Media release: Mandatory carbon audits: a complex task requiring specialised skills

21 Mar 2013Archived News Energetics in the News

Reported in The Australian Financial Review today, “Polluters face audit squeeze”, Energetics and BDO discuss the implications of The Clean Energy Regulator’s requirement that Australia’s top emitters undertake audits of their greenhouse emissions.

More than 100 of Australia’s largest emitters will be significantly impacted by the auditing requirement announced on Friday by the Clean Energy Regulator which will stretch the existing audit resources of many organisations and introduce additional complexity to the process.

The Clean Energy Regulator issued advice that Australia’s largest emitters of greenhouse gases, responsible for more than 125,000 tonnes CO2-e, must conduct a pre-submission audit of their emissions as reported under the scope 1 component of the National Greenhouse and Energy Reporting Scheme (NGERS).

Audits must be submitted by 31 October 2013.

NGERS is widely regarded as the world’s most rigorous emissions profile reporting program.  Profiling carbon emissions requires a specialised set of skills.

Brian Innes, General Manager, Resources and Industrials at leading carbon and energy management consultancy Energetics, said, “Every industry and many facilities will have their own specific greenhouse profiling needs. The effects of different technologies, fuel mixes, sampling techniques, and the varying process control systems need to be understood to efficiently qualify their scope 1 combustion emissions. Industrial processes with fugitive emissions, such as oil and gas, nickel, cement and clinker, waste management, ammonia and nitrate manufacturers have the problem of auditing areas which have not typically been a focus for measurement. Auditors will require sufficient knowledge of the site’s process control systems so they can review the thermodynamics and mass balances of the process to understand and efficiently manage the audit risk.”

He also said, “Sites moving to specific higher order methods to reduce their liability such as coal miners can expect scrutiny for their treatment of fugitive methane emissions in their operations. LNG and natural gas producers have complex profiles due to the accounting rules around flaring, venting and fugitives.  LNG companies will also be seeking JCP production audits as part of the assistance received under the Clean Energy Future’s Jobs and Competitiveness Program.”

Dylan Byrne, Environmental Sustainability National Lead Partner at audit, tax and advisory firm, BDO stated “Auditors need a proven NGER Act audit methodology and the necessary technical skills and experience to establish an opinion with confidence and efficiency.”

While auditors analyse final data and possess insights into corporate reporting mechanisms, for a carbon audit they need the support of experts – usually with engineering backgrounds - who understand energy and emission sources, process control systems, production processes and are familiar with operating environments.  Effort can then be concentrated on areas of highest audit risk, resulting in an efficiently executed result.

With this in mind, it is important for businesses to appoint auditors who have both technical knowledge  and sufficient depth in expertise to deploy across multiple audits in this busy auditing period.

BDO and Energetics recommend Australia’s largest emitters take steps to ensure  their auditors have this mix of sector experience and depth in capability so as to create an efficient assurance process that is not disruptive to their business.

Dylan Byrne said, “As with any business audit, businesses want a team that can hit the ground running.”

View the full article, 'Polluters face audit squeeze' by Marcus Priest, on the Australian Financial Review website. Please note that membership is required to access this article.

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