Greater transparency on emissions reporting planned

The Clean Energy Regulator (CER) has issued a consultation paper on a new Corporate Emissions Reduction Transparency report (CERT report) that will be relevant to Australian companies that report emissions under the National Greenhouse and Energy Reporting scheme (NGER). The CERT report will be first published in 2022, and include data on corporations’ carbon emissions and voluntary targets for the 2020-21 NGER reporting period. It is intended that the CERT report will become an authoritative source on climate action in the Australian business sector.

The CER has released the CERT report Consultation Paper and Draft Guidelines. The Consultation Paper provides a general overview of the policy behind the CERT report, how the data within the report will be presented, and other implementation considerations. The Draft Guidelines outline the technical rules that will govern the CERT report; in particular, participation eligibility, and how emissions and offsets are calculated, reported and verified. Both documents should be read in concert for a complete understanding of the CERT report.

Purpose of the CERT report

Corporations that meet the NGER data publication thresholds specified in the National Greenhouse and Energy Reporting Act 2007 (NGER Act) will be able to opt-in to the CERT report. Corporations may opt-in, or opt-out on a year-to-year basis. Although participation is intended to be voluntary, we note that media reports indicate the Government intends to ensure corporates show more accountability and transparency in relation to their emission reduction commitments and those who do not participate may be “named and shamed”.¹

The policy aim of the report is to support Australian corporations in making claims about their carbon emissions and renewable energy profile. Through publishing direct comparisons of business climate action, the report aims to encourage voluntary emissions reductions and grow participation in Australia’s carbon markets.

As it is an opt-in system, the CERT report will only be effective if Australian corporations see value in their emissions data being published. Therefore, the CERT report reflects a shift in Australian corporate culture towards increased transparency on emissions, particularly as Australian corporations increasingly commit to net-zero targets. The CERT report aims to be an authoritative and standardised data source for corporations to use when making claims about their emissions reductions to shareholders or the public.

The CERT report will integrate with, rather than replace Climate Active, which is an existing partnership between the Australian Government and businesses. Climate Active allows organisations of all sizes, not only corporations that report under the NGER Act, to be certified as carbon neutral. To integrate the schemes, the CERT report will note whether a corporation is a Climate Active participant, and if so, link to the corporation’s Climate Active public disclosure statement.

While the CERT report is initially only proposed for corporations that meet NGER data publication thresholds, the Consultation Paper notes that the option for participants below the NGER threshold to be included may be considered at a later stage.

Structure of the CERT report

The structure of the CERT report will be a simple table with various columns that detail the corporation’s voluntary emissions and/or renewable energy targets, and a measure of progress towards those targets. Progress will be assessed through a calculation of ‘net’ scope 1 emissions which are calculated against any surrender of eligible carbon units and certificates. Units recognised by the CERT report will include not only the CER’s own Australian Carbon Credit Units (ACCUs), but also a range of externally administered schemes including Verified Carbon Units (VCUs), Certified Emissions Reductions (CERs) and Voluntary Emissions Reductions (VERs).

Units do not need to be surrendered for the express purpose of the CERT report. ACCUs surrendered under state or territory schemes, or for compliance reasons under the Safeguard Mechanism can also be counted under the CERTs calculation of ‘net’ scope 1 emissions. Further, VCUs, VERs and CERs surrendered in other registries may be eligible for recording in the CERT report. However, all units will be only accepted as offsets for scope 1 emissions, not for scope 2 electricity consumption.

In relation to renewable energy, Large-Scale Generation Certificates (LGCs) which are created by power stations generating renewable energy, may be eligible for CERT report publication if they are voluntarily surrendered for the purpose of reducing the emissions intensity of a corporation’s electricity usage. To avoid double counting, a corporation’s power purchase agreement for renewable energy will not be recognised by the CERT report, as such agreements may also receive LGCs.

The CER is specifically requesting feedback on the best way for the CERT report to track corporations’ progress towards meeting their voluntary emissions reduction and energy use targets. It is noted that it is a challenge for the CERT report to include an indication of progress towards long-term targets, because the report is structured to publish emissions data on a year-by-year basis. Suggestions in the Consultation Paper include corporations providing their own self-assessment of progress towards meeting emissions targets, or adding a specific column to the table which compares emissions with the previous reporting year.

Next steps

Submissions are due by 19 March 2021. While submissions are open to any interested party, the Consultation Paper specifies a list of questions that the CER is specifically requesting feedback on.

The program is set to launch in mid-2021. Corporations that wish to opt-in for inclusion in the 2020-21 NGER reporting cycle will need to do so by 31 October 2021.

How can we assist you?

For more information on participating in the CERT report, or assistance with drafting a submission, please contact a member of our climate change team.

This article was co-authored with Sebastian Withers.