The past year was coloured by intense debate about Australia's climate change policies and punctuated by significant changes to the laws we administer.
These laws determine our role in regulating incentives for businesses and the community to reduce greenhouse gas emissions and increase investment in renewable energy.
While the policy debate continues to play out around us, the Clean Energy Regulator remains focused on the job in hand. We ensure our clients understand the opportunities available to them and their obligations according to the legislation of the day. We provide objective information on the performance of our schemes based on the data we are empowered to collect.
Against this backdrop, in the 2014–15 year, we focused on building capability to carry out new functions and maintain momentum in our business improvement activities.
Significant developments occurred during each quarter of the reporting year.
The financial year opened with the repeal of the carbon pricing mechanism on 17 July 2014. Our attention was on achieving an orderly closure with continued high standards of client communications and compliance.
In August, the Australian Government's Expert Panel released its report on the review of the Renewable Energy Target. The panel's recommendations prompted debate about the rationale for changes to the target for the remainder of the year. Installations at the small-scale continued at a steady pace, while the impact of investor uncertainty began to be seen in reduced growth in large-scale generation capacity.
Moving into the second quarter, we laid the necessary groundwork for the new elements of the Emissions Reduction Fund, in consultation with client groups and in close collaboration with the Department of the Environment. The enabling legislation came into effect on 13 December 2014. Our extensive preparations meant we were immediately ready to open our doors and receive applications under the new scheme.
During this quarter we also took a more proactive and risk-based approach to client engagement leading up to the National Greenhouse and Energy Reporting deadline of 31 October 2014. This resulted in the highest ever rate of on-time submissions.
The pace of change continued into the third quarter. We worked systematically with liable entities to true-up their final carbon price entitlements and obligations by the due date of 2 February 2015. We also responded to an unprecedented volume of applications for issuance of Australian carbon credit units (ACCUs) to carbon farming projects. Most of these units were immediately on-sold, and almost half of the liable entities used ACCUs to meet part of their final carbon price obligation.
Early in the final quarter of the financial year, we held the first Emissions Reduction Fund auction. On 23 April 2015 we announced that we had awarded 107 contracts for more than 47 million tonnes of carbon abatement.
As the reporting year drew to a close, in late June 2015 the Australian Parliament passed legislation to change the 2020 Renewable Energy Target from 41 000 gigawatt hours to 33 000 gigawatt hours, to provide 100 per cent exemption from Renewable Energy Target liability to emissions-intensive trade-exposed industries, and to reintroduce native wood waste as an eligible source.
Throughout the year, we kept our clients informed and updated, to provide certainty as early possible about how we would implement changes to our schemes.
We contacted our clients and stakeholders through a range of channels to provide frequent updates. We continued to publish comprehensive information on our website, which we redeveloped this year to enhance the user experience.
We also streamlined processes and systems in line with the Australian Government's deregulation agenda to reduce red tape and improve operating efficiency. To this end, we launched a more user-friendly, responsive and efficient REC Registry (the online system for Renewable Energy Target transactions), continued to refine the Emissions and Energy Reporting System and upgraded the Client Portal. We also streamlined applications and reduced processing times for project registration and for ACCUs under the Emissions Reduction Fund.
While external drivers dominated our day-to-day work, we also took the time during the year to reflect on our purpose, objectives and capabilities, as a prelude to preparing our second corporate plan.
The new plan, covering the period 2015–19, reaffirms both our purpose—accelerating carbon abatement for Australia—and our objectives to deliver efficient and effective administration, secure and enduring infrastructure; engaged and active clients, and a trusted, relevant, expert institution.
The plan focuses on how we will continue to develop our agency's capabilities—the skills, systems and processes we need to be efficient, effective and responsive in a fast-moving operating environment.
We also developed our agency risk appetite statement this year to help us assess and manage our risks and to define how we allocate resources and responsibilities to controls and treatments. This is particularly relevant because our risk environment changed through the year, as we moved from the compliance focus of the carbon pricing mechanism to the more participatory focus of the Emissions Reduction Fund.
I would like to thank all staff for their professionalism and adaptability through this period of change. They have embraced the challenges and kept true to our objectives with an unwavering commitment to client service. My thanks also to the Members of the Regulator who contributed valuable strategic insights throughout the year. Special mention must go to Dr Michael Sargent, who resigned from his position as Regulator Member in early 2015. Dr Sargent's industry knowledge, wise advice and depth of experience were pivotal in guiding strategy in the early years of the Clean Energy Regulator. We wish him all the best.
Looking ahead to the next 12 months, we will focus on consolidating our organisation to bed down the new and amended schemes and to build our whole-of-agency regulatory capabilities. This will make it easier for us to manage the peaks and troughs of activity across our different schemes and to continue to streamline our systems and processes.
We will make the required adjustments to the administration of the Renewable Energy Target and introduce the new annual statement to report on progress towards the target.
We will continue to invest in the National Greenhouse and Energy Reporting Scheme to improve usability, incorporate changes in the regulations and maintain high rates of compliance. Over time, this scheme has proved its worth in many ways, providing essential data and reports that are the backbone of our other schemes and initiatives. NGER data will provide the foundation for the Emissions Reduction Fund safeguard mechanism, the processes for which will be developed in time to apply from 1 July 2016. The safeguard will require the largest emitters to keep their emissions below a baseline—set by the Regulator based on historic data—or surrender credits to offset emissions over the baseline. This is designed to ensure emissions do not increase above historic levels.
The success of the first Emissions Reduction Fund auction demonstrated the value of experience built up under the Carbon Farming Initiative, with a large number of projects now under way and more coming on board. Our workload will continue to grow as new project methods are developed and generate project registrations. The next auction, which is now in our sights, will add to the portfolio of carbon abatement contracts to be managed. As we gain in experience we will find opportunities to further streamline services and manage risk more efficiently.
We had a full 12 months, and the next year looks equally busy. I am confident that we are in a strong position to maintain the momentum in our work accelerating carbon abatement for Australia.
Chair, Clean Energy Regulator
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.