March 2014
Thank you for your interest in the Emissions Reduction Fund Update. This newsletter provides
regular updates on the implementation of the Emissions Reduction Fund, the centrepiece of
the Australian Government’s Direct Action Plan. Please encourage others who may be
interested to subscribe at http://www.environment.gov.au.
IN THIS EDITION

Consultation on the Emissions Reduction Fund

Work progressing through technical working groups

Energy White Paper

Strong interest in updates on the Emissions Reduction Fund
Consultation on the Emissions Reduction Fund
The Australian Government has consulted widely on the design of the Emissions Reduction Fund
over the past month, receiving strong and considered responses to the Terms of Reference and
Emissions Reduction Fund Green Paper.
More than 280 submissions were made in response to the Terms of Reference released in October
and over 340 were made in response to the Green Paper.
The Government has also had in-depth discussions with business, environment and community
representatives.
This feedback is being considered in the development of the Emissions Reduction Fund White Paper,
which is due for release in April and will outline the final design of the Emissions Reduction Fund.
Details on the consultation process are available on the Department’s website at
http://www.environment.gov.au.
Work progressing through technical working groups
Technical working groups have been established to assist in developing methods for estimating
emissions reductions under the Emissions Reduction Fund. These groups continue to make good
progress towards developing methods for the start of the Emissions Reduction Fund. Reports from
recent meetings of these groups are set out below.
Within the technical working groups, methods are developed by nominated technical and industry
experts with other technical working group members serving as a reference group, providing direction
and feedback on development priorities and draft methods.
To register your interest in participating in technical working groups, please email emissionsreduction@environment.gov.au. New participants will serve on reference groups in the first instance.
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Coal Fugitive Emissions
The coal fugitive emissions working group met for the second time on 26 February. The group
discussed the activities that could be covered under the method including destruction of methane
from drainage or ventilation systems through flaring, combustion to produce electricity or flameless
oxidation.
The group also discussed the different scenarios for which project baselines would be needed, noting
that the Emissions Reduction Fund is likely to require that credited emissions reductions be from new
activities that are not required by regulations. Discussion centred on the treatment of existing
methane destruction activities and how to account for regulatory obligations at new and existing
mines.
The group also identified the sources of greenhouse gases that could be affected by the project and
discussed whether these should be accounted for under the method. The emissions sources
identified by the group include fuel use in auxiliary fans and compressors associated with flaring
activities. Methods will set out how to measure and monitor emissions that are included in the project
boundary. This is because projects can increase some sources of emissions whilst reducing others,
and credits must reflect net emissions reductions.
Facility Method
The facility method working group held its first meeting on 13 February 2014. A facility method would
be used by businesses that already report their emissions under the National Greenhouse and
Energy Reporting Scheme. This data can be used to create a simple method for these businesses to
use to participate in the Emissions Reduction Fund.
The group has held subsequent meetings on 27 February and 11 March 2014. The next meeting, via
teleconference, is scheduled for 27 March. This will be followed by a face to face meeting in mid April.
The group has discussed how emissions reductions could be calculated under a facility method,
including the merits of using absolute baselines and emissions intensity baselines. Discussion
focussed on how effective different types of crediting baselines would be in ensuring that emissions
reductions are real and additional.
The group noted that emissions across a large industrial facility can fluctuate significantly from year to
year in response to normal changes in production, for example in response to customer demands.
These fluctuations could obscure the impact of a genuine emissions reduction activity.
The group identified a range of options for addressing this issue, including the development of subfacility methods for measuring changes in reported emissions from part of a facility. Another option
might involve the aggregation of changes to line items within an emissions report where changes are
attributable to an emissions reduction activity.
For energy efficiency activities, another option would be for facilities to use an industrial energy
efficiency method.
Building Energy Efficiency
The working group on building energy efficiency met for the second time on 25 February. The group is
taking as their starting point for method development the NSW Energy Saving Scheme methods,
which draw on the International Performance Measurement and Verification Protocol (IPMVP) and the
National Australian Built Environment Rating System (NABERS).
The group identified the need for methods to cover whole-building upgrades as well as simpler
projects to install energy efficient equipment such as lighting, or better building management systems.
The group’s preliminary view is that the NSW methods are broad enough to cover both types of
projects.
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The group also considered whether the approaches to baseline setting will ensure that credited
emissions reductions are real and additional in all circumstances. For example, it may be more
common to upgrade high-end offices and shopping centres compared to non-premium ones. Further
work is being undertaken to identify genuine emissions reduction projects for different types of
buildings and equipment, understand how these would be credited under existing methods, and
assess whether these approaches would meet the likely requirements of the Emissions Reduction
Fund.
The group will also consider how to make methods simpler to use. For example, it may not be
possible to accurately estimate the impact of small equipment upgrades by measuring changes in a
building’s electricity use (metered approaches). Where there is sufficient data, modelled approaches
could be developed to make it easy to estimate the impact of projects like upgrading lighting or
heating and cooling systems.
Industrial Energy Efficiency
The industrial energy efficiency working group met for the second time on 25 February. This group is
also considering using or adapting existing methods, such as the NSW Energy Savings Scheme Rule.
The group noted that this method only covers reductions in electricity use (scope 2 emissions) and
does not cover reductions in direct emissions, for example, from the use of gas. The group will
examine how reductions in direct emissions could be covered under the method.
The group discussed the merits of different approaches for ensuring credited emissions reductions
are real and additional. Options include ensuring projects are new, using declining baselines to reflect
business as usual improvements in efficiency and requiring projects to go beyond common practice
levels of improvement. Participants stressed the importance of simple approaches for dealing with
additionality, and the value of leveraging existing methods in established and reputable schemes.
Transport
At its second meeting on 19 February, the working group on transport considered different
approaches to baseline setting, and how they would be established across the different sectors. The
group discussed how to use available fuel use and activity data to establish historical emissions
intensity baselines.
The group also discussed the impact of the project boundary on baseline setting. For example, the
group considered the need to apply different baseline scenarios for small projects and projects that
involve an entire fleet.
The group also examined the need to adjust baselines to account for actions taken to comply with
government requirements, or abatement that has been paid for by another government programme.
Waste
The working group on waste met for the second time on 27 February. The group considered the
scope of a potential wastewater method and agreed it would cover capture and combustion of biogas
from ’anaerobic digestion’ — a process by which microorganisms break down biodegradable material
in the absence of oxygen.
The group also examined options for distinguishing between waste treatment activities that are
already common practice and those that can deliver new and additional emission reductions. The two
main options identified are to cover treatment of only some types of waste, or to cover treatment of all
types of waste but only using the most efficient technologies.
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For landfill gas capture, the group is focussing on amending the landfill method approved under the
Carbon Farming Initiative to improve opportunities for projects at landfill sites that do not have a gas
capture system. The group will propose a straightforward approach to baseline setting using sitespecific regulatory requirements. This could involve, for example, using landfill licences and planning
approval documents to demonstrate that a landfill is compliant with its regulatory obligation to
minimise methane despite having no capture system in place. This will simplify eligibility requirements
compared to existing Carbon Farming Initiative landfill gas methodologies while retaining the
environmental integrity of the method.
Energy White Paper
The Australian Government will deliver an Energy White Paper in 2014 as part of a broader package
of Government reforms. The Energy White Paper will set the approach to energy policy to reduce cost
pressures on households and businesses, improve Australia's international competitiveness, and
grow our export base and economic prosperity.
The Government received more than 250 submissions in response to an Issues Paper released late
last year. The submissions are now being considered as part of developing a Green Paper to be
released in May 2014. The submissions and further details about the Energy White Paper are
available on the Department of Industry’s website (http://www.ewp.industry.gov.au).
Strong interest in updates on the Emissions Reduction Fund
The first edition of the Emissions Reduction Fund Update received a strong response, with more than
400 subscription requests within the first few hours of its release, increasing to more than 650 within
the first days. This is a clear indication of the level of interest in the development of this key
component of the Direct Action Plan.
Thank you for your interest and please feel free to circulate this update to others who may have an
interest in receiving regular information about the development of the Emissions Reduction Fund.
Subscribe to the Carbon Farming Initiative e-newsletter
To receive updates on the Carbon Farming Initiative, subscribe to the Carbon Farming Initiative enews at http://www.environment.gov.au. Previous editions can be viewed at
http://www.climatechange.gov.au.
Further information
For further details about the Australian Government’s Direct Action Plan and broader plan for
environmental policies please visit http://www.environment.gov.au.
Comments
We welcome your feedback on the Emissions Reduction Fund Update, including suggestions for
future content and format. Please send your comments to emissions-reduction@environment.gov.au.
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Disclaimer
The information included in the publication remains in development and parties are advised not to initiate any projects based
on the content of the newsletter. While the Commonwealth has made reasonable efforts to ensure the accuracy and
correctness of the material at the time of publication, the Commonwealth does not guarantee, and accepts no liability
whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of this material.
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