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Industrial equipment upgrades

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14 October 2022

Is the industrial equipment upgrades method suitable for your business?

Are you looking to upgrade your industrial equipment, such as compressed air systems, boiler systems or pumps?

If you have answered yes to this question, the industrial equipment upgrades method may be suitable for your business. Read on for more information.

The industrial equipment upgrades method sets out rules for projects that upgrade industrial equipment to improve energy efficiency, including upgrades to compressed air systems, boiler systems or pumps. Eligible projects may receive Australian carbon credit units (ACCUs) for emissions avoided by measured increases in energy efficiency, in comparison to the energy efficiency of the system prior to upgrade.

Legislative requirements

You must read and understand the method and other legislative documents to conduct an industrial equipment upgrades project and earn ACCUs. This includes:

Tools and Resources

Quick reference guide to the industrial equipment upgrade method

This quick reference guide provides basic information about eligibility criteria and obligations that must be met to earn ACCUs from an industrial equipment upgrades project. It includes specific requirements from the legislation described above but should not be viewed as an alternative to reading the full legislative requirements.


Eligibility requirements

To be eligible under the industrial equipment upgrades method, participants must:

  • carry out upgrades that have been recommended by a qualified auditor in an energy audit or energy efficiency report, and
  • have their proposed upgrades verified by a measurement and verification professional to declare the upgrade meets method requirements.

The project activities are similar to the activities under the existing industrial electricity and fuel efficiency method, however, the industrial equipment upgrades method is designed for smaller scale projects with an annual energy consumption limit of 500,​000 gigajoules. This limit applies to all equipment within the energy boundary.

The method sets out what must be included in an energy boundary to ensure that all energy flows that materially affect the energy​ consumption of the equipment being upgraded are included in abatement calculations.

Equipment upgrades included in a project under the industrial equipment upgrades method must be recommended by an energy audit or energy savings report. The report needs to be produced by an independent professional energy services contractor or consultant that has the expertise to identify and evaluate the opportunity for energy savings - no earlier than two years before the project registration application. It cannot be made by the equipment's manufacturer or supplier.

Industrial equipment units added after the project registration application must still satisfy the condition of having been recommended​ in an energy report.

A measurement and verification professional must provide a pre-upgrade and post-upgrade declaration for each industrial equipment unit upgrade, stating that the upgrade has been performed in accordance with the method. Project owners will need to contract a person that meets the qualifications of a measurement and verification professional to review the project activities and confirm requirements have been met. This includes checking the system has appropriate energy boundaries, and measurements and calculations are correct.

Project owners should carefully read the project requirements section to ensure their systems are eligible under the industrial equipment upgrade method.

The industrial equipment upgrades method requires that any equipment replaced by equipment of the same type, similar capacity, and materially higher (more than 5 per cent) efficiency during a project upgrade, is disposed of and not re-used or refurbished. This prevents the pre-upgrade emissions simply shifting to a different location, but allows repurposing of efficient equipment. Records of appropriate equipment disposal must be maintained for the purpose of compliance audits.

Equipment may be broken down into components for recycling, as long as they are not used for the same primary purpose.

Excluded upgrades

​Industrial equipment units excluded from an eligible offsets project under the industrial equipment upgrades method are where an industrial equipment unit:

  • has total energy consumption in a 12 month period (that ends at the end of the baseline period) greater than 500,000 gigajoules
  • is not in operation at the time of, or before, the upgrade (including new installations), or
  • is operated only as a reserve, back-up or emergency system before or after the upgrade.

Irregularly operating units, upgrades that substantially change output capacity, and upgrades to vehicles and aircraft are excluded from this method.

Maintenance activities are excluded, but may be performed alongside industrial equipment unit upgrades if it is reasonable to expect that any such work will not have a significant effect on the abatement generated by the industrial equipment upgrade (more than 20 per cent).

How is abatement calculated

The net abatement amount for a project is calculated by multiplying the difference between the baseline emissions and project emissions rates (emissions per day) by the number of days of operation for the upgraded unit during the reporting period, and by a tabulated decay coefficient. This product is totalled across all sub-units for the project. Any negative abatement from previous reporting periods is then deducted.

Project owners should note that some potential industrial equipment units may need to be excluded from the calculations.

You have the option of measuring each upgraded sub-unit only once, during the operating measurement period, to establish the sub-unit's performance baseline, or regularly, at the end of each reporting period. Where output is measured only once, a decay coefficient is applied to a sub-unit's abatement. The decay coefficient provides an incentive to measure a sub-unit's output for the entire crediting period. The decay coefficient accounts for the increasing uncertainty that the operating measurement period will be representative of output in each successive reporting period, and for gradual reductions in the effectiveness of the upgraded equipment or process. The coefficients are the same as those used in the industrial electricity and fuel efficiency method. The net abatement amount for a project is calculated for each reporting period.

The decay coefficient is one if a sub-unit's outputs are measured each reporting period and the output satisfies the output representativeness criterion. If the output of a sub-unit is not measured each reporting period or does not meet the criterion, the decay coefficient is less than one after the first year and decreases each year, reducing the sub-unit's abatement.

The abatement for each sub-unit in the project is totalled, any negative abatement from the previous reporting period is then deducted. The result is the project's net abatement amount for the reporting period.

Offsets report requirements

For an industrial equipment unit that was included in calculations for an earlier reporting period, but is not included in calculations for the reporting period that the offsets report relates to, the report must state the reason for the exclusion.

In the circumstances described in factors and parameters from external sources, the offsets report about the project for the reporting period must describe the reasons why it was not possible to define or calculate the factor or parameter.

Notification requirements

As per notification requirements project proponents must notify the Clean Energy Regulator of any safety or product performance issues identified with equipment installed or proposed to be installed in relation to the project as soon as possible after the proponent becomes aware of the issue.

Record-keeping requirement

The project owners must keep records of the pre-upgrade and post-upgrade declaration as well as keeping any other relevant records, the project proponent must keep records of the site of each industrial equipment unit that identifies the location of:

  • all the energy-consuming equipment included in the unit
  • equipment that measures the consumption of the energy-consuming equipment of the unit, and
  • the supply of energy for that consumption.

The project owner must keep records as evidence that any equipment removed as part of the project was disposed of in accordance with the method.

Monitoring requirements

For each industrial equipment unit, the fuel and electricity consumption within its energy boundary must be monitored separately to other energy use at the site. This is during the baseline period and the project measurement period for the unit.

If the industrial equipment unit includes a partly independent sub-system, the following parameters must be monitored separately:

  • the parts of the fuel and electricity consumption that are attributable to the internal and external outputs of the sub-system, and
  • if any lower grade energy that was originally created by the partly independent subsystem is returned to that subsystem—the energy returned. If any fuel or electricity drawn by the unit is transmitted fuel or electricity, then the amounts transmitted must be monitored.

The equipment used to monitor the fuel and energy consumption must be monitored during the relevant period, including:

  • verification of data
  • evidence of bias or drift, and
  • the integrity of any anti‑tampering measures applied to the equipment.

Measurement requirements

Measurements of electricity consumption for any period must reflect the active energy consumption.

Calculations to determine the abatement amount must be measured in accordance with:

If it is not practicable, project participants may use an approach consistent with relevant Australian, international or industry standards.

If a parameter is measured in a period using measuring equipment in accordance with industry practice, the same practice must then be used for any future period.

The project proponent may measure the data either directly, or by using a proxy method that enables the value of the parameter to be reliably calculated.

Proxy methods may include the use of derived measurements of the energy content of fluid flow rates, based on:

  • measured material flow rates, temperatures and pressures, adjusted for the effects of latent heat, venting of vapour or gases, and fluid losses (for example from valves), and
  • scientifically established material properties corresponding to the measured temperatures, pressures and material phases (for example gas or liquid), as documented in engineering or scientific handbooks or textbooks.

The same method must be used for all measurements of a particular quantity in both the baseline period and the project measurement period.

Monitoring equipment

An accredited technician must calibrate equipment used for monitoring requirements. The equipment must be installed and operated in accordance with the manufacturer's specifications.

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