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Industrial electricity and fuel efficiency

23 September 2016
​​ERF

Is the industrial electricity and fuel efficiency method suitable for your business?

  • Are you looking to undertake activities to reduce emissions from energy consuming equipment at one or more of your industrial or commercial sites?

  • Do you (or your staff) have an understanding of the detailed statistical, measurement and verification techniques required by this method, or are you willing to hire these skills?

If you have answered yes to all of these questions, the industrial electricity and fuel efficiency method may be suitable for your business. Read on for eligibility and compliance details.

The industrial electricity and fuel efficiency method sets out the rules for projects that reduce emissions by improving electricity and fuel use in many different sectors. The method is activity neutral and provides flexibility for participants to determine what activities are most appropriate for their project. Some activities that could be undertaken to reduce emissions include:

  • replacement or modification of boilers or heating, ventilation and air conditioning systems
  • improving control systems and processes
  • waste heat capture and re-use
  • improving the efficiency of crushing or grinding equipment on mining sites
  • replacing low efficiency motors, fans and pumps with high efficiency versions
  • installing variable speed drives (VSDs)
  • improving compressed air processes, and
  • fuel switching.

Method variations

Section 114 of the Carbon Credits (Carbon F​arming Initiative) Act 2011 (the Act)​ allows for methods to be revised and varied. This is to ensure methods continue to operate as originally intended. Variations to methods are developed and drafted by the Department of the Environment and Energy. Information on draft methods and method variations is available on the Department of the Environment and Energy’s website.

The Clean Energy Regulator recommends making yourself familiar with proposed method variations relevant to your project should they arise, and how any changes between the original method and the varied method may affect your project plan.

Legislative requirements

You must read and understand the method and other legislative requirements to conduct an industrial electricity and fuel efficiency project and earn Australian carbon credit units (ACCUs). This includes:

Tools and Resources

Quick reference guide to the IEFE method

This quick reference guide provides basic information about eligibility criteria and obligations that must be met to earn ACCUs from an industrial electricity and fuel efficiency project. It includes specific links to the legislation described above but should not be viewed as an alternative to reading the full legislative requirements. Additional information can also be found in the full method guide linked above.

Quick reference guide contents:

Crediting period

Seven years – The crediting period is the period of time a project can apply to claim Australian carbon credit units (ACCUs). The crediting period starts from the project start date, which is nominated by the project applicant.

Relevant section of the Act:

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Eligibility Requirements

There are general eligibility requirements in the Act, which include:

The method also requires that you have historical energy consumption data available, or that energy consumption is able to be measured before you commence the project.

Section 13 of the method also requires that specific information is included in a project application before the project can be considered eligible. You should ensure you refer to this section and provide all the required information in your application.

 

Relevant section of the Act:

Relevant section of the Method:

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Project Activities

A project involves activities that can improve the efficiency of installed energy consuming equipment, and thereby reduce emissions from that equipment. The method is technology-neutral, meaning that it does not require that a particular technology be used when carrying out activities. Examples of acceptable activities include:

  • modifying, removing or replacing existing energy-consuming equipment
  • modifying, removing, installing or replacing another piece of equipment that affects emissions from the energy-consuming equipment, even if it doesn't directly consume energy itself. For example, you could install activity sensors on a lighting system.
  • changing the way the equipment is controlled or operated
  • changing the fuel sources or mix of fuel sources used by the equipment, or
  • installing electricity-producing equipment such as cogeneration or tri-generation plants, where the produced electricity will be used by existing energy-consuming equipment on site to offset grid electricity.

 

Relevant section of the Method:

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Project implementations

A project is made up of one or more 'implementations'. An implementation is made up of one or more project activities. Due to the way baseline emissions are modelled, the number and types of activities that you can include in an implementation may be determined by whether their emissions can be jointly modelled.

For each implementation, there are three classes of equipment for which energy consumption is measured:

  • implementation equipment
    • the main equipment that is the subject of the project activities
    • e.g. a motor, boiler or compressed air system
  • interactive equipment
    • associated equipment whose energy use is affected by the project activities, and this dependence is as a result of transfer of heat, steam, cooling or useful physical work between the interactive and implementation equipment
    • e.g. a cooling fan units that can operate at a lower level after a heat recovery system is installed
  • co-metered equipment
    • equipment that is not affected by the activities, but whose energy use is measured together with the above types of equipment
    • e.g. a pump or other device that is measured by the same electricity sub-meter used to monitor the implementation equipment.

An implementation is said to be 'complete' when the implementation equipment has begun operating under normal conditions.

Relevant section of the Method:

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Exclusions

Excluded activities include:

  • electricity-generating equipment at a location (i.e. connection) that can export electricity to an electricity grid, and where the total installed capacity of the equipment is 30 megawatts or more and the location has the capacity to export to the electricity grid (see subsection 11(3)(a) of the method for more details)
  • vehicles or aircraft as defined by the transport methods
  • those that substitute heat, steam, cooling or other useful physical work from another site for that produced by the implementation, interactive or co-metered equipment
  • the generation of abatement through flaring or fuel incineration that dissipates heat into the atmosphere without producing heat for use
  • the combustion of biomass, or the use of biomass-derived energy, where the biomass is not an eligible renewable energy source under the RET scheme, or
  • those that are future activities not declared in the funding application.

 

In addition, green-fields projects that install new energy-consuming equipment 'from scratch' are also ineligible, unless they are replacing existing equipment or offsetting grid-supplied electricity use by existing equipment. This is because existing equipment is needed to calculate a baseline emissions model.

Relevant section of the Method:

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How is abatement calculated

Abatement is determined by comparing baseline emissions with project (operating) emissions. Baseline emissions are those that would have occurred if there had been no equipment upgrade or replacement, while operating emissions are those produced by the upgraded or replaced equipment.

The baseline emissions are estimated using a statistical technique called regression analysis which models energy use prior to the project and uses this model to calculate the baseline emissions after the implementation has been completed. This means the baseline emission are adjusted to reflect the production conditions that are experienced in the reporting period. A thorough understanding of the requirements of the method is essential in developing baseline emissions models and avoiding zero abatement outcomes.

How operating emissions are calculated will depend on which of the sub-methods you are using:

  • Under sub-method 1, you directly measure actual fuel or electricity use for each implementation in each reporting period.
  • Under sub-method 2, you develop an operating emissions model (similar to the baseline emissions model) for each implementation, for a period within the crediting period and use this model to calculate the energy use for the full crediting period. This sub-method may be appropriate where it is impractical or prohibitively expensive to install permanent sub-metering to measure reporting period fuel or electricity use over the entire crediting period.

You will need to determine which sub-method you will use when planning your project and you can only switch between sub-methods once during the project. More detailed information about the steps involved in calculating operating emissions using both sub-methods can be found in the Using the industrial electricity and fuel efficiency method guide.

The abatement from each implementation is then calculated as the difference between baseline and operating emissions levels. At the end of each reporting period, the abatement for each implementation is added together to determine the overall level of abatement from the project.

Relevant section of the Method:

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Reporting Requirements

In addition to the reporting requirements of the Act and the Rule, the method also sets out a number of method-specific requirements for offset reports.

For each implementation completed during the reporting period, you must provide:

  • details of the completion of the implementation
  • the interactive effects for each implementation
  • fuel and electricity consumption excluded under Section 32 of the method, including evidence showing how the exclusion met the requirements of that section.

     

    Note that the above information is only required if it is different from the information already provided in either the project application, or a previous offsets report.

    Abatement reporting must also be consistent. If you start including an implementation in the abatement calculations for the project, then it must be included for the duration of the project. You cannot remove implementations from the abatement calculations in reporting periods where they return negative abatement, and then reinstall those implementations in reporting periods where they return positive abatement.

 

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

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Monitoring Requirements

In addition to the general monitoring requirements of the Act, projects must meet specific monitoring requirements in the method.

You must monitor variables that affect the emissions associated with the equipment to enable the development of a baseline emissions model (and for sub-method 2, an operating emissions model). The variables that you choose must be monitored for the entire duration of the project. Section 59 in the method outlines the general monitoring requirements of a project, while Section 60 and Section 61 deal with sub-methods 1 and 2, respectively.

Relevant section of the Act:

Relevant section of the Method:

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Record-keeping requirements

In addition to the record-keeping requirements of the Act and the Rule, projects must also meet the specific record-keeping requirements in the method. Section 57 in the method explains that this includes records relating to the:

  • technical specifications of implementation equipment
  • completion of the implementation, and
  • reuse or disposal records of any implementation equipment.

In addition, you must keep records identifying the location of:

  • implementation, interactive and co-metered equipment
  • equipment that measures the energy consumption of that equipment, and
  • the energy supply for that consumption.

 

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

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Audits

All projects receive an audit schedule when the project is declared and must provide audit reports according to this schedule. A minimum of three audits will be scheduled and additional audits may be triggered. For more information on the audit requirements, see the Act, the Rule and the audit information on our website.

Relevant section of the Act:

Relevant section of the Rule:

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Specialist skills

Specialist skills will be required to carry out the project with the method. The emissions models must be developed using regression analysis and need to meet strict statistical requirements. A comprehensive understanding of statistics and measurement and verification techniques is therefore required. The Clean Energy Regulator recommends that you seek the services of an accredited engineer or statistician, or certified International Performance Measurement and Verification Protocol (IPMVP) professional.

Relevant section of the Rule:

Relevant section of the Explanatory Statement:

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