Climate Action in Focus: Recommendations for the NGER and ACCU Schemes by the Climate Change Authority

The Climate Change Authority has released its recommended changes to improve the operation and transparency of both the National Greenhouse and Energy Reporting (NGER) Scheme and the Australian Carbon Credit Unit (ACCU) Scheme.

As two of Australia’s key climate policies, reviewed every five and three years respectively, these reviews provide valuable insights for the government to consider in navigating its climate commitments over the next few years, as both domestic and global contexts are changing and the need for rapid and authentic climate action increases.

Here’s a quick summary of the key points from the reviews.

ACCU Scheme Review FY23

Framed by the question of whether the ACCU Scheme aligns with the objectives of the 'Paris Plus' context (“to describe the various agreements, targets, cross-border instruments and other initiatives and behaviours that contribute to the goals of the Paris Agreement”), the review explores the robustness of Australia's domestic climate change policies in the era of ambitious and urgent emission cuts and rapidly evolving international carbon markets.

While prioritising ambitious reductions, the Authority suggests the Australian Carbon Credit Unit (ACCU) Scheme plays a crucial role in smoothing the transition to net-zero emissions.

“In the near term, while businesses reduce emissions and develop low or no emissions commercial substitutes, the ACCU Scheme can help address very difficult to abate emissions. By facilitating trade in offsets, markets can smooth the transition for businesses while they make the necessary changes. However, net zero plans will only be successful if offsets are deployed wisely, and not just to displace or delay the direct reduction of emissions. Ambitious and urgent cuts to emissions are the priority.”

Key highlights:

The review builds on the recommendations of the Chubb review and suggests 15 recommendations for the government to consider. Key points include:

• To maintain the credibility of the ACCU Scheme in accrediting authentic and additional abatement, the Authority proposes regular reviews and updates to abatement calculation methods. This ensures alignment with advancements in science, technology, government policies, and markets, while increased monitoring and transparency in regard to additionality should enhance integrity in the market.

• Require project baselines to incorporate considerations for potential non-additionality over time and climate-driven changes in carbon stocks. This will allow project proponents to understand authentic abatement potential in a changing environment, contributing to more effective risk management and informed business decisions, plus giving heightened confidence in the integrity of the ACCU Scheme.

• Several recommendations are aligned to supporting First Nations, rural, regional and remote communities including:

  - Facilitating the reporting of non-carbon benefits (or co-benefits) as attributes of ACCUs in the upcoming Unit Register. This will be contingent upon meeting specified quality standards and supporting First Nations organisations in establishing a self-determined approach for verifying benefits derived from ACCU projects which directly impact First Nations communities and individuals.

  - Mandating project proponents to seek free, prior, and informed consent (FPIC) from Native Title holders before registering area-based projects on relevant land and extending support from the Chubb Review to include Native Title claimants and guide those consenting to ACCU Scheme projects.

  - Improve First Nations participation by building capabilities, providing resources, and supporting involvement in the development of new ACCU Scheme methods.

• Greater transparency and information available to the public on permanence periods, method development and the determination of net abatement from project offset reports, including adverse audit findings. Additionally, easily understandable details regarding the evidence base, assumptions, and limitations of method tools should be published.

• Addressing carbon leakage by authorising the Carbon Abatement Integrity Committee to assess and address market leakage risk in method evaluations, conduct regular assessments throughout a method's lifespan, and publish transparent reports on carbon leakage.

• A recommendation to include Carbon Capture and Storage (CCS) by supporting the establishment of a carbon dioxide removal industry. This would mean engaging internationally for reporting solutions, amending the CFI Act to include engineered removals, calling for method development proposals, and providing support through existing programs.

Read the full report from the CCA here.  

NGER Scheme review FY23

The Authority has observed an increasing demand for more detailed publicly available emissions and energy data, recognising the need for increased transparency to align with public expectations and international best practices.

The review also included the NGER scheme's coverage, encompassing sectoral coverage and reporting thresholds, with a specific emphasis on maintaining transparency and confidentiality.

Additionally, the Authority analysed the accuracy of existing estimation methods with a particular focus on fugitive methane management, reporting, and verification processes. Administration and compliance within the NGER scheme are also central to the authority's recommendations.

Key highlights/changes:

• More facility-level NGER data should be published to recognise the changing reporting environment and the need for transparent data to enable emissions claim verification.

• The NGER scheme should include the agriculture and land sectors in some capacity.

• The Australian government’s proposal for mandatory climate-related financial disclosures will require scope 3 emissions reporting, and this could be facilitated using NGER emissions data.

• The current reporting thresholds provide sufficient coverage at present and therefore should be maintained. Ongoing monitoring should be undertaken to ensure this continues in accordance with maintaining an accurate national inventory.

• The market-based reporting of renewable liquid and gaseous fuels should be incorporated into the NGER scheme, however, this will require the implementation of a certification scheme or framework to ensure accuracy and prevent double counting. Emissions factors and definitions for renewable fuels should be developed in consultation with the IPCC.

• Lower-order methods for fugitive methane emissions are not sufficiently accurate due to the general nature of simple emissions factors. In some sectors, it is recommended that Method 1 estimation is phased out entirely, while in other sectors, it is recommended that the availability of higher-order methods should be increased.

• Additional governance aspects include the development of a policy framework regarding using top-down fugitive methane measurements to independently verify facility-level fugitive methane emissions, which could be reported through the NGER scheme; and that the government develop Australia’s ability to measure and quantify fugitive methane emissions using satellite-based techniques.

Read the full report from the CCA here.  

Need Advice on NGERs or the ACCU Scheme?

We’ve been technical experts and trusted advisors to some of Australia’s most well-known companies for over a decade, including both advisory and reporting to NGERs and project advisory and support for the ACCU scheme, contact us for guidance and to learn more [email protected] or call +61 3 7035 1740.