Aggregation is the process of bringing multiple sources of carbon abatement together. Aggregation can be undertaken by individuals or organisations.
Aggregators provide a range of services that support participation in the Emissions Reduction Fund. Aggregators might be agents, project developers, holding companies or provide a range of expanded services. Aggregation can introduce economies of scale, reduce transaction and other business costs and help manage performance risk.
Aggregation as part of the Emissions Reduction Fund can be done in a number of ways. Regardless of the method used, two broad categories of aggregation apply:
It is important to remember that under the contracting arrangements of the Emissions Reduction Fund, the Clean Energy Regulator will contract with the participant to whom we will issue any ACCUs earned by the project. This party has taken responsibility for executing the project and will also take responsibility for delivering the contracted ACCUs. If other parties are involved in the project, commercial arrangements define how the financial costs and benefits, including performance risk, are allocated amongst the parties.
Note—The business models described below do not determine whether the Clean Energy Regulator will enter into a carbon abatement contract with an aggregator. Before qualifying or registering for Emissions Reduction Fund auctions, the Clean Energy Regulator will need to be satisfied, amongst other things, that the aggregator has the capability to deliver the proposed volume of abatement from the project.
ACCUs are specified as financial products in the Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act). This means that you may require an Australian financial services (AFS) licence to carry on a carbon services business including aggregation. Before entering into an aggregation arrangement participants should seek advice on the need to hold an AFSL. Further guidance can be found at www.asic.gov.au.
Participants may seek support from carbon service providers when undertaking a project. Carbon service providers are private businesses, independent of government, who assist farmers and land managers to participate in the Emissions Reduction Fund. The Department of Environment and Energy have developed information to highlight some important points for you to consider when working with or entering into agreements with carbon service providers.
Example 1 – participant owns or controls multiple sites
In this example the site owner is both the participant and the aggregator. Sites are aggregated at the project level (where activities at each site are bundled to form a project).
Example 2 – participant is a project developer
In this example the aggregator contracts with site owners for consultation and installation of building upgrades. The aggregator is the participant and bears the performance risk associated with undertaking the project.
Example 3 – participant engages multiple project developers on multiple sites
In this example, the aggregator is a business that contracts with multiple project developers to undertake activities across multiple sites. The project developer will approach site owners and undertake the efficiency activity. The project developer will then have a separate arrangement with the aggregator that empowers the aggregator to be the participant and manage the abatement contracting. If successful in entering into a carbon abatement contract:
Example 4 - participant is an energy retailer
In this example the aggregator is an energy retailer who applies an energy efficiency treatment to a population of customers. The energy retailer is the participant and bears the performance risks associated with undertaking the project.
In this example the aggregator undertakes all aspects of the project and can aggregate across multiple sites in a single project or register a separate project for each site with the intent of bundling some or all of them into a single contract.
The aggregator could establish one or several projects using the same method across multiple sites.
An aggregator has the same requirements as any other participant to substantiate their legal right to undertake the project, and responsibility for the project.
The Clean Energy Regulator’s approach is to require demonstration of existence of legal right to carry out the project at the time of project registration. This is done through the provision of:
You may support your explanation with documents demonstrating your legal right.
In relation to applications for project registrations that cover existing and prospective sites, the Clean Energy Regulator will ask for evidence of legal right at two stages:
As well as the above, an aggregator wishing to participate in the Emissions Reduction Fund must pass the fit a proper person test outlined under the
Carbon Credits (Carbon Farming Initiative) Act 2011. A person passes the fit and proper person test if:
The compliance and enforcement requirements that apply to an aggregator are the same as those that apply to all participants.
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.