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Estimating abatement quantity

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26 April 2018

Forward abatement estimate

All Emissions Reduction Fund projects must provide a forward abatement estimate (FAE) in tonnes of carbon dioxide equivalent (tCO2-e) at project registration. The FAE is your best estim​ate of the number of Kyoto Australian carbon credit units (ACCUs) likely to be issued for your project for the total crediting period.

Indicative agreed quantity

The indicative agreed quantity (IAQ) is provided during the auction qualification process and is the number of Kyoto ACCUs that you can deliver under a carbon abatement contract. The Clean Energy Regulator uses the IAQ to assess if the level of abatement is reasonable for your project(s).

For larger projects (with an IAQ 1,000,000 Kyoto ACCUs or more) you should consider contacting the Clean Energy Regulator to discuss your project and the types of evidence that will be required in advance of the auction qualification deadline.

The IAQ is indicative only and can be revised at auction registration when you provide the agreed quantity. However, as the timeframes for assessment of the agreed quantity are shorter than for the IAQ, it is recommended that you avoid increasing the agreed quantity where possible.

The auction guidelines provide further information that may help you determine the minimum IAQ or agreed quantity for each contract, minimum annual delivery amounts, or specify minimums for immediate delivery contracts.

Agreed quantity

The agreed quantity (AQ) is the quantity of Kyoto ACCUs to be delivered over the duration of the contract and is provided to the Clean Energy Regulator at auction registration. If you are successful at auction you will be required to deliver the AQ over the duration of the contract.

The AQ should be calculated when you are developing your delivery schedule as part of your business planning. It is important to ensure that the abatement amount can be generated, audited, reported, issued and delivered to the Clean Energy Regulator within the delivery term of the contract.

When is additional information required?

To ensure that you have a strong basis for assessing the quantity of abatement your project will deliver, the Clean Energy Regulator will require you to provide evidence to support your IAQ and AQ. You should make reasonable effort to ensure that the information you provide is accurate.

If the information you provide is incomplete, the Clean Energy Regulator will request further information. Depending on the timeframe, there may be a tight turnaround and a delay in providing further information can result in you not being qualified/registered in time to participate in the auction.

Types of evidence required at auction qualification

Auction qualificationEvidence required
If your IAQ is 1 000 000 Kyoto ACCUs or moreForecast modelling
If your IAQ is more than the delivery period equivalent of the FAEForecast modelling
If the Clean Energy Regulator has doubts about the accuracy of the estimateForecast modelling
All other auction qualification applicationsInformation summary

The delivery period equivalent for the FAE is calculated using the following formula:

Contract Term (Years) × (Projects FAE / Projects Crediting Period (years))

Types of evidence required at auction registration

Auction registrationEvidence required
An AQ that is greater than the IAQForecast modelling
All other offersNo further evidence required

Immediate delivery contracts

If your offer is for an immediate delivery contract then the project’s Kyoto ACCUs must be held in an Australian national register of emissions units (ANREU) account at the time the offer is made. The only evidence you are required to provide is the ANREU account that holds the units.

Forecast modelling

This information includes detailed information to show that the project will generate the abatement level indicated in your offer. It can include:

  • Modelling that shows assumptions, inputs and forecasts demonstrating how abatement volumes are calculated. This may include outputs from calculators such as FullCAM.
  • A detailed statement outlining assumptions and reasons for the quantity submitted.
  • Plans that describe the project and how it will be implemented.
  • Expert advice or partnerships that will support the project’s implementation.
  • Other information relevant to the project.

If the offer is for an aggregation project, then the Clean Energy Regulator is also looking for the sites and projects that have already been identified and the status of each. You will also need to provide evidence of planning and that you have resources to expand the project to new sites to meet your delivery obligations. This evidence can include:

  • The number of sites (or area if applicable) where legal right to carry out the project has been obtained.
  • The number of potential sites (or area if applicable) that have been identified and the status of the rollout to each.
  • A detailed statement outlining assumptions that have been made on how the rollout will progress.
  • Expertise, resources, agreements or partnerships that are in place to support the project.

Information summary

This information includes a brief description of the project and how it will generate the abatement that is being offered. If the project is an aggregation project, information on the number of sites and the status of each should also be included. Forecast modelling information can be provided if you wish.

Example of calculating IAQ and AQ

A participant registers a sequestration project with a crediting period of 25 years. At the time of project registration the FAE is 100,000 Kyoto ACCUs. Once the project has been registered, additional land within the project area is identified that is eligible under the method, thereby increasing the potential abatement from the project.

At auction qualification, the participant provides an IAQ of 45,000 Kyoto ACCUs for a 10 year contract. As the IAQ is greater than delivery period equivalent of the FAE (100,000 / 25 years x 10 year contract = 40,000), evidence must be provided to justify the higher level of abatement.

In this case, evidence of the increased land area for the project, as well as modelling showing the new area can generate 47,000 Kyoto ACCUs over 10 years is provided.

At auction registration, the participant has reviewed their offer and has decided to provide an AQ of 43,000 Kyoto ACCUs over 10 years. This decreased amount will allow them to maintain a buffer should the project underperform. As the AQ is less than the IAQ, no further evidence is required when submitting their auction registration.

How evidence is assessed

The information you provide to support your IAQ and AQ will be assessed to ensure that you

  • understand the project and its method
  • have understood what is required to generate the abatement you have offered
  • have the expertise required to implement the project, and
  • are able to expand the project to new sites if the project is an aggregation project.

Even though an assessment on your IAQ and AQ is conducted, the Clean Energy Regulator does not endorse your abatement amount or, guarantee, or provide assurance on your ability to deliver on the abatement amount provided.

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