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Industrial and commercial emissions reduction method

16 December 2021
ERF

Is the industrial and commercial emissions reduction (ICER) method suitable for your business?

  • Are you looking to undertake activities to reduce emissions from energy consumption or industrial process emissions at one or more of your industrial or commercial sites?
  • Do you (or your staff) understand the detailed statistical, measurement and verification techniques required by this method, or are you willing to hire these skills?

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

The ICER method provides an incentive to undertake activities that reduce energy-consumption emissions or industrial process emissions produced by existing equipment.

The method provides flexibility for project proponents to determine what eligible activities are most appropriate for their site. In this way, the ICER method is activity neutral. Examples of activities that could be undertaken under the method include:

  • replacement or modification of boilers or heating, ventilation, and air conditioning systems
  • improving control systems and processes
  • waste heat capture and re-use
  • replacing low efficiency motors, fans, and pumps with high efficiency versions
  • installing variable speed drives (VSDs) to target the output of motors more closely
  • improving compressed air processes
  • changing chemical manufacturing processes to reduce the production of industrial process emissions
  • installing electricity generating equipment to service electricity-consuming equipment that would otherwise use grid electricity, or to provide less emissions-intensive off-grid electricity
  • fuel or feedstock switching.

Projects undertaken under the ICER method may consist of multiple but distinct activities occurring at the same or different sites. This means the ICER method is suitable for aggregation.

In addition to lowering emissions, well-designed projects undertaken under the ICER method could potentially reduce facility energy-costs, improve productivity, reduce maintenance as well as generating income from carbon credits.

ICER method to replace the Industrial electricity and fuel efficiency (IEFE) method

The ICER method was developed in response to stakeholder feedback on the existing IEFE method. The ICER method builds on aspects of the IEFE method and makes a number of enhancements including:

  • introducing activities that reduce industrial process emissions as a new abatement opportunity
  • improving method usability by providing project proponents greater flexibility when conducting projects and calculating abatement, and
  • introducing a project-specific additionality measure.

As the ICER method was designed to supersede the IEFE method, the IEFE method will be revoked. The process for revoking the IEFE method will commence after the Clean Energy Regulator has finalised arrangements with existing project proponents for transferring to the ICER method.

Existing IEFE projects whose crediting period has started can move to the ICER method if they meet the eligibility requirements or they can continue using the IEFE method even after it is revoked. You can apply to transfer your project through the Client Portal.

Existing IEFE projects whose crediting period has not started can:

  • if the crediting period start date for the project has not already been varied: apply to vary their crediting period start date and then transfer to the ICER method, or
  • revoke their IEFE project and apply to register their project under the ICER method. See ‘Eligibility requirements’ below for information about newness for restarting ICER projects.

Existing projects registered under the Facilities method may also apply to move to the ICER method provided the application is made during the first reporting period for the project prior to submitting an offsets report for that period.

For detailed information about transferring your project to the ICER method see Making changes to your project and the ICER simple method guide.

For further guidance, email enquiries@cleanenergyregulator.gov.au or phone 1300 553 542.

Guidance available

The documentasset:Industrial and commercial emissions reduction - simple method guide provides a step-by-step guide on how to register, run and report on an ICER project.

Legislative requirements

You must read and understand the method and other legislative requirements to conduct an industrial and commercial emissions reduction project and earn Australian carbon credit units (ACCUs). This includes:

Tools and Resources

Quick reference guide to the ICER method

This quick reference guide provides basic information about eligibility criteria and obligations that must be met to earn ACCUs from an ICER project. It includes specific links to the legislation described above but should not be viewed as an alternative to reading the full legislative requirements. Additional information can also be found in the ICER simple method guide linked above.

Contents

Crediting period

The crediting period for a project under the ICER method is 7 years.

The crediting period is the period of time a project can apply to claim Australian carbon credit units (ACCUs). The crediting period starts from the project start date, which is nominated by the project applicant.

Projects under the ICER method can defer the start of their crediting period for up to 3 years after the date the project is registered.

Relevant section of the Act:

Relevant section of the Rule:

Eligibility requirements

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

There is an in lieu of newness provision in section 17A of the ICER method for restarting ICER projects that replaces the standard newness requirement set out in the Act. The in lieu of newness provision allows projects that were registered under the IEFE method and started project activities before their crediting period had commenced, to meet the newness requirement if they revoke their IEFE project and register the project under the ICER method. If a project is not a restarting ICER project, the newness requirement in the Act applies.

The ICER method requires project proponents to provide a statement of activity intent when they apply to register their project under the ERF. A statement of activity intent is a statement that the activities the project proponent intends to implement would not likely be implemented in the absence of the activities being included in a registered ERF project. This ensures the method credits for carbon abatement that is unlikely to occur in the ordinary course of events.

The ICER method requires that you have historical energy consumption and emissions data available, or that energy consumption and emissions is able to be measured before you commence the project. This is required to enable the development of baseline emissions models.

Section 14 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 in your application.

Relevant section of the Act:

Relevant section of the Method:

Eligible activities

An ICER project consists of one or more implementations. Each implementation involves one or more eligible emissions-reducing activities applied to existing emissions-producing equipment. The method is technology-neutral, meaning that it does not require that a particular technology be used when carrying out activities. Eligible activities include:

  • modifying, removing, or replacing existing emissions-producing equipment or changing the way it’s controlled or operated.
  • changing the fuel sources or the mix of fuel sources used by existing emissions-producing equipment.
  • modifying, removing, installing, or replacing equipment that affects the emissions produced by existing emissions-producing equipment.
  • installing electricity generation equipment such as co-generation equipment or solar panels to:
    • provide existing equipment that would otherwise consume electricity obtained from an electricity grid with electricity that is less emissions-intensive than the grid electricity, or
    • replace existing off-grid electricity generation equipment with less emissions-intensive off-grid electricity generation equipment.

The ICER method allows proponents to add new activities to their project after the date their project is registered under the ERF by providing an updated statement of activity intent. The updated statement may apply to new activities at the site of an implementation already included in the project or may apply to entirely new implementations, such as an implementation at a distinct site.

This provides a mechanism for project proponents to continue to identify new opportunities and claim ACCUs for new emissions reducing activities that are unlikely to occur in the ordinary course of events.

Relevant sections of the Method:

Exclusions

Several activities are not eligible under the ICER method and cannot be included in an ICER project. Excluded activities include:

  • Activities that relate to electricity generation equipment with a combined capacity greater than 30 megawatts where the equipment has the capacity to export to an electricity grid and either:
    • the export of electricity to the grid is regarded as ‘scheduled’ or ‘semi-scheduled’ by the market operator of the grid, or
    • the generation equipment has the annual capacity to generate more electricity than the total electricity used by the site of the generation equipment in the 12 months before the application was made to register the project under the ERF
  • Activities that relate to a vehicle or aircraft that could be covered by the Land and sea transport or Aviation ERF methods
  • Activities that involve equipment at residential premises that are not commercial residential premises or retirement villages
  • Activities that involve the use of biomass that is not an eligible renewable energy source
  • Projects that generate abatement through flaring or fuel incineration that dissipates heat into the atmosphere without producing heat for use
  • Activities that lead or are likely to lead to a material impact on fugitive emissions
  • Greenfields projects that install new equipment ‘from scratch’ are not eligible unless they are replacing existing equipment or offsetting grid electricity use by existing equipment. Records from existing emissions-producing equipment are needed to develop a baseline emissions model.

Relevant section of the Method:

How is abatement calculated

The abatement generated by your ICER project is calculated by summing the abatement generated by each implementation.

To calculate abatement for an implementation, the project proponent must compare the measured emissions that occur after the implementation is completed (the ‘measured operating emissions’) to the estimated emissions that would have been produced if the implementation had not taken place (the ‘baseline emissions’).

To estimate baseline emissions for an implementation for each reporting period, the project proponent must first develop a baseline emissions model.

Baseline emissions models may be either:

  • a regression baseline emissions model developed using statistical regression analysis, or
  • an engineering baseline emissions model developed using engineering-based modelling techniques.

Baseline emissions models must be developed using values of emissions and model variables measured during a baseline measurement period chosen by the project proponent.

Once the baseline emissions model is developed, the project proponent can measure the values of the chosen variables during the reporting period and insert these values into the model to estimate the level of emissions that would have been produced in the absence of the implementation.

A thorough understanding of the requirements of the method is essential in developing baseline emissions models. The ICER method includes minimum statistical requirements that baseline emissions models must meet, and abatement is reduced if the model estimates baseline emissions with high uncertainty. If using an engineering baseline emissions model, project proponents must also provide a declaration from a suitably qualified and independent professional that the model meets the requirements of the method.

When calculating abatement, project proponents must also account for any interactive effects. An interactive effect is a flow-on change in emissions that occurs because of the implementation activities but are outside the modelling boundaries for the implementation.

More detailed information about the choices involved in developing a baseline emissions model and the steps involved in calculating abatement can be found in the ICER simple method guide.

Relevant section of the Method:

Reporting requirements

In addition to the reporting requirements of the Act and the Rule, the ICER method also sets out several method-specific requirements for offset reports.

For each implementation completed during the reporting period, additional reporting requirements include:

  • details of the completion of the implementation
  • details of the boundary for the implementation
  • the interactive effects for the implementation
  • fuel and electricity consumption excluded under Section 43 of the method, including evidence showing how the exclusion met the requirements of that section.

The additional information is only required if it is new or different from the information already provided in either the project application, or a previous offsets report.

Abatement reporting must also be consistent. You cannot remove implementations from the abatement calculations in reporting periods where they return negative abatement, and then reinstall those implementations in reporting periods where they return positive abatement. If an implementation is removed for a reporting period, it must continue to be removed for all future reporting periods.

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

Monitoring requirements

In addition to the general monitoring requirements of the Act, ICER projects must meet specific monitoring requirements in the method. Sections 65 to 68 set out these requirements. Section 69 sets out requirements if a project proponent fails to monitor a parameter and allows the proponent to make a conservative estimate based on relevant data in some circumstances. The project proponent must take steps to minimise the time period for which an estimate is used.

Relevant section of the Act:

Relevant section of the Method:

Record-keeping requirements

In addition to the record-keeping requirements of the Act and the Rule, ICER projects must also meet the specific record-keeping requirements in the method. Sections 62 and 63 in the method explain that this includes records relating to:

  • the technical specifications of equipment modified or installed as part of the implementation
  • the completion of the implementation activities that constitute the implementation
  • the reuse or disposal records of any implementation equipment, and
  • any declarations made by an independent measurement and verification professional

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

Audits

Audits are an important requirement of the Emissions Reduction Fund and provide assurance over the integrity of ACCUs. 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 example, if the net abatement amount for a reporting period is above a certain threshold.

For more information on the audit requirements, see the Act, the Rule and the audit information on our website.

Relevant section of the Act:

Relevant section of the Rule:

Specialist skills

Specialist skills are required to carry out a project in accordance with the ICER method. The emissions models used in the ICER method must be developed using statistical regression or engineering-based modelling techniques and meet strict statistical requirements. Not all activities will be able to meet these statistical requirements even though the activity may reduce emissions.

As a result, the ICER method requires a complex understanding of statistics and measurement and verification techniques. The Clean Energy Regulator recommends that you seek the services of an accredited engineer or statistician, or a measurement and verification professional to design and assist in running the project. Drawing on professional expertise may enhance the design and operation of a project and assist in earning carbon credits.

Relevant section of the Rule:

Relevant section of the Method:


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