National Greenhouse and Energy Reporting (NGER) Scheme

11 April 2025

Director
National Inventory Systems and International Reporting Branch, Quarterly and Industrial Emissions Section
Department of Climate Change, Energy, the Environment and Water

National Greenhouse and Energy Reporting (NGER) Scheme – 2025 Amendments

Thank you for the opportunity to comment on the 2025 Amendments to the NGER Scheme.

Australian Gas Infrastructure Group (AGIG) is one of Australia’s largest energy infrastructure groups with distribution, transmission and storage assets worth over $9 billion. Across every Australian mainland state, and the Northern Territory, our infrastructure delivers gas to over 2 million homes, businesses and industry; and transports and stores gas that underpins the Australian economy for power generation, mines and manufacturers. We do this safely, reliably and in a cost-efficient manner for our customers. Our business is supporting the energy transition by delivering the natural gas that is needed today and advancing low carbon solutions for the future.

Our Net Zero Ambition and emissions reduction targets outline our ongoing dedication to a sustainable energy future.
Our targets include reducing our Scope 1 and 2 emissions across all AGIG assets by 30% from 2020-levels by end-2030, tracking and reporting our material Scope 3 emission categories, with a view of setting measurable targets by end-20271 and continuing to work with customers and stakeholders to deliver and develop the energy infrastructure solutions essential to lowering emissions – including through natural gas, renewable gas and carbon capture and sequestration solutions.

We are active participants in the transition from natural gas to renewable and carbon-neutral gases such as renewable hydrogen and biomethane for our customers. We are investing in renewable gas projects - today we have three projects operating or under construction, and a pipeline of additional projects which will provide confidence in the deliverability of renewable gas to customers.

We are strongly supportive of the introduction of market-based reporting of emissions from consumption of biomethane and hydrogen, and we are appreciative of the continued collaboration with industry and government on the development of these standards. Renewable gases such as biomethane and hydrogen have an important role to play in emissions reduction, energy security and cost in the overall energy system, and provide critical options for entities covered by the
Safeguard Mechanism to decarbonise.

There is significant potential for renewable gases to be developed at scale and contribute to emissions reduction and energy supply. The Australian Energy Maret Operator’s (AEMO) latest draft Inputs Assumptions and Scenarios Report
(IASR) indicates it expects biomethane and hydrogen could contribute up to 220 PJ and 236 PJ in supply respectively by
20502. The proposed amendments to the NGER Scheme to enable market-based accounting will enable this potential to be unlocked, supporting Australian jurisdictions who are putting in place or consulting on policies to provide support the development of renewable gases.

Together with the development of the GreenPower Renewable Gas Guarantee of Origin (RGGO) and federal Guarantee of Origin scheme, the proposed changes to the NGER Scheme are critical enablers of the renewable gas industry and will support the efficient delivery of renewable gases using existing distribution network infrastructure which is renewable-gas ready.

1
Refer to p23 of AGIG’s 2024 ESG report: https://www.agig.com.au/~/media/Files/AGIG/ESG/Mar25/AGIG193-2024-ESG-Report_Digital-F8
2
See p72-76 of AEMO’s Draft IASR, February 2025. draft-2025-inputs-assumptions-and-scenarios-report-stage-2.pdf

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We are keen to continue engaging with the Department of Climate Change, Energy, the Environment and Water
(DCCEEW) on the role gas infrastructure plays in enabling and delivering renewable gas projects as the nascent industry scales and develops.

We provide three key areas of feedback on the proposed amendments:

• Loss factors: We consider that a loss factor is not needed to account for renewable gas pipeline transport losses.
Gas losses are already accounted for and covered by existing unaccounted for gas market-based reconciliation
frameworks between injection and deliveries. Inclusion of an additional loss factor is likely to lead to double counting.

• Certificate vintaging and temporal linking: Requiring renewable gas certificates to be matched to natural gas
network injection within the reporting year would lead to unintended market outcomes, creating unnecessary risk
and volatility into a market still in its earliest stages. We recommend that this requirement is removed.

• Fugitive emissions from oil and natural gas operations: We propose establishing a Method 3B for natural gas
transmission and distribution facilities that would utilise the existing Method 3 for onshore natural gas production,
other than emissions that are vented or flared—wellheads available to natural gas transmission and distribution
facilities. This will establish a measured ‘leaker/non-leaker’ differentiation for components in natural gas transmission,
referring to established leaker/non-leaker factors and enable the use of the leak detection options included in the
American Petroleum Institute (API) Compendium 2021.

Our detailed comments on loss factors and certificate vintaging and temporal linking are provided in the appendix to this letter. In respect of our comments on fugitive emissions, we consider this an important issue for DCCEEW to consider that is supported by and outlined in further detail in the Australian Pipelines and Gas Association’s (APGA) proposal3.

Once again, we commend DCCEEW for its continued consultation throughout the process of engagement on the NGER
Scheme. Should you wish to discuss in further detail please contact Shawn Tan, Manager Policy, at shawn.tan@agig.com.au at first instance.

Kind Regards,

Cathryn McArthur
Executive General Manager, Customer and Strategy

3
Refer to the APGA submission. The APGA submission was developed in consultation with pipeline owners and operators, including AGIG.
https://apga.org.au/submissions

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Appendix

1. Loss Factors
We note the proposed NGER amendments as follows: “Renewable gas certificates represent an amount of renewable gas produced and injected into the network – some of this gas will be lost before reaching the consumer. DCCEEW’s proposal is to apply a loss factor to account for pipeline transport losses.”

We are of the view this is not required as gas losses are already accounted for and covered by existing unaccounted for gas market-based reconciliation frameworks between injections and deliveries.

Losses are already accounted for in the emissions reporting and liabilities of the network

The proposed NGER amendments require that a market-based approach will be the mandatory approach for determining the composition of gas received, with any gas consumed from the network that is not supported by certificates having to be reported as natural gas. By extension, this would also mean that any gas lost from the network (fugitive) not supported by certificates would be considered natural gas, effectively requiring additional certificates to be procured for the fugitive emissions, or reducing the amount of renewable claims being made by the buyer of the renewable gas certificate.

As networks are emissions reporting entities under the NGER Scheme, the “loss factor” in the proposed mechanism results in double counting – any gas not delivered (i.e. fugitive emission) is accounted for in the emissions reporting
(and subsequently, liabilities) of the network/pipeline company. Applying a loss factor to the renewable gas certificates to account for pipeline transport losses is therefore unnecessary and the proposed requirement should be removed.

Accounting for renewable gas losses is conceptually inconsistent

The proposed NGER amendments also note, “Allowing reporters to determine the composition of gas they receive from the grid based only on the amount of renewable gas injected into the grid, with no accounting for losses, would overestimate the renewable gas component eventually received by a customer.” This results in inconsistencies with the purpose of the market-based reporting method, which is to separate the renewable claims from the gas (the “green credits”), against the physical delivery of the gas (the “renewable gas component eventually received by a customer”).

The allocation of risk for losses in electricity and gas are currently (correctly, in our view) allocated to the owner of the network infrastructure, who is best placed to deal with losses (for example, in AGIG’s case, through our mains replacement program), rather than the end customer.

Regarding the reference to loss factors in the electricity grid and implications on Scope 2 market-based reporting, the two systems fundamentally deal with losses in different ways, and the differences in methodology for dealing with those losses arises from how the market balances financially.

In addition, there is little benefit for working out loss factors for biomethane and hydrogen for the market-based mechanism, as should customers be allowed to claim the full amount of renewable gas delivered to the system, then the residual loses are simply treated as “natural gas” and are reported by the infrastructure owners as their Scope 1 emissions.

Recommendation:

• We recommend that a loss factor is not needed to account for renewable gas pipeline transport losses.

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2. Certificate Vintaging and Temporal Linking

We note that DCCEEW’s preferred position is that to be used for market-based reporting in a reporting year, renewable gas certificates must represent renewable gas that was injected into the natural gas network in the reporting year. This approach is not practical for several reasons, which we have outlined below.

The proposed approach would result in unintended market outcomes

As currently drafted, this proposal would privilege gas injections in the earlier parts of the annual cycle and be to the detriment of producers with gas injections towards the end of the annual cycle. The shorter the amount of time available between the creation of the certificate and when it is required to be used to show an offset would result in market outcomes that would be more volatile than would be the case with a longer certificate life and would introduce risk unnecessarily into a market that is still in its earliest stages.

This would hinder investment, market participation, and innovation in this space, and not be aligned with customer needs. Investment in this space by gas producers and gas consumers, would be negatively impacted by the volatility and uncertainty (for example in spot market pricing towards the end of the reporting cycle) that would be created by having certificates age out in this manner.

Negotiation of long-term contracts between producer and consumer would also be negatively impacted by the need to closely coordinate both injection volumes and withdrawals and the timing of those, and to also contractually resolve events such as interruptions to a biomethane process, or an unexpected outage at the consumer’s plant.

It is unnecessary to restrict potential markets, as current frameworks allow the matching of timing of gas usage

The requirement for certificates to represent renewable gas that is injected into the natural gas network in the reporting year would also impact businesses that are looking at offsetting their historical emissions, and the proposal would effectively exclude producers from selling to buyers in this market. For example, Microsoft has committed to removing its historical emissions since its founding in 1975 by 2050, as part of its emissions reduction strategy. 4

Finally, the current certification frameworks allow customers to match the timing of gas usage to certificates should they choose to do so (for example, as required by its customers or investors). For emissions accounting, the date of issue of the certificate will be clearly recorded and available, so the underlying year-to-year progress on emissions reduction and accounting for that can be tracked independently of how an individual business reports its market position. We consider it is therefore unnecessary to restrict the matching of certificates within the NGER Scheme.

Recommendation:

• We recommend that the requirement for certificate vintaging and temporal linking is removed.

4
https://www.microsoft.com/en-us/corporateresponsibility/sustainability

+61 8 8227 1500
info@agig.com.au agig.com.au