Know your obligations
The proposed Carbon Pollution Reduction Scheme (CPRS) will indirectly affect all businesses by putting a price on carbon pollution. However, only a small number of entities – those with high emissions – will have direct obligations under the CPRS and the Government is supporting them to the make the transition to the low carbon economy for our future.
Until the CPRS commences (scheduled for July 2011), the main obligations for business relate to the Renewable Energy Target (RET) and reporting obligations for large greenhouse gas emitters, energy consumers and energy producers under the National Greenhouse and Energy Reporting (NGER) System.
What is the National Greenhouse and Energy Reporting System (NGER)?
To ensure Australia’s action to reduce carbon pollution is effective, the Government has developed the National Greenhouse and Energy Reporting (NGER) System to measure and monitor corporate greenhouse gas emissions, energy production and energy consumption.
Collection of this information is important. For example, the amount of carbon pollution produced by Australian industry and reported under the NGER System will help the Government determine how many permits should be sold under the CPRS. This information also helps us compare our emissions levels with other countries.
The NGER System is a mandatory corporate reporting system, which is established by the National Greenhouse and Energy Reporting Act 2007 (NGER Act).
Information collected under the NGER System will:
- underpin the Carbon Pollution Reduction Scheme
- inform government policy formulation and the Australian public
- help meet Australia’s international reporting obligations
- assist Commonwealth, state and territory government programs and activities
- avoid the duplication of similar reporting requirements in the states and territories.
Find out whether your business has reporting obligations.
Which businesses will be directly affected by the CPRS?
The CPRS will cover around 75 per cent of all of Australia’s emissions.
Early estimates suggest that the CPRS will directly cover around 1,000 businesses and other organisations in Australia. As such, the great majority of Australia’s 7.6 million registered businesses will not have CPRS regulatory obligations. Households will not have any direct obligations.
The range of legal entities that the CPRS will directly affect is broad, including corporations, trusts, individuals, and governments.
The obligations for these directly affected businesses will include reporting emissions-related information and a liability to surrender emissions units.
Why does the CPRS cover the businesses that it does?
Most emissions are covered by imposing liabilities on the emissions of large industrial facilities. Increasing the cost of carbon pollution where it originates provides the clearest incentive to reduce emissions.
However, it would be difficult to directly impose the cost of carbon pollution on every emitter. For example, in the transport sector there are many millions of car drivers that contribute to carbon pollution. Instead of including all drivers under the CPRS, it is more practical to cover emissions by applying obligations higher up the supply chain. That is why CPRS obligations will apply ‘upstream’ on fuel suppliers. Similarly, for synthetic greenhouse gases CPRS obligations will apply upstream on importers and producers.