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Production-adjusted baseline

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18 June 2021

NGER​​

Important information for responsible emitters

The final elements of the transition to the new baseline setting arrangements, including the expiry of reported baselines, will be in place for the 2021-22 compliance period.

We encourage you to start your planning now. Options for setting baselines will be more limited for baselines commencing 1 July 2021.

Please be aware that:

  • The final year reported baselines will apply is 2020-21, unless you are a grid-connected electricity generator.
  • 1 July 2020 is the final commencement date for calculated baselines that use site-specific production variables and/or site-specific (estimated) emissions intensities.
  • Calculated baselines commencing after 2020-21 must use prescribed production variables and default emissions intensities unless applying under the inherent emissions variability criteria.
  • Production adjusted baselines commencing after 2020-21 must use prescribed production variables and default emission intensities unless moving from a calculated baseline with site-specific values.
  • Facilities coming off reported baselines can apply for a production-adjusted baseline, without needing a calculated baseline first, provided they use prescribed production variables and default emissions intensities.
  • If your facility's baseline was affected by changes to Global Warming Potentials, we will contact you to discuss updating this number to reflect the current values.

Note: If you want to use site-specific emission intensities for some or all production variables in a calculated baseline you must apply by 1 November 2021.

The application form required to apply for a production adjusted baseline is available on the National Greenhouse and Energy Reporting scheme forms and resources page.

Guidance is available to assist responsible emitters understand their obligations and the application and assurance requirements.

Applicants are encouraged to contact the Clean Energy Regulator on 1300 553 542 or via email CER-SafeguardBaselines@cleanenergyregulator.gov.au if they have any questions about any aspect of the application process.

A production adjusted baseline can be made after or during a facility's calculated baseline or benchmark baseline, using the production variables and emissions intensities set in the previous baseline. Existing facilities may also apply for a production adjusted baseline, without first applying for a calculated baseline, if they use only prescribed (annually adjusted) production variables and the associated default emissions intensity values.

Prescribed production variables (both annually adjusted and fixed) are listed in Schedule 2 and Schedule 3 of the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Safeguard Rule). More details on prescribed production variables can be found in the Safeguard Mechanism: Prescribed production variables and default emissions intensity values document published on the Department of Industry, Science, Energy and Resource's website.

If a responsible emitter does not apply for a production adjusted baseline, a facility with a calculated or benchmark baseline that expires will generally revert to a default baseline emissions number of 100,000 tonnes carbon dioxide equivalent (t CO2-e).

Unlike a calculated baseline or benchmark baseline, a production adjusted baseline does not expire. It will continue to remain in effect until another baseline determination is made for the facility.

How a production adjusted baseline is set

In broad terms, production adjusted baselines are determined by multiplying actual production from a period by an emissions intensity value:

Production-adjusted baseline = actual production × emissions intensity

In practice, how this calculation is determined will depend on a number of factors, discussed below.

Emissions intensity

The emissions intensity that is used for a production adjusted baseline will depend on a facility’s particular circumstances.

A facility transitioning from a calculated baseline can choose to use either the emissions intensity used in making the previous calculated baseline or, if applicable, the relevant default emissions intensity (from Schedule 2 or 3 of the Safeguard Rule).

Facilities transitioning from a benchmark baseline must use the same emissions intensity that was used in the benchmark baseline (from Schedule 1 of the Safeguard Rule).

Facilities that don’t have a calculated or benchmark baseline must use prescribed production variables from Schedule 2 of the Safeguard Rule and also use the associated default emissions intensity values.

Production adjusted baselines that adjust annually

Where a facility uses a prescribed production variable that has been identified as suitable for annual adjustment, its production adjusted baseline will be set annually, based on actual production in each year. Prescribed (annually adjusted) production variables are listed in Schedule 2 of the Safeguard Rule. Actual production will be reported as part of the facility’s standard NGER report. Each year, the facility’s baseline will be calculated by multiplying the reported amount of production by the relevant emissions intensity.

Production adjusted baselines that are fixed

All other production adjusted baselines will be fixed with actual production derived from the year with the highest level of actual production during the production assessment period. For a facility transitioning from a calculated baseline, the production assessment period is the period that the calculated baseline was in force. These baselines will be calculated upon approval of the application and are then fixed.

Production adjusted baselines that include both fixed and annually adjusting components

Production adjusted baselines may also be set based on both actual production each year and actual production from the production assessment period. This occurs where a facility has multiple production variables where one or more are listed in Schedule 2 of the Safeguard Rule and must form part of an annually adjusting baseline, and the remaining production variables are not listed in Schedule 2 and therefore form part of a fixed baseline. One portion of the baseline is therefore calculated upon approval of the application (and fixed). The remaining portion of the baseline is calculated each year following the submission of production quantities for the reporting period. In any year, a facility’s total baseline will be the sum of these portions.

Applying for a production-adjusted baseline

Applications for a production adjusted baseline must be received between 1 July in the financial year the production adjusted baseline is to start, and 31 October, after the end of the first financial year to be covered by the baseline. This means that for a particular starting year there is a sixteen month window during which production adjusted baseline applications can be submitted.

Variations to a production adjusted baseline

Facilities with an existing production adjusted baseline may apply to vary that baseline if they produce a new prescribed (annually adjusted) production variable that was not included in the original production adjusted baseline. Such variations can be made even where the original production adjusted baseline did not include an annually adjusted production variable. Please contact the Clean Energy Regulator on 1300 553 542 or via email to discuss applying to vary a production adjusted baseline.

The Clean Energy Regulator may also vary a baseline (including a production adjusted baseline) for several other reasons, including where a facility restructures or ceases a particular activity.


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