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Land and sea transport method

06 December 2016
CFI ERF

Is the land and sea transport method suitable for your business?

  • Are you looking to undertake activities to reduce emissions from your transport activities?

  • Do you have at least three years of annual fuel use and service data for the relevant vehicles or vessels or groups of vehicles or vessels?*

  • Is the fuel used in your vehicles or vessels ‘taxable fuel’ as per the meaning provided for by the Fuel Tax Act 2006?

If you have answered yes to all of these questions, the land and sea transport method may be suitable for your business. Read on for eligibility and compliance details.

*You may not need historical fuel use data if your project relates to light vehicles (e.g. cars and utes) and it is not possible for you to collect this data (e.g. hire car companies).

The land and sea transport method sets out the rules for projects that reduce emissions by improving fuel efficiency and changing energy sources for vehicles and vessels used domestically. The method is a piece of legislation that along with other instruments determine Emissions Reduction Fund requirements.

The method is activity neutral and provides flexibility for participants to determine what activities are most appropriate for their project. Activities that could be undertaken to reduce emissions include:

  • replacing vehicles
  • modifying existing vehicles or vessels e.g. reducing weight or improving aerodynamics / reduce drag
  • changing energy sources (fuel switching), or
  • changing operational practices.

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 requirements

You must read and understand the method and other legislative requirements to conduct a land and sea transport project and earn Australian Carbon Credit Units (ACCUs). This includes:

Tools and Resources

Department of Environment information on the land and sea transpor​t method (Includes information about the development of the method)

A guide to using the land and sea transport method

Webinar on Land and Sea transport

documentasset:Project offset report Bulk upload spreadsheet for transport methods

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Quick reference guide to the land and sea transport method

The quick reference guide provides basic information about eligibility criteria and obligations that must be met to earn ACCUs from a land and sea transport project. It includes specific links to the relevant legislation 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.

Relevant section of the Act:

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Eligibility Requirements

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

In most situations, Section 10 in the method also requires that you have three years of relevant historical data (eg amount of fuel consumed, distances travelled and tonnage) to ensure that baseline data used for calculating abatement reflects the recent, actual performance of the vehicles. The exception to this is a project, conducted by a rental car or fleet lease company, which only involves the replacement of a light vehicle fleet and where it is not possible to monitor fuel use data due to a genuine physical or practical limitation of the proponent’s business model. In this case the baseline may be set using the Australian Government’s Green Vehicle Guide.

Sections 12 and 15 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.

Relevant section of the Act:

Relevant section of the Method:

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Project Activities

A project involves implementing emissions reduction activities on at least one vehicle or group of vehicles. The activities must fall into at least one of the following categories:

  • replacing vehicles
  • modifying existing vehicles
  • changing the energy source or the mix of energy sources used by vehicles, or
  • improving operational practices in relation to vehicles.

In addition, a project must be classified as either a ‘group of vehicles’ project or an ‘aggregated vehicles’ project. Each type of project is suitable to different transport businesses and has different rules relating to what types of vehicles can be included and how abatement is calculated.

A group of vehicles project is more likely to suit businesses that do not collect data at the level of individual vehicles, such as public or hire fleets and logistics companies. These projects:

  • can include light vehicles, trucks, buses, trains and marine vessels
  • cannot include mobile equipment

Mobile equipment is off-road self-propelled machinery not covered by another vehicle category. Some examples are mining and agricultural vehicles.

In a group of vehicles project, the emissions reduction activities must be applied to all vehicles in a sub-group. A sub-group contains all vehicles of the same vehicle category within a business unit or transport operation.

An aggregated individual vehicles project is more likely to suit businesses that have vehicle-specific data, such as railways, shipping and some trucking operations. These projects:

  • include trucks, buses, trains, marine vessels and mobile equipment, but
  • cannot include light vehicles.

In an aggregated individual vehicles project, emissions reduction activities do not necessarily need to be applied all the vehicles within a vehicle category. This means that you can choose which vehicles within each category and business units participate in the project, however, the duty cycle of the vehicle must remain substantially the same.

Transport mode switching refers to changing between vehicle categories (eg between rigid trucks and rail freight). In the context of the current Emissions Reduction Fund land and sea transport method, a mode shift project is possible only where a proponent conducts operations across both vehicle categories (providing that the duty cycle of the replacement vehicle is the same as the replaced vehicle). Any abatement created is not based on the difference in emissions intensity between categories of vehicles. Rather, abatement is created by improvements in emissions intensity within the categories of vehicles involved in the project. Under the current method, mode switching projects are unlikely to result in the creation of abatement.

Relevant section of the Method:

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Exclusions

A project only covers vehicles and vessels using ‘taxable fuel’. This has the effect of excluding international usage, such as export shipping. Air transport is also excluded, because it is covered under a separate aviation method.

In addition, the activities must specifically aim to reduce the emissions intensity of the chosen vehicles, and cannot aim to reduce emissions from vehicles generally. For example, an activity cannot be designing a mobile phone app that allows users to run their vehicles more efficiently.

The method does not allow projects based on switching the vehicle category (or changing transport mode) unless the switch complies with the requirements of the aggregated individual vehicles activity (see above). The project must also use fuels which have emissions factors that can be calculated in accordance with the NGER (Measurement) Determination.

Relevant section of the Method:

Relevant section of the NGER (Measurement) Determination:

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How is abatement calculated

Abatement is calculated by comparing the emissions in a project’s reporting period with the emissions that would have occurred in the same period had the project not happened (the latter is called your baseline emissions).

To calculate your baseline emissions, you first need to determine the emissions intensity for each sub-group of vehicles or individual vehicle (depending on your type of project) in the three years prior to the project. Emissions intensity is the emissions produced per ‘service unit’. A service unit is a unit of measure for the services performed by vehicles and the allowable service units are set out in Schedule 1 of the method and depend on the vehicle category and your type of project. Examples of service units include ‘kilometres (km)’ ‘tonne kilometres (tkm)’ and ‘passenger kilometres (pkm)’.

The exception to this process is light vehicles, for which fuel data cannot be monitored due to refuelling being conducted by a third party, as is the case with most hire car and fleet lease companies. In these cases, Section 28 in the method provides that emissions intensity can be set using the Australian Government’s Green Vehicle Guide.

Please see the full guide to the land and sea transport method for more detail on how to calculate emissions, emissions intensity and abatement.

Relevant section of the Method:

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Reporting Requirements

In addition to the reporting requirements of the Act and the Rule, Section 28 of the method sets out the information that must be provided if the Green Vehicle Guide is used for working out the amount of abatement. This includes:

  • vehicle make, model and fuel type
  • details of replacement vehicles, if any.

You are required to provide project reports in a form approved by the Clean Energy Regulator.

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 the specific monitoring requirements set out in the method. This includes the service unit and energy consumption data that need to be collected and monitored for each sub-group (for a group of vehicles project) or individual vehicle (for an aggregated individual vehicles project).

The method includes several options for collecting this data, including approaches that are used in various transportation industries to collect data for other purposes. If you are unable to monitor any of the specified parameters during a reporting period, Section 34 explains how you must estimate their value.

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, Section 31 of the method sets out additional record-keeping requirements. This includes:

  • descriptions of vehicles and any project activities performed on the vehicles
  • changes to operational practices
  • composition of and changes to groups and sub-groups (for a group of vehicles project)
  • replacement of vehicles (for an aggregated individual vehicles project), and
  • whether or not any vehicles or equipment used to help power or operate project vehicles were installed or operating as part of the project.

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. The costs of audits are met by the project participant.

Relevant section of the Act:

Relevant section of the Rule:

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Specialist skills

Specialist skills may be needed to carry out the project with the method. Examples of specialist skills include:

  • registered professional engineer
  • certified energy manager, and
  • certified measurement and verification professional.

 

Relevant section of the Rule:

Relevant section of the Method:

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