How do companies estimate carbon emissions?

Under the carbon pricing mechanism, around 500 of the biggest polluters will be required to measure their emissions and report them to the Clean Energy Regulator.

What activities generate carbon emissions?

burning fossil fuels, such as in electricity generation or in transportation; cement or steel making, which release industrial process emissions; coal and LNG mining, which release greenhouse gases which are trapped underground; and waste management.

How are these activities measured?

Emissions from each of the above activities are measured in different ways. Emissions from burning fossil fuels can be estimated by multiplying the quantity of the fossil fuel used by an emission factor that reflects the typical carbon content of that fuel. Emissions from industrial processes, such as cement and steel making, can be estimated by measuring the inputs into those processes, and multiplying them by factors that take into account the chemistry of these processes. More advanced methods are also available that involve more precisely and directly measuring greenhouse gas emissions that are produced. Sampling and analysis approaches to emissions estimation have been used for many years in the electricity industry. Direct monitoring while not common, occurs in the coal mine industry where state legislation has required the monitoring of methane levels for health and safety reasons. Complete methods for estimating emissions are set out under the National Greenhouse and Energy Reporting (NGER) system.

National Greenhouse and Energy Reporting (NGER) framework

NGER legislation was introduced and passed by the former Coalition Government in 2007. The NGER Act 2007 makes reporting mandatory for corporations whose energy production, energy consumption, or greenhouse gas emissions meet certain specified thresholds. Companies have been reporting to the Government through the NGER system since 2009.

Measurement of emissions under the carbon pricing mechanism

The methodologies that businesses will use to estimate their emissions will be those set out in the NGER (Measurement) Determination 2008. In general, businesses will be able to choose between four methods: a default method (method 1); facility specific methods (methods 2 and 3) and; direct monitoring (method 4).

For certain emissions sources businesses will be required to use higher order methods. This will be the case where such methods are already in widespread use by the industry. The following NGER methods will be required for estimation of emissions from the following sources: electricity generators: (methods 2-4); perflurocarbon emissions from aluminium smelting: (methods 2-4); fugitive emissions from underground coal mines: (methods 2-4); legacy emissions from solid waste landfills: (methods 1-3). Under the carbon pricing mechanism, staged increases in the accuracy of emissions estimates over time will be pursued by imposing increasing minimum methodologies for certain sources. The responsible Minister will use existing powers under the National Greenhouse and Energy Reporting Act 2007 to set minimum estimation methodologies for certain sources of carbon emissions. The Minister will consult with affected companies on the implementation costs and on the adequacy of notice before imposing new minimum standards for emissions estimation methodologies for a source or activity.

Consistency with international reporting

The NGER framework and methods reflect the approaches of the international guidelines governing the estimation of national greenhouse gas inventories and, similarly, national practice such as for the EU Guidelines for the Monitoring and Reporting of Greenhouse Gas Emissions and the US Environment Protection Agency Mandatory Greenhouse Gas Reporting Rule. The structure of the NGER framework facilitates the integration of corporate and facility level data with the methods utilised in Australias National Greenhouse Accounts. Estimation methods are based on those used by the Department of Climate Change and Energy Efficiency in preparing the Governments annual submission to the United Nations Framework Convention on Climate Change which is reviewed annually by an expert review team.

Determining possible carbon pricing liability

Further Information
For further information go to the Clean Energy Future website at www.cleanergyfuture.gov.au or call 1800 057 590. For more detailed information relating to the NGER system go to: www.climatechange.gov.au/government/initiatives/national-greenhouse-energy-reporting.aspx The National Greenhouse Accounts can be found at: www.climatechange.gov.au/climatechange/emissions.aspx