The Government proposes to update baselines to better align with current circumstances. There are three elements to the proposed approach:
- Transitioning all reported baselines to calculated baselines
- Simplifying calculated baselines
- Annually updating baselines for actual production
Shift to calculated baselines
It is proposed that all facilities using a reported baseline must apply for a calculated baseline in 2018-19 or 2019-20. Facilities that already have a calculated baseline cannot reapply.
Existing rules accommodating natural resource variability in mining, oil and gas will remain.
For landfill facilities, which do not have a discernible output, it is suggested an approach may be to use gas capture rates similar to the current baseline setting approach for new landfills.
Simplified calculated baselines
Calculated baseline applications involve an administrative cost, particularly around audit requirements. The Government proposes to introduce an option to use default production variables and emissions intensity values to reduce application costs.
This approach is somewhat similar to the availability of lower order methods for emissions reporting under the National Greenhouse and Energy Reporting Scheme (NGERS), which allows businesses to choose between different methods to report their emissions.
It is intended that offering default values (similar to NGERS method 1) will reduce administrative costs associated with calculated baselines. This includes audit costs by avoiding the need to audit site specific emissions-intensity forecasts. Businesses can continue to use site specific values if they consider it to be beneficial. However, once a facility uses a default emissions-intensity value it could not move back to a site specific value.
Annual updates in line with actual production
Under the proposed approach, baselines could be updated in line with production levels. Baselines will increase with production, and also decrease when production falls.
Adjustments for production would start at the end of a facility’s calculated baseline period, in line with the existing approach for calculated baselines. However, it is proposed to allow businesses to apply this approach earlier.
Annually updated production baselines could either apply only to emissions-intensive trade-exposed facilities, or more broadly to all facilities.
The automatic annual baseline adjustments would require businesses to report production every year. This is not expected to be problematic given many businesses already report production under existing obligations, or otherwise have production data on hand.
The Government is considering two potential options for updating baselines - either on actual production or on forecast production. Using actual production means baselines would be set after each compliance year. Whereas using forecast production would allow baselines to be set in advance. A true-up would occur after final emissions and production data are reported.
In relation to new facilities post-2020, the Government will consider how the existing policy for new facilities sits with changes for existing facilities once they are finalized.