Business wins reprieve on emissions rules

31 Aug 2009Archived News Energetics in the News

PUBLISHED: The Australian Financial Review by John Breusch and Annabel Hepworth - Energetics is quoted on opinions about the NGER programme.

Business is set to win a reprieve from mandatory emissions and energy use reporting requirements as the national regulator vows to focus on educating rather than punishing companies struggling to comply with the new federal rules.

But the commonwealth’s greenhouse and energy data officer, David Rossiter, has warned he will use tough powers, including fines for chief executives, against “opportunistic behaviour” by companies aimed at flouting their obligations.

More than 450 businesses face a deadline today to register with the national system for mandatory emissions reporting, known as NGERS.

The government recently rebuffed a demand by peak business groups, including the Business Council of Australia and the Australian Bankers Association, to delay the deadline for companies to provide their first reports under the scheme.

“In the early years you’ll see people who have made errors of some sort or other,” Mr Rossiter told The Australian Financial Review.

“You would treat that as an opportunity for education rather than for enforcement and bring them back to [voluntary compliance].”

High-energy businesses such as miners, transport firms and manufacturers are required to apply for registration by today. The scheme is designed to create a national system for mandatory emissions reporting and underpin carbon trading.

Industry players are estimated to be spending billions of dollars to upgrade their corporate computer systems and overhaul their workplaces to comply with the legislation, but there are fears some businesses are not ready.

By October 31, companies that registered will have to file detailed reports on their greenhouse and energy use to the government.

Mr Rossiter said he might take a stronger line against “opportunistic behaviour” where there were sufficient grounds to believe a company was trying to avoid its obligations.

“I hope that doesn’t happen, and I suspect it probably won’t in the early years anyway,” he said.

The government has been staring down a backlash from business over the laws.

Groups including the Australian Bankers’ Association, Business Council of Australia, Australian Industry Group and Property Council of Australia recently wrote jointly to the government asking it to delay the reporting date of October 31.

The AFR has learned that the business groups argued a delay would cut their compliance costs by avoiding double-handling of data and of reporting processes – big energy-using businesses also have to report on their compliance with separate federal energy efficiency opportunities legislation by December 31.

The groups also argued that because the start of emissions trading had been delayed to 2011, reporting information to the regulator was less urgent.

It is understood the groups received a letter from the acting Minister for Climate Change, Greg Combet, rejecting the push for extra time.

Leighton Holdings chief executive Wal King estimated that the company would have to spend $6 million to $8 million a year to report and deal with paperwork under the scheme.

“There’s still areas of uncertainty with the whole thing. In terms of greenhouse and the whole greenhouse debate, it’s coming, and you really have to comply with it,” he said.

Leightons wants a moratorium on penalties under the scheme, given that the federal government has delayed the carbon trading scheme by a year.

Australian Bankers’ Association chief executive David Bell said: “I think we will all gain comfort that the government is prepared to be flexible with how these processes are put into place. We understand the government has an absolute need for this information.”

Rio Tinto said it was on track to meet the deadine for the scheme.

“The work required to meet the new requirements has certainly been resource intensive, involving collaborative work with our operations and has required some additional staffing,” a Rio Tinto spokeswoman said.

Cement Australia’s national sustainability manager, Stuart Ritchie, said the company had engaged PricewaterhouseCoopers to help it untangle issues related to how NGERS, National Greenhouse and Energy Reporting System, applied to its complex legal corporate structure.

“That has proven to be a somewhat more difficult exercise that we’d anticipated,” he said.

“We have a long history of emissions data, but the new reporting system requires us to manually recalculate to a new set of legal entity boundaries, and will necessitate a reworking of our current reporting systems.”

Boral has been collecting data on emissions from more than 700 of its sites because it has previously complied with other schemes and believes this has helped it avoid spending a lot of money on consultants and systems.

“The reality is that if we had not been voluntarily reporting our energy and greenhouse emissions for the past five years, if we were starting NGERS reporting from a standing start, it would be a significant challenge to be ready in time to report,” a Boral spokeswoman said. “It has taken us several years to develop and refine our systems and for our people to understand what is required in collecting reliable energy and greenhouse data.”

NGERS was enacted by the Howard government. It imposes mandatory requirements for companies to report their greenhouse gas emiaaions, with fines for failing to comply.

Mr Rossiter said the government had expected registration applications from about 450 companies, but had already received almost 600. It appeared some companies that did not meet the threshold had applied just to be safe.

Registered companies are expected to have to report by October 31 for the 2008-09 financial year. Because lower thresholds for reporting will be phased in by 2010-11, about 700 medium and large companies are expected to be included eventually.

Deloitte leader of climate change reporting and assurance Brad Pollock said there had been confusion about the laws.

“There’s a whole raft of companies that are still very large companies but they’re just not sure whether or not they are over the thresholds,” he said.

Deacons’ natural climate change practice head Elisa de Wit said it had been inundated with requests for advice on the requirements.

“I think it’s fair to say that companies weren’t as ready as they thought they were: firstly in deciding are they actually caught by NGERS, do they have to comply; then how do they organise data so that they can actually start putting their report in place,” Ms de Wit said.

Climate change consultancy Energetics said NGERS required a far greater effort by organisations for compliance and reporting then earlier programs such as Greenhouse Challenge Plus.

Advisers said while there had been energy and greenhouse reporting from the industrial sector, reporting in the commercial sector had been far more sporadic.

Paul Curnow, a partner in the Baker & McKenzie climate change practice, said that while large companies were on top of their NGERS reporting requirements, “when you get down to the smaller players… then there’s a lot of people who I think aren’t prepared for it”.

Data collection could be particularly complicated in industries like mining, where owners, operators and sub-contractors might each have to identify and report their respective emissions. “It can be quite onerous. And the data requirements can be quite onerous because you do have to go down to quite a lot of detail in terms of sources and all types of emissions,” he said.

Allens Arthur Robinson partner Grant Anderson said one of the most significant concerns for businesses facing the reporting deadline was ensuring they complied with the “fairly complex” regulations and measurement requirements in NGERS.

There were also questions over who has reporting responsibility in sectors such as contract mining and construction, where activities were frequently outsourced.

Join the conversation