Contents

• The regulatory additionality requirements
• The government program requirement

The regulatory additionality requirements

The Emissions Reduction Fund (ERF) legislation has a regulatory additionality requirement, which is intended to ensure that ERF projects (activities) to reduce emissions or sequester carbon do not receive Australian Carbon Credit Units (ACCUs) if those activities are already required by law.

The CER has developed guidance on how it will assess and implement regulatory additionality for the ERF.

In summary the Clean Energy Regulator takes the view that regulatory additionality will be met if:

1. the Regulator is satisfied the activity goes beyond any existing legal requirement; or
2. the activity is covered by an ‘in lieu’ provision in the applicable ERF method; or
3. the Commonwealth, state or territory regulatory requirement refers to reducing or offsetting emissions but does not specify a particular activity to do so; and to help fulfil or meet a state or territory requirement to reduce or offset emissions, the regulated entity establishes an ERF project and transfers ACCUs from that project into a specified Commonwealth holding account in the Australian National Registry of Emissions Units (ANREU).

Whether a project meets the regulatory additionality requirements will depend on the circumstances and will be assessed by the Clean Energy Regulator on a case-by-case basis.

Regulatory requirements be expressed as general requirements in documents that are adopted by or under a law, such as State or Territory guidelines that apply to a particular industry sector or activity, and do not have to relate to a particular project.

Regulatory requirements may be contained in a number of forms, including but not limited to:

• Commonwealth, State or Territory legislation
• guidelines set by State and Territory environmental regulators that have legislative effect
• licences
• permits
• consents (other than Eligible Interest Holder)
• codes of practice that have legislative effect
• environmental approvals
• development approvals, and
• local government area requirements.

When applying to have an Emissions Reduction Fund project registered, you will be asked whether the project, or any part of it, is required to be carried out by or under a law of the Commonwealth, a State or a Territory or was mandatory under a Commonwealth, State or Territory that was repealed or amended so as not to be required from 24 March 2011.

Your answer to this question should be 'Yes' if:

• the project, or any part of it, is required to be carried out to meet a condition imposed by, or agreed with, a Commonwealth, State or Territory department, agency or body;
• there are any Commonwealth, State or Territory laws that require the project activities to be undertaken or if any part of the project is being undertaken as remedial action as a result of a non-compliance with a regulatory approval or permission; or
• there are any Commonwealth, State or Territory laws that mandated an activity that is involved in the project, but that no longer mandate that activity due to the law being repealed or amended to be less onerous after 24 March 2011.

Examples

Here are some examples of how the regulatory additionality requirements are expected to operate.

The following projects are unlikely to meet the first regulatory additionality requirement:

1. Projects involving forestry activities for biodiversity objectives or offsets undertaken to directly satisfy requirements imposed on developments.
2. Projects that involve planting trees to satisfy a condition of a development approval (e.g. where planting as a visual screen, windbreak or for amenity), unless the tree planting was discretionary, and other options, such as a concrete wall, could have been used to satisfy the requirement or unless planting more trees goes above and beyond what was required and will result in more abatement.
3. Revegetation, where it is the sole option to satisfy biodiversity requirements imposed on a location unless the revegetation activity goes above and beyond what was required and will result in more abatement.
4. Projects that involve upgrading the star rating of a building to meet star rating requirements in a local government area, unless the projects would exceed the relevant requirements.
5. Projects involving changing equipment to meet work health and safety requirements, such as in a remediation agreement.
6. Undertaking an activity to control feral management in a national park where this is required by a Plan of Management unless the feral animal management goes above and beyond what was required and will result in more abatement.

However, there are circumstances that will be assessed on their merits by the Clean Energy Regulator:

• If complying with the law allows a choice between a range of options, and the selected activity results in more eligible abatement than other options (i.e. the project proponent goes above and beyond what was required with a resulting increase in abatement), then the additional abatement may result in the project being eligible for registration.

If the law prescribes a specific activity, but the scale of activity outlined in the Emissions Reduction Fund project clearly goes above and beyond what was required to comply with the law. The following projects are not likely to meet the second regulatory additionality requirement:

• Projects in Victoria that involve activities that were a requirement of the state's mandatory Environment and Resource Efficiency Plans (EREP) program that was ended in 2013.
• Projects in Queensland involving activities that were mandatory under repealed or amended vegetation protection laws.

The government program requirement

Some projects that include activities also carried out under specified Commonwealth, state or territory government program or schemes may be excluded from participating in the Emissions Reduction Fund. This is intended to ensure that emissions reductions are not incentivised under the Emissions Reduction Fund if the projects have received incentives under another government program.

Projects are able to source funding or in-kind support from other government programs in some cases. It is not the Government's intention to prevent participants from obtaining funding or in-kind support from multiple sources. For example, the Government anticipates that environmental planting projects could receive assistance from the Green Army, fire management projects may involve rangers involved in Indigenous ranger programs and some energy efficiency projects may receive funding assistance through investment schemes run by the Clean Energy Finance Corporation and Australian Renewable Energy Agency.

The table below provides a high-level overview of the additionality requirements and associated government program specified in the rule. Full details of excluded activities is included in section 21 of the Carbon Credits (Carbon Farming Initiative) Rule 2015 (the rule). If the government program your Emissions Reduction Fund project receives funding from is not listed below and your project does not contain certain activities under a government program listed below, then your project is not excluded from participation in the Emissions Reduction Fund under the ‘government program requirement’ provisions.

Activities included in an Emissions Reduction Fund project may expand on a non-Emissions Reduction Fund project that has previously been funded by a government program specified above , but must not currently receive funding from those government programs listed above.

The excluded activities specified above may be included in an Emissions Reduction Fund project if:

• the project’s method allows for abatement from the excluded activities to be subtracted from the project’s net abatement amount, or
• the excluded activity has only a minor or trivial impact on the abatement amount.

The Clean Energy Regulator will require participants to make a statement about support from other government programs as part of their application for project registration. If a project subsequently breaches the government program requirements you must notify the Clean Energy Regulator in:

• writing within 60 days of becoming aware of the change
• any offsets reports following the change.