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Compliance priorities 2018-19

13 November 2019

Corporate​​​​

Outcomes of 2018-19 Compliance Priorities

In September 2018 we published documentasset::​Compliance priorities 2018–19 reflecting our proactive approach to ensuring compliance. Overall most of our scheme participants continued to demonstrate high-levels of compliance with their obligations across the schemes. This was confirmed by our increasingly sophisticated data-matching capabilities and detection and verification tools. However there remains a small proportion of participants that, particularly within the Small-scale Renewable Energy Scheme (SRES), continue to be non-compliant and wilfully ignore the law. We have continued to mature our capability to proactively disrupt and deal with these challenging participants and take appropriate enforcement action.

For those scheme participants that were accidentally non-compliant we provided resources and education materials and implemented new ways to make it easier for them to comply and we engaged early when compliance issues arose to deal with them efficiently and effectively. Progress against our 2018-19 priorities is set out below.

Emissions Reduction Fund

In 2018-19 the Clean Energy Regulator (CER) undertook extensive engagement with stakeholders to finalise the development of guidance on stratification, evidence and record keeping for projects under the Human-Induced Regeneration (HIR) and Native Forest from Managed Regrowth (NFMR) methods (the Guidelines). Published on 8 May 2019, the Guidelines provide additional clarity about the agency’s expectations on how project proponents should evidence (through field data) compliance with key elements of the HIR and NFMR method requirements.

In 2019-20, the agency will focus on ensuring project reports meet the requirements of the Guidelines.

In line with the 2018-19 compliance priorities the CER used high resolution imagery to assess 143 sequestration projects to ensure their claims for Australian carbon credit units (ACCU’s) were consistent with the requirements of the method.

Legal right was assessed for all claims for ACCUs in 2018-19. Legal right was assessed for 380 projects in total across the financial year.

Overall, contracted project proponents continued to meet contractual obligations with 87 per cent of contracted ACCUs delivered against schedules.

National Greenhouse and Energy Reporting (NGER) Scheme

We issued guidance to support more consistent and accurate emissions and energy data in the coal mining, power generation and transmission, and landfill sectors. Our desktop assessments and audits found that reporters were aware of the guidance and mostly complied with our expectations. We identified instances where reporters did not adhere to our regulatory position on requirements for reporting certain emissions and energy sources for these sectors.

As a consequence, 96 NGER reporters (11%) were required to resubmit their reports due to reporting errors and we used appropriate compliance actions to ensure that reporters provide accurate reports in the future.

We continued a program of work to strengthen the controls in our audit framework, including changes to legislation, guidance and improved education activities.

We conducted inspections of six auditors to check their performance which assists with protecting the integrity of reported data across our schemes. We accepted one deregistration of an auditor and 100 per cent of auditors complied with the new disclosure of fees requirements.

Safeguard mechanism

We engaged early with responsible emitters to ensure that they had sufficient information to make informed decisions about the best emissions management option available. We then worked with individual applicants to ensure that adequate information was provided to assist us in assessing the accuracy of claims for calculated baselines, emissions intensity variations and multi-year monitoring periods. By 1 March 2019, 100 per cent of responsible emitters had met their obligations under the safeguard mechanism.

Renewable Energy Target

Small-scale Renewable Energy Scheme (SRES)

With upfront benefits provided in the SRES via Small-scale Technology Certificates (STCs) representing the expected amount of electricity in megawatt hours that is to be generated or displaced by the system installed we continued to see unacceptably high-levels of wilful and reckless non-compliance.

To block some forms of non-compliance upfront we rolled out the SRES Solar Panel Validation initiative to ensure that only compliant solar panels were installed. We also continued to use Australian Energy Market Operator (AEMO) data to check claims for STCs and applied more rigorous manual checks where warranted.

During the year we initiated 32 new investigations from referrals, we referred one brief to the Commonwealth Director of Public Prosecutions and provided two referrals to State regulators and had two matters before the courts. One of these matters has subsequently resulted in a criminal conviction for fraud in the SRES.

Through our multifaceted approach to compliance we recovered STCs valued at over $770,0001, suspended 6 registered person account holders due to improper certificate creations, deregistration of companies by the Australian Securities and Investments Commission or companies being placed into liquidation and entered into 1 enforceable undertaking. We failed STCs on 7826 occasions, representing approximately 2 per cent of claims made. There are a variety of reasons why STCs are failed. Common reasons include previously created and registered information, a lack of compliance paperwork and incorrect details in claims made.

To improve compliance we introduced compulsory knowledge checks and self-assessments to assist new and existing agents understand their SRES obligations (the SRES Smart program). A total of 441 agents completed the program. Our existing and new activities have empowered agents to enhance their compliance practices and reduce their risk of STC failures.

Large-scale Renewable Energy Scheme

We continued to implement sophisticated analytics across claims for large-scale generation certificates (LGCs) to determine whether the generation was eligible for registration. We failed LGCs on 511 occasions, representing approximately 5 per cent of claims made. This has increased from the previous year following new requirements for nominated persons to self-assess their eligibility and enter their generation data into REC Registry.

We permanently suspended the accreditation of 11 renewable energy power stations for not producing electricity from an eligible energy source (nine power stations), and failing to submit electricity generation returns (two power stations). Suspended power stations are unable to claim LGCs for any generation during their suspension.

Renewable Energy Target (RET) Liability

We assessed and validated energy acquisition statements (EAS) related to the 2017 and 2018 assessment years. These activities resulted in 37 liable entities amending their EAS.

We issued proof of debt notices to 3 liable entities for unpaid shortfall charges and expect final settlement will occur in 2019-20.

As a result of the execution of a monitoring warrant issued under the Renewable Energy (Electricity) Act 2000, the entity involved had to pay increased shortfall charges for 2013, 2014, 2015 and 2016.

Footnotes

1 21,452 STCs surrendered at an average price of $36.20

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