The Emissions Reduction Fund: Crediting

Department of the Environment, 2014

The Clean Energy Regulator will issue Australian Carbon Credit Units for emissions reductions from registered projects.

Once credits have been issued they can be purchased by the Government through the Emissions Reduction Fund or sold to organisations that wish to offset their emissions.

How do businesses register projects?

Project proponents will register their emissions reduction projects with the Regulator. They can also register to participate in a forthcoming auction. The Regulator will check:

  • the identity, probity and capability of the proponent (the 'fit and proper person' test)
  • that the project is consistent with an approved method
  • the proponent's legal right to undertake the project, including the consent of others with an interest in the land to sequestration projects
  • the commercial readiness of the project, and
  • the credibility of the proponent's emissions reduction estimates.

The Regulator will only undertake the final two checks if businesses intend to participate in an auction.

Information about registered projects will be recorded by the Regulator and published in the Emissions Reduction Fund Registry on its website. The Registry listing will provide a description of the project, the proponent's name, the applicable emissions reduction method, the location of the project, and the number of Australian Carbon Credit Units that have been issued to the project.

How will projects receive credits?

Proponents will undertake their projects and report their emissions reductions to the Regulator. The Regulator will verify those reports and issue credits to the proponent.

The Regulator will issue credits into the Australian National Registry of Emissions Units (ANREU) and businesses will need to have an account in the ANREU to receive credits. The basic identity and probity checks undertaken by the Regulator for project registration will enable businesses to open an account in the ANREU.

Project reports can be submitted as frequently as every six months where the method allows, or more frequently with the agreement of the Regulator.

If a project proponent has a contract with the Regulator following an auction the contract will include a schedule for the delivery of Australian Carbon Credit Units. Once a contract is agreed, the frequency and timing of reporting will be governed by this schedule.

The Regulator will apply a risk-based approach to determine how often audit reports will need to accompany a project report, what they will need to cover and the level of assurance required. The Regulator will have the authority to require proponents to obtain:

  • an initial audit at the beginning of the crediting period
  • a minimum of three audits (including the initial audit) in total over crediting periods of seven years or more, with the potential for fewer audits over shorter crediting periods, and
  • additional audits based on the Regulator's risk-based approach.

How are emissions reductions calculated?

Proponents will use an approved method to estimate the likely emissions from their proposed projects. Emissions reduction methods will set out the rules for estimating emissions reductions from different activities.

Over what period will projects receive credits?

The Emissions Reduction Fund will credit projects for a single defined 'crediting period'. The crediting period is the period of time over which a project can create Australian Carbon Credit Units.

In general, emissions reduction projects will have a crediting period of seven years and sequestration projects will have a crediting period of 25 years.

More information

Details about the Emissions Reduction Fund are available at:
 www.environment.gov.au/emissions-reduction-fund.

Note: While the Commonwealth has made reasonable efforts to ensure the accuracy, correctness or completeness of the material, the Commonwealth does not guarantee, and accepts no liability whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of this material. Any references to the potential costs or benefits of undertaking an activity in accordance with an emissions reduction method are estimates only. This material is not a substitute for independent professional advice and entities should obtain professional advice suitable to their particular circumstances.