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Facilities method

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25 August 2017

Is the facilities method suitable for your business?​​

  • Does your facility report under the National Greenhouse and Energy Reporting (NGE​R) scheme?
  • Are you looking at conducting an activity at the facility to reduce greenhouse gas emissions that ​would not occur in the absence of an Emissions Reduction Fund project?
  • Will you have submitted NGER data for the facility for four consecutive NGER reporting years prior to the NGER reporting year in which you commence the project? 
  • Is your facility one that is not a transport facility or facility aggregate?
  • If you have answered yes to these questions the facilities method may be suitable for your business. 
​The facilities method provides a high-level, activity-neutral framework to calculate abatement from facilities that report under the National Greenhouse and Energy Reporting (NGER) scheme. This method can only be used by facilities that have submitted NGER reports.

Please note the facilities method was amended on 22 March 2016. 

The Variation makes the following changes to the Facilities determination:

  1. Amends the baseline period so that it covers the four years prior to application and any subsequent years before project commencement. This ensures that the baseline data is more robust.
  2. Amends the application requirements to give proponents sufficient time to submit their baseline data.
  3. Clarifies the treatment of projects undertaken at emissions-intensive electricity generators. Emissions-intensive electricity generators may now undertake minor maintenance activities without affecting abatement calculations.
  4. Clarifies that production variables need to have been used or produced at a facility during the whole baseline period.
  5. Clarifies the process for combining multiple output variables into a single production variable.
  6. Amends the definitions of major changes to better reflect the original policy intent regarding facility eligibility.
  7. Clarifies that facilities cannot earn credits during the baseline period, and cannot earn credits before they commence abatement activities at the facility.
  8. Makes minor changes to correct minor technical errors in the method

Please ensure that you are referring to the latest version of the method. The Clean Energy Regulator will declare projects based on the legislation that is in force on the date of declaration.

Projects established using the facilities method may include one or more of the following activities:
  • replacing or modifying boilers
  • improving control systems and processes
  • waste heat capture and re-use
  • upgrading turbines
  • improving the efficiency of crushing or grinding equipment
  • replacing low efficiency motors, fans and pumps with high efficiency versions
  • installing variable speed drives
  • improving compressed air processes
  • reducing industrial process emissions
  • behavioural changes
  • installing low emissions-intensity electricity generation equipment, and
  • fuel switching.

 

To register a project using the facilities method you must include a statement of activity intent. The statement of activity intent provides information that project abatement activities, identified at the time that the statement is made, would not have been implemented at the facility if it was not being undertaken as an Emissions Reduction Fund project. A statement should be provided for each facility covered by the project.

The statement can be signed by the Chief Financial Officer or another officer of the person who has the operational control over the facility. If the statement is signed by an officer other than the Chief Financial Officer at the time the project application is received, emissions reductions for the facility will be capped at 100,000 tonnes of carbon dioxide equivalent (tCO2-e) for the year.

A statement of activity intent signed by the Chief Financial Officer can also be provided after project registration. This would occur where an officer other than the Chief Financial Officer signed the statement but the facility would like to have the abatement limit of 100,000 tCO2-e removed.​

Method variations

Section 114 of the Carbon Credits (Carbon Farming Ini​tiative) 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 obligations​

​Facilities method quick reference guide​

​Contents

1. Crediting period

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​​2. Eligibility requirements

 

General eligibility requirements of the Act which include:

The method requires that facilities included in a project must:

  • have submitted or will be able to submit NGER data to the Clean Energy Regulator for the baseline period. The baseline period includes the four consecutive NGER reporting years prior to the NGER reporting year in which the project is declared an eligible offsets project and any additional NGER reporting years that pass before abatement activity starts
  • have access to the NGER facility level emissions and production variable data for each NGER reporting year in the baseline period 
  • have at least one production variable in both the baseline and crediting period 
  • provide a statement of activity intent 
  • be identified in the application.

In addition facilities included in the project must not:

  • have undergone any major changes during the project’s baseline period 

Relevant section of the Act: Act – Part 3

Relevant section of the Method: Method - Part 3​


 

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3. Exclusions

  • Applicants should be aware of types of facilities or activities that are excluded by this method. They include:
  • Transport facilities
  • Facilities that are part of a facility aggregate during the baseline or crediting period
  • Facilities that use ineligible biomass for energy, or import heating, cooling or off-grid electricity generated by ineligible biomass 
  • Ineligible abatement activities as defined under section 8 of the method.
  • Activities that change the quantity of a production variable produced or processed by the facility and have a material effect on project abatement.
  • Facilities that are currently part of another project registered under the Facilities Method.

Relevant sections of the Method: Method – Part 3, and Part 1 section 8​

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​4. How is abatement ca​lculated?

The method credits NGER facilities for improvements in the level of emissions per unit of output (also referred to as the reduction in emissions intensity of one or more production variables). 

In broad terms, a facility receives credits equal to its reduction in emissions intensity (compared to its baseline level), multiplied by its total output in the crediting period. This crediting approach assumes that the relationship between emissions and production is linear.

Importantly, the method includes several provisions which could result in zero abatement for one or several reporting years. These include:

  • Failure to meet monitoring requirements (Section 81(2))
  • Significant expansion or changes to output (Section 27(4))
  • Where an input or intermediate product has been chosen as a production variable and the proportion requirements of section 27(3) of the method have not been met. ​

See how abatement is calculated under the facilities method for a general overview of the equations used.

Relevant section of the Method: Method - Par​t 4 Section 81(2); Section 27(4); Section 27(3)

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​5. ​Monitoring requirements

In addition to the general monitoring requirements of the Act, projects must meet specific monitoring requirements in Part 5 of the method.

  • Greenhouse gas emissions, energy production and energy consumption (section 76).
  • Implemented abatement activities (section 77).
  • Changes relating to the operation of a facility (section 78).
  • Production variables (section 79).
  • Exported electricity (section 80).

Section 81 outlines the consequences for not meeting the monitoring requirements, which includes zero abatement for one or more reporting years. 

Relevant section of the Act: Act - Part 17

Relevant section of the Method: Method -Part 5 Division ​4​ and Section 81

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​6. Record keeping requirements

In addition to the general record keeping requirements of the Act, Section 74 sets out specific record keeping requirements including:

  • Removal and disposal of equipment or other components.

Relevant section of the Act: Act – Part 17

Relevant rule: Rule – Part 17

Relevant section of the Method: Method -Part 5 and Division 3

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7. Reporting requirements

In addition to the general reporting and notification requirements of the Act , Part 6 of the Rule and Section 65 of the method set out specific reporting requirements including:

  • Information about new production variables (Section 66)
  • Information about biomass used as an energy source and imported electricity, heat or cooling from biomass (Section 67)
  • Information about greenhouse gas emissions, energy production and energy consumption (Section 68)
  • Information about facilities (Section 69)
  • Any further information required by guidelines published under Section 70 of the Rule.

Relevant section of the Act: Act – Part 6

Relevant Rule: Rule Part 6

Relevant section of the Method: Method Part 5 and Division 1​

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8. Audit

All Emissions Reduction Fund projects receive an audit schedule and must provide audit reports according to this schedule. A minimum of three audits will be scheduled and additional audits may be triggered. For information on audit requirements see Part 19 of the Act, Part 6 of the Rule and information on Audits on our website.

Relevant section of the Act: Act – Part 19

Relevant Rule: Rule Part 6​

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9. Specialist skills recommended

A registered project must comply with the rules for calculating the t CO2-e net abatement am​ount for a project for a reporting period and the monitoring, record-keeping and reporting requirements of the method to receive ACCUs. Specialist skills may be needed to meet these requirements.

Examples of recommended specialist skills include:

  • Registered professional engineer (PE)
  • Certified Energy Manager (CEM) 
  • Certified Measurement and Verification Professional (CMVP)
  • Verified experience in energy or facility management, or measurement and verification 

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