EXPLANATORY STATEMENT
Carbon Credits (Carbon Farming Initiative) Act 2011
Carbon Credits (Carbon Farming Initiative) Methodology (Industrial, Domestic and
Commercial Wastewater) Determination 2014
EXPOSURE DRAFT
Background: Emissions Reduction Fund
The Carbon Credits (Carbon Farming Initiative) Act 2011 (the Act 1) enables the crediting of
greenhouse gas abatement from emissions reduction activities across the economy.
Greenhouse gas abatement is achieved either by reducing or avoiding emissions or by
removing carbon from the atmosphere and storing it in soil or trees.
In 2014, the Australian Government introduced the Carbon Farming Initiative Amendment
Bill 2014, which establishes the Emissions Reduction Fund (ERF). The ERF expands on the
Carbon Farming Initiative (CFI) by extending the scope of eligible emissions reduction
activities and by streamlining existing processes. The ERF has three elements: crediting
emissions reductions, purchasing emissions reductions, and safeguarding emissions
reductions.
Emissions reduction activities are undertaken as offsets projects. The process involved in
establishing an offsets project is set out in Part 3 of the Act. An offsets project must be
covered by, and undertaken in accordance with, a methodology determination.
Subsection 106(1) of the Act empowers the Minister to make, by legislative instrument, a
methodology determination. The purpose of a methodology determination is to establish
procedures for estimating abatement (emissions avoidance or sequestration) from eligible
projects and rules for monitoring, record keeping and reporting. These methodologies will
ensure that emissions reductions are genuine—that they are both real and additional to
business as usual.
In deciding to make a methodology determination the Minister must have regard to the advice
of the Emissions Reduction Assurance Committee (ERAC), an independent expert panel that
will be established to advise the Minister on proposals for methodology determinations. The
Minister will also consider any adverse environmental, economic or social impacts likely to
arise as a result of projects to which the determination applies.
The Carbon Farming Initiative Amendment Bill 2014 also provides a process for an Interim
ERAC to advise on draft methodology determinations before the Bill is passed by Parliament.
In particular, clause 393 of Schedule 1 to the Carbon Farming Initiative Amendment Bill
2014 enables the advice of the Interim ERAC to be used in the place of advice of the statutory
ERAC after the Bill commences. It is intended that consultation on this exposure draft be
used to inform the advice of the Interim ERAC under that provision.
The ERAC (or Interim ERAC) must include in its advice to the Minister the Committee’s
opinion on whether the proposed determination complies with the proposed offsets integrity
standards to be set out in section 133 of the Act. The offsets integrity standards require that an
eligible project should result in carbon abatement that is unlikely to occur in the ordinary
1
All references to ‘the Act’ in this document refer to the Carbon Credits (Carbon Farming Initiative)
Act 2011, as if were amended by the Carbon Farming Initiative Amendment Bill 2014 (as introduced
into the Senate on 26 June 2014).
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course of events and is eligible carbon abatement under the Act. In summary, the offsets
integrity standards also include that:
• amounts are measurable and capable of being verified;
• the methods used are supported by clear and convincing evidence;
• material emissions which are a direct consequence of the project are deducted; and
• estimates, assumptions or projections used in the determination should be
conservative.
Offsets projects that are undertaken in accordance with the methodology determination and
approved by the Clean Energy Regulator (the Regulator) can generate Australian Carbon
Credit Units (ACCUs), representing emissions reductions from the project.
Project proponents can receive funding from the ERF by submitting their projects into a
competitive auction run by the Regulator. The Government will enter into contracts with
successful proponents, which will guarantee the price and payment for the future delivery of
emissions reductions.
Further information on the ERF is available on the Department of the Environment website,
www.environment.gov.au/emissions-reduction-fund.
Background: Wastewater
Wastewater, when treated in open anaerobic lagoons (i.e. under conditions without oxygen),
generates biogas which is released to the atmosphere. This biogas consists of approximately
55-70 per cent methane. Methane is a greenhouse gas with a global warming potential 21-25
times greater than carbon dioxide.
Emissions from wastewater treatment can be minimised by replacing deep open anaerobic
lagoons with anaerobic digesters. An anaerobic digester is an enclosed system which treats
organic material in anaerobic conditions. Examples of anaerobic digesters include covered
lagoons as well as engineered biodigesters. A key benefit of replacing a deep open anaerobic
lagoon with an anaerobic digester is that the biogas generated from wastewater treatment can
be captured and combusted, such as by flaring or as fuel for an internal combustion engine.
Therefore, switching to an anaerobic digester results in lower greenhouse gas emissions.
Four methodologies developed under the Carbon Farming Initiative (CFI) deal with the
capture and combustion of methane generated from agricultural waste:
• Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries
using Engineered Biodigesters) Methodology Determination 2013;
• Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from
Manure in Piggeries) Methodology Determination 2012;
• Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from
Manure in Piggeries 1.1) Methodology Determination 2013; and
• Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from
Dairy Manure in Covered Anaerobic Ponds) Methodology Determination 2012.
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The existing CFI determinations were assessed and endorsed by the Domestic Offsets
Integrity Committee as meeting the additionality and offsets integrity requirements of the
CFI. In general, the Exposure Draft Carbon Credits (Carbon Farming Initiative)
Methodology (Industrial, Domestic and Commercial Wastewater) Determination 2014 (the
draft Determination) applies an approach consistent with the existing CFI determinations.
This draft Determination makes some improvements to calculations including streamlining
the approach to calculating baseline emissions and providing a more flexible approach to
accounting for emissions from ineligible waste.
The draft Determination provides an incentive for wastewater operators to replace deep open
anaerobic lagoons with anaerobic digesters. Projects can earn credits in the form of ACCUs
for the destruction of the methane generated from eligible wastewater.
Application of the draft Determination
The draft Determination sets the requirements for implementing and monitoring offsets
projects that would avoid emissions by replacing a deep open anaerobic lagoon with an
anaerobic digester. These rules have been designed to reflect the requirements of the offsets
integrity standards and ensure that emissions reductions are real and additional to business as
usual.
Project proponents wishing to implement projects under the draft Determination, once it is
made, must make an application to the Regulator under section 22 of the Act. They must also
meet the general eligibility requirements for an offsets project set out in subsection 27(4) of
the Act, which include compliance with the requirements set out in the draft Determination,
and the additionality requirements in subsection 27(4A) of the Act. The additionality
requirements are:
• the newness requirement;
• the regulatory additionality requirement; and
• the government program requirement.
Subsection 27(4A) of the Act provides that a methodology determination may specify
requirements in lieu of any of the above requirements. The draft Determination does not
specify any requirements in lieu, and so all three requirements in the Act apply to eligible
wastewater projects.
Public Consultation
The draft Determination has been developed by the Department of the Environment in
collaboration with a technical working group of experts from the waste industry and the
Regulator. The waste sector technical working group held meetings on 26 November 2013,
27 February 2014, 21 July 2014 and 25 September 2014. The technical working group has
reviewed draft versions of this methodology prior to the release of this draft Determination
for public consultation.
The exposure draft Determination has been published on the Department’s website for public
consultation from 15 October 2014 to 12 November 2014. Details for how to make a
submission are provided on the Department of the Environment website,
www.environment.gov.au
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Draft Determination Details
The draft Determination will be a legislative instrument within the meaning of the Legislative
Instruments Act 2003.
The draft Determination will begin on the day after it is registered.
The draft Determination will end when it is either revoked under section 123 of the Act, or on
the day before it would otherwise be repealed under the Legislative Instruments Act 2003,
whichever happens first. Under subsection 50(1) of that Act, a legislative instrument such as
the draft Determination is repealed on the first 1 April or 1 October falling on or after the
tenth anniversary of registration of the instrument on the Federal Register of Legislative
Instruments. For example, if the draft Determination is registered between 1 October 2014
and 1 April 2015, it would expire on 31 March 2025.
Details of the draft Determination are at Attachment A.
Note on this explanatory statement
Numbered sections in this explanatory statement align with the relevant sections of the draft
Determination.
The definition of terms highlighted in bold italics can be found in the draft Determination.
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Attachment A
Details of the Methodology Determination
Part 1
1
Preliminary
Name of determination
Section 1 sets out the full name of the draft Determination, which is the Carbon Credits
(Carbon Farming Initiative) Methodology (Industrial, Domestic and Commercial
Wastewater) Determination 2014.
2
Commencement
Section 2 provides that the draft Determination will commence on the day after it is registered
on the Federal Register of Legislative Instruments.
3
Authority
Section 3 provides that the draft Determination would be made under subsection 106(1) of the
Act.
4
Duration
Under subparagraph 122(1)(b)(i) of the Act, a methodology determination remains in force
for the period specified in the determination.
Paragraph 4(a) provides that the draft Determination will be in force from the commencement
until the day before it would otherwise be repealed under subsection 50(1) of the Legislative
Instruments Act 2003.
Instruments are repealed under that provision on the first 1 April or 1 October following the
tenth anniversary of registration on the Federal Register of Legislative Instruments.
Paragraph 4(b) ensures that the draft Determination would expire in accordance with
subparagraph 122(1)(b)(i) of the Act.
If the draft Determination expires or is revoked during a crediting period for a project to
which the draft Determination applies, the draft Determination will continue to apply to the
project during the remainder of the crediting period under subsections 125(2) and 127(2) of
the Act. Project proponents may apply to the Regulator during a reporting period to have a
different methodology determination apply to their projects from the start of that reporting
period (see subsection 128(1) of the Act).
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Definitions
Section 5 defines a number of terms used in the draft Determination.
Generally, where terms are not defined in the draft Determination, they have the meaning
given by section 5 of the Act.
Under section 23 of the Acts Interpretation Act 1901, words in the determination in the
singular number include the plural and words in the plural number include the singular.
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Key definitions in section 5 of the draft Determination include those set out below.
Anaerobic digester refers to a system used to promote anaerobic digestion of wastewater and
collect the biogas that is produced as a result. The anaerobic digester includes the transfer of
biogas to a combustion device.
Combustion device refers to a flare, boiler, internal combustion engine or other similar device
used to combust biogas. The definition sets out general principles that a device must meet to be
approved by the Regulator as satisfying the requirements of this methodology.
Deep open anaerobic lagoon refers to an existing wastewater treatment lagoon. Deep is
defined as being of a depth greater than two metres. The NGER (Measurement)
Determination states that anaerobic lagoons greater than two metres deep have the same
methane generating output as anaerobic digesters. The methodology requires that the lagoon
being replaced must be a deep open anaerobic lagoon. This ensures that no extra methane is
generated simply as a result of replacing an open anaerobic lagoon with an anaerobic digester.
This helps guarantee that any emissions abated by the project would have occurred in the
baseline, and therefore the abatement is genuine.
Domestic or commercial wastewater means liquid wastes and sludge from housing or
commercial premises (including human waste).
Eligible wastewater is any industrial, domestic or commercial wastewater which is from a
source that is consistent with the historic source. The wastewater must be consistent with the
historic source of wastewater to ensure that estimates of baseline emissions accurately reflect
what would have occurred in the absence of the project.
Historic source refers to the source(s) of wastewater treated at the wastewater facility in the
12 months before an application is made for the declaration of a project as an eligible offsets
project. These sources need to be documented and must represent either industrial, domestic
or commercial wastewater.
Industrial wastewater refers to liquid wastes or sludge resulting from the production of a
commodity, by an industry. This definition is consistent with the definition used in the NGER
(Measurement) Determination.
NGER (Measurement) Determination refers to the National Greenhouse and Energy
Reporting (Measurement) Determination 2008, made under subsection 10(3) of the National
Greenhouse and Energy Reporting Act 2007, as amended from time to time.
Source means the point of generation of wastewater. This might be the physical location
where the wastewater is generated or a specific activity or facility that generates the
wastewater.
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Part 2
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Wastewater projects
Wastewater projects
The effect of paragraphs 27(4)(b) and 106(1)(a) of the Act is that a project must be covered
by a methodology determination, and that the methodology determination must specify the
kind of offsets project to which it applies.
Section 6 specifies the high level features of a project under this draft Determination that
distinguish it from other types of offset projects. A key feature for this kind of offsets project
is that a deep open anaerobic lagoon (which is treating either domestic and commercial or
industrial wastewater or any combination of both, as specified in Part 3) is replaced with an
anaerobic digester.
The draft Determination defines these kinds of projects as wastewater projects.
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Part 3
7
Project Requirements
Operation of this Part
Paragraph 106(1)(b) of the Act provides that a methodology determination must set out
requirements to be met for a project to be an eligible offsets project. Under
paragraph 27(4)(c) of the Act, the Regulator must not declare that a project is an eligible
offsets project unless the Regulator is satisfied that the project meets these requirements.
Part 3 of the draft Determination specifies a number of requirements that must be met in order
for a project to be an eligible offsets project.
A key requirement under both the ERF and the CFI is that credits are issued for emissions
reductions that are ‘additional’ – that is, emissions reductions would not likely have occurred
under normal business conditions, in the absence of the ERF. The newness, regulatory
additionality and government program requirements are additionality requirements specified
in subsection 27(4A) of the Act. These requirements are sufficient for eligible wastewater
projects and therefore the draft Determination does not specify requirements in lieu of those
in the Act.
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Lagoons to be replaced
The lagoon to be replaced must be a deep open anaerobic lagoon that treats any combination
of domestic, commercial or industrial wastewater.
A project application must include evidence of the kind and source of wastewater treated in
the 12 month period before an application is made. Evidence for the kind and source(s) of
wastewater in the 12 months before an application is made is necessary to ensure that
emissions reductions are genuine. The historical data will help assess whether other sources,
inconsistent with the historic wastewater sources, are being treated in the project (for instance
additional wastewater sources being treated with the objective of generating more biogas).
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Anaerobic digesters
The project must replace a deep open anaerobic lagoon with an anaerobic digester to collect
the biogas.
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Combustion devices
Biogas produced by the anaerobic digester must be combusted by a combustion device. If a
combustion device is not a flare, boiler or internal combustion engine then the device must be
approved by the Regulator prior to its use. The Regulator will check that the device meets the
requirements specified in the definition of combustion device in the draft Determination.
These requirements include that the device combusts biogas with a destruction efficiency of
at least 98 per cent and that the combustion process can be monitored on a minute-by-minute
basis.
8
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Projects to be in accordance with application
The project must be implemented substantially in accordance with the project application
made under section 22 of the Act. A project must seek approval from the Regulator if they
intend to make a significant change from the project outlined in the application.
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Part 4
Net abatement amount
Division 1
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Operation of this Part
Operation of this Part
Paragraph 106(1)(c) of the Act provides that a methodology determination must specify how
to calculate the carbon dioxide equivalent (CO 2 -e) net abatement amount for the project in
relation to a reporting period. Part 4 sets out these rules.
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Overview of gases accounted for in abatement calculations
This section provides a summary of the greenhouse gas sources that are assessed in order to
determine the net abatement amount. The emission sources which need to be taken into
account when calculating abatement for the project are set out in Table 1.
Table 1: Overview of gases accounted for in the abatement calculations
Greenhouse gases and emissions sources
Relevant calculation
Emissions source
Baseline emissions
Treatment of eligible wastewater in a
deep open anaerobic lagoon
Project emissions
Fossil fuel consumption
Project emissions
Electricity consumption
Project emissions
Emissions from anaerobic digester
leaks and venting events
Emissions from the combustion of
biogas
Project emissions
Project emissions
Treatment of digestate
Greenhouse gas
Methane (CH 4 )
Carbon dioxide (CO 2 )
Methane (CH 4 )
Nitrous oxide (N 2 O)
Carbon dioxide (CO 2 )
Methane (CH 4 )
Nitrous oxide (N 2 O)
Methane (CH 4 )
Methane (CH 4 )
Nitrous oxide (N 2 O)
Methane (CH 4 )
Nitrous oxide (N 2 O)
A number of emission sources are excluded from the abatement calculations for the following
reasons:
•
in the baseline scenario, nitrogen emissions are excluded for reasons of both
conservativeness and simplicity;
•
emissions from the transport of digestate are excluded as these emissions are
considered immaterial to the overall emissions of the project. This exclusion is
supported by analysis of data from existing CFI projects. This exclusion also
streamlines the record keeping and reporting requirements for project proponents; and
•
carbon dioxide emissions emitted from the treatment of wastewater and the
combustion of biogas are excluded, because these emissions have a biogenic origin
(originate from organic material) and so are not counted towards Australia’s national
greenhouse gas accounts.
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14
References to factors and parameters from external sources
Default, calculated and monitored parameters must be sourced or measured according to the
instructions within the draft Determination. The draft Determination aligns with the NGER
(Measurement) Determination; however, the draft Determination must take precedence over
other sources. Unless otherwise specified, the proponent should use the NGER
(Measurement) Determination approaches and default values that are sourced from
referenced documents current at the time of reporting emissions reductions from an approved
project or at the time the report is required (whichever is earlier). The application of
referenced documents current at the time of reporting is consistent with the approach used in
existing CFI determinations.
Subsection 14(2) clarifies that projects are not expected to retrospectively apply monitoring
requirements specified in the NGER (Measurement) Determination or other relevant sources.
Projects should apply the monitoring requirements using approaches current at the time
monitoring occurs.
Division 2
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Method for calculating net abatement amount
Net abatement amount (A)
The carbon dioxide equivalent net abatement amount for an eligible offsets project is set out in
equation 1. For wastewater projects the net abatement amount is baseline emissions minus
project emissions.
Division 3
Baseline emissions
This Division sets out how baseline emissions should be calculated. The baseline provides an
estimate of potential methane emissions that would have been released to the atmosphere from
eligible waste, in the absence of the project.
The approach to calculating baseline emissions differs from the existing CFI determinations as
well as the NGER (Measurement) Determination. This is because both of these approaches use
a theoretical calculation to estimate the amount of methane that would have been released to
the atmosphere. A theoretical approach has not been used for reasons of simplicity, since it
would require sophisticated modelling techniques where an open anaerobic lagoon has been
replaced with an engineered biodigester.
The draft Determination estimates baseline emissions by determining the amount of methane
that was destroyed by the project. This amount of methane is taken to have been the same
amount of methane that would have been generated in the absence of the project. For a given
load of waste, the switch from using a deep open anaerobic lagoon to an anaerobic digester
does not result in more methane being generated. This is consistent with the NGER
(Measurement) Determination, which provides that lagoons with a depth greater than two
metres have the same methane generation output as engineered biodigesters.
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16
Baseline emissions (E B )
Baseline emissions represent the potential methane emissions from eligible wastewater that
would have been emitted to the atmosphere in the absence of the project. For the purposes of
this draft Determination, the amount of methane generated and released to the atmosphere is
presumed to be equivalent to the amount of methane destroyed by the combustion device.
Section 16 provides for the calculation of baseline emissions by adding the amount of
methane combusted by each combustion device (h) (M Com,h ) and applying the factor for
the proportion of biogas generated by eligible wastewater (W EW ).
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Proportion of biogas that is generated by eligible wastewater (W EW)
Anaerobic digesters may be used to treat waste from a range of sources. Under this draft
Determination, only the destruction of methane from eligible wastewater should be credited.
This section provides for the calculation of the proportion of biogas that is generated from
eligible wastewater.
If during a reporting period, less than two per cent of the total volume of material treated is
ineligible material and the volume of an individual type of ineligible material is not greater
than 0.5 per cent, then the proportion is taken to be one (that is one hundred per cent of biogas
generated is taken to be from eligible wastewater). This enables incidental amounts of
ineligible wastewater to be treated by the project. These limits have been adopted from the
CFI Engineered Biodigesters methodology.
If more than two per cent of material treated is ineligible or more than 0.5 per cent is an
individual type of ineligible material then equation 3 is used.
Equation 3 determines the ratio of biogas generated by eligible wastewater to the total
amount of biogas generated.
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Methane generated by eligible wastewater (M EW)
Section 18 sets out how to calculate the methane generated by eligible wastewater.
Equation 4 uses the quantity of volatile solids and the maximum methane producing capacity
of material type (w). The quantity of volatile solids is used to measure the amount of waste
type (w) that is capable of producing biogas when treated anaerobically. The maximum
methane producing capacity is a measure of how much methane a material type (w) emits. By
multiplying the amount of volatile solids of material type (w) with its maximum methane
producing capacity, the total amount of methane emitted from material type (w) can be
determined. Maximum methane producing capacities for material types (w) are determined in
accordance with section 20.
In section 18 material type (w) is a type of eligible wastewater.
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Methane generated by ineligible material (M IM )
Section 19 sets out how to calculate the methane generated by ineligible material. Equation 5
uses the quantity of volatile solids and the maximum methane producing capacity of material
type (w). The quantity of volatile solids is used to measure the amount of the portion of waste
type (w) that is capable of producing biogas when treated anaerobically. The maximum
methane producing capacity is a measure of how much methane a material type (w) emits. By
multiplying the amount of volatile solids of material type (w) with its maximum methane
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producing capacity, the total amount of methane emitted from material type (w) can be
determined. Maximum methane producing capacities for material types (w) are determined in
accordance with section 20.
In section 19 material type (w) is a type of ineligible material.
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Maximum methane-producing capacities (M Max,w)
The maximum methane producing capacity for a material type may be determined either in
accordance with the monitoring requirements (see Part 5) or by using default values for the
material type (set out in the table in Schedule 1). If a proponent chooses to monitor the
maximum methane producing capacity for a material type (w) rather than use an available
default value, then the proponent is not permitted to subsequently use a default value for
material type (w). If a default value for a material type is not set out in the table in Schedule
1, then the maximum methane producing capacity must be determined in accordance with the
monitoring requirements (see Part 5).
If a default value becomes available through an update to the Determination, then at that point
in time the project is able to choose to use the default value. A proponent who selects to use
the newly available default value may decide to revert to monitoring, but cannot change back
to the default. A proponent is able to select different options for different material types.
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Methane combusted by combustion device (h) (M Com,h )
Section 21 provides three approaches to calculate the methane combusted by combustion device
(h) (M Com,h ). The approaches are consistent with other CFI determinations which involve the
use of anaerobic digesters such as the Carbon Credits (Carbon Farming Initiative)
(Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology
Determination 2013.
The approaches are:
1. If the device is a boiler or a flare with a monitoring and control system then methane
combusted is calculated using equation 6;
2. If the device is an internal combustion engine then methane combusted may be calculated
using either equation 6 or equation 7; or
3. If the device is not covered by either of the first two approaches (paragraphs 21(1)(a) or
(b)) then the methane combusted must be calculated using equation 8.
Equation 6 (subsection 21(2)) requires the volume of biogas sent to the combustion device (h)
(Q BG,h ) to be monitored. This quantity of biogas is multiplied by the proportion of biogas that is
methane (W BG,CH4 ) to determine the quantity of methane combusted (M Com,h ). The proportion of
biogas that is methane (WBG,CH4 ) is determined either by using the default proportion listed in the
NGER (Measurement) Determination or determined in accordance with the monitoring
requirements (see Part 5).
Subsection 21(5) requires that if a project chooses to determine (W BG,CH4 ) in accordance with the
monitoring requirements, then the project must continue to use this approach for the remainder of
the project. This restricts projects from swapping between default and monitored values. If a
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project uses the default value for (WBG,CH 4 ), the project may change to continuous monitoring but
cannot change back to the default.
Equation 7 (subsection 21(3)) determines the amount of methane combusted by an internal
combustion engine. The amount of electricity produced by the internal combustion engine (Q EG,h )
depends on the amount of biogas sent to the combustion device (M Com,h ) multiplied by an
efficiency factor (Eff h ) which determines how much of the energy in the biogas is converted to
electricity.
Similar to equation 6, equation 8 (subsection 21(4)) determines the quantity of methane
combusted (M Com,h ) as the volume of biogas sent to the combustion device (h) (Q BG,h,m )
multiplied by the proportion of biogas that is methane (W BG,CH4 ). In addition, equation 8 requires
monitoring the operation of the combustion device (O h,m ). If the combustion device is not
operated satisfactorily in minute (m), then O h,m is assigned 0, otherwise it is 1 (see Part 5 for
monitoring requirements). This monitoring is done on a minute by minute basis and paired to
values for the same minute (m) for the volume of biogas sent to the combustion device (h)
(Q BG,h,m ) and the proportion of this biogas that is methane (W BG,CH4 ). Equation 8 ensures that
only methane combusted when the flare is operating in a satisfactory manner is included as part of
calculating baseline emissions. (W BG,CH4 ) is worked out in the same way as for equation 6.
Division 4
Project emissions
Project emissions sources are consistent with the CFI Engineered Biodigesters methodology.
Where a project does not exceed the thresholds for treating ineligible material, a key change
in this draft Determination is to exclude the calculation of emissions from the anaerobic
digester as a result of leakage or venting events. This emission source is not calculated as a
project emissions source because the approach to calculating baseline emissions already
accounts for emissions from leakage. As noted in Division 3, baseline emissions are based
on the amount of methane combusted in the project, which inherently does not include any
biogas that has been leaked or vented before being sent to the combustion device.
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Project emissions (E P )
Emissions from the project are calculated by taking into account emissions from fuel and
electricity used in the operation of the facility, emissions from the combustion device as well
as from the end management of digestate produced.
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Emissions from fossil fuel use (E Fuel )
Emissions from fossil fuel use (E Fuel ) are calculated using equation 10, based on monitoring
the quantity of each fossil fuel type used in the reporting period (Q Fuel,i ).
This quantity of fossil fuel can be monitored on different bases (solid, liquid and gas), and
must be converted to a common measure of energy (gigajoules) using an energy content
factor that is unique to the fuel and the basis of how its quantity is measured (EC i ). This
amount of energy is then multiplied by an emissions factor (EF ijoxec ) that calculates the
emissions of each greenhouse gas type (j) (carbon dioxide, nitrous oxide and methane)
resulting from the use of the fossil fuel (i). Proponents are required to repeat this calculation
for each fossil fuel used and for each greenhouse gas (j) emitted. The emissions are then
added together.
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The energy content factors (EC i ) and emissions factor (EF ijoxec ) are default factors sourced
from the NGER (Measurement) Determination.
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Emissions from purchased electricity use (E Elec )
Emissions from using purchased electricity (E Elec ) are calculated using equation 11 by
multiplying the quantity of electricity used to operate the facility during the reporting period
(Q Elec ) by the relevant scope 2 grid-based electricity emissions factor (EF Elec ) for the source
of the electricity used.
The electricity emission factor (EF Elec ) is set out in the National Greenhouse Accounts
Factors published by the Department and will apply unchanged from the date of project
declaration provided that the source of the electricity does not change. If the electricity is
from a source other than an electricity grid included in the National Greenhouse Accounts
Factors, then the project should apply the factor provided by the supplier of the electricity or
if that factor is not known then a factor for off-grid electricity should be used.
This approach to electricity emissions is applied consistently across all relevant emissions
reduction methodologies. This approach is a change from existing CFI determinations which
referred to state-based factors published in the NGER (Measurement) Determination. Further
information on electricity emissions factors will be published by the Department.
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Emissions from anaerobic digester leakage or venting events (E AD,IM )
Emissions from an anaerobic digester occur in two circumstances. The first results from the
biogas collection efficiency of the anaerobic digester because under normal operation, a small
amount of leakage will occur. Emissions from the normal operation of the anaerobic digester
are taken to be two per cent of the total methane produced. This is consistent with the default
98 per cent collection efficiency of an anaerobic digester which has been used in previous
CFI determinations.
The second circumstance occurs when there is a major venting event and biogas stored in the
system is released to the atmosphere.
Only the proportion of emissions resulting from ineligible material is included in this
emissions source. This is because the proportion of emissions resulting from eligible
wastewater has been accounted for in the baseline calculations. The baseline calculations
estimate the amount of methane produced as a result of eligible wastewater being treated in a
deep open anaerobic lagoon. To calculate this figure, this draft Determination uses the
proportion of methane, generated from eligible wastewater, that is destroyed by the project.
However this amount of methane combusted will be less than the amount of methane
generated in the deep open anaerobic lagoon.
This loss is not due to replacing a deep open anaerobic lagoon with an anaerobic digester. As
mentioned above, for a given amount of wastewater, the amount of methane generated in both
technologies is the same. Rather, the loss is due to the fact that there will always be some
amount of biogas lost when it is transmitted from an anaerobic digester to a combustion
device. These losses occur through leaks in piping as well as the venting of biogas for
operational reasons. These losses are captured by this emissions source.
The baseline calculation, by using the amount of methane destroyed, effectively takes this
emissions source into account for the treatment of eligible wastewater. To include these
emissions in this calculation step, would effectively amount to double counting.
15
However since the baseline calculation does not take into account the proportion of methane
generated by ineligible material, the proportion of anaerobic digester emissions generated by
ineligible material needs to be accounted for. Since any amount of ineligible material can be
treated in this method, it is important to include these emissions for conservativeness, since it
cannot be assumed that these emissions would have occurred in the absence of the project.
26
Volume of methane vented due to a major venting event (M vent,q )
The fugitive emissions from anaerobic digester major venting events, for example, when
maintenance is required, must be calculated using equation 13. Venting emissions are
calculated by multiplying the maximum biogas storage capacity of the storage system by the
number of days over which the venting occurs.
27
Emissions from the combustion of biogas (E Com )
Methane and nitrous oxide emissions released as a result of methane combustion are
calculated using equation 14.
Proponents calculating methane emissions combusted by combustion device (h) (M Com,h )
using equations 6 or 8, are required to either use a default value or monitor the methane
fraction of the volume of biogas sent to combustion devices (W BG,CH4 ). As per subsection
20(5), where a project proponent chooses to monitor the methane fraction of the volume of
biogas sent to combustion devices (W BG,CH4 ), they must do so for the entire project. If a
project uses the default value for (W BG,CH4 ), the project may change to monitoring but cannot
change back to using the default values.
28
Emissions from the end management of digestate (E Dig )
Section 28 calculates the emissions from the end management of digestate removed from the
anaerobic digester. As there are several ways in which the digestate could be treated, this
section is used to add together emissions from different digestate treatment types. Emissions
from treatment types are calculated in accordance with sections 29, 30 and 31. If the digestate
is not treated using a treatment type covered by sections 29, 30 and 31then the digestate
emissions are taken to be zero.
29
Digestate – aerobic treatment (E Dig,aer,n )
Section 29 is used to calculate emissions from the aerobic treatment of digestate. Emissions
are estimated using default emissions factors multiplied by the amount of digestate treated.
Default emissions factors are taken from the CFI Engineered Biodigesters methodology.
16
30
Digestate – disposed to landfill (E Dig,LF )
Section 30 provides for the calculation of emissions from digestate when it is disposed to
landfill. The calculation is similar to section 29, however landfill gas capture and combustion
is also taken into account as not all emissions generated in a landfill would be released to the
atmosphere. The average capture rate for methane emissions of landfill gas in the state or
territory in which the landfill operates are based on the Australian National Greenhouse Gas
Inventory Report 2012. Average rate of landfill gas capture will be updated over time.
Projects that are declared as an eligible offsets project will use the value in force at the time
the project commences and retain the value for the life of the project.
31
Digestate – treated in open anaerobic lagoon (E Dig,Lag)
Section 31 sets out how to calculate emissions from the treatment of digestate in open
anaerobic lagoons. This equation requires the quantity of digestate, the volatile solids content
of the digestate and the maximum methane producing capacity of the digestate to be
monitored (see Part 5 for monitoring requirements).
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Part 5
32
Reporting, record keeping and monitoring requirements
Operation of this Part
Subsection 106(3) of the Act provides that a methodology determination may require the
project proponent of an eligible offsets project to comply with specified reporting, record
keeping and monitoring requirements.
Under Parts 17 and 21 of the Act, a failure to comply with these requirements may constitute
a breach of a civil penalty provision, and a financial penalty may be payable.
The reporting, record keeping and monitoring requirements specified in Part 5 of the draft
Determination are in addition to any requirements specified in the Act, Regulations 2 and
legislative rules.
Reporting periods
The Act and subordinate legislation provide for flexible reporting periods between six months
and two years in duration. Proponents should be aware that the Act and subordinate
legislation may also specify other reporting and notification requirements affecting the draft
Determination.
Offsets report requirements
General offsets report requirements are included in the Act and subordinate legislation. The
general offsets report requirements specified in Division 6.1 of the Regulations are intended
to be streamlined and transferred to legislative rules. This draft Determination does not
include any offsets report requirements in addition to the requirements of the Act and
subordinate legislation.
Changed audit requirements
The Act provides for a risk-based approach to auditing emissions reductions. Subsections
13(1) and 76(4) of the Act provide for legislative rules to be made by the Minister, specifying
the level of assurance, frequency and scope of the audit report that must be provided with
project reports for different types of projects.
Notification requirements
No notification requirements are specified in the draft Determination. The Act and legislative
rules will specify notification requirements that apply to all ERF projects. The Regulations
currently include several notification requirements and the intention is to transfer these
requirements from Regulations to legislative rules over time.
2
The Carbon Credits (Carbon Farming Initiative) Regulations 2011 can be accessed at
http://www.comlaw.gov.au/Details/F2012C00466. It is intended that these requirements in
Regulations will be revised and transferred to legislative rules for the ERF over time.
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Record keeping requirements
The Act and legislative rules will specify record keeping requirements that apply to all
projects. The Regulations currently include several record keeping requirements and the
intention is to revise these requirements and transfer them from Regulations to legislative
rules. These requirements are expected to include:
• correspondence between the proponent and the Regulator in relation to an eligible
offsets project;
• offsets reports and CFI audit reports (if any);
• evidence that the project is, and continues to be, of a kind to which the determination
applies, including details of the emissions reduction or sequestration activities
undertaken for the project;
• evidence that in implementing and operating a project, the requirements for
maintaining a project’s declaration continue to be satisfied;
• evidence that the carbon dioxide equivalent net abatement amount has been
ascertained using the method specified in, or ascertained in accordance with, the
determination;
• records of all monitoring data required to be collected;
• evidence that the specified requirements to monitor the project have been met;
• where applicable, evidence that operation, monitoring and calibration of equipment
for the project is in accordance with manufacturers’ specifications and calibration
instructions;
• information about significant variations in the scope of the project; and
• information about any event that is reasonably likely to significantly increase or
decrease abatement.
All records required above must be kept in a form that is easily and quickly accessible for
inspection and audit.
The draft Determination imposes no additional record-keeping requirements.
33
Requirement to monitor certain parameters
Section 33 specifies requirements to monitor a wastewater project that is an eligible offsets
project under paragraph 106(3)(d) of the Act.
The draft Determination requires that measurement procedures meet specifications in the
NGER (Measurement) Determination or other relevant standards and other requirements
under the National Measurement Act 1960. This is implicit where a parameter must be
measured in accordance with the NGER (Measurement) Determination, and otherwise a
monitoring parameter must meet appropriate measuring requirements.
Any equipment or device used to monitor a parameter must be calibrated by an accredited
third party technician at intervals, and using methods, that are in accordance with the
manufacturer’s specifications.
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Section 33 also describes the consequences of failing to monitor in accordance with the
monitoring requirements. In general, when parameters cannot be monitored according to
provided specifications, no inputs should be used in the calculations for that period. This
clarifies that if a project does not comply with the monitoring requirements then activity for
that period should not be counted.
Section 33 acts as an incentive for proponents to ensure their monitoring devices are operating
effectively and that any periods of ‘failure’ are minimised. This is a conservative assumption
in accordance with the offsets integrity standards in the Act and supports accurate reporting
and crediting of genuine emissions reductions.
34
Monitored parameters
Section 34 lists parameters used in the calculation of net abatement amounts in Part 4 of the
draft Determination that require monitoring, including specifications for the procedure,
frequency of monitoring and how to derive the parameter value based on the measurements
and monitoring data.
Key monitoring parameters are:
• the quantities of each waste type treated by the project;
• the quantity of fuel and electricity used by the project; and
• the volume of biogas sent to combustion devices and the methane content of that
biogas.
Where the monitoring frequency of a parameter is specified as ‘continuously’, this means it
should be monitored throughout the reporting period at intervals necessary to meet the
specified standards.
20