and an assessment of factors that would stop or delay this

market conditions and forward sales contracts (or other evidence of the facility’s supply chain, such as purchase contracts for inputs)

if forecast production is based on potential short-term contracts or spot price market sales, the responsible emitter should demonstrate a reasonable basis for the forecast production or expected market share, and

any further evidence considered necessary by the auditor.

4.2 Forecasting covered emissions

It is expected that forecasts of total covered emissions will typically be built up from production forecasts and associated fuel combustion emissions, and if relevant, waste emissions and industrial process emissions, in addition to forecasted fugitive emissions.

The calculations or modelling used to derive the forecasts should be transparent and repeatable.

Evidence requirements for forecasting covered emissions

In the application for a calculated baseline, a responsible emitter will need to provide a summary of the material assumptions that provide a reasonable basis for the forecast covered emissions.

Auditors will (among other things):

check the calculations or modelling (and test repeatability)

undertake statistical analysis of the accuracy of the forecast covered emissions, and

seek evidence of the assumptions that have been used in forecasting covered emissions.

4.3 Calculating emissions intensity

When calculating the emissions intensity of production variables, the responsible emitter is required to follow the emissions intensity calculation criteria set out in section 6.

If there is only one production variable, then its emissions intensity is calculated by dividing the total covered emissions of the facility by the production variable quantity [as required by subsection 6(3)].

If there are two or more production variables:

the total covered emissions of the facility are apportioned between each production variable in accordance with the relevant requirements and principles of the emissions intensity calculation criteria (see 4.3.2 Apportioning covered emissions to individual production variables), and




the covered emissions apportioned to each production variable are then divided by that production variable quantity [as required by subsection 6(4)].

4.3.1 Calculating emissions intensity—general requirements and principles

The following requirements and principles of the emissions intensity calculation criteria apply regardless of whether a facility has one or more production variables.

Emissions units

The emissions intensity must be expressed in units of t CO2-e per unit of the production variable [as required by subsection 6(5)].

If a greenhouse gas other than carbon dioxide has contributed, or is reasonably likely to contribute more than one per cent of the expected covered emissions in the financial year used to determine the calculated baseline, the emissions intensity of that gas in t CO2-e per unit of each production variable must be identified separately [as required by subsection 6(6)].

This information will enable the Clean Energy Regulator to make a variation to baselines relating to future changes in carbon dioxide equivalence under section 56. The requirement to provide this information in an application for a calculated baseline saves the responsible emitter from resubmitting emissions intensity information in response to future legislated changes to global warming potentials.

Measuring covered emissions

Covered emissions must be measured in a manner that is consistent with the NGER Measurement Determination [as required by subsection 6(7)].

In particular:

If the method used in the facility’s most recent NGER report to measure a particular occurrence of a source of emissions is expected or intended to be used for the whole of the period to be covered by the calculated baseline, then this is the method that should be used in forecasting covered emissions for the purpose of the emissions intensity calculation.

If there is an expectation or intention to change to a different method to measure a particular occurrence of a source of emissions during the period to be covered by the calculated baseline, then the method that should be used in forecasting covered emissions for the purpose of the emissions intensity calculation is the new method (see the next example).

If it is not practical to apply the new method, forecasts of covered emissions should be adjusted to reflect the emissions levels expected under the new method. This is required to ensure that emissions intensity forecasts are reasonable and based on assumptions that are reasonably expected to reflect the emissions intensity of the facility in the baseline setting year, in accordance with subsection 28(2).

Example—measuring covered emissions

If a facility reports an occurrence of a source of emissions using method one in 2015–16, and is intending to report using method one in the first year of the calculated baseline period, 2016–17, but change to method two in 2017–18 and 2018–19, then method two should be used in forecasting covered emissions for the purpose of the emissions intensity calculation (being the new method).




Consistency with any previous calculation method

If a calculated baseline or baseline variation has previously been made for the facility, the method used for calculating the emissions intensity should be consistent with the method previously used in any previous successful application for a baseline, or a variation of a baseline, relating to the facility [in accordance with the principle in subsection 6(10)].

4.3.2 Apportioning covered emissions to individual production variables

If an emissions source could be attributed to the emissions intensity of two or more production variables, then covered emissions from that source should be apportioned between the variables. Covered emissions must be apportioned in a manner that is consistent with the NGER Measurement Determination [as required by subsection 6(7)].

The emissions intensity of each production variable must fairly represent the actual emissions attributable to the production variable [as required by subsection 6(8)]. For example, covered emissions should not be attributed to a production variable when in fact they could with greater or equal justification be attributed to another of the facility’s production variables.

Where emissions from a particular source are attributable to and apportioned between two or more production variables—in each of the first three years to be covered by the calculated baseline, the sum of the covered emissions apportioned to each production variable should be no more than five per cent greater than the total covered emissions, or expected covered emissions, from that source during each year [in accordance with the principle of subsection 6(9)].

The apportionment of covered emissions to individual production variables should be free of bias that may lead to an overestimate of covered emissions in the period to be covered by the calculated baseline due to changes in the relative mix of production variables [in accordance with the principle of subsection 6(11)].

4.3.3 Evidence requirements for calculating emissions intensity

In the application for a calculated baseline, a responsible emitter will need to provide information demonstrating that the emissions intensities have been determined consistently with the relevant requirements and principles of the emissions intensity calculation criteria. In circumstances where certain principles cannot be met, the responsible emitter should include an explanation as to why.

Auditors will, among other things, seek evidence that the emissions intensity criteria requirements and principles have been met.

4.4 Additional information requirements for forecasts

4.4.1 Measures to reduce greenhouse gas emissions intensity

An application for a calculated baseline must include an outline of the measures to reduce greenhouse gas emissions intensity undertaken or to be undertaken at the facility, in accordance with paragraph 27(1)(b).

The information should separately categorise measures undertaken at the facility and measures that are yet to be undertaken at the facility:

Information should only be provided about measures undertaken that continue to reduce greenhouse gas emissions intensity at the facility.

For example, if a measure to reduce greenhouse gas emissions intensity was undertaken at a facility from 2011–12 to 2013–14, but was ceased in 2014–15, information on this measure should not be provided.




Information should only be provided about measures that are to be undertaken if there has been a final decision to undertake the measure (such as if a final investment decision has been made, or if work is already underway).

The responsible emitter should provide a concise summary of the measures. If the application is successful, the Clean Energy Regulator will publish the summary on its website.

4.4.2 Environmental impact assessments

An application for a calculated baseline must include copies of the most recent environmental impact assessments (if any) relating to activities at the facility that result in significant covered emissions, in accordance with paragraph 27(1)(f).

An environmental impact assessment is a process required under State and Commonwealth environmental and planning legislation. A range of assessment processes may be undertaken (depending on the legislation), including specific measurement and investigation of the impacts of greenhouse gases.

For the purposes of meeting the requirements of paragraph 27(1)(f) , applicants should consider the following:

If these processes were performed when the facility was established, which may be some time ago, that environmental impact assessment must still be included, as the most recent environmental impact assessment.

If an environmental impact assessment required additional investigation or management of greenhouse gases this should also be included.

If only some sections of the environmental impact assessment document are relevant to the facility’s covered emissions, the responsible emitter may attach the relevant sections instead of attaching the full document.

If the environmental impact assessment document is a publicly available document, the responsible emitter may provide a link to the document (along with references to the relevant sections) instead of attaching the full document.

4.4.3 Relevant earlier estimates

An application for a calculated baseline must include any relevant earlier estimates of the estimated production variable quantities, emissions intensities and total covered emissions [in accordance with paragraph 27(1)(g)]. Relevant earlier estimates mean any of the following:

an estimate included in an environmental impact assessment statement

an estimate made in an earlier application for a calculated baseline in relation to the facility, or

an estimate published by the responsible emitter or by a person associated with the responsible emitter, such as their controlling corporation that:

» was publically available or submitted to the Clean Energy Regulator before the relevant application for a calculated baseline, and

» relates to the expected covered emissions, covered emissions intensity or quantity of a production variable relied upon in an application for a calculated baseline.

Relevant earlier estimates may differ from the forecasts submitted in the application. In these circumstances an explanation must be provided as to why this is the case. The Clean Energy Regulator will not make a calculated baseline unless it is satisfied the explanation is reasonable. An explanation may be premised on (but not limited to) factors such as:




changes to the key assumptions underpinning production forecasts due to more recent or accurate information becoming available, or

a change in the method used to make the forecast, with justification as to why the new method is more accurate.

The applicant must provide any relevant earlier estimates, regardless of whether the applicant considers the earlier estimates to be no longer current or relevant.

4.4.4 Historical emissions and production data

An application for a calculated baseline must include any historical emissions and production data that supports the estimated production variable quantities and emissions intensities in the application, in accordance with paragraph 27(1)(i).

This will be the historical data that has been relied on in combination with the responsible emitter’s assumptions to form its forecasts. If the responsible emitter is relying on a trend in historical data when developing forecasts, the data should cover a time period which is of sufficient length to evidence the trend.




5 The application process

5.1 Application form and requirements

An application for a calculated baseline must be completed by the responsible emitter for the facility, using the form approved by the Clean Energy Regulator. If an application for a calculated baseline is made by a person other than the responsible emitter for the facility, the application will be invalid.

The application must be signed by the executive officer of the responsible emitter.

Applications must be complete and include all information required by the form, including the information required under section 27 and an audit report that complies with section 28. An application that is not complete and has not included all information will be invalid.

Supporting evidence for the information included in an application will need to be retained by the responsible emitter and made available to auditors. The NGER Act requires responsible emitters to keep records of their activities that are relevant to compliance and allow for accurate reporting for a period of five years after the end of the year in which the activity took place.

Responsible emitters wishing to apply for a calculated baseline are encouraged to contact the Clean Energy Regulator on 1300 553 542 or email [email protected] if they have any questions about any aspect of the calculated baseline application process.

Note

This guidance is not intended to prescribe evidence requirements for audit. The types of supporting evidence suggested are intended as a guide for responsible emitters and auditors. Auditors are likely to require information and evidence specific to the facility.

The examples and information given should not be considered a complete list of requirements or substitute for an auditor’s professional judgement.

5.1.1 Responsible emitter

The responsible emitter is the person with operational control of the facility.

Where a controlling corporation has operational control over a safeguard facility, it will be the responsible emitter for the purposes of the safeguard mechanism. However, where a member of a controlling corporation’s group has operational control, the group member will be the responsible emitter. Operational control could also be held by other entities if the emissions from the facility are not currently reported under the NGER Act.

If it is unclear which person (entity or company) has operational control over a facility, please consult the NGER operational control supplementary guideline.

Please ensure the responsible emitter is identified before applying for a calculated baseline. If an application for a calculated baseline is made by a person other than the responsible emitter for the facility, the application will be invalid.




http://www.cleanenergyregulator.gov.au/DocumentAssets/Pages/Operational-control-supplementary-guideline.aspx

http://www.cleanenergyregulator.gov.au/NGER/Reporting-cycle/Assess-your-obligations/Facilities-and-operational-control


5.1.2 Executive officer

An executive officer is defined as:

for a body corporate, an executive officer holds one of the following positions or an equivalent position:

» Director

» Chief Executive Officer

» Chief Financial Officer, or

» Company Secretary

for a trust, a trustee of that trust

for a corporation sole, the person that comprises the corporation sole, or

for a body politic or local governing body, a person that holds an office created under the instrument or legislation that establishes the body politic or local governing body.

The executive officer is required to sign the application and make a declaration that, among other things, the information supplied is true and correct.

5.2 Application deadlines

An application can be given to the Clean Energy Regulator:

No earlier than one year before the start of the first year of the proposed calculated baseline—except if the requested start date of the calculated baseline is 1 July 2016, in which case an application may be given to the Clean Energy Regulator from 1 July 2016.

No later than the first 31 October after the end of the first financial year of the proposed calculated baseline.

For example, if an application specifies the requested start date of the calculated baseline as 1 July 2018, the application may be given to the Clean Energy Regulator between 1 July 2017 and 31 October 2019.

However, within the application window there are additional deadlines that apply depending on the forecast emissions data the responsible emitter wants to use in its application:

Applications submitted before 31 July of the first year of the calculated baseline can use forecast emissions data from any of the years within the period of the calculated baseline (noting that responsible emitters must use the year with the highest forecast level of production as the baseline setting year).

Applications submitted before 31 July of the second year of the calculated baseline are restricted and cannot use forecast emissions data from the first year of the calculated baseline (even if it is the year with the highest level of production) This means the responsible emitter will be restricted to using forecast emissions data from the final two years within the period of the baseline determination.

Applications submitted before 31 October of the second year of the calculated baseline (the final deadline) cannot use forecast emissions data from the first two years of the calculated baseline. This will mean that the responsible emitter must use forecast emissions data from the third and final year of the calculated baseline to set the calculated baseline.

The interaction between the year with the highest level of production of the primary production variable and the application submission deadlines is shown in Figure 1.

Note that for the deadlines set out in paragraph 27(1)(c) and referenced in the example below and Figure 1, if a particular deadline falls on a Saturday, Sunday or Public Holiday in the Australian Capital Territory then




http://www.cmd.act.gov.au/communication/holidays

the application can be submitted on the next business day (in accordance with subsection 36(2) of the Acts Interpretation Act 1901).

Example—calculated baseline requested to start on 1 July 2016

Facility X forecasts the highest level of production of the primary production variable to occur in the 2016–17 year. An application must have been submitted to the Clean Energy Regulator by 1 August 2016 (as 30 July falls on a weekend) to use that year’s production and emissions intensity forecasts to determine the baseline.

If facility X missed the 1 August 2016 deadline, an application for a calculated baseline can still be submitted up until 31 October 2017. In this case:

Production and emissions intensity forecasts for either the 2017–18 or 2018–19 year will be used to determine the baseline—depending on which year is expected to have the next-highest level of production of the primary production variable, and whether the application is submitted before or after 1 August 2017 (if the application is submitted after 1 August 2017, only 2018–19 forecasts can be used to determine the baseline).

The resulting baseline may not be as high as if the baseline had been determined using 2016–17 production and emissions forecasts, and could result in facility X exceeding its calculated baseline in the 2016–17 year.

Figure 1: Deadlines for calculated baseline applications

5.3 Application processing and decision-making

5.3.1 Application receipt and processing timeframes

Upon receipt of an application form, the Clean Energy Regulator will email the responsible emitter acknowledging receipt. The Clean Energy Regulator will then check to ensure the application is a complete application.




If the application is not complete, the Clean Energy Regulator may either

refuse to accept the application and require the application be resubmitted, or

request that the information required to complete the application be provided so that a formal assessment of the application can begin.

If the application is complete (or the additional required information is provided) , the Clean Energy Regulator will begin the formal assessment process and take all reasonable steps to ensure a decision is made on an application within 60 days of the complete application being submitted.

Applications that include all requested information are more likely to be processed quickly. The following will assist in the assessment of applications:

information on the selection of the production variable(s) of a facility

the basis of preparation for the forecasts

the actual calculations to derive the forecasts (at a high level), and

a high-level plant and process map explaining where production variables and emissions occur in a facility.

5.3.2 Requests for information

If additional information is required to inform the decision-making process, section 29 provides that the Clean Energy Regulator may request further information in relation to the application. The request for information will specify the period in which the information must be provided. This will typically be 14 days from the date of the notice, unless complex or extensive information is being requested.

The Clean Energy Regulator will take all reasonable steps to ensure a decision is made on the application within 60 days of the additional information being provided.

In the event that information is not provided within the specified time period, the Clean Energy Regulator may refuse to consider the application, or refuse to take any action or any further action, in relation to the application.

Note

In requesting information under section 29 of the Safeguard Rule, the Clean Energy Regulator may request information that is additional to the information required under section 27 and also consider this additional information in making a determination, as long as it is relevant to the application.

5.3.3 Withdrawal of application

A responsible emitter may, by written notice to the Clean Energy Regulator, withdraw an application at any time before a decision is made on the application.

5.3.4 Decision to make a calculated baseline

If an application has been made in accordance with section 22, the Clean Energy Regulator may make the calculated baseline, applied for, if it is satisfied that:




the audit report accompanying the application contains reasonable and limited (including qualified) assurance conclusions in accordance with section 28

the relevant new facility, inherent emissions variability, significant expansion or initial calculated baseline criteria have been met

if previously published estimates of production levels, emissions or emissions intensity differ from estimates in the application, that the responsible emitter’s explanation of the difference is reasonable, and

the application complies with the Safeguard Rule in all other respects.

In making a calculated baseline, the Clean Energy Regulator will not adjust the baseline emissions number put forward in the application. If there are not sufficient grounds for the Clean Energy Regulator to make a calculated baseline using the baseline emissions number put forward in the application, the application will be refused (see 5.3.5 Decision to refuse to make calculated baseline).

Publication of a calculated baseline

As soon as practicable after making a calculated baseline, the Clean Energy Regulator will provide written notice of the decision to the responsible emitter, and publish details of the calculated baseline on its website. As defined in section 4, details of the calculated baseline will include:

that it is a calculated baseline

the facility to which the calculated baseline relates

the responsible emitter for the facility to which the calculated baseline relates

the start and end date of the calculated baseline

whether the new facility criteria, significant expansion criteria, inherent emissions variability criteria or initial calculated baseline were satisfied in relation to the making of the calculated baseline, and

the baseline emissions number.

The Clean Energy Regulator will also publish the information provided by the responsible emitter in accordance with paragraph 27(1)(b), which is an outline of the measures to reduce greenhouse gas emissions intensity undertaken, or to be undertaken, at the facility.

The Clean Energy Regulator must publish a range of information about facilities specified under section 72, including covered emissions and net emissions, as that information becomes available.

Request not to publish a calculated baseline

Responsible emitters can apply under section 25 of the NGER Act to request that details of the calculated baseline not be published.

A request can only be made in relation to information which reveals, or could be capable of revealing:

trade secrets, or

any other matter having a commercial value that would be, or could reasonably be expected to be, destroyed or diminished if the information were disclosed about a specific facility, technology or corporate initiative relating to the corporation or person.

An application form to request that information not be published can be found on the Clean Energy Regulator website.

In assessing an application, the Clean Energy Regulator will consider whether the applicant has demonstrated that there are real and substantial grounds to find that publishing the information will (or




http://www.cleanenergyregulator.gov.au/NGER/Forms-and-resources/Forms#Application-for-information-not-to-be-published

could reasonably) reveal a trade secret or affect the commercial value of a specific facility, technology or corporate initiative. Grounds that are speculative, hypothetical or theoretical will not be sufficient.

5.3.5 Decision to refuse to make calculated baseline

Before making a decision to refuse to make a calculated baseline, the Clean Energy Regulator will notify the responsible emitter of its intention and its preliminary reasons, and afford the responsible emitter time to respond. If the Clean Energy Regulator decides to refuse to make a calculated baseline, written notice of the decision will be provided to the responsible emitter.

If the Clean Energy Regulator has refused to make a calculated baseline, applied for in a properly made application, subsection 22(5) provides that a new application may be accepted no later than the 1 February after the 31 October deadline. This provision allows responsible emitters to address the matters that caused the Clean Energy Regulator to refuse to make the calculated baseline applied for, within the general application window.

5.3.6 Variation and remaking of calculated baseline

A calculated baseline may be temporarily varied by the Clean Energy Regulator if the responsible emitter makes an application under section 46 based on a reduction in emissions intensity.

A calculated baseline must be varied by the Clean Energy Regulator if there are future changes to the global warming potential values set out in section 2.02 of the NGER Regulations (in accordance with section 56).

A calculated baseline may be remade by the Clean Energy Regulator because of error (in accordance with section 57), including if information provided to the Clean Energy Regulator by the responsible emitter was false or misleading.

Before making a decision to vary a calculated baseline under section 56, or remake a calculated baseline under section 57, the Clean Energy Regulator will notify the responsible emitter of its intention and afford the responsible emitter an opportunity to respond.

5.3.7 Review rights

The Clean Energy Regulator will notify the responsible emitter of their review rights when making a decision.

A person whose interests are affected by a decision of the Clean Energy Regulator to make or refuse to make a calculated baseline and is not satisfied with the decision, may apply to the Administrative Appeals Tribunal for review of the decision (see section 56 of the NGER Act).




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