Power generators: verify your emissions data ahead of the Clean Energy Regulator’s mandatory audit

12 Jul 2013Archived News Climate Change Matters

Australia’s power generators are well practiced in reporting emissions under the National Greenhouse and Energy Reporting Scheme (NGERS). However in recent times that data has assumed a new significance. Emissions reported now determine the size of a generator’s liability under the carbon pricing scheme and, on top of that, reported data is subject to a mandatory emissions verification audit.  

And even with a potential change in Federal Government later in 2013 we are unlikely to see the removal of emissions reporting obligations: quite the opposite. Information released so far on the Coalition’s Direct Action Plan suggests that NGERS data will form the baseline from which businesses can offer abatement “for sale” through the proposed Emissions Reduction Fund using a reverse auction process.  Businesses that increase emissions over a determined “business as usual” level will incur a penalty. 

It’s more important than ever to get your emissions data right. 

Lock in your auditor now

Due to the scale of the carbon liability, generators are now subject to an emissions verification audit process as administered under the federal Clean Energy Regulator. 

Energetics and our alliance partner BDO can provide emissions verification audits. With Energetics’ deep technical knowledge and BDO’s assurance approach, we are able to review internal data and systems as part of a pre verification process. This allows the generator to identify and rectify issues prior to any formal audit process.

Even if there was a change of government and a repeal of the Clean Energy Act to remove the current carbon price, generators can still expect an audit of their FY13 and FY14 emissions liability.

Accuracy in reporting minimises carbon costs

Any errors or uncertainty in this reporting process can lead to non-compliance and unnecessary costs. Overestimation of an emissions profile creates additional costs whereas underestimation will leave you exposed to short fall charges. For example, for a base load 500MW unit, a 1% error in emissions reporting is equivalent to approximately $900, 000 per year in carbon liability which provides a strong financial incentive for generators to ensure that the numbers are accurate.
There are a number of questions and issues that need to be addressed to ensure complete and accurate data:

  • Managing and reporting fuel inventory.  You need to have confidence in your fuel data (primarily coal).  Questions to be answered include, what are the limitations associated with different types of measuring equipment?  How are calculated emissions impacted by the accuracy and calibration of equipment?  What is the impact of the integration of fuel invoicing data with stockpile analysis? Has the site documented how it adheres to required measurement standards, frequency/testing energy content?
  • Reporting emissions methodology.  What is a higher order emissions methodology and why does it matter? What are the benefits and pitfalls associated with higher order methods? What is the uncertainty associated with the methodology and the implications for calculated emissions?
  • Understanding the various information pathways from the site processes into reporting.  What are the critical control points? Who is responsible? Are there any material transcription errors? Is the data of sufficiently high quality? Data should be interrogated and reconciled to identify errors.
  • Undertaking internal assurance and verification will provide confidence that audit quality data is being produced.
  • Supporting management systems – ensuring your management systems support a robust outcome.  Are your policies and procedures on data systems appropriate? Have you managed your reporting risk? Do they support quality in the reported data?

Opportunities beyond immediate emissions analysis

Energetics’ experience has also shown that an accurate understanding of an organisation’s emissions profile provides an opportunity to identify and unlock further savings. Examples include:

  • Leveraging existing reporting structures for NGERS, EEO or NPI (for example) by integrating them with general business data systems. Understand how the costs associated with the internal use of generated power has increased (cost of fuel, emissions permits, opportunity cost) and how this impacts the cost benefit analysis for potential efficiency and upgrade projects.
  • The generation sector is now required to participate in the Federal Government’s Energy Efficiency Opportunities (EEO) Program, the output of which is subject to company board sign off and public disclosure.
  • Increased focus on energy efficiency across all systems (from the turbine itself down to the many auxiliary systems). This is of particular importance now that reduced market demand has seen generators typically operating at only part loads when they are designed to be most efficient at full load.
  • Review maintenance and equipment replacement criteria for optimum operating efficiency and revenue.

Annual Clean Energy Investment Plans 

As part of the Federal Clean Energy Futures legislation, most brown coal fired generators were able to apply under the Coal Fired Generation Assistance package for help to adjust to the carbon price. Assistance is provided across six years, during which time there are key dates for the lodgement of Annual Clean Energy Investment Plans and to satisfy an Annual Power System Reliability Test, or risk potential forfeiture of the free permits.

For those receiving Coal Fired Generation Assistance, preparation of a yearly Clean Investment Plan that will be publicly reported needs to include plans for, investment in new capacity and R&D, emissions intensity reduction in existing stations and a report on the outcomes of the Energy Efficiency Opportunity assessment process.

Since NGERS was introduced, Energetics has been assisting many reporting entities including a number of coal mines and power generators (Alinta, BHP, Verve, CS Energy, Xstrata, Vale).  We have gained a depth of understanding of typical issues and measurement practices, limitations and data gaps, and how the different business systems assist in the data collection process. 

Energetics can help your organisation ensure that your emissions data is robust and audit-ready in order to meet multiple business requirements. Our experts can conduct audit assurance ahead of the CER’s mandatory audit, identify opportunities to lower carbon costs and meet the requirements of the Clean Investment Plan with documents that stand up to public scrutiny. Please contact one of our experts. 

Join the conversation