Should you be reporting your greenhouse gas emissions?

The Gillard Government’s planned introduction of a carbon tax has generated much media scrutiny over recent weeks. Whilst the Government’s position is continuing to evolve, and work is being done to determine the mechanism and amount for the proposed carbon tax, it appears increasingly likely that the Government will try to pass a carbon tax bill following the 2011 Federal Budget. We consider that it is important for organisations to begin preparing for the changes ahead, irrespective of whether they are a direct emitter (and hence likely to be directly paying the carbon tax) or whether they are a consumer of carbon intensive products (that is likely to experience increased costs in the supply chain).

Whilst the potential carbon tax may impact businesses in the future, there is already legislation requiring many businesses to report on their carbon emissions.  The most significant legislation in this regard is the National Greenhouse and Energy Reporting (NGERs) Act 2007, which has required certain companies to report their greenhouse gas emissions, energy use and energy production since the 2008/09 financial year. Recording and reporting emissions and energy data in this way was seen as one of the first steps in establishing an emissions trading scheme, and whilst this scheme has not currently been implemented, the reporting obligations under the Act remain.

What do companies have to report?
Companies that meet the NGERs threshold (and are therefore required to report under the Act) are required to disclose:

• their greenhouse gas emissions
• their energy production
• their energy consumption
• other information required under the ACT

The thresholds for reporting have declined since the inception of reporting in 2008/09 (meaning that each year, more companies are required to report) until the 2010/11 year, from which time the thresholds stabilise.  The Act requires companies to consider whether the thresholds have been breached from both and individual manufacturing and consolidated corporate perspective.  The reporting thresholds in 2010/11 and future periods are:

• Facility threshold – 25 Kilotonnes (kt) of greenhouse gas emissions (CO2 equivalent) and/or 100 Terajoules (TJ) of energy consumed or produced
• Corporate threshold - 50kt of greenhouse gas emissions (CO2 equivalent) and/or 200TJ of energy consumed or produced

In practice, the calculations to determine whether a company exceeds the threshold are often complex, as are the calculations and disclosures required in the NGERs report of a company that does exceed the reporting threshold.  The Act also contains severe enforcement penalties for non-compliance with the reporting requirements, which can be up to $220,000 for companies and an equivalent penalty for Chief Executive Officers.

As Australia moves closer to a carbon price, more companies will be seeking assurance over their greenhouse gas emissions and energy data. Grant Thornton maintains relationships with a number of reputable engineers who may be able to help you ensure you are reporting accurately and on time, in accordance with the NGERs Act.

If you are unsure of whether the Act applies to your organisation or would like more information on the Act or the Government’s plans to reduce greenhouse gas emissions from Australian industry, contact your usual Grant Thornton advisor.

Author, Cameron Smith, March 2011

Want advice or more information on this topic?

Click here to contact the author