Crediting period

Seven years the crediting period is the period of time a project undertakes activities which generate eligible abatement.

Eligible abatement is calculated and reported to the Clean Energy Regulator where Australian carbon credit units (ACCUs) may be claimed for a portion of that abatement. Remaining portions of the calculated abatement may be claimed over the following years, either during the crediting period or during the extended accounting period.

Relevant section of the Act:

• Act - Part 5

Extended accounting period

Up to six years the extended accounting period begins immediately following the end of the seven year crediting period. During this time, projects report and earn ACCUs for the abatement calculated and accrued during the crediting period. Activity undertaken during the extended accounting period is not eligible to be credited for emissions reductions.

Relevant section of the Explanatory Statement:

• Explanatory Statement - Part 4 Division 2

Project Activities

A source separated activity may be one or more of the following:

• A new waste diversion activity which involves separating eligible organic material from a waste stream to divert that material from landfill.
• An expansion waste diversion activity which involves expanding an existing source separation collection service to increase the amount of organic material diverted from landfill. This activity diverts eligible organic material from landfill for processing by eligible waste treatment technology.
• An aggregated waste diversion activity which occurs where eligible organic material, collected as a result of multiple new or expansion waste diversion activities, is processed at a single waste treatment facility or unit.
• A charity diversion activity which involves diverting surplus commercially or industrially sourced food from landfill.

An example of each of the above activities may be found in the explanatory statement to the method.

Relevant section of the Method:

• Method - Part 2

Relevant sections of the Explanatory Statement:

• Explanatory Statement - sections 10, 11, 12 and 14

Eligibility requirements

General eligibility requirements of the Act include:

• Newness and additionality,
• Government programme funding, and
• Legal right

For this method a project proponent must have the legal right to carry out a source separated waste project including all associated activities. This might mean that there are commercial agreements in place between different entities (e.g. local government, waste generators, charities and waste management organisations) that are involved in a source separated waste project (see page 4 of the explanatory statement).

Applicants, who submitted a notice of intent before the Emissions Reduction Fund commenced, are allowed to have the newness of their projects assessed as at the time of their notice (if their application was made before 1 July 2016).

Eligible organic material refers to particular waste mix types. A list of eligible organic materials is found in the methods definitions (section 5).

The types of waste that are ineligible include recyclable paper or cardboard, biosolids, wastewater or inert (inorganic) waste (see page 11 of the explanatory statement).

Requirements for all eligible source separated activities are outlined in section 15 of the method.

Relevant section of the Act:

• Act Part 3

Relevant sections of the Method:

• Method - Part 3 Division 2
• Method - Part 1
• Method - Part 3 Division 1

Relevant section of the Explanatory Statement:

• Explanatory Statement - Background: Source separated Organic Waste Methodology Determination

Project activity requirements

Requirements for new waste diversion activities covering processing of waste treatment, relevant periods, trial waste diversion activities and evidence and record keeping are outlined in section 10 of the method.

Regarding trial waste diversion activities:

• Applicants are able to trial a source separation activity and remain eligible to implement a new waste diversion activity provided the trial occurred in the activity area during the relevant 24-month period but not within the last 12 months. Material diverted from landfill by the trial can be disregarded for the purposes of establishing that material previously went to landfill.
• If the trial occurred within the last 12 months, the applicant must account for that activity using the requirements for expansion waste diversion activities (see section 11).

Requirements for expansion waste diversion activities covering activity area, evidence and record keeping are outlined in section 11.

Requirements for aggregated waste diversion activities (section 12):

• The activity must contain two or more new waste diversion activities and/or expansion waste diversion activities.

The method identifies four particular types of new, expansion and aggregated waste diversion activities. These activities are;

• a commercial food waste activity
• a municipal food waste activity
• a municipal garden and park waste activity, or
• a municipal food and garden and park waste activity

For each of the activity types above, the method provides optional default waste composition values for the purpose of simplifying abatement calculation. The requirements that must be met are outlined in subsections 13 (2) (5). This methods default values are pre-defined proportions of waste mix types in material collected by the waste diversion activity.

If a source separated activity is not one of the above particular activities, then waste audits (see section 61) must be used to determine the composition of eligible waste diverted by the activity.

Waste audits need to determine an accurate assessment of waste composition and account for seasonal variation across the reporting period. Waste audits need to be repeated according to the schedule defined in subsection 61(3) and need to achieve a 95 per cent confidence interval for eligible organic material diverted from landfill.

Section 61(4) sets out the requirements for a person that conducts a waste audit.

Requirements for charity diversion activities are outlined in section 14.

Relevant sections of the Method:

• Method Part 3 Division 1
• Method Part 5 Division 4

Abatement calculations

Australian carbon credit units (ACCUs) are generated for the calculated net carbon abatement as a result of eligible source separated organic waste method activities.

Calculating the net abatement amount for a source separated organic waste projects reporting period is worked out by adding together the activity abatement portion for the reporting period and any activity abatement portions from previous reporting periods that have accrued:​

Applicants should note that accrued activity abatement portions must not have been used to calculate the carbon dioxide equivalent net abatement amount for a previous reporting period.

Calculating activity abatement portions for a reporting period are worked out by dividing the abatement generated by the projects source separation activities (during the reporting period) into seven equal portions. One portion is used to calculate the net abatement amount for the reporting period and the other six portions accrue over time, to be used in future reporting periods.

Section 25 of the method describes project activity information to be used in calculations whilst section 26 describes the calculation and accrual of activity abatement portions.

When a potential activity is implemented, or when an activity is left out of the calculations, the applicant is required to include additional information in the offsets report for the reporting period (in accordance with section 50).

All activities that the applicant is undertaking should be included in the calculations, unless the project has been divided (see section 64 of the method). Where a project is divided into parts, only calculated abatement relevant to the activities included in the relevant part of the project is to be reported.

Relevant sections of the Method:

• Method Part 4 Division 2
• Method Part 4 Division 3
• Method Part 5 Division 1
• Method Part 6

Baseline calculations

Baseline emissions are the methane emissions from eligible organic material that would have been generated had the separated waste been disposed of in landfill.

Baseline emissions for a source separated organic waste activity are worked out using the formula described in section 28 of the method.

Sections 29 to 35 of the method provide further details of related sub-methods, formula and formula equations.

Relevant section of the Method:

• Method Part 4 Division 3 Subdivision B

Reporting requirements

In addition to the general reporting and notification requirements of the Act and Rules, each source separated organic waste project report (also referred to as an offsets report) must:

• Identify each source separation activity that is included in the calculations and provide the information listed in section 50(1)(b)(i) to (ix).
• Provide the information and evidence to support the activity, if the calculations include potential activities.

Identify source separation activities that applicants have left out from calculations, and provide reasons why they were not included.

Relevant section of the Act:

• Act Part 6

Relevant section of the Rule:

• Rule Part 6

Relevant section of the Method:

• Method Part 5 Division 1

Credits and reporting

The method calculates emissions reductions in equal portions for each reporting period over the seven year project crediting period.

Abatement portions are claimed over successive years during the crediting period and the extended accounting period. This approach better aligns with the rate of abatement for these projects and is consistent with the other waste diversion method The Alternative Waste Treatment method.

The duration of the extended accounting period is six years.

As source separated organic waste projects are awarded credits on submission of an offsets report, those offsets reports may be submitted throughout both the crediting period and the extended accounting period. There is a diagram, illustrating the crediting period and extended accounting period for a project, accessible in the explanatory statement (page 28).

Relevant section of the Explanatory Statement:

• Explanatory Statement Division 2

Record keeping requirements

All ERF projects involve general record-keeping requirements according to the Act and Rules.

Section 57 of the method applies when waste audits are used to determine the composition of material generated by one or more source separated organic waste activities or sub-activities.

Waste audits are needed to determine an accurate assessment of waste composition and account for seasonal variation across the reporting period.

Scheme participants must keep a record of evidence that each waste audit period occurred during any relevant seasonal variations.

Relevant section of the Act:

• Act Part 17

Relevant section of the Rule:

• Rule Part 17

Relevant section of the Method:

• Method Part 5 Division 3

Monitoring requirements

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

Monitoring requirements for charity diversion activities are noted in section 59 whilst monitoring requirements for other source separation activities are noted in section 60.

Section 62 outlines the consequences for not meeting the requirements. However, there are circumstances where an applicant may be unable to monitor a parameter according to the specified requirements. When this occurs, adjustments must be applied for the time intervals that the parameters are not being monitored (the ‘non-monitore​d period). The table in section 62(1) provides determinations of parameters for non-monitored periods.

Relevant section of the Act:

• Act Part 17

Relevant section of the Rule:

• Rule Part 17

Relevant section of the Method:

• Method Part 5 Division 4

Audit

The purpose of an ERF audit is to establish reasonable assurance that abatement achieved and reported on is accurate. Audits are conducted by registered category 2 national greenhouse and energy auditors.

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 the audit requirements of the Emissions Reduction Fund see Part 19 of the Act, Part 6 of the Rule and online information about Audits.

In addition to audit requirements under the Act, the Method outlines specific requirements for waste audits (see section 61). These requirements are outlined in the project activity requirements section of this quick reference guide.

Relevant section of the Act:

• Act Part 19

Relevant section of the Rule:

• Rule Part 6

Relevant section of the Method:

• Method Part 5 Division 2