Who is liable for natural gas supplies?
- If natural gas is supplied to an end user, the supplier is liable for the potential greenhouse gas emissions embodied in the natural gas, except where liability is transferred from the supplier to the end user through a mechanism called an obligation transfer number (OTN).
- Entities responsible for 'large gas consuming facilities' that have applied for and received an OTN are liable as direct emitters for the natural gas supplied to them. It is mandatory for these companies to quote an OTN and mandatory for suppliers to accept the quotation. A facility becomes a 'large gas consuming facility' the second year after the facility has emissions from natural gas combustion of 25 000 tonnes or more CO2-e (in any financial year after 1 July 2010).
- Entities that use natural gas as a feedstock or in the manufacture of compressed natural gas, liquefied natural gas or liquefied petroleum gas may quote their OTN when supplied with gas for this use. In these cases, it is also mandatory for suppliers to accept the quotation. OTN holders are not liable for the potential emissions embodied in the natural gas in these circumstances as these uses do not result in the release of emissions into the atmosphere or are covered by a carbon price.
An OTN can be used in some other circumstances to take on the liability for the potential greenhouse gas emissions embodied in the natural gas. In these cases it is voluntary to both quote an OTN and for the natural gas supplier to accept those quotations.
The guideline Reporting natural gas liability: Interim Emissions Number reporting is available for natural gas suppliers who need to report to the Clean Energy Regulator.