Overview of the ACT Scheme

General Principles

The Greenhouse Gas Abatement Scheme in the ACT commenced on 1 January 2005 and is currently legislated to remain in force until 2020. The scheme works closely with the NSW scheme, which came into operation on 1 January 2003. (http://www.greenhousegas.nsw.gov.au/ )

The policy objectives of the Greenhouse Gas Abatement Scheme are to:

reduce greenhouse gas emissions associated with the production and use of electricity; and
develop and encourage activities to offset the production of greenhouse gas emissions.

The GGAS in the ACT forms part of the Territory’s commitment to reduce greenhouse gas emissions. A range of policy and program measures including GGAS constitute the ACT Government’s current climate change initiative

The scheme imposes mandatory greenhouse gas benchmarks on all ACT electricity retailers and certain other parties to abate the emission of greenhouse gases from the consumption of electricity in the ACT. These parties are referred to as benchmark participants. At present the scheme applies only to retail suppliers but potentially may include large electricity users who elect to manage their own benchmark.

The scheme sets a Territory greenhouse gas benchmark expressed in tonnes of carbon dioxide equivalent (tCO₂-e) per capita. The level set for 2005 was 7.96 tonnes per capita and the benchmark progressively drops to 7.27 tonnes per capita in 2007, and will continue at this level until the scheme ends in 2020. These benchmarks correspond to those adopted in NSW. The ACT greenhouse gas benchmarks (tCO₂-e per capita) for 2005-2012 are shown in Figure 1.

ICRC Figure 1 ACT Benchmarks for the ACT Electricity Sector
Figure 1 ACT’s per capita greenhouse gas benchmarks for the electricity sector

The Territory’s per capita greenhouse gas benchmark for a given year is multiplied by the total Territory population for that year, as determined by the ACT Independent Competition and Regulatory Commission (ICRC), to produce the annual electricity sector benchmark. This represents the total amount of greenhouse gas emissions allowable for the consumption of electricity in the ACT.

Benchmark participants are allocated a share of the electricity sector benchmark based on the level of their electricity sales as a proportion of the total Territory electricity demand.

Benchmark participants are required to reduce their emissions of greenhouse gases to the level of their greenhouse gas benchmark by offsetting their excess emissions through the surrender of abatement certificates created in either the ACT or NSW. These certificates are created by accredited abatement certificate providers and can be traded to benchmark participants. Under GGAS, benchmark participants can also claim credit for the surrender of Renewable Energy Certificates (RECs) under the Australian Government’s Mandatory Renewable Energy Target (MRET).

Abatement certificate providers abate the emission of greenhouse gases through eligible activities. They can achieve this through reducing the greenhouse gas intensity of electricity generation; generating low emission intensity electricity; demand side abatement activities which involve reducing consumption, or increasing the efficiency of the consumption of electricity; or through carbon sequestration activities – for instance, managing forests so as to capture and retain carbon from the atmosphere. Undertaking eligible abatement activities enable an abatement certificate provider to create abatement certificates.

Benchmark participants must submit an Annual Greenhouse Gas Benchmark Statement to the ICRC by 18 March each year, or a later date agreed by the ICRC, to show how they have complied with their greenhouse benchmark for the previous compliance year. The statement details their emissions and any abatement certificates being surrendered to the ICRC to meet their greenhouse gas benchmark.

The ICRC will confirm whether the participant has achieved their benchmark or whether there is a greenhouse shortfall and a liability for a greenhouse penalty. Greenhouse shortfalls refer to excess emissions remaining after the surrender of abatement certificates, and currently attract a penalty of $11.50 per tCO₂-e (tonne of carbon dioxide equivalent).

A panel of Approved Auditors has been established by IPART to conduct investigations associated with accreditation. The panel is also certified to conduct pre- and post-regulation audits of abatement certificate creation and annual compliance reporting.

Abatement certificates can be traded between scheme participants. The creation, trade and surrender of abatement certificates are registered on the NSW Greenhouse Gas Abatement Scheme Registry maintained by IPART. The function of the registry is to track the ownership and status of certificates. Where a trade in certificates has occurred outside of the registry, whether bilaterally, through brokers or through other trading platforms, the change in ownership of those certificates is recorded on the registry. However, the registry is not a trading platform. For more information on the scheme registry please see the Registry section.

A greenhouse shortfall can be carried forward to the following compliance year but must be abated by surrendering additional abatement certificates in that year or the greenhouse penalty must be paid. Participants can carry forward a shortfall of up to 10% of their greenhouse gas benchmark for all years of the scheme except 2007 (the first year to meet the 7.27 tonnes per capita level).

Scheme Coverage

The scheme imposes mandatory greenhouse gas benchmarks on all holders of ACT electricity retail licences. These are mandatory benchmark participants.

While the scheme also allows electricity users with electricity loads greater than 100 GWh to elect to manage their own greenhouse gas benchmarks (called elective benchmark participants), at this stage there are no participants of this size in the ACT.

Implementation on the scheme

The GGAS in the ACT is implemented jointly by the Scheme Administrator and the Scheme Regulator.

The NSW Independent Pricing and Regulatory Tribunal and its specialised body the Greenhouse Gas Scheme Administrator serve as the Scheme Administrator(http://www.greenhousegas.nsw.gov.au/ ), while the ACT Independent Competition and Regulatory Commission (http://www.icrc.act.gov.au) performs the functions of the Scheme Regulator.

Scheme Administrator

The functions of the Scheme Administrator are to:

Accredit abatement certificate providers;
Administer the on-line Scheme Registry, which records the registration and transfer of certificates created from abatement projects;
Monitor, and report to the Minister on, the extent to which accredited abatement certificate providers comply with the Act; and
Audit greenhouse gas abatement activities.

Scheme Regulator

The functions of the Scheme Regulator are to:

Establish greenhouse gas benchmarks for participants;
Monitor benchmark participants’ compliance, and report to the Minister on the extent to which benchmark participants comply with greenhouse gas benchmarks; and
Impose penalties if required.

The scheme in the ACT is implemented through the following:

Scheme Structure

The key elements of the Greenhouse Gas Abatement Scheme in the ACT and their interactions are outlined in Figure 2.

ICRC Figure 2 ACT Greenhouse Gas Abatement Scheme

Figure 2 Greenhouse Gas Abatement Scheme in the ACT

Key Factors

The ACT greenhouse gas benchmarks (expressed in tonnes of CO₂-e per capita) are set through the Electricity (Greenhouse Gas Emissions) Act 2004 (ACT) . The Level set for 2005 was 7.96 tonnes and the benchmark progressively drops to 7.27 tonnes in 2007. This level will be maintained until 2020, when the scheme is currently scheduled to end.

The ICRC, as compliance regulator, determines and publishes a number of key factors used by benchmark participants to set individual greenhouse gas benchmarks. The key factors for a given year are published through Notifiable Instrument under the Electricity (Greenhouse Gas Emissions) Act 2004 (ACT) , and it is normally done at the end of the preceding year.

The ACT scheme’s key factors for 2007 are as follows:

ACT pool coefficient for greenhouse emissions is 0.941 CO₂-e/MWh
The total ACT electricity demand is 2,810 GWh
The total ACT population is 326,400
The electricity sector benchmark is 2,372,928 tonnes of CO₂-e.

The ACT scheme’s key factors for 2008 are as follows:

ACT pool coefficient for greenhouse emissions is 0.954 t CO₂-e/MWh
The total ACT electricity demand is 3,118 GWh
The total ACT population is 327,300
The electricity sector benchmark is 2,379,471 tonnes of CO₂-e.

Setting individual greenhouse gas benchmarks

Excess emissions after the surrender of abatement certificates will be regarded as greenhouse shortfalls and these are liabloe to a greenhouse gas penalty, currently set $11.50 per tCO₂-e. The penalty is adjusted each year by the Consumer Price Index.

To streamline the audit process, IPART (the compliance regulator for the NSW GGAS) will be the main point of contact on audit proposals covering both ACT and NSW Statements. Thus, the auditor should provide IPART with a single Detailed Scope of Works clearly indicating that it is for both the NSW and ACT Statements. The Detailed Scope of Works should include information about the audit scope, audit team and procedures. However, an individual audit report is required for each Benchmark Participant.

Greenhouse Gas Abatement Certificates

The surrender of Certificates to the Scheme Regulator (ICRC) is the means by which the benchmark participants will demonstrate their abatement of the greenhouse gas emissions and reach their individual greenhouse gas benchmark levels. Both the ACT and NSW use a single tradeable certificate (at present termed a NSW GGAS Abatement Certificate, or an NGAC for short).

One NGAC represents the abatement of one tonne of CO₂-e associated with the consumption of electricity in NSW and the ACT.

1 NGAC = 1 tC0₂-e

NGACs are transferable certificates that may only be created by accredited abatement certificate providers.

In the ACT, the following activities can create NGACs:

Low-emission generation of electricity
Activities that result in reduced consumption of electricity

Rules for calculating the emissions abated from the above activities in the ACT are discussed under the heading Legislative Framework . The ACT has its own compliance rule but the other rules are the same as for the NSW GGAS.

Compliance with the Greenhouse Gas Benchmark

Each year benchmark participants are required to reduce their emissions of greenhouse gases to the level of their greenhouse gas benchmark. Where a benchmark participant’s emissions are above the benchmark, it must offset its excess emissions through the surrender of abatement certificates.

Excess emissions remaining after the surrender of abatement certificates will be regarded as greenhouse shortfalls and these are liable to a greenhouse gas penalty, currently set at $11.50 per tC0₂-e. The penalty is adjusted each year by a formula that uses the Consumer Price Index for the ACT.

A greenhouse shortfall can be carried forward to the following compliance year but must be abated in that year or the greenhouse penalty applying to the shortfall must be paid. Benchmark participants can carry forward a shortfall of up to 10% of their greenhouse gas benchmark in all years of the scheme except 2007.

The scheme also allows benchmark participants to count Renewable Energy Certificates (RECs) under the Australian Government Mandatory Renewable Energy Target (MRET) towards meeting their greenhouse gas benchmark. Only RECs surrendered to the Office of the Renewable Energy Regulator in respect to their electricity sales in the ACT may be counted.

Compliance Process

Benchmark participants must demonstrate compliance with greenhouse gas benchmarks and lodge an Annual Greenhouse Gas Benchmark Statement with the ICRC by no later than 18 March of the year following a compliance year or a later date permitted by the ICRC. The ICRC is required to report to the Minister on the extent to which benchmark participants have complied (or failed to comply) with greenhouse gas benchmarks by 1 July of the year following the compliance year.

The Statement calculates a benchmark participant’s greenhouse gas benchmark, shortfall and liability (if any) for a greenhouse penalty.

Benchmark participants should refer to the Guide to Completing the Annual Greenhouse Gas Benchmark Statement for Benchmark Participants in the ACT ( ) before completing their statements.

Benchmark statements must be audited prior to submission to the Commission. The Statement will not be considered to be in a form approved by the Commission without an audit report attached.

Benchmark participants Licensed in ACT and NSW

An Act benchmark participant that is also a retail supplier under the NSW scheme may engage a single auditor toaudit both jurisdictions' benchmark statements. Auditors must be selected from IPART's 'Audit and Technical Services Panel' and must be authorised to undertake audits of Statements. All panel members are listed on IPART's website: www.greenhousegas.nsw.gov.au . The contract between the benchmark participant and the auditor, including the engagement process, must be consistent with IPART’s Audit and Technical Services Panel Agreement.

Two deed polls will be required from the benchmark participant - one for the ACT ( ) and one for NSW. The NSW deed poll is accessible on IPART’s greenhouse gas website (www.greenhousegas.nsw.gov.au ). A deed poll must be lodged with each compliance regulator, namely the ICRC and IPART, before the audit commences.

Separate audit reports will be required for the ACT and NSW. The audit report for the ACT Statement must be addressed to the Senior Commissioner, Independent Competition and Regulatory Commission. The audit report for the NSW Statement must be addressed to the Chairman of IPART.

IPART’s Audit Guideline, Audit Scope and Audit Report Template for Benchmark Statements set out the requirements for auditors and describe the audit arrangements and requirements for Audit Reports in detail. These documents are available on IPART’s greenhouse gas website www.greenhousegas.nsw.gov.au .

Further Information

The Greenhouse Gas Abatement Scheme in the ACT is based on the Greenhouse Gas Abatement Scheme in operation in NSW. For detailed information about the NSW scheme see their website www.greenhousegas.nsw.gov.au .

Features particular to the ACT scheme are contained in this website.