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Contact: Tim Kelly
Ref: CR23/317
27 January 2023
Department of Climate Change, Energy, Environment and Water
GPO Box 3090
Canberra ACT 2601
Email: GuaranteeofOrigin@industry.gov.au
To the Consultation Panel
RE: Guarantee of Origin Scheme- Renewable Electricity Certification - Policy position
paper for renewable electricity certification under the Guarantee of Origin scheme
and for economy-wide use.
Thank you for the opportunity to provide feedback on this important area of policy.
The Town of Gawler has declared a climate emergency and is committed to taking action towards a safe climate that does not exceed 1.5 degrees of global warming, to avoid unacceptable impacts from climate change. Council has established a Climate Emergency
Action Plan (CEAP) to guide future our activities. Our CEAP is focussing on three key areas:
1. Town of Gawler operations;
2. Enabling and influencing communities to respond to the climate emergency; and
3. Leadership and advocacy.
The renewable electricity transition is identified as the most significant way for Council and our community to contribute to reducing emissions.
We are deeply concerned about the lack of legal foundation and clear accounting guidance for purchasing and claiming renewable electricity use. There continues to be varying methods and advice across government departments, with multiple accounting methods in play at the same time for the same renewable electricity. Government agencies, programs and service providers provide inconsistent opinions on how renewable electricity claims work, causing uncertainty and structurally unfair cost structures. This inconsistency is restricting councils and their communities when seeking to transition to renewable electricity for accredited renewable electricity purchased from the grid and on site solar systems.
The discussion paper and proposal for a national renewable electricity framework to be established under the Federal Jurisdiction is a welcome step. However, the proposed policy position has not acknowledged the foundational accounting issues which must be addressed in order for a scheme to be legitimate, have integrity and underpin fair pricing structures.
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Whilst our interest extends to the accompanying consultation on the Product-based Emissions
Accounting Framework, there has not been sufficient time to provide detailed feedback on two consultation papers. We consider that the reform of Australia’s electricity and renewable electricity frameworks to formally establish market based accounting is the priority, being an essential pre-requisite for any product based emissions accounting framework.
Please find attached to this letter the Town of Gawler’s submission Guarantee of Origin
Scheme- Renewable Electricity Certification - Policy position paper.
Once again, I thank you for the opportunity to provide feedback on this important area of policy.
If you have any further questions with respect to this submission, please contact Councils
Environment and Sustainability Officer, Mr Tim Kelly on (08 8522 0143) or via email at
Tim.Kelly@Gawler.sa.gov.au
Yours faithfully
Henry Inat
Chief Executive Officer
Telephone: 85229221
Email: Henry.Inat@gawler.sa.gov.au
Attached
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27 January 2023
Department of Climate Change, Energy, Environment and
Water
GPO Box 3090
Canberra ACT 2601
GuaranteeofOrigin@industry.gov.au
RE: Guarantee of Origin Scheme- Renewable Electricity Certification - Policy position paper for renewable electricity certification under the Guarantee of Origin scheme and for economy-wide use.
Thank you for providing the opportunity to provide feedback on this important area of policy.
The Town of Gawler has declared a climate emergency and is committed to taking action towards a safe climate that does not exceed 1.5 degrees of global warming, to avoid ever increasing and unacceptable impacts from climate change. Council has formally adopted a
Climate Emergency Action Plan to guide our future activities and decision making, with this
Plan focussing on three key areas:
1) Town of Gawler operations;
2) Enabling and influencing communities to respond to the climate emergency, and;
3) Leadership and advocacy.
The transition to renewable electricity is identified as the most significant way for Council and communities to contribute to reducing emissions.
Council purchases a proportion of its electricity as accredited GreenPower and has established an aspirational target to increase utilisation of 100% renewable electricity to complement our on-site renewable electricity generation and use.
Our Climate Emergency Action Plan also seeks for Council to achieve net zero emissions for its operations by 2030 and equally enable communities to participate in transitioning to renewable electricity use and net zero emissions. This aspiration will require accredited renewable electricity, carbon offsets and low carbon products and services to be credible and affordable underpinned by legislated accounting frameworks that prevent double counting and support fair pricing structures.
INTRODUCTION
Whilst our formal response to this consultation is limited to the Renewable Electricity
Certification paper due to time constraints, there is a recognised need for improvements to establish market-based accounting. This is required within legislation for both accredited renewable electricity (at zero Scope 2 emissions) and carbon offsets (as negative Scope 3 emissions) to underpin the supply chain analysis and emissions attributes in a way that prevents double counting and supports fair pricing structures.
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For the Town of Gawler to successfully lead its community, Council is of the view that the accredited renewable electricity frameworks must be reformed as a high priority so that consumers who wish to follow our lead, can purchase accredited GreenPower at a fair price with exclusive rights to the Emission Reduction and Renewable Energy use (ER&RE) attributes.
Council actions to reduce emissions include supporting the electric vehicle transition, electrifying sites and infrastructure, reducing the use gas as far as possible and actively exploring 100% accredited renewable electricity to meet our electricity needs from the grid.
Our experience in purchasing and seeking clarity for accredited renewable electricity, and through our engaging with customers in our community has highlighted significant problems - no legal definition for renewable electricity use, double counting and subsequent unfair pricing structures. These problems can be addressed through establishing market-based accounting electricity (and carbon offsets) under the National Greenhouse and Energy Reporting (NGER)
Framework as the legislative instrument that will ensure clear and consistent rules with fair pricing structures for all consumers.
Recent efforts of Council through the Local Government Association Procurement to purchase
100% renewable electricity from 1 January 2023 have proven unsuccessful with a deferral necessary until there is better clarity and pricing fairness. The challenges included:
• While renewable electricity is now cheaper to produce compared with fossil fuel
electricity, the pricing structures for renewable electricity remain as a penalty cost
above the cost of standard grid electricity. The cost for Council in addition to a doubling
to tripling in the electricity price rates/MWh would have been an additional charge of
$71,000 per year on a demand load of 1,300 MWh per year (even if claiming the
mandatory Renewable Power Percentage).
• 100% renewable electricity is not legally defined. There are different interpretations
on what is required to achieve 100% renewable electricity use across the various non
legislated methods and assurance schemes. Whilst Council sought recognition for the
Mandatory Renewable Power Percentage we have paid for, this is not yet recognised
in products beyond Climate Active and the Corporate Emissions Reduction
Transparency Scheme. The outcome of this situation being that to achieve 100%
renewable electricity, the offers provided to Council were to be charged at 118 %
renewable electricity.
• We understand that all grid connected renewable electricity is allocated to the grid
under the NGER Determination and non-legislated National Greenhouse Accounts
(NGA) Factors, and the use of these factors is applied in the default emissions
disclosure on electricity bills across Australia and in government policy modelling on
matters such as the Future Fuels Strategy and Electric Vehicles. It is therefore of
concern to know that all accredited renewable electricity is double counted.
• We also understand that our on-site renewable electricity produced and consumed
behind the meter and claimed by Council, has been allocated to the grid where the
NGER liable corporations which make up near 60% of Australia’s electricity use, are
allocated most of these benefits as lower emissions. Our on-site claim is being double
counted. Noting that our on-site renewables have been fully allocated to the grid, we
are still not able to claim these renewables (27% of the grid) to count towards our 100%
purchased renewable electricity claim.
Under these circumstances Council cannot justify the increased cost, and can fully appreciate why household and small to medium businesses customers in our community may find renewable electricity options unaffordable and confusing.
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The Town of Gawler and the local government sector continue to call for clear and consistent rules for accredited Renewable Electricity through resolutions such as:
Australian Local Government Association – National General Assembly 2022
31 Town of Gawler SA – Carried
That this National General Assembly, building on the 2021 National General
Assembly resolution and progress to date towards clear and transparent rules
for renewable electricity, calls for formal engagement with the Federal
Government and Department of Industry, Science Resources and Energy to
accelerate reforms for nationally legislated market-based greenhouse
accounting and rules for renewable electricity and carbon offsets to be
established in Australia.
Australian Local Government Association – National General Assembly 2021
34 Town of Gawler Council, SA - Carried
The National General Assembly calls on the Federal Government to amend the
National Greenhouse and Energy Reporting (NGER) Framework to establish a
legal definition of what is required to buy renewable electricity via the
electricity grid and claim 100% renewable electricity use and zero emissions.
This will establish market-based accounting for renewable electricity, create a
single nationally consistent method that applies to electricity and renewable
electricity consumption and prevent double counting for all customers
including for councils, seeking legally assured, clearly defined and fairly priced
renewable electricity.
The proposal for the Renewable Electricity Certification to be managed under the National jurisdiction and apply across the economy is welcomed. However, the proposals outlined in the discussion paper do not yet address the foundational need for a single market-based accounting framework to apply clear and consistent rules to all consumers to prevent systemic double counting and underpinned by fair pricing structures.
SUMMARY OF RESPONSES AND RECOMMENDATIONS TO
THE RENEWABLE ELECTRICITY CERTIFICATION PAPER
Departmental intent:
It is noted that the Department of Climate Change, Energy, the Environment and Water
(DCCEEW) is seeking to provide:
• a mechanism to track and verify emissions associated with hydrogen and other low
emissions commodities produced in Australia.
• provide an enduring certificate mechanism for renewable electricity which could
support a variety of renewable energy claims.
• a renewable electricity certification mechanism to track and verify renewable electricity
generation as part of the Guarantee of Origin scheme as well as to support other
voluntary claims.
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The proposed scheme has not addressed the needs of consumers to be allocated use of renewable electricity as the essential ‘book end’ of a tracking and verification scheme.
It is also noted that the DCCEEW recognise that:
Renewable electricity certificates are used widely in market-based
electricity and carbon accounting methodologies to recognise the use of
renewable electricity and its zero emissions attribute.
However, this proposal for a new and additional scheme does not propose to integrate these attributes into the certificates for end customer claims. In addition, the proposal does not address foundational problems of systemic double counting of renewable electricity and the subsequent impacts on inequality and unfair pricing structures that are constraining the consumer market for renewable electricity.
Double Counting
The proposed Certification Scheme does not address that all renewables sent out to the grid in Australia have been fully allocated across all consumers through the location-based
National Greenhouse and Energy Reporting (NGER) Determination and the National
Greenhouse Accounts (NGA) Factors Workbook.
This allocation is used for all NGER reporting and in the default emissions information provided on all electricity bills and in the modelling practices by the Federal Government used to underpin such documents as the Future Fuels Strategy (2022). The information is used for public annual reporting and for reputational, product and service based claims. It is also used to determine the level of offsetting required when organisations purchase carbon offset electricity.
Australia’s voluntary renewable electricity markets currently sell renewable electricity attributes that have already been fully allocated, a second time. This means that all of
Australia’s voluntary renewable electricity purchased in market-based contracts is double counted.
RECCOMENDATION 1
That the NGER Determination and NGA Factors Workbook be amended to transition to
market-based accounting for electricity for the Reputational, product and service based
claims used in public reporting and for reputational, product and service based claims. This
will prevent the double counting in end user claims caused by the use of location-based
accounting and market-based counting at the same time for the same renewable electricity
in the same market.
Establish the Renewable Electricity Attributes as an integrated part of purchasing accredited renewable electricity
Whilst acknowledging that consumers are buying renewables primarily for the attributes of
‘renewable electricity use’ and ‘zero electricity emissions’, the Discussion Paper provides a section on attributes that does not establish the two essential key attributes of ‘Renewable electricity use’ and ‘Zero electricity emissions’ as attributes within the framework or assurance certificates – Large Scale Certificates (LGCs) and Renewable Electricity Guarantee of Origin
(REGO) certificates.
With the knowledge that all renewable electricity sent out to the grid and sold in voluntary markets is double counted and the knowledge that LGCs do not legally incorporate two key
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attributes, the proposed Renewable Electricity Certification could not have legitimacy or integrity until market-based accounting is established to integrate the two key attributes into the scheme and into the allocation for end renewable electricity consumers.
DCCEEW has also discussed the use of International Renewable Energy Certificates (I-
RECs) to trade renewable electricity attributes across international borders, without actually introducing the International REC Standard and describing needs of I-RECs. Extreme care is required when considering such an option to prevent against double counting which is virtually inevitable.
Unlike LGCs and the proposed REGOs, I-RECS require the ‘renewable electricity use’ attribute and by implication also require the ‘zero electricity emissions’ attribute to be integrated into the certificate. To make the system work they also require the use of National
Residual Mix Factors (RMF). Australia’s frameworks do not align sufficiently to enable the use of I-RECs, or their creation with any integrity, as clearly outlined below:
• Australia is still using location-based accounting for the NGER Reporting and in the
NGA Factors with these being the foundation of default electricity emissions printed on
bills across the nation.
• Australia’s RMF does not yet net out voluntary, household and small scale renewables
and is therefore not a true RMF.
• Australia allows corporations, businesses, and individuals to select the accounting
option, either location-based or market-based that is most favorable to themselves for
making reputational, product and service based claims. It does not require claims by
those not buying renewable electricity to use the RMF, and in a state with lots of
renewable electricity generation the location-based accounting can make claims look
more green than the contribution made.
• Australia has not established market-based accounting in law for its market jurisdiction
so its support to participate in other cross international border schemes like I-RET and
to make cross border adjustments for emissions and renewables use, is questionable.
• The idea of trading renewable electricity across disconnected grids is arguably a
contravention to the foundational concepts of Scope 1, 2 and 3 emissions, with Scope
2 emissions requiring a connection through a transmission grid, steam pipe or
equivalent. It would be better for the use of the zero emissions attribute only, to be
traded as a negative Scope 3 emission with appropriate cross border adjustments.
There should be acknowledgement that the renewable electricity produced is
consumed from the grid of its origin.
RECCOMENDATION 2
That the essential attributes of ‘Renewable electricity use’ and ‘Zero electricity
emissions’ are integrated into the attributes of LGCs and REGOs, displayed on the
certificates and in columns on the REC Registry. That there be a corresponding
consequential reform to the NGER Determination to transition to market-based electricity
accounting for Scope 2 (& Scope 3) emissions to underpin renewable and green claims and
prevent systemic double counting.
The use of I-RECs cannot be supported at this stage due to Australia’s lack of legislative
and accounting detail to support complex frameworks without double counting.
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Defining 100% Renewable Electricity Use
The Proposed Certification Scheme does not provide a definition of 100% renewables use.
There is no description of how mandatory renewable electricity will be allocated up to 2030, and whether this can be claimed towards 100% renewable electricity use based on the
Renewable Power Percentage (RPP) or on a state or grid extent basis.
There are currently multiple methods and practices on what makes up 100% renewable electricity, with ordinary household and GreenPower customers forced to pay for the mandatory RPP (~18%) plus 100% GreenPower, whilst Climate Active participants are able to claim the RPP towards their claims. Large scale system owners that produce and consume renewable electricity on site are also able to create and sell LGCs for the renewable electricity they have consumed.
RECCOMENDATION 3
It is recommended that the policy clarify a single method definition and safeguards for end
users to claim 100% renewable electricity use with zero electricity emissions.
Assuring that renewable electricity has been created is insufficient
The proposal, despite being for the benefit of end user products and claims, is not assuring renewable electricity allocation for end users as it is limited to assuring renewable generation only. The Clean Energy Regulator already has full information on renewable electricity generation, the challenge is now about how to track renewable electricity claims by end users, through a legislated allocation process back to the origin. This proposal does not achieve its intent because the renewable electricity has already been fully allocated across all customers and the attributes of renewable electricity use and zero emissions are not integrated as attributes in Large Scale Certificates (LGCs) currently, or in the proposed Renewable
Electricity Guarantee of Origin (REGO) certificates.
Generation ≠ Use.
Assurance that renewable electricity can be tracked from generation to allocation customer and use for the creation of products and services with green claims is the clear requirement.
RECCOMENDATION 4
It is recommended that the scope of the policy be expanded to ensure that it covers both
the assurance of renewable electricity creation and the allocation of renewable electricity
use at zero electricity emissions to the end user customer.
Fair pricing structures
Renewable electricity is now cheaper to produce compared with fossil fuel sources yet for most consumers the cost of renewable electricity remains as an unaffordable cost penalty above the total cost of retail electricity products. This is caused by multiple factors including:
• The legacy of LGCs being separated from the electricity as a derivative product in
markets (originally for mandatory compliance) has led to a situation where it can be
applied to standard grid and fossil electricity contracts to change the colour from black
to green. This has caused the current situation where renewables are now always
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charged at a penalty premium rate rather than an as alternative product that can
compete on its merits.
• Competition with the Mandatory LGC Market creates upward pricing pressure on LGCs
despite the Mandatory Renewable Electricity Target (RET) having been achieved
several years ago.
• The prevention of new renewable electricity from pre-1997 renewable electricity
generation facilities also creates unnecessary upward pressure on LGC pricing.
RECCOMENDATION 5
It is recommended that the proposed Policy adopt a Hybrid Ledger-Certificate accounting
framework that is market-based where renewable electricity is sold as complete renewable
electricity with the assurance certificates for end user claims. The separation of certificates
(LGCs/REGOs) for green claims via derivative markets should be discontinued.
In addition, DCCEEW should enable all new renewables from pre-1997 infrastructure to
enter the end user renewables market and consider whether the continuation of the RET to
2030 is a benefit or has become a constraint to markets and an un-warranted pricing and
administration pressure.
A Single National GreenPower Scheme
The Certification is proposed as a new and additional renewable electricity assurance
Scheme. It is understood that the NSW administered National GreenPower Accreditation
Scheme may continue and there is uncertainty as to whether LGCs would continue in addition to REGO certificates.
The direct outcome is that there are now so many schemes, certificates and assurance frameworks established for renewables, offsets and other certificates, being trialled or proposed, that the stakeholders and market participants struggle with permanent consultation and extreme confusion and uncertainty from the conflicting logics and lack of legal clarity and lack of accountability for issues.
For consistency, common rules and methods to apply across the whole market, there is a need for only one accounting framework and one renewable electricity assurance scheme.
RECCOMMENDATION 6
It is recommended that:
1. The NGER Determination reformed to cover market-based accounting for the
requirements of general market transactions and mandatory reporting by ~NGER
liable 415 corporations.
2. The creation of new REGO certificates and other derivatives should be avoided
where possible and consequential amendments made to the Renewable
Electricity legislation and NGER Determination to integrate renewable electricity
attributes into one assurance certificate.
3. The state based GreenPower accreditation scheme should be transitioned to the
Federal Jurisdiction to follow the NGER Determination rules and be administered
by the Clan Energy Regulator.
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DETAILED RESPONSES TO THE DISCUSSION PAPER AND
QUESTIONS
Policy Context
The end user voluntary Renewable Electricity Schemes in Australia operate using market- based concepts but without the necessary legislated market-based accounting rules to allocate renewable electricity use and zero Scope 2 emissions to the customer end users.
The NGER determination and the NGA Factors have already allocated all renewable electricity across all consumers in location-based state electricity factors. These factors are widely used across the economy as the basis for printing emissions on electricity bills and in Government policy analysis. This allocation is used by corporations and businesses for reputational, product and service based claims.
Where schemes have been created to used market-based accounting concepts outside regulatory frameworks in Australia this has resulted in 100% systemic double counting and pricing unfairness as well as major confusion as there is no single definition of what comprises renewable electricity use.
The proposed Federal Government Policy for renewable electricity end use must address the issues of legal uncertainty, systemic double counting and pricing unfairness for the whole market. This must include for clarity of those who purchase and claim the use of renewable electricity, and those who are benefiting from a free ride in lower emissions without paying for renewable electricity, and those who are being charged for renewable electricity but are not being allocated the renewables they have paid for.
Location-based accounting and market-based accounting
cannot coexist in the same market without systemic double
counting and pricing unfairness.
The solution is for all reputational, product and service based claims to be based on market- based accounting only, and any location-based reporting to be clarified as a contextual comparison (if it was not possible to buy renewable electricity via the market). For simplification, location-based accounting for end consumers could be fully phased out.
2.1 Need for a new mechanism - Renewables
2030 Sunset
It is noted that the RET scheme will conclude in 2030. There is an opportunity to fully transition to market-based accounting for renewables by 2030 or earlier because the target was already achieved some years ago. The ongoing compliance has since become a legacy cost and regulatory burden providing no additional outcome.
Renewable electricity exports
It is agreed that the interest in exporting electricity/renewable electricity to Asia has created an additional urgency to establish market-based accounting of the renewables and zero emissions in advance of such projects.
It is worth noting that the proposal represents an extension of jurisdiction whilst each state in
Australia has been established as a separate jurisdiction with location-based accounting.
However, location-based accounting has not served consumers fairly with mandatory RET contributions being applied equally across Australia, but the renewables use, and lower emissions claims being made unequally by each state. This highlights the need for a formal
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regulated market-based accounting framework that prevents double counting and allocates emissions and renewables use according to consumers buying either renewable electricity, or a residual mix of electricity from the grid.
Pre 1997 renewables (infrastructure)
It is agreed that buying renewable electricity should not be dependent on the age of the power station where it was created. Power stations built before 1997 such as Tarraleah in Tasmania
(commissioned in 1938), are producing new renewable electricity each year, and to restrict pre 1997 renewables from the market is to create an artificial scarcity and an unwarranted upward pricing pressure.
One accounting scheme for all consumers
In addition to the needs identified in the discussion paper, is the need for a common accounting scheme under the federal jurisdiction. The scheme should apply to all consumers including
GreenPower customers and those seeking a Guarantee of Origin (GoO) assurance for corporate reputational, product and service based claims.
2.2 Interactions with existing accounting schemes
The discussion Paper advises that:
Renewable electricity certificates are used widely in market-
based electricity and carbon accounting methodologies to
recognise the use of renewable electricity and its zero emissions
attribute.
The discussion paper does not discuss that market-based accounting is not formerly established in Australia and that Australia’s renewable electricity certificates, LGCs do not incorporate these attributes resulting in all claims being double counted.
The proposed Renewable Electricity Certification creates yet another scheme for accounting and assurance, without addressing the underlying need to establish market-based accounting under the NGER Determination for renewable electricity use and zero Scope 2 emission claims. The outcome of a further scheme will be to continue confusion, cost and complexity without addressing the integrity and assurance requirements of market participants.
To continue the NGER location-based scheme without the reform to transition to market-based accounting will continue structural double counting and will not provide market certainty. The
GHG Protocol Scope 2 guidance- Quality Criteria 7, has clearly stated that where market- based claims are supported, that “no other instruments that convey this claim to another end user shall be issued for the contracted electricity”. DCCEEW in proposing the continuation of location-based NGER Reporting (and by association the NGA Factors), is allowing 100% double counting of the claims to occur.
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Climate Active, GreenPower, NABERS, Corporate Emissions Reduction Transparency report,
RE100 and the TCFD framework as used in Australia are all operating outside a legislated accounting framework and with systemic and structural double counting.
Ideally there would be one accounting framework for electricity/renewable electricity accounting and claims created under the NGER Determination and a single national
GreenPower assurance scheme under the federal jurisdiction. The other assurance schemes should align their renewable electricity requirements to the NGER Determination and
GreenPower.
There is no impediment for integrating renewable electricity reforms with the RET scheme now and making any necessary further changes when the mandatory requirements of the RET scheme are phased out by 2030 or before.
It is noted that the Department does not intend to change the treatment of Emissions Intensive
Trade Exposed Industries (EITEI) under this proposal. This is concerning because currently,
EITEI exempt activities make up a large proportion of the 60% of electricity demand by corporations. The corporations claiming exemption from contributing to the RET are still able to claim lower emissions allocated to the grid which currently include approximately 18% mandatory renewables, 27% small scale and household system renewables and all voluntary renewables. EITEI corporations may use the lower emissions for their reputational, product and service based claims and in their annual public reporting. This represents a massive free ride and undermines the integrity of voluntary renewables.
A transition to market-based accounting under the NGER Determination would allow EITEI activities to continue to be exempt from financial contribution but would importantly discontinue any free riding in their reporting and claims.
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3. Purpose and principles
The purpose and principles of the Policy should be enhanced to provide a single legislated accredited renewable accounting and assurance foundation for all consumers.
There is a danger that creating a new scheme which is not equally applicable to all consumers, will continue pricing unfairness and uncertainty, with a specific example of this is the difference between Climate Active and GreenPower. Climate Active allows the mandatory Renewable power Percentage to count towards a 100% renewable electricity claim whilst GreenPower customers are charged for both the mandatory renewables and 100% voluntary GreenPower
(~120% in total) to make a similar claim.
Different schemes applied by different jurisdictions of
Government, Regulators and Business groups, create
inequality and unfairness.
3.2 Role for the Australian Government
The discussion paper refers to the RET Scheme to create Renewable Electricity Certificates as leading to “credibility, transparency and confidence in Australia’s renewable Electricity
Certificate market”.
Where LGCs were created and used for mandatory markets, the scheme has worked well but long standing concerns about utilising LGCs for voluntary markets and the absence of any legislated rules for accounting for use and zero Scope 2 emissions in voluntary renewable markets have been overlooked.
There is inadequate acknowledgement of long-standing concerns including:
• No market-based accounting framework established in law
• Systemic double counting
• Free riding
• Pricing unfairness
• No single definition on what constitutes renewable electricity use.
There is a major role for the Federal Government to establish a single market-based accounting framework for all consumers and a truly National GreenPower Accreditation
Scheme to serve for those that require assurance and certification.
A legislated accounting framework established under the NGER Act and NGER Determination as the regulatory instrument would support strong governance and enable the Clean Energy
Regulator to regulate end user renewable markets under a legal foundation.
Consumers are currently severely hampered by the issues of not having a nationally consistent renewable electricity market framework to prevent pricing unfairness and provide consumer certainty.
It is agreed that “Having one national framework would reduce the risk of a single unit of renewable electricity being certified by multiple schemes, and avoid other complexities related to having multiple certificate mechanisms concurrently operating in the market”. In the view of Council, this is essential to provide the foundation for a fair and credible market, however this cannot happen if the current location-based approach for Scope 2 emissions accounting continues in the NGER Determination and NGA Factors.
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Design (Renewables Certification)
The outline of the design is built on the current RET architecture and refers to an LGC as representing 1 megawatt hour of eligible renewable electricity generation. There is a fundamental problem with this definition as consumers are seeking to claim use, not generation.
Claiming renewable electricity use at zero emissions requires use-based allocation assurance, not just the assurance that renewable electricity was created. This matter has identified in previous consultations, but has not yet been acknowledged. Where renewable electricity is created but claimed by multiple end users., The existing framework is not well understood, but
LGCs are not able to assure a claim. As a consequence, claims will not be not proven and the framework will not be robust or practical.
The solution is to legally assign the attributes of renewable electricity use and zero Scope 2 emissions with the assurance mechanism/LGC/REGOs. Without this legal basis the system has no integrity or credibility. This will be essential for “An enduring renewable certificate mechanism would be fit-for-purpose for various voluntary uses in the lead up to, and beyond, the RET sunsetting in 2030” as suggested in the discussion paper.
There is no issue in incorporating marginal loss factors into renewable electricity allocation for end users, subject to there being transparency on whether this is averaged across the nation or determined using an alternative method.
Policy position proposal 1: The Department proposes to develop and implement an
enduring tradeable renewable electricity certificate mechanism administered by the Clean
Energy Regulator.
RESPONSE 1
A Hybrid Ledger/LGC system is proposed. The current LGC system is already a hybrid
LGC and ledger system as it is not able to operate without the ledger recording framework
maintained by the Clean Energy Regulator and market participants.
The key difference is that LGCs are currently used in segregation to both renewable
electricity and emissions accounting frameworks which have resulted in pricing unfairness
and systemic double counting. The problems of a certificate scheme operating in isolation
from renewable electricity include:
• Most customers who are buying renewable electricity which is cheaper to produce
are charged as a premium cost penalty above standard grid electricity
• That those entities with greater than 100KW systems can claim use of renewables
produced and consumed behind the meter, whilst still selling LGCs, so creating in a
100% double count.
• LGCs and voluntary renewable markets operate outside legislation and in
contradiction to the NGER Determination and NGA Factors which allocate the same
renewables using location-based methods.
The use of LGCs separate to electricity to claim renewables or to subsidise >100 kW on site
systems, has worked for larger corporations and site system owners. However, for most
ordinary households and small to medium businesses consumers seeking to buy
renewables, the framework has added additional cost without any actual legislated
allocation of renewables or zero Scope 2 emissions.
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The proposal for decoupled Renewable Electricity Guarantees of Origin (REGOs) has not
addressed these issues and may further discourage consumers seeking renewable
electricity and send some to search for off grid solutions.
REGOs/LGCs will work better under a legislated market-based accounting framework
where the certificates assure renewable electricity end use. This would mean that
renewable certificates are used with renewable electricity contracts (on a net basis), rather
than to artificially imply (outside legislation) that the colour of standard grid electricity
contract is able to be changed from black to green.
This is also important towards the Guarantee of Origin Scheme where renewable electricity
will underpin the supply chain analysis and claims.
4.1 Eligibility (Renewable Electricity)
REGOS & LGCs
The system would be simplified by reforming the LGC mechanism to assure renewable electricity use contracts up until 2030 and using LGCs as part of a Hybrid Ledger/ LGC
Certificate based system for market-based accounting and allocation. There is arguably no need to create new certificates to perform exactly the same function. Beyond 2030, the Hybrid
Ledger/LGC system could continue for an entirely market-based approach where emissions
(or zero emissions) are allocated in accordance with purchasing choices.
The discussion on avoidance of double counting in this section does not address the multiple forms of systemic double counting that are preventing the integrity of claims and pricing fairness. To address these matters, it is essential that the attributes of renewable electricity use and zero Scope 2 emissions are legally integrated into any certificates used.
Small Tradeable Certificates (STCs)
DCCEEW hold two concurrent and opposite views on STCs as follows:
• The NGER Technical Guidelines 2017-18 (the most recent published method that
applies to the NGER Determination) describe that the state grid factors are calculated
from “Electricity sent out consumed from the grid in each state”. Small scale
renewables produced and consumed behind the meter on a net annual basis:
o are not sent out to the grid.
o are not consumed from the grid.
o are not intended for the grid.
• In support of this method, STCs have never been tradable commodities for end user
claims. Climate Active has guided small scale system owners to claim small scale on
site renewables for use and zero emissions and no household or small scale system
owners have ever been formally advised that the sale of STCs would mean that third
parties would claim those same renewables.
However, the policies above ≠ the policies below
• DCCEEW at the same time has been allocating all small scale renewables to the grid
with the current level of deemed small scale renewable electricity assessed by the
Clean Energy Regulator as 27.26% of the grid.
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• DCCEEW has recently provided its current practice in the 2022 edition of the NGA
Factors Workbook, but this is not a legal document:
For the purposes of calculating electricity emission factors,
all small scale solar generation is assumed to be exported
to the grid (NGA Factors November 2022),
The result is that all small scale renewables are double counted.
Policy position proposal 2: The Department proposes to allow renewable electricity generation to create REGOs where that generation has not already created LGCs, STCs
(unless the certificate creation period has passed) or other certificates.
RESPONSE 2
LGCs & REGOs
There is no need to differentiate renewable electricity certificates (LGCs or REGOs) on
the basis of the age of generation infrastructure, because the Renewable Electricity Target
has already been achieved. A Hybrid Ledger/LGC based accounting framework would
automatically enable consumers to make additional claims about the net source of
generation from specific generation sites, from pre 1997 infrastructure or from post 1997
infrastructure.
STCs
Any expansion of the use of STCs for 3rd party renewable claims must address and
prevent systemic double counting issues:
• Behind the meter produced and consumed renewables should not be counted to
dilute grid factors or be claimed be claimed by third parties.
• For small scale system owners selling surplus renewable electricity there must be a
quantified distinction between the on-site use and surplus sold on a net annual basis.
This could be achieved either on an average statistically significant and robust
prepared survey or on a site-by-site basis and ledger based process.
It is essential that this matter is clarified before there can be any planning of what happens
post 2030. Any solution must fully inform system owners and customers of their options
whilst assuring that all pathways of systemic double counting are prevented.
Renewable energy sources
Policy position proposal 3: The Department proposes to allow eligible renewable energy sources as defined under the Renewable Energy (Electricity) Act 2000 to create REGOs.
RESPONSE 3
Renewable electricity sources should include the basic generation requirements of the
Renewable Energy (Electricity) Act 2000 with the following consequential amendments:
The renewable electricity sources to:
• All renewable electricity use as a part of the scheme to be assured that it is the only
claim of use and zero emissions and that all other pathways to double counting are
prevented (such as preventing the concurrent NGER and NGA Factors location-
based claims).
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• Renewable electricity counted in the scheme to meet the Quality Criteria of the GHG
Protocol Scope 2 Guidance.
• Exclude the exclusion of native forest wood waste as determined in the recent public
consultation.
• Include renewable electricity from pre 1997 sources such as old hydro-electric
infrastructure producing new current year renewable electricity
• Exclude the small scale renewables produced and consumed behind the meter
• Exclude large scale renewables produced and consumed behind the meter from any
eligibility to create LGCs or REGOs.
• Exclude assurance of secondary products and services created under this scheme.
These would be better addressed by broader assurance schemes that integrate
Scope 1, 2 and 3 accounting for reputation, product and service based claims using
a reformed NGER Framework that properly deals with market-based accounting.
Storage
Storage of renewable electricity should not be used to create LGCs/ REGOs or any other kind of renewable electricity product. The concept would confuse very different attributes and is not consistent with accounting for renewables use and zero emissions for end user renewables on a net average basis.
At best, the storage of renewable electricity amounts to a parasitic loss of electricity. There are of course benefits for the management of the grid to enhance greater use of renewables at non optimum times, but that is a separate matter.
Policy position proposal 4: The Department proposes to allow storage facilities to create
REGOs for electricity dispatched if they demonstrate that the stored energy came from
eligible renewable electricity generation by first surrendering an appropriate REGO or LGC.
RESPONSE 4
For the purpose of creating LGC or Rego Certificates, renewable electricity which passes
through storage facilities should be addressed with the appropriate parasitic loss factor
applied to the accredited renewable electricity fed into the storage facility.
Any accredited renewable electricity sold coming from a storage facility must have the
appropriate loss applied to renewables and must not claim standard grid electricity for the
loss and then allocate non adjusted renewables to the customer. This is particularly
applicable to pumped hydro schemes that use standard grid electricity for uphill pumping.
Double counting must be prevented in all circumstances.
Small Scale Storage
It may be simpler to treat energy distributed from small to medium storage as a grid
characteristic and increase the allowance for grid losses that are already built into
accounting frameworks.
Large Scale Storage
Large storage devices such as pumped hydroelectric schemes are likely to sit within the
generation portfolio of a wholesaler or retailer and should therefore internalise these losses
before the renewable electricity is ‘sent out’ to the grid.
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Offshore generation and generation for export
Policy position proposal 5: The Department proposes that electricity generated by
offshore renewable energy power stations and storage facilities located within coastal
waters of states and territories, the territorial sea of Australia, and Australia’s Exclusive
Economic Zone, and electricity that is exported internationally, be eligible to create REGOs.
RESPONSE 5
Offshore generation connected to the Australian grid for Australian business and
commercial use is already part of Australia’s renewable electricity grid and therefore should
be eligible for Australia’s renewable electricity markets.
Offshore renewables produced and consumed on-site such as for oil and gas extraction
activities should not be eligible to create LGCs or REGOs as this would be double counting.
Exports of renewable electricity to other nations such as to Asia, should not be used to
create LGCs or REGOs for use in Australia. The discussion paper proposal is consistent
with a Hybrid ledger/LGC market-based accounting model where the certificates are
integrated with the actual renewable electricity sold in contracts (in this case to Asia). This
highlights the need for an economy wide market-based approach that properly accounts for
consumer contracts rather than location-based claims where the electricity is generated.
Below-baseline generation
As previously discussed, there is no good purpose in restricting renewable electricity availability for contracts on the basis of the age of the generation infrastructure.
The Department is correct to recognise that consumers should have access to renewable electricity at lowest cost. This has been a major issue that has prevented households and businesses from taking up renewables over the past two decades, because accredited renewable electricity products have been charged as a cost penalty above the price of standard grid electricity.
The price of GreenPower and accredited renewables have been inflated by:
• An artificial supply constraint on new renewables created from pre 1997 infrastructure.
• Competition for LGCs with the mandatory compliance market for a target that was
actually achieved several years ago.
• Subsidising on-site large scale produced and consumed renewables by both NGER
and non NGER system owners.
• The exemption of EITEI activities from contributing to renewable electricity, whilst still
being able to claim emissions reduction associated with renewables via the NGER
Determination and NGA location-based account factors. This continues to be a major
(yet unquantified) proportion of the electricity market.
Policy position proposal 6: The Department proposes to allow all renewable electricity
generation to create REGOs regardless of power station age.
RESPONSE 6
It is agreed that buying renewable electricity should not be dependent on the age of the
power station where it was created. To restrict pre 1997 renewables from the market is to
create artificial scarcity and an unwarranted upward pricing pressure.
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Size threshold
The situation for small scale systems is completely uncertain as DCCEEW has multiple and contradictory positions on where the renewable electricity and zero emissions of small-scale systems are allocated. This has resulted in 100% systemic double counting of all small-scale renewables.
Policy position proposal 7: The Department proposes to allow all renewable electricity
generation to create REGOs regardless of power station or storage facility capacity.
RESPONSE 7
Until there is further consultation with all system owners and households that have
established small scale generation for their personal; renewable electricity use and zero
emission claims (and with deeming periods of up to 10 years and with many continuing to
2030), there should be no proposal to create REGOs from small scale system owners.
Consultation must fully inform all small-scale system owners of what has happened and
what the implications would be for any future proposals.
4.2 Energy Attributes
Section 2.2 of the discussion paper states that:
Renewable electricity certificates are used widely in market-based
electricity and carbon accounting methodologies to recognise the use
of renewable electricity and its zero emissions attribute.
The key attributes for renewable electricity customers and claims are therefore:
1: Renewable electricity use
2: Zero Scope 2 emissions
However, this proposed policy makes no provision to legally incorporate these key attributes into LGCs/REGOs It of significant concern that with the two key attributes are missing from the discussion paper proposal and no stated intent for legislated market-based accounting, that the entire framework will lack legitimacy and integrity.
The other items presented by DCCEEW are secondary information relating to the certificates and administration of the scheme in carrying and transferring the two key attributes, but are not attributes in themselves.
It is a major oversight in this paper that the attributes required by consumers are clearly recognised but omitted from being integrated into the assurance certificates of the schemes.
The other information is secondary and should not be confused with key attributes.
It is disappointing that the proposal has not openly discussed that the key requirements of enabling market-based renewable electricity for end user claims is fully dependent on transferring the allocation of use and zero Scope 2 emissions to the paying renewable end user customer.
Policy position proposal 8: The Department proposes to require REGOs include all the
information currently displayed on LGCs, and that this information be publicly visible.
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RESPONSE 8
The key attributes to be integrated with LGCs and REGOs must be:
1: Renewable electricity use
2: Zero Scope 2 emissions
However, the key attributes of transferable renewable electricity use allocation and zero
electricity emissions are absent in LGCs and must be integrated into any continuation of
LGCs/REGOs for the scheme to have legitimacy and integrity.
Ensuring that these two key attributes are integrated into the LGC under a legislative
instrument is particularly important as the Department has already acknowledged under
Section 2.2 that:
Renewable electricity certificates are used widely in market-based
electricity and carbon accounting methodologies to recognise the
use of renewable electricity and its zero emissions attribute.
Given that the function of REGOS in voluntary markets is essentially the same as the
function of LGCs, it is supported that the information currently displayed on LGCs is also
displayed on REGOs and would be publicly visible via the REC Registry.
Additional information (attributes?)
Secondary information could be disclosed on the below the two key attributes (and as a column in the REC Registry). What has been described as additional attributes/information are arguably additional metadata rather than attributes.
Policy position proposal 9: The Department proposes to allow RET participants to choose
to include on LGCs some or all of the additional information required on REGOs.
RESONSE 9
Secondary information if it did constitute an actual attribute, could be addressed through
customer- provider market-based contracts in a Hybrid Ledger/-LGC based accounting
framework and would not need to be incorporated into the accounting scheme. To include
secondary attributes will add complexity and cost as well as being contradictory to the notion
of market-based electricity accounting for emissions and use on a net annual basis.
There is a cost associated with new mandatory requirements for information/attributes when
much of the market may not require these attributes as a part of the scheme.
More importantly, additional attributes are a distraction from the need to integrate the core
attributes of renewable electricity use allocation and zero electricity emissions within
certificates, noting that these are currently absent in Australia’s voluntary renewable
electricity markets, GreenPower and LGCs.
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Power station age
Policy position proposal 10: The Department proposes to require REGOs include the
commissioning date of the power station or storage facility creating the certificates.
RESPONSE 10
This is a secondary attribute that may add unnecessary cost and complexity if incorporated
into the scheme, particularly in contracts where consumers are purchasing renewables from
multiple generation facilities of different ages.
As contextual information, the information could be included as part of the LGC/REGO
metadata. However, it should not be confused as a key attribute beyond assuring that the
generation source is approved as renewable electricity for voluntary end user markets.
Despite the age of power stations once being a determinant of whether renewable electricity
could be regarded as additional or not additional, this is no longer the case because the
RET has already been achieved. There is no longer a driver for new renewable
infrastructure to be built through the RET Mechanism.
In addition, because all voluntary action is counted towards the Australia’s Nationally
Determined Contribution (NDC) additional voluntary action means that the achievements of
industry can be less.
Location of Generation
Policy position proposal 11: The Department proposes to require REGOs to include the
grid location of the power station or storage facility creating the certificates.
RESPONSE 11
There is already conflicting location-based and market-based logic used in the same market
for the same renewable electricity at the same time which results in systemic double
counting. Location-based accounting is not consistent and is not complementary to market-
based accounting.
Market-based renewable electricity frameworks would be best served by deciding the
frameworks to apply to the full grid rather than to artificial state-based boundaries within a
grid.
There is an important decision to be made in designing the long term future of electricity
markets and the necessary accounting framework to be used in Australia. Considerations
include:
• For twenty three years, Australian electricity consumers have contributed equally to
Australia’s renewable electricity development (unless they are exempt) regardless
of which state or territory they are located in. To use location as an attribute (as is
used in location-based accounting) has inherent risks of inequality.
• Information to enable consumers to choose renewables locally, to support business
in their local grid jurisdiction, the identification of which grid the electricity is coming
from, may be of interest of the consumer.
• Should DCCEEW go down the path of having segregated electricity grids, rather
than treating the combination of Australia’s grids as a whole, then there will also be
a need for multiple residual grid mix factors to be calculated and used for those not
buying renewable electricity, rather than having one National Residual Grid Mix
Factor.
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The state and territory grid location has no place as a primary attribute under market-based
frameworks where it is the purchase of renewable electricity that determines the allocation
of renewables use and zero Scope 2 emissions regardless of where the electricity was
sourced via the Australian grid or grids.
Other/micro-grids.
Extreme care is necessary when dealing with off grid and miro-grid installations. Key
considerations must include:
• Are the consumers, liable wholesalers or retailers in the microgrid
contributing to the mandatory RET? This should determine whether there is a
reasonable entitlement to claim the National Renewable Power Percentage (RPP)
towards a 100% renewables claim or not.
• Are consumers within the off grid facilities that include renewable generation,
claiming use of renewable electricity and zero electricity emissions? If the
renewables use and zero emissions are used on-site or within the microgrid, then
there should be no eligibility to create and sell LGCs/REGOS for renewables already
claimed because this would be another form of double counting.
Time of generation
Policy position proposal 12: The Department proposes that REGOs created by power
stations and storage facilities over 1 MW in capacity be required to include a
timestamp reflecting the hour in which the electricity was dispatched by the power
station or storage facility.
RESPONSE 12
Not supported.
This is a proposal that may be of interest to some consumers but risks becoming a complex
administrative burden with additional costs for all stakeholders.
The proposal contradicts the foundational concept of certificates assuring that the attributes
of renewable electricity use at zero emissions are conveyed to the customer. There have
already been situations where time of use is suggested as an alternative method for claiming
renewable electricity without the voluntary surrender of LGCs.
Any proposal for time of use claims will establish a competing logic and greater complexity.
Would this mean that LGC-REGO assurance is not valid at certain times of the day?
The time of generation should not be confused as a key attribute. A hybrid ledger-LGC
based accounting framework would still enable individual customer entities to describe load
matching with their generator providers should they wish to do so. There is no need to
further complicate the Renewable Electricity Certification Scheme by mandating this
additional information.
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Policy position proposal 13: The Department proposes to require REGOs to include information indicating whether the certificate was created for generation exported overseas, or for electricity dispatched from a storage facility.
RESPONSE 13
This administrative activity and metadata should be the core business of the Clean Energy
Regulator in administering the REC Registry. It should not be confused as a key attribute of this Policy. This is about establishing suitable guidance for the Clean Energy Regulator to be able to administer the scheme.
Electricity exported overseas
It is first important to note that it is not possible to export generation to an overseas
nation. It is the electricity that is exported.
A Hybrid Ledger/-LGC based accounting framework will track electricity sent
overseas and must also prevent the double counting of end use claims.
Storage and LGC/REGO Creation
Not supported.
As suggested in response to Policy Position 4, for the purpose of creating LGC or Rego
Certificates, renewable electricity which passes through storage facilities should be addressed with the appropriate parasitic loss factor applied to the accredited renewable electricity fed into the storage facility. The renewable electricity which comes out of a storage facility cannot be new renewable electricity, it can only be the continuation of renewable electricity already created, adjusted for parasitic loss.
Surrender
Policy position proposal 14: The Department proposes that anyone may surrender a
REGO at any time, including for the purpose of creating a product Guarantee of Origin certificate.
RESPONSE 14
Not supported.
There is good reason to integrate LGCs/Regos with renewable electricity contracts, rather than to create and use derivative markets that undermine the integrity of renewable electricity use claims.
The GHG Protocol; Scope 2 Guidelines address this particular matter in their Quality Criteria
(Table 7) as follows:
Quality Criteria 4
Be used redeemed as close as possible to the period of
energy consumption to which the instrument applies.
To align with international best practice, the proposed Renewable Electricity Certification scheme should not allow more than a 12 month period for claiming renewables use and submitting the paperwork/data to the Clean Energy Regulator who administers the ledger accounting component of voluntary renewable electricity.
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Energy attribute matching
Policy position proposal 15: The Department proposes that the Clean Energy Regulator
develop systems and processes to facilitate the voluntary matching of certificates based on
time or other energy attributes.
RESPONSE 15
Not supported.
This proposal is an extension of Policy Position Proposal 12, and as such may create
additional costs for the interests of very few customers.
The proposal is contradictory to the concept of using LGCs as the major instrument and
does not recognise the role of storage.
As suggested in response to Proposal 12, a Hybrid Ledger/LGC Market-based
Accounting Framework would enable individual customer entities to describe load
matching with their generator providers should they wish to do so. There is no need to
further complicate the Renewable Electricity Certification Scheme by mandating this
information in the certificates and then enabling a voluntary opt-in choice for a small number
of consumers.
Proxy surrenders
Policy position proposal 16: The Department proposes to require REGOs to include the
name of the person or organisation on whose behalf the REGO is being surrendered, where
applicable and if the surrender is being made on behalf of many organisations.
RESPONSE 16
Not supported for non NGER liable customers.
Supported for large NGER liable customers.
There has always been a fundamental difference between GreenPower and LGC Surrender
where if GreenPower is claimed, that stakeholders know that through the accreditation
program that LGCs have been voluntarily surrendered. However, for an entity claims that it
is purchasing LGCs, there is no way for stakeholders to know whether LGCs have been
created, sold, banked or never surrendered.
It is strongly suggested that the proposed Renewable Electricity Certification Scheme is
actually a reform for GreenPower to become a National Scheme, underpinned with
legislated market-based accounting in a Hybrid Ledger/LGC market-based Accounting
Framework where double counting is prevented and claims can be assured.
Such an approach would enable the proxy surrender mechanism of GreenPower to
continue.
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Surrender purpose
Policy position proposal 17: The Department proposes that additional information
capturing the purpose of the REGO surrender be required to be provided when a person or
organisation surrenders a REGO, and be publicly visible.
RESPONSE 17
This proposal is not an attribute and is not supported. It is an upstream data capture of a
downstream intent.
The administration of such an idea would add significant cost and administrative burden for
an unnecessary outcome.
Currently there are two surrender purposes for either mandatory compliance or voluntary
renewables use. Once the mandatory mechanism is extinguished by 2030 or earlier (given
that the RET has already been achieved), then the only reason will be for voluntary
surrender.
All of the surrender purposes described by the discussion paper proposal amount to the
same intent for voluntary renewables use as a customer at zero electricity emissions.
Significant reform is required for legislated market-based accounting for consumers to
achieve this outcome.
Beyond this, there is no need for the Renewables Certification Scheme to disclose for what
purposes the renewables are used. That task should be for Climate Active as the national
product/service based assurance scheme. It is up to end users to disclose that they are
purchasing GreenPower/LGCs/REGOs to underpin any public claim or reporting that they
may make.
Source or storage technology
ADDITONAL RESPONSE
Not supported.
This is a secondary issue that can be addressed between suppliers and consumers within a hybrid LGC-Ledger based system. It should not be confused as a key attribute.
Certificate Creation Date
ADDITIONAL RESPONSE
The claims for use of renewables need to align with the GHG Protocol Scope 2 Guidance
Quality criteria for use to be claimed in relation to recent generation. A hybrid LGC-Ledger based system would restrict the loopholes that can occur with separation of the attributes from electricity and perverse banking and borrowing. It should not be confused as a key attribute.
Certificate Owner Status
ADDITIONAL RESPONSE
This is administrative metadata that should be the core business of the Clean Energy
Regulator in administering the REC Registry. It should not be confused as a key attribute.
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5. IMPLEMENTATION
5.1 Legislated frameworks and administration
The proposal to administer the scheme trough the RET legislation is inadequate without market-based reforms to the NGER Determination to enable market-based accounting with integrity and to prevent the continuation of systemic double counting.
All renewable electricity sent out to the grid is currently allocated across all electricity consumers under the NGER Determination and NGA Factors Workbook. This allocation is used across the economy, including to print the default emissions on all consumer electricity bills and in Government policy and analysis such as the Future Fuels Strategy modelling.
As such, Australia’s voluntary renewable electricity markets exist with systemic double counting and without legal foundation to support claims of renewables use and zero emissions for renewables consumption via the grid.
It is essential that there is reform to establish market-based accounting within the NGER
Determination and NGA Factors Workbook so that those buying renewables can legitimately claim renewables use and those not buying renewable electricity report on electricity consumption using a properly prepared Residual Mix Factor (RMF).
Without this, the Renewables Certification Scheme is just another double counted claim unsupported by legislation like LGCs and GreenPower.
Conceptually, a Guarantee of Origin Scheme is to track use back to origin. This proposal assures the origin with a broken connection to use claims and by definition, it could not work.
All renewable generators that create LGCs are already registered, and their production is known. The issues arise where known renewables generation is claimed as use, by multiple users at the same time.
The architecture of the current Renewable Energy (Electricity) Act 2000 and its administration by the Clean Energy Regulator is not designed to prevent systemic double counting.
5.2 Implications for the RET and other schemes
The discussion paper makes no mention of the need to reform the NGER Framework to establish legislated market-based accounting so that voluntary renewables can work with legitimacy and integrity without systemic double counting.
In the final paragraph of the Discussion paper the following paragraph makes the vaguest of hints to prevent double counting, but not in regard to the NGER Determination:
Consequential amendments may be needed to adjust the rules governing
other schemes, including to avoid double counting or recognise or exclude
REGOs where LGCs are already recognised or excluded, such as under
the Carbon Farming Initiative rule under the Emission Reduction Fund
scheme.
The NGER Act was created with the Objects that include:
The first object of this Act is to introduce a single national reporting
framework for the reporting and dissemination of information related
to greenhouse gas emissions, greenhouse gas projects, energy
consumption and energy production of corporations to:
(b) inform government policy formulation and the Australian
public;
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There is a need for the material reforms to establish market-based accounting enacted through the NGER Act and its legislative instrument being the NGER Determination and the non- legislated NGA Factors Workbook. Without these reforms, all renewable electricity will continue to be allocated across all grid customers and therefore all voluntary claims will remain systemically double counted due to the architecture of the schemes.
CONCLUSION
Whilst the proposal for a National Renewable Electricity Certification scheme is welcomed, the scheme must be underpinned by a market-based electricity accounting scheme, applied appropriately across the market to those purchasing renewables and those not purchasing renewables. The scheme should be underpinned by legislated clear and consistent rules to prevent systemic double counting and enable fair pricing structures.
Our staff would be happy to meet and discuss this submission in more detail.
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