Carbon Sequestration in the he NSW Greenhouse Gas Abatement Scheme (GGAS)

Transcription

1 Carbon Sequestration in the he NSW Greenhouse Gas Abatement Scheme (GGAS) Simon Kelley 13 September 2005 This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or

2 Presentation Outline Overview of GGAS Carbon Sequestration under GGAS Definitions Eligibility Ongoing requirements Considerations for participating in GGAS Forestry activities accredited so far

3 Overview of the GGAS This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or

4 Key Aspects of GGAS Designed to reduce the greenhouse emissions from electricity sold in NSW Establishes targets for annual per capita emissions in NSW (State Benchmark) Benchmark participants are permitted to emit a share of total allowable emissions in NSW (the Electricity Sector Benchmark) Emissions above a participant s s share must be offset by surrendering abatement certificates

5 Legislative Framework Electricity Supply Amendment (Greenhouse Gas Emission Reduction) Act 2002 Electricity Supply (General) Amendment (Greenhouse Gas Emission Reduction) Regulation 2002 Greenhouse Gas Benchmark Rules of 2003: No. 1 Compliance No. 2 Generation (NEM-wide) No. 3 Demand Side Abatement (NSW and ACT) No. 4 Large User Abatement Certificates (NSW and ACT) No. 5 Carbon Sequestration (NSW at this stage)

6 How GGAS is Administered Department of Energy, Utilities and Sustainability (DEUS) Policy maker Develop/Amend GGAS Rules Independent Pricing and Regulatory Tribunal () GGAS Administrator Compliance Regulator Implement GGAS Rules

7 The Benchmark (Target) millions tco 2 -e Benchmark (actual) Emissions (actual) Benchmark (projected) Benchmarks Emissions Emissions (projected)

8 Supply and demand basics Demand Supply Liable Parties with a Benchmark Electricity retailers Market customers Direct suppliers Large users (elected in) Accredited Abatement Certificate Providers Electricity generation Energy efficiency Forest-based carbon sequestration Industrial processes

9 Demand compliance mechanism Liable parties meet their benchmarks by surrendering abatement certificates 1 NGAC = 1 tco 2 -e e abated

10 Supply - NGACs NGACs can be created for: Lower intensity generation anywhere in the Grid (NSW, QLD, VIC, SA.. Tas) Demand Side Abatement (energy efficiency) in NSW / ACT Carbon Sequestration (forestry) in NSW

11 Supply Accredited Projects 155 separate projects accredited 55 demand side abatement (energy efficiency) 95 electricity generation (low-emission or improved efficiency) 1 industrial process emissions 4 carbon sequestration

12 Market for NGACs To meet benchmarks, the liable parties needed approximately 3.4 million NGACs in 2004 And million NGACs p.a. by 2007 Over 15 million NGACs registered Over 160,000 from Carbon Sequestration

13 Market for NGACs Source 15 August 2005 All trades are on the open market GGAS Administrator not involved with trading and the GGAS Registry is not a trading platform

14 Carbon Sequestration under GGAS This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or

15 Current scope of GGAS Carbon Sequestration Rule (No. 5) Covers forestry projects only Broad definition in the Australian context which can cover woody vegetation Policy-maker maker s s intent is to expand the GGAS s scope to cover other LULUCF projects International conventions and accounting rules need to be clarified

16 Eligible Forest GGAS is consistent with Australian Definitions: Forests that are Kyoto-consistent Must be human-induced Must have capacity to achieve minimum levels of crown cover (20%) and height at maturity (2 metres) Must be in areas of greater than 0.2 Ha and at least 10 metres wide Must not have been forested on the 31 st of December 1989

17 GGAS Definitions Additional eligibility requirements for participation in the GGAS Must have Carbon Sequestration Rights registered on the land title Must be in NSW or another jurisdiction approved by the Minister Must not have been brought to account or traded for any other purpose

18 Permanent Carbon Stocks The GGAS requires that carbon stocks are maintained for 100 years after abatement certificates are created Conditions of Accreditation are the main avenue for ensuring that this obligation is met by Pool Manager Restriction on Use registered on the land title is the last line of defence

19 Accreditation Framework GGAS Administrator () Sequestration Pool Manager (GGAS Accredited) Forest One Sequestration Pool Forest Two Forest Three

20 Flexibility The framework has been developed to allow a wide variety of situations to be brought forward and accredited, e.g.: The land is owned by the Pool Manager Pool Manager only owns or controls Carbon Sequestration Rights Forests are permanent or forests are part of a portfolio of commercial stands Monoculture or mixed-species

21 Eligibility for Accreditation Is it a Carbon Sequestration Activity? Is there a Sequestration Pool Manager? Are there appropriate Risk Management Procedures in place? Are there appropriate Record Keeping Arrangements in place? Are the calculations acceptable?

22 Record Keeping Arrangements Fundamental requirement of GGAS and is often audited More complex for carbon sequestration Larger number of parameters and inputs Greater level of documentation for demonstrating forest eligibility Sequestration Pool framework requires tight controls to be effective Audits assist in assessing these prior to registration of abatement certificates

23 Documented Procedures Key to being able to control and repeat the way that abatement is calculated Planting and land records Estimating carbon stock change Modelling of growth between inspections Gathering of data to use in the models Particularly important for Sequestration Pool Managers with large portfolios

24 Ongoing Monitoring Monitoring and reporting arrangements for accredited Sequestration Pool Managers made to suit the situation Different levels of reporting for creating NGACs and for maintaining carbon stocks Conscious development of a culture of compliance from the outset Incident reporting required Flexible remedies for stock depletion

25 Verification and Audits Audits used to assist in verification of abatement calculations Inputs as well as processes Expectation that data will be best available Audits also can be used to assist in verifying ongoing eligibility after NGACs have been created

26 Participating in GGAS This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or

27 Considerations for Participating Identify the least cost approach: 1. Apply to be an accredited Pool Manager - or 2. Enter into a commercial agreement with an existing accredited Pool Manager

28 Application Process Application materials available at Application form Guide to applying Carbon Sequestration Rule Consider the eligibility, record keeping and ongoing requirements outlined Interim Australian Standard (Carbon Accounting for Greenhouse Sinks) $500 application fee

29 Participating through an existing Pool Manager Simplifies participation as the Pool Manager is responsible for compliance List of accredited Pool Managers at Australian Forest Corporation Pty Ltd CO2 Australia Limited Forestry Commission of NSW Go-Gen Gen Australia Pty Ltd

30 Commercial agreement between Pool Manager and forests in their Pool GGAS Administrator () Sequestration Pool Manager (GGAS Accredited) Forest One Sequestration Pool Forest Two Forest Three

31 Forestry activities accredited to date... This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or

32 Permanent Forests Forests planted with no intent to harvest Monoculture or mixed species Carbon stocks retained as long as forest is not destroyed Carbon Stocks Years after planting 100

33 PF- Project Opportunities Two projects already accredited using this approach Any eligible environmental planting has the potential to realise the value of the carbon stocks that are accumulated Risk of destruction encourages the use of a portfolio of forest stands

34 Plant-Grow Grow-Harvest Minimum carbon stocks maintained over 100 years Carbon Stocks Years after planting

35 PGH - Project Opportunities Commercial forestry operations on eligible land Requires a sophisticated approach to tracking carbon stocks in the Sequestration Pool and the impact of harvesting and replanting

36 Other information Australian Greenhouse Office National Carbon Accounting Toolbox Planning Forest Sink Projects A Guide to Carbon Pooling and Investment Structures A Guide to Legal, Taxation and Contractual Issues

37 Potential gov.au This presentation may be used in its current format provided the source is acknowledged and the content is not modified. Alternatively, the content may be modified provided it is not represented as the views of the Scheme Administrator or