Reporting Greenly

01 Dec 2008Archived News Energetics in the News

PUBLISHED: License to Operate - By Keryn Hassall, Principal Consultant, Energy and Emissions Reporting. Keryn tells License to Operate magazine of the importance of early action in reporting to the NGER.

It is half-way through this financial year and companies have a new reporting challenge – NGER, the National Greenhouse and Energy Reporting System. NGER is the world’s first mandatory energy/carbon reporting scheme. The Commonwealth Government passed the National Greenhouse and Energy Reporting Act (NGERA) in September 2007.

The purpose of the new law is to ensure that there is a consistent approach to greenhouse gas emission reporting across Australia. The collection and reporting of information related to greenhouse gas emissions, greenhouse gas projects, energy production and energy consumption is a precursor to establishing the Carbon Pollution Reduction Scheme (CPRS). Compliance obligations under the new law began in July 2008 with the first reporting period required for the 2008/2009 financial year. Businesses are now faced with the challenge of implementing and complying with this legislation.

Preparing for NGER can feel like a journey through a maze and this article intends to give businesses some helpful hints for their journey. Reporting to NGER is due to be submitted by the end of October 2009, but there is much work to be done by companies in order to establish data capture and management processes to support NGER reporting requirements. In short, NGER is more than a simple compliance task.

The first step on the NGER journey is to determine whether a company trips the relevant NGER thresholds. Companies should assess all available information on company operations and activities, energy use, energy production and greenhouse gas emissions. This will allow a company to clarify their data collection obligations and the range of emission sources that must be measured and reported from those operations. Combustion of fuels is a major source of emissions, but there are also fugitive emissions to consider – including methane from coal mines or sewage treatment, and industrial process emissions from calcination of carbonates or use of fuels as feedstock.

There are four primary tasks in preparation for NGER:

  • Determining operational control and facility boundaries;
  • Establishing or revising processes to capture necessary data;
  • Selecting and implementing specified calculation methods; and
  • Building processes to collate captured data and calculate emissions using selected methods.

Each of these primary tasks will be supported through building awareness among staff of the significance of NGER and the role of energy and emissions information in determining permit liability under the CPRS.

Operational control boundary

Determining the boundary of a corporation’s reportable activities is an important task in NGER preparation. The NGER requirements are not based on corporate structure or ownership of assets, but on ‘operational control’ – the organisation with the authority to introduce and implement operating, environmental, or health and safety policies for a site or activity.

There can be no double counting under NGER, the corporation with ‘operational control’ over a site or activity must report all energy and emissions from all contributing companies.

Companies are now reviewing contracts to clarify operational control, documenting agreements with clients and contractors and establishing processes to capture and share data across these boundaries.
If operational control boundaries have not been resolved, the next steps are to:

  • Identify sites or activities where the boundary is unclear;
  • Review contracts to determine which party has policy;
  • Agree boundaries with clients and contractors; and
  • Decide how to share information across boundaries.

Data capture and management

NGER is all about information and therefore it is essential to capture all necessary information in an efficient way. It is much easier to capture data when it becomes available than to spend months of 2009 seeking and compiling data from the 2008 archives.

Ideally, this data capture should be embedded in existing processes. Data on energy purchases that arrive on invoices can be captured through accounts payable processes. The capture of data necessary for calculating process emissions should be captured through routine production data process information sets.

When updating processes to capture data for NGER, companies should consider all the data items needed to support the numbers, particularly the unit of measure and the way in which the amount was measured. NGER requires reporting of measurement methods used for both the energy source and the emissions calculation, so capturing and keeping the information about how the measurement was calculated, not just the measurement number, is recommended.

Data quality is expected to be high, similar to the data used for financial reporting, so as well as developing robust processes for data capture, companies should also have systems and processes to compile and review data for accuracy and completeness. Once data is being captured through operational processes, it should be collated to a single database for calculation of emissions. This coordinated approach allows for analysis of other aspects for NGER reporting, such as determination of facilities exceeding the facility threshold, identifying incidental emission sources and sites, and aggregation for reporting purposes.

One complication for data capture is that fuel use must be separated into transport or stationary energy uses, to allow for calculation using the separate emissions factors. Sites where all diesel is drawn from a central tank system may need to upgrade fuel logging to ensure that it can be correctly allocated.

Capture of data to calculate fugitive methane is a challenge for coal mines; periodic emissions monitoring equipment is required in some cases, or regular sampling and analysis of gas to defined standards, either of which can add significant expense.

Implementation of new data capture processes will affect people across an organisation, and will be most successfully implemented if employees have an awareness of the significance of NGER and the CPRS and the role the data they provide plays in the corporate informational preparation. Some corporations are providing training in NGER compliance so that employees understand the background, others are focussing on training in the processes to capture and manage data.

If processes are not yet established for data capture, some next steps are:

  • Look at existing processes that provide measurement or capture data, and assess what can be used for NGER. Revise processes to capture necessary data and associated details.
  • Ensure that there is confidence in capturing the necessary data and implement processes and systems to gather the data for analysis.
  • Consider using a third party energy information system to support data capture and management (such as Energetics’ EnTERPRIZE.EM®).
  • Raise awareness among staff of the significance of this information and the processes to capture and manage energy and emissions data.
  • Decide with clients and contractors how information will be shared across operational control boundaries.

Emissions calculation methods

Emissions calculations must be made using a method specified in the NGER Determination. This sets out up to four methods for calculating emissions from each emission source. Method 1 uses default emission factors and is the easiest to apply, with the higher order methods (methods 2 – 4) requiring investment in testing or emissions monitoring equipment. For some industries, such as fossil fuel electricity generation, method 1 is not permitted and a higher order method must be used.

In some cases it will be important to assess the business case for moving from the simpler emission calculation method to a higher order method – which may be more expensive to conduct but provides a more accurate result for emissions trading. Some of Energetics’ clients have predicted costs of one million dollars or more to implement emissions monitoring equipment or processes that will comply with specified NGER measurement or calculation methods.

If the plan is to use a higher order method, be sure that it will be properly implemented and will produce reliable data – once a report is submitted using a higher order method, corporations must report using that method for four years before changing to a lower order method.

If calculation methods have not already been decided, the next steps are:

  • Decide which emission calculation methods will be used for each emission source, and the data required to capture to use this method; and
  • Consider the costs and benefits of using higher order methods.

Conclusion

The deadline for the first NGER Report may not be until October 2009, but there is much work to be done. Many companies are yet to establish data capture and management processes to support NGER reporting. As well as organising data, companies are still determining operational control over sites by negotiating with clients and reviewing contracts to clarify operational authority. It is time for companies to step back and review their progress on NGER preparation in order to find a clear pathway through the maze.

One outcome of NGER and CPRS will be to transfer attention on energy and greenhouse gas emission information from the periphery of the business (site level) to the centre (strategic level) – with increasing interest from Chief Financial Officers and others at executive levels. This is the time for companies to invest effort into establishing processes that will enable robust data for NGER and therefore permit liability for CPRS.

Keryn Hassall

Keryn Hassall, Principal Consultant, Energy and Emissions Reporting

 

Keryn specialises in the collection, analysis and reporting of information for decision-making, particularly information on energy and greenhouse emissions to support formal reporting and environmental performance programs. She has considerable experience in development of data collection methodologies and mechanisms, robust data analysis and reporting for diverse audiences. Her work at Energetics is focussed on development of greenhouse gas inventories and providing advice on information processes to support measurement of emissions.

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