Baseline determinations will be made for a covered facility for a financial year. If no baseline determination is made, the default baseline will be 100,000 tonnes CO2-e, which is also the minimum number that can be included in a baseline determination.
Baselines will reflect data reported under the National Greenhouse and Energy Reporting Scheme (NGERS), and will generally reflect the highest emissions level reported between 2009/10 and 2013/14.
The types of baseline determinations that can be made include:
Baselines can also be adjusted if a facility meets the emissions intensity test in a financial year.
In each case, the Regulator will produce a baseline determination, which will be publicly reported on the Regulator’s website.
Reported emissions baseline
A reported emissions baseline determination will be made by the Regulator if:
- NGERS reports have been submitted for 5 financial years commencing on 1 July 2009 (5 year period), and at least one of these reports had more than 100,000 tonnes CO2-e
- NGERS reports were submitted for at least 3 years of the 5 year period, and emissions exceeded 100,000 tonnes CO2-e for at least 3 of the 5 year period, or
- at least one NGERS report has been submitted during the 5 year period, and emissions exceeded 100,000 tonnes CO2-e for at least one year, and the responsible emitter seeks a reported emissions baseline determination from the Regulator prior to 1 August 2016.
The reported emissions baseline will be the highest annual number of tonnes CO2-e set out in the available NGERS reports produced during the 5 year period. The draft rules contain provisions to assist the Regulator in making its determination, such as the ability to disregard emissions arising from activities which are no longer carried out at the facility, or are reported as part of another facility. There is also the power for the Regulator to vary the baseline determination if a NGERS report on which it was based is found to be incorrect, it is resubmitted after the determination is made or activities which resulted in significant emissions (more than 5% of the baseline) are no longer carried out at the particular facility.
Responsible emitters will receive advance notification of the baseline which the Regulator proposes to set for a particular facility, and will have the opportunity to make comments on the proposed baseline. The Regulator must aim to have made baseline determinations by 1 August 2016.
Calculated emissions baseline
Calculated emissions baseline determinations are for facilities that do not have sufficient historical data for a reported emissions baseline determination or for which historical emission may be a poor indicator of future emissions. It is based on estimates of production at a facility and it expires once actual production data is available.
Calculated emissions baseline determinations last for 3-5 years depending on the size of a facility. A facility may apply for a total of two calculated-emissions baseline determinations.
A calculated emissions baseline determination can be sought by a responsible emitter if the following criteria are satisfied:
- new facility: the facility is a “new” facility, meaning it has not been covered by a NGERS report during the 5 year period, and it is expected to emit more than 100,000 tonnes CO2-e for a financial year between 2016/17 and 2019/20
- significant expansion: the facility has completed a “significant expansion” (see below)
- inherent emissions variability: the facility undertakes extraction of a natural resource or processes natural gas associated with the extraction of natural gas from a natural gas reserve, and the grade, depth or other properties of the natural resource or natural gas reserve has a direct effect on the emissions of the facility, and the facility has limited ability to control the emissions related to the natural resource or natural gas reserve (these criteria are known as the “inherent emissions variability” criteria)
- initial calculated baseline: the facility has received a reported emissions baseline determination or submitted NGERS reports during the 5 year period, and the facility’s emissions for the 2016/17 financial year are expected to exceed the baseline emissions number (known as the “initial calculated baseline” criteria).
A facility will undertake a significant expansion if it increases its production capacity by more than 20%, or produces a new product, from the installation of new plant or equipment. If a significant expansion will take place before 1 July 2020, the operator of the facility may apply for a calculated emissions baseline determination to cover the whole facility. If the significant expansion will take place after 1 July 2020, a benchmark emissions baseline determination will be made (see below). This determination will only apply to emissions associated with this expanded capacity, and not to the balance of the facility.
Benchmark emissions baselines
Benchmark emissions baselines determinations are for new facilities and significant expansions which can no longer access calculated emissions baseline determinations. They commence no earlier than 1 July 2020.
Rather than using the responsible emitter’s estimates, a benchmark emissions baseline determination is made using the ‘Benchmark Emissions-Intensity Index’ set out in the legislation. Existing industry data will be used to develop benchmark emissions intensities that are representative of best practice and where data is limited, international data or independent technical advice will be used.
Production adjusted baseline
A responsible emitter may apply for a production adjusted baseline determination if they were subject to a calculated emissions baseline determination or benchmark emissions baseline determination which has expired (provided that the facility’s covered emissions exceeded 100,000 t CO2-e in one of the financial years that were covered by the determination), or if it was eligible for a benchmark emissions baseline under new facility criteria but never obtained one.
The baseline emissions number is calculated using existing historical data which accounts for changes in production variables and emissions intensity.
Variation of baseline determination for reduction in emissions intensity
If a facility exceeds its baseline but it simultaneously reduces its emissions intensity, the responsible emitter for a facility may apply to the Regulator for a variation of a baseline determination, subject to meeting an ‘emissions intensity test’.
If the application is successful, the baseline is increased to match the facility’s covered emissions for this financial year, after which the facility returns to its original baseline.
An application for variation cannot be made if there is a monitoring period declaration for a multi-year period (see below).
If the facility has only one production variable, the emissions intensity test is a straightforward comparison with the baseline intensity comparison year - the emissions intensity in the variable year must be lower. If there are multiple production variables, it is calculated according to an equation set out in the Safeguard Mechanism rules.