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FEATURE MEDIA ITEMS 


The 2015 United Nations Climate Change Conference (COP 21) held in Paris in December 2015 adopted a resoution to reduce carbon output “as soon as possible” and for all 195 countries to do their best to keep global warming “to well below 2 degrees C”.

The Australian Federal Government has conducted the second auction of the Emissions Reduction Fund, the centrepiece of its Direct Action Plan for the control of Carbon emissions in Australia, and has repealed the Clean Energy Future legislative package with the last Carbon Tax payments made in February 2015.

25 November 2016: Momentum won’t be lost, says Clean Energy Regulator chief

25 October 2016: Regulator sets out NGER compliance focus

09 September 2016: Regulator issues new safeguard baselines

23 June 2016 Big emitters show interest in looser emission limits

24 May 2016: Preparing for the introduction of the safeguard mechanism

05 May 2016: ERF auction results -average price drops to $10.23

2 February 2016: Australian Senate to scrutinise corporate carbon disclosures

29 January 2016: CER: 20 million ACCUs issued under the Emissions Reduction Fund

23 December 2015: Dirtier energy mix pushes up Australia’s GHG emissions

15 December 2015: Goodbye CERs Paris accord may impact offset use in Australia

08 December 2015: Back to the Future - the ALP’s soft start ETS

12 November 2015: ERF auction 2: Regulator to buy carbon credits worth $557m

09 November 2015: Alcan Gove, Optus, Australian Paper to earn carbon credits

05 November 2015: Up to $1b for farmers in ERF to plant trees and burn grass

23 September 2015: Chloe Munro, CER: shift in project types - Industry embraces the ERF

17 September 2015: Australian states explore carbon market amid federal inaction

15 September 2015: Tougher safeguard rules a possibility under new Australian leader

13 August 2015: Safeguard mechanism moves to centre stage in emissions plan

20 May 2015: Trucker leads way in Greg Hunt’s climate plan

 

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25 November 2016: Momentum won’t be lost, says Clean Energy Regulator chief

There are good reasons why the market for carbon credits won’t falter even though most of the ERF budget is now under contract, according to the Clean Energy Regulator.
The latest auction has left slightly more than $440 million in the ERF budget, enough for at least one more auction round, and developers of new projects should “focus on that”, according to the Regulator’s chief executive, Chloe Munro.
Munro told Footprint that many existing project developers have their hands full managing their existing delivery contracts, which makes it a good time for new businesses to think about participating.
Even if the next auction used all the remaining funds, which was not a given, the government will be considering whether to top up the fund at the next Budget, she added.
Furthermore, by next year the safeguard mechanism will be fully “up and running”, which could result in large emitters looking for carbon credits, and there will also be a comprehensive review of federal carbon policy in 2017, she said.
“When you see all the things lined up, there are actually quite a lot of reasons to think the momentum will continue,” she said.
Consequently, “if you are working on a concept, then I wouldn’t be worried about a hiatus that might come”, Munro said.
“I would focus on whether the project looks like it’s a runner and continue that work.”
Plenty of abatement available
Munro said the results of the four ERF auctions had proved that there is “a significant source of supply of carbon abatement in Australia”.
The Regulator undertook to buy less abatement at this auction than in the previous three, but Munro said it was important to look at the results in context.
The first two auctions purchased much more abatement than most people anticipated largely because of the “pent-up supply” built up between the abolition of the carbon pricing mechanism and the start of the ERF, she said.
In addition, the second auction resulted in contracts for projects that had started “in anticipation of the ERF”.
“So by the third and fourth auction, what we were seeing was a steadying of supply,” she said.
Furthermore, the third auction was boosted by one project to be carried out in Great Barrier Reef catchments that will deliver a massive 15 million tonnes of abatement, Munro noted.
“it is not going to be often that there are projects that are this large,” she said.
If the Reef project is discounted, then the amount of abatement purchased in the two most recent auctions is roughly the same, as are the prices, Munro said.
“There is obviously a lot of abatement available in that [price] ballpark,” she concluded.

Source: Footprint


25 October 2016: Regulator sets out NGER compliance focus

The Clean Energy Regulator has reminded NGER reporters that their reports for 2015-16 must be submitted by midnight on October 31 and has detailed its compliance focus for the year.
The Regulator will focus on three aspects, according to an update to its website.
The three priorities will be ensuring the accuracy of information provided on energy production and consumption, emissions from flaring and facility locations, the update says.
The Regulator says its monitoring activities will include desktop reviews, a mix of targeted and random audits and site visits to a range of representative facilities “to build knowledge and examine how reporters collect and report data”.

Source: Footprint


09 September 2016: Regulator issues new safeguard baselines

The Clean Energy Regulator has finalised new safeguard emissions baselines for 42 of Australia’s largest emitters, including Engie’s Hazelwood and Loy Yang B brown coal power plants.
The individual baselines for the two power plants will apply in the unlikely event that total emissions from all electricity generators exceed the special sector-wide baseline that initially applies to them.
If that were to occur, Engie’s 1542MW Hazelwood power station would be entitled to emit 17.75 million tonnes of greenhouse gas without risk of a penalty.
That amount is more than 10% above the 15.78 million tonnes it emitted in 2014-15, according to NGER data.
The 953MW Loy Yang B power station would be entitled to emit 9.76 million tonnes of greenhouse gas.
NGER data doesn’t allow a comparison of the baseline for Loy Yang B with actual 2014-15 emissions, because the NGER figure for the corporate entity that operates the power station also folds in emissions from its Kwinana cogeneration plant.
The 42 operations with new baselines also include three Anglo Coal mines in Queensland – Callide, Foxleigh and Moranbah North.
Other facilities that now have baselines include Nyrstar’s Port Pirie lead smelter in South Australia and Incitec Pivot’s Phosphate Hill fertiliser plant in Queensland.
The Regulator has now finalised a total of 204 safeguard baselines for top emitting sites, with up to 150 more still to be set.

Source: Footprint


23 June 2016 Big emitters show interest in looser emission limits

Some big emitters covered by the safeguard mechanism that starts July 1 have indicated they might seek approval to exceed past emission high-points, according to the Clean Energy Regulator.
When the safeguard mechanism begins, the operators of about 350 facilities that emit more than 100,000 tonnes of greenhouse gas annually must ensure they keep below specified limits, known as baselines.
A spokesperson for the Clean Energy Regulator said that over the past four weeks the agency “has contacted the majority of entities” that operate facilities qualifying for a safeguard baseline.
The Regulator has proposed baselines calculated on the basis of emission high-points over the five years from 2009-10 to 2013-14, which is the safeguard mechanism’s default limit.
Baselines set at historical highpoints are unlikely to impose any meaningful constraint on the vast majority of facilities as their emissions will be lower than they were over the five-year period, according to industry observers.
Limits calculated from projected emissions
However, companies that consider they are likely to emit more than they did in the past can apply for “calculated baselines” determined on the basis of forecast emissions.
By doing so, they can ensure that they don’t incur a charge if they exceed previous levels.
“A number of emitters indicated that they may be considering applying for a calculated baseline,” the Regulator’s spokesperson told Footprint, adding that formal applications for these higher baselines can’t be submitted until after July 1.
Once baselines are finalised, they will be published on the Regulator’s website.
Limited lifespan
The default safeguard baselines theoretically apply indefinitely, but industry observers almost unanimously expect a returned Coalition Government would tighten them after its proposed 2017 policy review.
That could mean the initial safeguard baselines will have a lifespan of no more than two years.
The Labor Party has explicitly stated that it will tighten emission controls on large emitters .
Meanwhile, the Regulator has released a detailed presentation on the operation of the safeguard mechanism.
The presentation runs through the various forms of baselines and specifies key deadlines.
It describes how various types of baselines are determined and explains how the Regulator calculates each facility’s actual “net emissions number” for a particular year.
Most facility operators will have until February 2018 to ensure that their 2016-17 net emissions number is below their baseline.
However, operators have various ways to avoid any charge for excess emissions.
These include applying to have their emissions averaged over multiple years and applying for a baseline variation.

Reference paper from regulator: Safeguard mechanism workshop presentation (Clean Energy Regulator, June 2016)

Source: Footprint

 

24 May 2016: Preparing for the introduction of the safeguard mechanism

In the lead up to the introduction of the safeguard mechanism on 1 July 2016, the Clean Energy Regulator will be releasing additional information, guidance and forms to better assist clients understand the safeguard mechanism and meet their safeguard obligations.
Notification of proposed reported baselines. Responsible emitters will receive the notification of their reported-emissions baseline from the Clean Energy Regulator, via email, over the next few weeks. Notifications are being sent to an Executive Officer of each responsible emitter and, unless alternative details have been provided.
Reported baselines – information now available
Between July and September 2016, the Clean Energy Regulator will make a reported baseline determination for each eligible facility under section 16 of the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Safeguard Rule). More information about the reported baseline determination process is now available on the Clean Energy Regulator website.
Calculated baseline application form
The calculated baseline application form is now available for responsible emitters who intend to apply for a calculated baseline by 30 July 2016. A responsible emitter must apply for a calculated baseline by 30 July 2016 if it:
  • intends to apply for a calculated baseline for a facility to commence on 1 July 2016, and
  • wishes to rely on 2016-17 production and emissions intensity data to determine its calculated baseline, under section 27(1)(c)(i) of the Safeguard Rule.
More information about thecalculated baseline criteria and application process is available on the Clean Energy Regulator website.
Seeking comment on safeguard technical discussion papers
The Clean Energy Regulator is seeking comment on a series of discussion papers, which will inform the development of final technical guidance materials. The Clean Energy Regulator has now published the following papers for comment:
  • Discussion paper three: production variables
  • Discussion paper four: forecasting emissions data
See the Clean Energy Regulator website to review the discussion papers and submit comment. All comments must be submitted by 5pm (AEST), Monday 6 June 2016.
Baselines for the transport sector
The transport sector forms will be published soon and relevant entities will be contacted directly once this information is available.

Source:  Clean Energy Regulator


05 May 2016: ERF auction results -average price drops to $10.23

Woolworths and Visy have picked up contracts in the third ERF auction, but land sector projects still dominate the program, today’s third ERF auction results show.
The Clean Energy Regulator today announced that it will award 73 contracts based on ERF3 auction bids to buy a total of 50.5 million tonnes of carbon abatement at an average price of $10.23 per tonne (down from $12.25 at the last auction).
The contracts have a total value of $516.2 million.
Significant Industrial Projects
Woolworths won its contract to supply 418,209 tonnes of abatement over seven years through a lighting upgrade project and Visy will supply 17,500 tonnes over seven years through an energy efficiency project.
Gold Fields Australia also secured a contract for an energy efficiency project at its Granny Smith gold mine that will deliver 85,845 tonnes over seven years.
Vegetation projects dominate
However, the lion’s share of the total abatement contracted at the auction will be delivered through land sector projects that boost the amount of carbon stored in vegetation (47.2 million tonnes out of the 50.5 million total).
A total of 28 of the 73 contracts awarded in the third auction went to one company that specialises in land sector projects – Terra Carbon Pty Ltd (which operates as GreenCollar in Australia).
Terra Carbon also secured the two largest contracts at the auction, to be delivered through its Catchment Conservation Alliance, which will between them will deliver 20.5 million tonnes of abatement over 10 years.
Goldfields Carbon Group secured the next largest contract, for the delivery of 3.9 million tonnes through a forest regeneration project.
Landfill and waste sector projects won 10 contracts in the third auction to a supply a total of only 1.6 million tonnes of abatement.
State agencies win contracts
Two state environment departments also secured contracts (not counting Terra Carbon’s Catchment Conservation Alliance project that will involve Queensland’s Department of Environment and Heritage Protection).
The two departments are the NSW Office of Environment and Heritage and the WA Department of Parks and Wildlife.
The 73 new contracts represent 77% of the volume of abatement offered to the Regulator at a price below the benchmark price it had set for the auction.
Environment Minister Greg Hunt said the overwhelming dominance of the land sector in the latest auction results “discredits forever Labor’s ridiculous claim that the ERF is all about ‘paying big polluters’”.
‘Exceptional outcome’
Chloe Munro, the Regulator’s chief executive, described the result as “an exceptional outcome” in terms of the amount purchased and the price.
“Our objective is simply to purchase as much abatement as we can with the funds available,” she said. “All three auctions have exceeded our expectations in this regard.”
Munro will appear shortly before a Senate environment committee Estimates hearing to discuss the results in more detail.
In auction two, held last November, the Regulator contracted to buy 45 million ACCUs worth $557 million at an average price of $12.25.
In auction one, held in April last year, the Regulator contracted to buy 47.3 million ACCUs for a total of $660.4 million at an average price of $13.95.

Source:  Footprint News

 

2 February 2016: Australian Senate to scrutinise corporate carbon disclosures

The Senate today voted to investigate whether Australian companies are adequately disclosing their carbon risk.
Coalition senators opposed the inquiry, but the motion to establish it passed by 35 votes to 28 with the support of Greens and most independents.
Terms of reference oblige the inquiry by the Senate Economics References Committee to consider current and emerging international disclosure frameworks, disclosure practices within corporate Australia and the extent of regulatory and policy oversight.
The inquiry, instigated by Greens Senator Peter Whish-Wilson, must also take into account work by the G20 Financial Stability Board on carbon risk impacts (see background).
Senator Whish-Wilson, the Greens’ finance spokesperson, said the inquiry would provide “a critical stocktake of where we are at and where we need to head”.
“France has established mandatory disclosure for investment banks, and various share markets around the world are moving to mandatory disclosure,” he said.
Today’s motion for a carbon risk disclosure inquiry succeeded after the Senate last year voted down an earlier Greens motion for an inquiry with slightly different terms of reference.
The Economics References Committee will complete its report by June 22.
The committee, which was most recently in the public eye over its wide-ranging inquiry into corporate tax avoidance, is currently chaired by Labor Senator Chris Ketter.

Source (part article): Footprint


29 January 2016: CER: 20 million ACCUs issued under the Emissions Reduction Fund

The Clean Energy Regulator has this week issued the 20 millionth Australian carbon credit unit (ACCU) since their introduction in 2011.
Each ACCU represents one tonne of carbon dioxide equivalent (tCO2-e) that has been stored or avoided by a project registered under the Emissions Reduction Fund or its predecessor the Carbon Farming Initiative.
ACCUs have been issued across the Australian economy, with projectsin all states contributing to the reduction of Australia’s emissions.
“During 2012, the first full calendar year of the Carbon Farming Initiative , the Clean Energy Regulator issued only 350,000 ACCUS. In comparison, in 2015 under the Emissions Reduction Fund, nearly eight million ACCUs were issued,” said Chloe Munro, Chair of the Clean Energy Regulator.
“Reaching this milestone shows the Emissions Reduction Fund is accelerating carbon abatement in Australia.”
“Australian businesses, councils, communities and Indigenous groups have embraced the opportunities available under the Emissions Reduction Fund.”
There are many options for businesses to sell their ACCUs, including being sold to the Commonwealth under a carbon abatement contract when a participant is successful at an Emissions Reduction Fund auction.
The recipient of the 20 millionth ACCU is EDL LFG, which runs a series of landfill gas projects in the ACT, Queensland, New South Wales and Victoria. This week, the company’s projects were issued more than half a million ACCUs.  Additionally, a number of vegetation and regeneration projects were also issued ACCUs this week​.
EDL has 11 landfill gas to energy projects registered in the Emissions Reduction Fund.  These projects capture and destroy waste methane generated by organic waste in landfills and convert that waste into renewable energy. 
“The Clean Energy Regulator congratulates EDL on their long standing commitment to reducing Australia’s greenhouse gas emissions. We encourage all businesses and community groups to explore the options for participating in the scheme,” Ms Munro said.​
The third Emissions Reduction Fund auction will be held on 27 and 28 April.

Source: Clean Energy Regulator 


23 December 2015: Dirtier energy mix pushes up Australia’s GHG emissions

Australia’s greenhouse gas emissions rose 1.3% in 2014-15 to 549.3 million tonnes of CO2e, according to government data, as coal use increased after the carbon tax repeal.
Electricity generation emissions increased 3% to 186.1 million tonnes of CO2e in the twelve months to June 2015, according to data from the Department of the Environment.
“This increase corresponds to a flatlining in demand in the National Electricity Market (NEM) between the year to June 2014 and the year to June 2015 … combined with an increase in the emissions intensity of delivered electricity,” the report said.
Electricity emissions from black coal rose 1.4% and brown coal 9.7%, the report said. Wind and other renewables increased 12.2%, but gas (6.2%) and hydro (30.3%0 saw drops.
The comeback of coal in the generation mix has been well documented by NEM analysts, and coincided with the July 1, 2014 removal of the carbon tax.
Most other sectors of the economy also saw higher GHG emissions in 2014-15, but this was partly offset by a 3.4% drop from agiculture, largely due to declining beef cattle population, a reduction in sheep numbers and reduced production of several key crops.
Compared to 2005, Australia’s emissions have dropped 10.2%. Its target according to its DNC is to reduce emissions 26-28% below 2005 levels by 2030.
Australia now emits 23.2 tonnes of CO2e per capita, a 28.4% drop from 1990 but still among the highest in the developed world.

Source: Stian Reklev in Carbon Pulse


15 December 2015: Goodbye CERs Paris accord may impact offset use in Australia

After two decades of diplomatic promise and failed outcomes, the Paris COP has delivered a landmark agreement to limit global warming to below 2 degrees, beating expectations by delivering a legally binding framework, and a broader ambition to limit global warming to 1.5C above pre-industrial levels.
While a number of elements remain unresolved, the Paris Agreement has established a number of key outcomes, including:
• Temperature increases – Governments have agreed to limit warming to “well below” 2C, with broader ambition to “pursue efforts” to limit temperate increases to 1.5C above pre-industrial levels.
• Pledges – 187 countries have put forward plans for emissions cuts in the form of nationally determined contributions (NDCs), which are voluntary, established via a bottom up process. Pledges will be reviewed every five years, with a voluntary “stocktake” to take place in 2018.
• Voluntary cancellation of Kyoto units – The final text encourages parties to voluntarily cancel units issued under Kyoto, including certified emissions reductions that are valid for the second commitment period as a result of past performance.
• Carry-over after 2020 – Text around the potential carryover of Kyoto units after 2020 was not resolved under the Agreement and is expected to be refined at subsequent meetings.
• International market mechanism – Provisions supporting a new international market-based mechanism were agreed. The new mechanism is expected to replace the Clean Development Mechanism (CDM) and Joint Implementation (JI) programs established under Kyoto, with the final rules to be designed over the upcoming years, ahead of the launch of the scheme after 2020. The new mechanism will be open to developed and developing countries and is expected to be overseen by the UNFCCC.
While the Paris Agreement is a major step forward, there is still plenty of work to be done on the detail of a number of sections of the Agreement, including the ‘transparency framework’, which will set out how individual country efforts will be monitored and reported, plus the design of the new international market mechanism and the transition from existing Kyoto programs such as the CDM and JI.
In addition, for Australian stakeholders, text around the potential carryover of Kyoto units after 2020 was not resolved, and is expected to be refined at subsequent meetings, with pressure growing for Parties to voluntarily cancel Kyoto units.
The Australian government has indicated it will continue to utilise its “accounting benefit” to meet its 2020 commitment, with carry-over credits and lower than projected emissions growth bringing Australia’s 2020 abatement task to minus 28 million tonnes. This is despite national emissions being projected to grow 6 per cent from current levels to 4 per cent above 2000 levels by 2020, as we outlined in our latest Market Update.
UNCERTAINTY OVER USE OF KYOTO UNITS
The failure of the Paris Agreement to clarify the carry-over of Kyoto units after 2020 may lead to some uncertainty in the Australian market over the next several years, with potential for Australia’s performance in overshooting its 2020 target – should it continue to rely on Kyoto units – to not be carried forward into the post-2020 period.
Pressure for Parties to voluntarily cancel Kyoto units was led by Germany, Denmark, the Netherlands, Sweden and Britain, which remain keen to close the so called “hot air loophole”, ensuring Parities take action to achieve real cuts in emissions.
In real terms, this is unlikely to have any impact on Australia’s 2020 commitment given lower projected emissions growth will ultimately see our target come into reach, however uncertainty over how – or if – Kyoto units will be carried over to support Australia’s post-2020 target may cast some doubt on the role of Kyoto units under any future Australian compliance market.
This comes as Environment Minister Greg Hunt re-stated that international credits remain on the government’s agenda, and are widely expected to be introduced in parallel to tighter emissions baselines under the Safeguard Mechanism.
Even if the government’s 2017 policy review allows international carbon credits, the use of low-cost Certified Emissions Reduction units (CERs) may be delayed until further detail comes to light on how these units will transition to the new international market after 2020. Given new rules are unlikely to be designed for the new international scheme until far later than 2017,  uncertainty the future role of CERs impact the local market, or may ultimately force the government to reverse its position on the voluntary cancellation of Kyoto units.
DISCONNECT BETWEEN RHETORIC AND DOMESTIC POLICY
While domestic and international policymakers will continue to debate the merits of international units in Australia, talk of their adoption domestically may be premature, with current Australian policy still unlikely to trigger any robust compliance demand, irrespective of what units are allowed to be acquired or surrendered.
We continue to believe that the ability for companies to “re-baseline” under the Safeguard Mechanism will erode any compliance demand, meaning that the first phase of the safeguard mechanism will not have any impact in curbing emissions growth, or imposing any compliance obligations on liable entities.
Subsequently, while the government has sharpened its rhetoric on the international stage, a significant disconnect is emerging between the government’s international language and the effectiveness of its domestic policy to meet its 2030 emissions reduction commitments.
This is heightened by the diminishing funding for the Emissions Reduction Fund – which is likely to be fully committed by the end of 2016. From that point, the Australian market may be left without a hard emissions baseline, or any mechanism to incentivise emissions reductions. While the government has established a 2017 review of its Direct Action Plan, this is will not report until November 2017, with amendments unlikely to be implemented until 2018-19 at the earliest.
This suggests Australia may face a prolonged period without effective climate policy in operation, at a time when international scrutiny – and Australia’s own climate rhetoric – is growing stronger.

Source: Reputex


12 November 2015: ERF auction 2: Regulator to buy carbon credits worth $557m

The Clean Energy Regulator revealed it will enter into 129 contracts for the supply of a total of 45 million tonnes of abatement at an average price of $12.25, after last week’s second ERF auction.
The volume purchased is about the same as in the first auction, with a “somewhat lower” average price, Clean Energy Regulator chief executive Chloe Munro told Footprint.
Total expenditure on ERF2 contracts will be almost $557 million, Munro said.
The Regulator accepted about three quarters (72.3%) of the bids that came in below the benchmark price it set for the auction.
The benchmark price representing a cut-off above which bids wouldn’t be accepted under any scenario.
The decision to accept 72.3% of bids below the benchmark was made using an assessment tool that sequenced bids and determined the “best value” cut-off point, Munro said.
The list of projects that successfully secured contracts at the second auction is available here.
They include Quantum Power Ltd (for a bioenergy project), EDL Projects (Grosvenor waste coal mien gas power station), Pacific National (fuel savings program) and Corporate Carbon (“industrial carbon emissions reduction”).
(See Chloe Munro video on auction results - 2 minutes 29 seconds).
$1.2 billion total spend
In combination with ERF1 contracts, the latest auction amounts to a total spending commitment of about $1.2 billion to purchase almost 92.8 million tonnes of abatement at an average price over the two auction rounds of $13.12.
(See information sheet on combined results of April and November auctions).
Munro said she was “very pleased with the level of participation and the competitive bidding”.
“This auction has revealed that more abatement is available at the low end of the cost-curve,” she said.
Munro added that this auction had for the first time also resulted in the awarding of ERF contracts for industrial energy efficiency activities and projects that cut emissions by capturing waste coal mine gas.
Projects using these methods will supply about four million tonnes of the contracted abatement, Munro said.
However, there had also been “sustained interest” from the land sector, including from projects that earn credits through fire management in savanna lands, she said.

Source: Footprint.

Statement of interest: Resource Intelligence, associate company of Carbon Intelligence, is advising companies on the Industrial Electricity & Fuel Efficiency project contracted by Corporate Carbon referred to in the article.


09 November 2015: Alcan Gove, Optus, Australian Paper to earn carbon credits

Major emitters have been cleared to earn valuable carbon credits at their facilities, and the nation’s largest hotel operator will receive them for lighting upgrades at its pubs.
An update to the Clean Energy Regulator’s register of approved projects shows it has authorised Alcan Gove to create credits from its Gove “alternate power generation project”, which will follow rules in the ERF energy and fuel efficiency method.
The Regulator gives no details on the project, but it is likely to refer to involve a switch from oil to gas, which would be delivered through a new Katherine to Gove pipeline.
That pipeline already has EPBC approval and EIS documentation prepared in 2013 said the fuel switch would cut annual emissions for the mine and refinery by about 336,000 tonnes a year.
As well as slashing energy costs, switching to gas would have reduced Alcan Gove’s liability under carbon price scheme – which was then in place – by more than $4.5 million a year, the 2013 documentation said.
The Gove bauxite mine is still operating, but the refinery is under care and maintenance.
The latest update to the Regulator’s ERF register also shows Australian Paper will follow rules in the same ERF method to earn credits from a “high pressure header elimination and stripper heat exchangers replacement project” at its Maryvale Mill in Victoria.
The register also lists two new NSW coal mine waste gas projects, both operated by Our Energy Group Pty Ltd, a company established only two years ago.
Optus
Meanwhile, Optus stands to reduce the costs of upgrading its mobile phone base stations by earning carbon credits via an arrangement with energy efficiency company Outperformers.
The ‘Optus base station cooling project’, which will follow rules in the energy and fuel efficiency method to create credits, and is the second ERF project successfully developed by Outperformers, which began as a business operating under the NSW and Victorian energy efficiency schemes.
According to the telco’s sustainability report, released earlier this year, Optus has upgraded energy use metering at 560 of its mobile phone base stations over the past year, allowing it to track their energy use every 15 or 30 minutes.
It has also replaced air conditioners in mobile phone base stations with temperature controlled fans that provide “free cooling” when external temperatures are lower than the temperature inside the station.
Another new ERF project registrant is Woolworths-owned ALH Group, which owns more than 300 hotels and licensed premises as well as the Dan Murphy’s chain, and has gained approval to earn carbon credits from lighting upgrades at its premises.
New projects for Corporate Carbon
Corporate Carbon Solutions, which had already registered about 20 ERF projects that will earn credits from various methods, has successfully registered three new ones.
One of them will follow the ERF transport method and earn credits “by replacing existing vehicles, changing energy sources or the mix of energy sources and changing operational practices”, according to the Regulator’s ERF register.
“The vehicles in this project are both land vehicles and marine vessels,” the register says.
Its other two project will earn credits by fertiliser management, following rules in the ERF method on storing carbon in soils in grazing systems.

Source: Footprint.

Statement of interest: Resource Intelligence, associate company of Carbon Intelligence, is advising companies on the largest Land & Sea Transport and Industrial Electricity & Fuel Efficiency projects contracted by Corporate Carbon referred to in the article.

 

05 November 2015: Up to $1b to plant trees and burn grass

The federal government will pay up to $1 billion to farmers to grow more native trees on their properties or burn off savannah grass as part of the second auction from the $2.5 billion Emissions Reduction Fund which opened yesterday.
Carbon farming projects, like regeneration and savannah burning, are expected to dominate the auction, but big industry players such as Qantas and Woolworths are also set to make a bid for the first time.
The projects are bidding for contracts from the Clean Energy Regulator where they will be paid to reduce carbon emissions that would otherwise have been released into the atmosphere. The strong interest is expected to drive down the cost of the carbon abatement contracts.
Cobar farmer David Snelson is a seventh-generation sheep grazier but he’s decided to turn his hand to carbon farming to earn some extra money through what seems like a never-ending drought.
On his 10,000 hectare property, Yarrawonga, in western NSW, Mr Snelson will dedicate about half his farm to re-generation of native trees - and be paid for it by taxpayers. He’s had to reduce the number of sheep on his property from about 4000 to 3000 and commit to not clearing half his property but Mr Snelson is hoping it will be enough to keep him in the black and keep his farm in family ownership.
“It’s off-set revenue I have lost from the drought. If I can make a bit of money and keep my property that’s great. If it’s also helping to reduce the nation’s carbon footprint that’s a bonus,” Mr Snelson told The Australian Financial Review.
Mr Snelson is one of 389 projects bidding for the second auction of the $2.5 billion Emissions Reduction Fund, which opened on Wednesday.
More than $1 billion is expected to be awarded when the results of the auction are released next week - once again raising the prospect the federal government may be forced to top-up the fund before next year’s election.
In the first auction, 43 companies were awarded contracts worth $660 million to eliminate 47 million tonnes of carbon, with an average price of just under $14 a tonne.
Climate Friendly manager Josh Harris, a project developer who is working on 50 smaller carbon projects from Cape York in North Queensland to western NSW, said he expected the land sector to dominate the carbon market in this week’s auction.
Of the 389 projects registered for the auction, about 75 per cent are from the land sector, including re-forestation projects and savannah burning by traditional owners to avoid wildfires. Only 10 per cent are from the larger industrial sector and the rest are from landfills and other projects, Mr Harris said.
“The land sector is still dominating the sector, mostly farmers and Aboriginal groups. There is a few legacy landfill projects still in there but mostly it’s the land sector,” Mr Harris said.
Carbon farmers can reduce hundreds of thousands of tonnes of carbon - sometimes even millions of tonnes - during the course of the 10-year contracts. They are independently audited every year to keep track of the regeneration of the properties. One of the projects that won a contract in the first auction was the Kinchela Forest regeneration project, about 60 kilometres south of Bourke in north-west NSW.
The former sheep and now cattle property is about 16,100 hectares in size, with the regeneration project of native trees taking up 13,083 hectares.
Kinchela landowner John Cliveden Bull aims to prevent about 20,000 tonnes of carbon emissions each year. He said he hoped carbon farming would help reduce the need for government drought funding.
Mr Harris said the stronger interest in the second auction could drive down the price of carbon abatement as projects lower the costs to secure a contract. “The main change between the first and second auction is there is more interest this time. There’s been a 50 per cent increase in projects bidding from 250 the first time to 389 now.”
Melbourne-based consultancy RepuTex has also predicted forest regeneration, savannah burning and coal mine waste activities will be the big winners from this week’s auction. The presence of a few big players will most likely drive down the cost of abatement below the $13.95 a tonne from the first auction.
“While industry accounts for only a small number of projects registered…we anticipate they will supply a few relatively large volume of credits, particularly from coal mine waste gas and industrial energy efficiency projects,” RepuTex said on Monday.

Source: Mark Ludlow in Australian Financial Review quoted in FarmOnLine 

Statement of interest: Carbon Intelligence audited the Kinchela project referred to in this article.

 

23 September 2015: Chloe Munro, CER: shift in project types - Industry embraces the ERF
There has been a major change this month in the type of projects applying to earn carbon credits, according to Clean Energy Regulator chair Chloe Munro.
Last Friday was the cut-off for projects to apply in time to participate in the November ERF auction, and on that day alone the Regulator received 22 applications.
Many of the September applications are still under review – with the Regulator generally processing them within 30 days – and are yet to appear on the official register.
But Munro told Footprint that a large portion are for activities other than in the land and waste sectors that have long dominated the official register of projects authorised to earn credits.

Efficiency projects
Of the project applications received in September, “just shy of 40%” were for projects that weren’t in the land sector, Munro said.
“So that is quite a shift.”
These new-style projects will create credits by following some of the more recent rules (known as ‘methods’) that reward efficiency improvements, and Munro isn’t surprised it has taken some months for companies to come to terms with them.
Although some organisations involved in the technical working groups that helped develop the new methods were “ready to go” almost as soon as they were finalised, others had to spend time getting to grips with the requirements, she said.
“So you do expect to see quite a lag.”

Safeguard interplay
Munro said it remains to be seen how many of the projects from industry that register to earn credits (which are technically known as Australian Carbon Credit Units or ACCUs) choose to participate in the auction on November 4 and 5.
She noted that emitters with an ERF contract to sell their credits can still take the abatement they represent into account when they calculate whether their net emissions are above or below their safeguard baselines.
“So they can have a contract, return the ACCUs to us, and get the benefit of having reduced their emissions in terms of the safeguard,” she said.
But it is a different story if they sell their ACCUs to another organisation, such as another large emitter, as then the abatement is owned by the buyer.
That provides a strong incentive for large emitters to bid their ACCUs into the ERF, but Munro said not all entities approved to earn them will necessarily bid into auctions.
For example, an aggregator uncertain about the pace at which they can grow their business might prefer to sell their ACCUs to other companies as they earn them, rather than having to decide on a schedule lasting several years for delivering credits to the Regulator.

The sweet spot
For the November auction the Regulator will contract to buy between 50% and 100% of the bids that come in under the secret benchmark price, whereas in the first auction it committed to buy 80% of them.
Munro says the introduction of this “variable volume threshold” is a natural evolution of the auction process, describing it as “a more sophisticated decision rule”.
“The 80% threshold was a very blunt instrument,” she said.
“For this auction we want to have a bit more ability to consider this question of what is the sweet spot if you like, of balancing maximising the volume [of abatement] we purchase with keeping the price low.”
“What the variable threshold allows us to do is to think about – based on what the bid stack actually is – what threshold really represents the best value for money.”
Munro said the task of setting the variable threshold within the range of 50% to 100% of eligible bids would be “a relatively mechanical process” in which the benchmark price and other parameters would be taken into account.
“We set those parameters, then we run the decision tool on the bids that we’ve got, and then the outcome of that will be a bunch of successful bids and that will tell us what the percent is,” she said.
Munro said her organisation is hopeful that the variable volume threshold will help to “encourage bidding at the lowest price at which it is worth the proponent’s while to do the project” because of the extra uncertainty it adds to the auction process.

No political influence
Munro was firm in dispelling any notion that the Minister’s office could or would influence the ERF auction process.
“Let me clear that up for you absolutely,” she said.
“The Minister can only direct us in general matters and he certainly could not direct us in terms of anything such as the detail of how we take any of our decisions,” she said.
“But more importantly the Minister and his office have always shown great respect for our independence, and the Minister has been quite clear that he doesn’t want to know any of that.”
“Not only do they not try to influence us but we don’t tell them,” she said, adding that her organisation never discusses with the Minister the benchmark price it will use and had not sought his approval or advice on setting a variable volume threshold for the next auction.

Tips for bidders
Munro’s main tip for participants in the next ERF auction is to make sure that they have correctly priced their bids.
“It really comes back to having done your homework, done your business planning and really understanding your cost structure and what a reasonable amount of abatement that you can achieve will be,” she said.
“It is as simple as that really.”
“We don’t anybody to come forward with a bid and find very quickly that they are not able to fulfil that commitment because they haven’t planned properly.”
It is also important to “get your auditor on board early on”, to help work out the abatement potential, the delivery schedule and the reporting process.

Next steps
Munro said the ERF auction procedure would continue to evolve.
“Each time we will think about the process anew.”
Auction frequency will continue to depend on the pace of project registrations and Munro also noted the potential for the Regulator to contract to buy abatement other than through an auction.
These alternative purchasing processes could suit a very large project that follows a bespoke method for earning credits and that might have difficulty in proceeding without the certainty of a contract, she said.
“That is a possibility, but we haven’t seen that circumstance arise yet,” Munro said.
One of the concerns with contracting outside a competitive process such as an auction is how to decide on a price, she noted.
“But naturally as we build a portfolio of contracts we can have a bit more confidence about where prices might fall.”

Source: Footprint (formerly Carbon & Environment Daily)

17 September 2015: Australian states explore carbon market amid federal inaction -media
South Australia is looking at the option of launching a state emissions trade scheme in lieu of a federal carbon pricing policy and has received interest from New South Wales, Queensland and Victoria, InDaily reported Thursday.
The SA state government would prefer a national carbon market, but may choose a state-level option if new Prime Minister Malcolm Turnbull continues to back his predecessor’s Direct Action Plan, SA Environment Minister Ian Hunter told the Adelaide-based newswire.
“I sincerely hope his early pledge to stick with the derided ‘Direct Action’ policy makes way for a proper commitment, and that state-based schemes won’t be required,” Hunter said.
He added that feedback from other states had been positive.
“Queensland, Victoria and New South Wales have all indicated an interest to me,” he said.
Victoria Environment Minister Lisa Neville said in March her government was considering an ETS as one possible policy to meet the state’s revived climate target.
In June, Victoria appointed an expert panel headed by Baker & McKenzie’s Martijn Wilder, a carbon market veteran, to provide a list of recommendations by the end of year of policies that might be suitable for the state. Emissions trading is likely to be on that list.
South Australia’s Hunter said his team is looking at how the emissions market in California and Quebec works to get a clearer idea on what a state-based Australian CO2 scheme might look like.
Any state-based ETS, covering SA alone or several states, would most likely take at least two or three years to develop, and a Labor win in next year’s federal election would likely bring back a government eager to launch a national market.
The state-based ETS initiative, however, does put pressure on Prime Minister Turnbull, who has taken a lot of stick from the opposition since he was sworn in on Wednesday for what Labor and Greens MPs say is a “sell-out” of his stance on climate policies.
Meanwhile, on Thursday eight of Australia’s biggest companies, accounting for 12% of the nation’s total GHG emissions, called on the government to put in place an ambitious climate policy that would create certainty for investors.
“We support the bipartisan objective that international negotiations in Paris deliver a positive outcome to put the world on the path to limiting global temperatures to less than two degrees Celsius,” the statement said.
“We all acknowledge that achieving this will be challenging for Australia and all countries. But agreeing on a goal and a pathway to achieving this is critical and should not be delayed. The longer we wait, the harder it will be and the more it will cost us.”
The statement was signed by the CEOs of AGL, BHP Billiton, GE Australia, Mirvac, Santos, Unilever, Wesfarmers and Westpac.
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Source: Carbon Pulse


15 September 2015: Tougher safeguard rules a possibility under new Australian leader
Incoming Prime Minister Malcolm Turnbull may have opted for party harmony over headline changes to Australia’s climate change policy, but the safeguard mechanism might provide him with the opportunity to subtly tighten up some of his predecessor’s loose ends, according to observers.
Turnbull made it abundantly clear on Monday that he has no intention to spend the run-up to next year’s election developing new climate policies for Australia.
For the next year at least and probably a while longer, the Direct Action Policy with its Emissions Reduction Fund will remain the country’s key tool to cut carbon emissions.
But the ERF’s safeguard mechanism, which aims to ensure that the fund’s emission cuts aren’t cancelled out by increases elsewhere in the economy, might give Turnbull – an outspoken supporter of climate policies – an opportunity.
With only relatively minor adjustments, the mechanism could be turned into something akin to a baseline and credit scheme.
CROSSBENCH TALKS
The mechanism, criticised for its lack of teeth, is still out for public consultation and negotiations with the opposition are expected before the final version will be adopted by both houses of parliament.
Market analysts Reputex said some “amendments are likely to be brought forward by the Senate crossbench over the upcoming weeks, and will present the most immediate opportunity for Mr Turnbull to fine-tune government policy, while working within the constraints of the Coalition party room mandate to avoid a de facto carbon pricing regime”.
Descending emission baselines for big polluters after 2020 might be an option, as could “default baselines” if the baseline issue is not solved in the government’s planned 2017-2018 climate policy review, Reputex said.
Analysts have said the proposed baseline levels for emitters – set at their highest level of emissions over the past five years – are so high they will fail to restrict carbon output for most of the companies that would be covered by the mechanism.
“Even should only minor adjustments be made to government policy, we anticipate the cumulative safeguard compliance market may grow to between 200 and 500 million tonnes of carbon dioxide equivalent (Mt), covering around 100 companies,” Reputex said.
“In a scenario where descending baselines are applied, this would grow the total compliance market to approximately 1,000 MtCO2e, considerably expanding the compliance market.”
EVOLUTION
Richard Hobbs, an analyst with Bloomberg New Energy Finance, agreed Turnbull is likely to want to add substance to Australia’s climate policy, at least in the longer term.
“Turnbull may seek to evolve Abbott’s Safeguard Mechanism that places loose baselines on emitters – which is likely to drive very little abatement as currently proposed – to a more robust baseline-and-credit emissions trading scheme,” he said in a research note.
“This will be a substantial policy and perhaps political challenge – and is a key policy to watch in the coming weeks and months.”
However, he stressed that any policy changes would likely be evolutionary rather than revolutionary.
“Turnbull was ousted as opposition leader in 2009 for not being consultative, and for pressuring the Coalition to support an emissions trading scheme, which is still deeply opposed by many in the party room,” Hobbs said.
PRIORITY DOUBTS
But some doubted that even minor tweaks of the safeguard mechanism would be part of Turnbull’s strategy.
“My sense is that Turnbull’s promise to leave climate policy intact until after an election will probably extend to changing baselines or any of the significant rules in the exposure draft,” said Declan Kuch, a research fellow at the University of New South Wales.
“I think it’s an open question, and an entirely political one – ie. how much pressure will his government be subjected to on the issue of climate over coming months?”
Green groups, the renewable energy industry and others are likely to heap as much pressure as they can on Turnbull ahead of December’s pivotal UN climate summit, but the question is whether that will have any effect at all.
Tony Abbott did just fine at the last election without their backing, and Turnbull likely sees far more potential for winning sufficient support to be elected PM by focusing on broad issues like the economy and defence.

Source: Stian Reklev in Carbon Pulse

2 May 2015: Trucker leads way in Greg Hunt’s climate plan

David Cole is a happy trucker. He has just won just won a federal government contract worth more than $2 million to cut greenhouse gas emissions. He is proud of the contract: it is good for the planet and will help him convert his gasping old rigs into a gleaming new fleet of fuel efficient semi-trailers.
But Cole, who runs refrigerated logistics for listed trucker Automotive Holdings Group, warns that the red tape to win the contract was a pain. It involved engaging consultants and lots of paper work. In fact, he cannot imagine how a smaller trucking company could qualify. “Even as a mid-size, mid-tier operator, it’s quite onerous,” he says.
AHG’s refrigerated trucking fleet is a case study both for the possibilities and pitfalls in the federal government’s $2.5 billion Direct Action program to reduce greenhouse gas emissions. Environment Minister Greg Hunt announced last week the results of a reverse auction by his Emissions Reduction Fund, which granted 140 contracts worth $660 million to encourage firms that promised to cut greenhouse gas emissions. He said the auctions were a “stunning success” and proved that the Coalition could cut emissions much more cheaply than the carbon tax, which it scrapped last year.
Perth-based AHG, which after a series of acquisitions is now the biggest refrigerated trucker in Australia and owns the Rand brand in Victoria, has promised to cut 150,000 tonnes of CO2, or a reduction of about 10 per cent on its current levels. It will use the cash to bring forward the purchase of more fuel-efficient trucks that meet the “Euro 5” emissions standards. Usually it replaces about 40 of its 240 line haul vehicles a year but the $2 million will fund a quicker renewal program. AHG has also promised to shift a share of cargo from road to rail, buying new refrigerated rail containers and cutting emissions by 75 per cent.
AHG is a positive sign for Hunt because until recently emissions-reduction programs have focused on worthy but fairly limited technologies. All the other 139 contracts in the auction went to companies that soak up carbon by planting forests, reduce leakage of methane gas from land fill and piggeries, and to Indigenous firms that use traditional burn-off techniques to reduce the risk of big bush fires. All these schemes were operating under the carbon tax and have simply switched to a new bureaucratic model.
But AHG is the first company outside this field and the first transport project to win federal funding. Other truckers might follow. Toll Group spokesman Christopher Whitefield says, “While Toll did not bid at the first auction, we are following the auction process with interest and have a number of projects identified for potential future bidding.”
No contracts
But the concern is that many other sectors, such as commercial property, manufacturing and power generation, won no contracts in the first auction. Since these sectors account for the bulk of emissions, without their participation Direct Action will struggle to meet its target of cutting emissions by 5 per cent by 2020 and it will be impossible to match much bigger cuts expected by 2030.
One big problem about the program is the bureaucracy and risk in accrediting abatement programs bidding in the auctions and then proving to the government each year that they have actually delivered the promised emissions reductions.
Firms must file a detailed audited return each year to receive payment under the ERF contract. As the scheme grows, thousands of companies will have to go through this process. The carbon tax, by contrast, affected only the largest large emitters, yet it covered 60 per cent of the economy.
AHG had to hire consultants to fill out the forms and staff will have to handle the reporting obligations over the next six years to get paid. Cole says this will trim a lot of the profit from the contract and he thinks one reason bigger firms like Toll and LinFox missed out was that they might have worried about costs.
“It’s not a simple business. They may have gone higher than we did,” Cole says.
There are some sectors where Direct Action could work at current prices, especially in some manufacturing processes, such as cement and brick making, which generate about 10 per cent of emissions. For example, brick maker Brickworks is considering filters on the smokestacks of its plants. Chief executive Lindsay Partridge says the company “may well participate in the next auction”.
Robert Murray-Leach, chief executive of the Energy Efficiency Council, is a fan of the Direct Action scheme but says it is only part of the solution and he will be surprised if the price of abatement falls much below the $13 a tonne average achieved last week.
The structure of ERF auctions does not suit many crucial sections of the economy, he says.
Robert Murray-Leach, chief executive of the Energy Efficiency Council, is a fan of the Direct Action scheme but says it is only part of the solution and he will be surprised if the price of abatement falls much below the $13 a tonne average achieved last week. The structure of ERF auctions does not suit many crucial sections of the economy, he says. “We really hope the auctions will drive energy efficiency but we don’t see much evidence in commercial property,” he says.  “There might be some scope in industrial. You would need to have upfront payments and probably a higher auction price.”
Meanwhile, Cole is preparing to buy new trucks and refrigerated rail containers. He admits the system is complicated but he says AHG is serious about reducing emissions. “This is not just about securing a cheque from the government.”
Source: Geoff Winestock in Australian Financial Review 
Statement of interest: Resource Intelligence, associate company of Carbon Intelligence, is advising AHG on this first Land & Sea Transport project, referred to in the article.