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By 31 August 2009, eligible Australian corporations that emit prescribed levels of greenhouse gasses or which produce or consume specified amounts of energy, must register with the Greenhouse and Energy Data Officer Photo: Tasman Miller

By Tina Perinotto

The Department of Climate Change will take a soft approach to businesses who have accidental trouble managing their compliance the National Greenhouse and Energy Reporting Act 2007.

Not so if the behaviour is deliberate or criminal, according to an advisory note published in May by Clayton Utz special council Claire Smith and partner Peter Briggs that discusses the newly released Compliance and Enforcement Policy NGER Act that specifies how compliance with the new Act will be managed.

The Act requires that by 31 August 2009, eligible Australian corporations that emit prescribed levels of greenhouse gasses or which produce or consume specified amounts of energy, register with the Greenhouse and Energy Data Officer.

Reports for the 2008-2009 reporting year are due by 31 October 2009.

According to the Clayton Utz note, the GEDO will encourage stakeholders to voluntarily comply with the Act, but understands that this will present challenges to stakeholders, particularly during the first reporting period.

“In light of this, section 5 of the Policy says that the GEDO’s response to non-compliances will be risk-based. It will take into account the behaviour and motivations of stakeholders.

“Corporations required to report under the NGER Act should therefore feel some relief that the GEDO will deal with accidental non-compliance (for example in the first year or so of reporting while developing internal control systems) by providing targeted information and helping that corporation to avoid future errors.”

But if the behaviour is opportunistic or criminal and fraudulent in nature, under the risk-based approach, the GEDO will be much less understanding, the note says.

“You should make every effort to put systems in place to comply with the NGER Act.

“The GEDO is available to provide information and assistance to help you with this.  However, if internal control systems fail or there are mistakes made while trying to comply in the first couple of years, the Policy indicates that you will be given a reasonable opportunity to correct the non-compliance.”

Key issues to consider are:

  • participation requirements and thresholds (controlling corporations, facilities and operational control)
  • data collection and methodologies
  • registration requirements
  • reporting requirements
  • liability issues

According to Clayton Utz the NGER Act applies to: eligible Australian corporations which emit prescribed levels of greenhouse gases or which produce or consume specified amounts of energy

A corporation will be required to register under the NGER Act, in accordance with section 12:

  • if it is a controlling corporation (that is a constitutional corporation that does not have a holding company incorporated in Australia); and
  • if it or the entities in its corporate group produce emissions from “facilities” under its “operational control”; and
  • if it or the entities in its corporate group meet one or more of the thresholds set out in section 13 of the NGER Act for a financial year. There are corporate-level and facility-level thresholds for greenhouse gas emissions and energy production and consumption. The thresholds decrease significantly over the next few years giving more and more companies obligations under the NGER Act.

According to the National Greenhouse and Energy Reporting System Calculator, User Guide (www.climatechange.gov.au/reporting/calculator/pubs/ngers-calculator.pdf)  Section 13 of the NGER Act specifies that thresholds at the corporation-level are to be phased in progressively during the first three years of the reporting system, beginning 1 July 2008.

An extract from the User Guide says:

“A controlling corporation will meet a threshold in a financial year if, in that year,
facilities under the operational control of members of the corporate group emit
greenhouse gases, produce energy, or consume energy, at or above the following
levels (or pro rata for part of a year):

• 125 kilotonnes carbon-dioxide equivalent (kt CO2-e), or 500 terajoules
(TJ) of energy, for the 2008-09 financial year;

• 87.5 kt CO2-e or 350 TJ of energy for the 2009-10 financial year; and

• 50 kt CO2-e or 200 TJ of energy for the 2010-11 financial year.

At the facility level, the threshold of 25 kt CO2-e or 100 TJ of energy per financial
year will apply from commencement of the reporting system on 1 July 2008.”

According to Clayton Utz says these are complex questions and it recommends specific legal advice.