All Emissions Reduction Fund projects must provide a forward abatement estimate (FAE) in tonnes of carbon dioxide equivalent (tCO2-e). The FAE is your best estimate of the number of Australian carbon credit units likely to be issued for your project for the total crediting period.
The purpose of the FAE is to allow the Clean Energy Regulator to assign an audit schedule for your project.
Your FAE is an estimate only and should be rounded to the nearest 50 000 tCO2-e over the crediting period for your project. This will be 25 years for savanna burning projects and 7 years for all other emissions avoidance projects. The crediting period will be 15 years for avoided deforestation projects and 25 years for all other sequestration projects. Note that the crediting period for a project may not be the same as the contract period.
The audit schedule will set out the number of known or 'scheduled' audits for a project. For more information on audit in the ERF refer to
documentasset:Guidance on Audits under ERF.
There is no one 'right' way to calculate your FAE. It is expected you will estimate the amount of abatement your project is likely to achieve as part of your normal business practice to help guide whether to undertake the project (i.e. investment decisions). Your figures used to make this type of business decision or to gain financing can be used as your FAE.
In order to make a reasonable estimate you should:
Some methods have tools available to calculate emissions achieved, such as the
solid waste calculator, or
FullCAM tool, which may be used to estimate your abatement.
For other methods there may not be any tool or calculator available. You may consider the use of a third party expert, such as an engineer, statistician or specialist consultant, to assist you in estimating how much abatement your project might produce.
If you are a transitioning Carbon Farming Initiative project, or have undertaken similar activities under other state or territory schemes you may use your historical data to predict the future performance of your project. This data should be considered in combination with the understood abatement curves to guide you to a reasonable estimate.
Variation between the FAE and actual carbon abatement achieved is expected.
In the event you underestimate your FAE, and would have otherwise been scheduled for more audits, trigger variance audits may be required. If you think your abatement may significantly vary from your FAE you should consider the possibility of one or more trigger audits being applied to your project and cost your compliance accordingly.
Overestimating your FAE may result in a reduction of the number of scheduled audits if your reports demonstrate a large overestimation over time.
The FAE will be used in conjunction with other information provided with the application guide the setting of the audit schedule. However, projects may also be subject to unscheduled or triggered audits in addition to the schedule audits. There are three triggers the Clean Energy Regulator may use to determine the audits:
If any of the above changes occur the Clean Energy Regulator may notify participants in writing specifying the reason for the additional audits.
For more information on what the audit schedule means for your audit requirement please make yourself familiar with the
documentasset:Guidance on Audits under ERF.
Jenny is running a Carbon Farming Initiative transition project, under a reforestation and afforestation method, and reported under the Carbon Farming Initiative for three years before the Emissions Reduction Fund started.
Jenny’s project produced 25 000 tCO2-e in its first year, 40 000 tCO2-e in the second year and 56 000 tCO2-e in the third year.
Jenny knows that generally abatement for sequestration projects builds for around seven years before peaking and then gradually declines out to 25 years. Her project is already at the third year.
Based on her first three years data and FullCAM modeling from the project site, Jenny could compare the difference in the first three years of FullCAM modeling and her reported abatement. This difference could then be used to extrapolate her abatement for the next 25 years, based on the abatement profile generated in FullCAM. These calculations mean Jenny has calculated her FAE as accurately as possible.
Joe is planning to run a project under the commercial buildings method, and he wants to upgrade 20 commercial buildings by an average of one NABERS star rating each.
Joe has identified a number of different activities that he’d like to undertake for his project – some in all buildings and some in only a portion of the buildings.
While the commercial buildings method provides calculations of abatement, given the complexity of the types of activities and range of activities he’s planning for his project, Joe finds a consultant who has undertaken similar projects in the NSW Energy Savings Scheme and who is also a NABERS accredited assessor to estimate his forward abatement estimate.
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