An Obligation Transfer Number (OTN) is used to transfer carbon price liability for the potential greenhouse gas emissions embodied (embodied emissions) in an amount of natural gas, liquefied petroleum gas (LPG) or liquefied natural gas (LNG) supplied from a gaseous fuel supplier to the recipient of that gas.
From 1 July 2013 an OTN can be quoted for supplies of LPG or LNG under the carbon pricing mechanism, in addition to natural gas supply. A new and expanded OTN application form is now available to accommodate the expansion of the OTN mechanism to include LPG and LNG for non-transport use. Guidance on completing the form will be available soon.
If you supply natural gas, LPG or LNG to another person (the recipient), you are liable for the potential greenhouse gas emissions embodied in the gas, except where liability is transferred from you to the recipient through quotation of an OTN. These emissions are commonly referred to as "embodied emissions".
An OTN is used to keep track of liability so that liability is not imposed twice on the same amount of natural gas, LPG or LNG. For example, it ensures that emissions from the use of natural gas, LPG or LNG that count towards a large gas consuming facility's direct emissions liability or a large LPG or LNG consuming facility's emissions liability do not also count towards an OTN holder's embodied emissions liability in relation to that facility.
If you are responsible for a large gas consuming facility or a large LPG or LNG consuming facility, you are liable as a direct emitter for the emissions resulting from the combustion of the natural gas, LPG or LNG supplied to the facility. A facility becomes a 'large gas consuming facility' the second year after it has emissions from natural gas combustion of 25 000 tonnes or more CO2-e in any financial year after 1 July 2010. A facility becomes a 'large LPG or LNG consuming facility' the second year after it has emissions from the combustion of both LPG or LNG of 25 000 tonnes or more CO2-e in any financial year after 1 July 2011.
It is mandatory for the recipient of the natural gas, LPG or LNG supplied for use at a large gas consuming facility or an LPG or LNG consuming facility to quote an OTN and mandatory for suppliers of natural gas, LPG or LNG to accept the quotation. Note that the recipient of the natural gas, LPG or LNG may not necessarily be the operator of the large natural gas/LPG/LNG consuming facility.
Entities are also permitted to quote an OTN when they:
- use natural gas in the manufacture of CNG, LNG or LPG; or
- use natural gas used wholly or partly as a feedstock; or
- use some or all of an amount of LPG or LNG as a feedstock; or
- use some or all of an amount of LPG or LNG in such a way as to not emit any greenhouse gases.
Entities may also apply to be an approved person or approved recipient to quote an OTN on the basis that it is likely that covered emissions from the operation of an eligible facility of the applicant in an eligible financial year attributable to combustion of natural gas or LPG or LNG will be at least 25,000 tonnes CO2-e.
If you do apply for an OTN, you are required to give your LPG or LNG or natural gas supplier written notice of your intention to quote an OTN as required under the Clean Energy Act 2011. This must happen at least 28 days (or a lesser number of days if the gas recipient and the natural gas supplier agree) before the first occasion the OTN is quoted. The written notice:
- must be from the natural gas, LPG or LNG recipient to the supplier; and
- does not need to include the OTN number, and can therefore be done before the OTN has been issued by the Clean Energy Regulator; and
- must include the recipient's intention to quote their OTN under the relevant section of the Clean Energy Act 2011 as follows:
- Section 55B for natural gas use in a large gas consuming facility; or
- Section 56 for natural gas use in a large gas consuming facility as an approved person; or
- Section 57 for natural gas use as a feedstock; or
- Section 58 for natural gas use in manufacturing CNG, LNG or LPG; or
- Section 58AA for LPG or LNG use in a large LPG or LNG consuming facility; or
- Section 58AB for LPG or LNG use as a feedstock; or
- Section 58AB for LPG or LNG use as an approved recipient; or
- Section 58AB for LPG or LNG use in such a way as to not emit any greenhouse gases.
Applying for an Obligation Transfer Number
To apply to be issued with an OTN, see our forms and calculators page for the relevant application form.
Applications for mandatory or permissible quotation of an OTN for the 2013-2014 financial year must be made as soon as possible to enable the Clean Energy Regulator to make a decision before 1 July 2013.
The OTN Register page lists:
- current OTN holders, and
- Gaseous fuel suppliers that have requested to be entered on the list of gaseous fuel suppliers.
A list of cancelled and surrendered OTNs is also available.
Further information can also be found by viewing our Frequently Asked Questions or contacting the Clean Energy Regulator by phone on 1300 553 542 or email firstname.lastname@example.org. Further contact information is available on the contact us page.