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How to Reduce Emissions for Transport Operators

A Plain English Introduction to The ERF Methodology to earn credits from reductions in emissions intensity from Transport


NOTE:  The below is a summary of a DRAFT  Emissions Reduction Fund Methodology -  

There may be some changes before it becomes law. 

Background:

The transport sector represents 15 per cent of Australia's annual emissions and offers potential for emissions reductions across the range of transport modes and vehicle categories, including light and heavy vehicles, air, rail and sea.

This method will allow for crediting emissions reductions achieved through a reduction in the emissions intensity of transportation (i.e. emissions per unit of transportation service).

The draft Determination includes different emissions intensity service units to reflect the different types of services that vehicle categories provide, for example, passenger-kilometre (pkm) or tonne-kilometre (tkm).

Along with road, rail, air and sea transport, the draft Determination provides for crediting emissions reductions from mobile equipment (for example, mining trucks or agricultural machinery).

The methodology will  provide for crediting emissions reductions based on changes to emissions intensity rather than changes to absolute emissions.

It will be  activity neutral to support a broad range of activities to reduce emissions intensity within the transport sector, including:

  • replacing existing
  • modifying existing vehicles;
  • changing energy sources (that is, fuel switching) or the mix of energy sources; and
  • changingoperational practices.

This draft Determination includes two sub-methods to quantify reductions in emissions intensity, to provide flexible options for different types of transport projects and business structures.

  • Sub-method 1 credits emissions reductions from a group of vehicles where vehicles of the same vehicle category are treated as a single entity, against a historically-derived baseline, which for some vehicle categories improves over time. Emissions reductions from different vehicle categories are then aggregated. This sub-method is likely to be suitable for large vehicle fleets such as hire car companies or public bus fleets.
  • Sub-method 2 credits emissions intensity reductions achieved by individual vehicles, where baselines are tailored to the vehicle and activity being undertaken. This sub- method is likely to be suitable for proponents with disaggregated, vehicle-specific data, such as aviation and shipping. Emissions reductions from multiple individual vehicles are then aggregated.
  • Project proponents wishing to implement projects under the draft Determination, once it is made, must make an application to the Regulator.
  • They must also meet the general eligibility requirements for an offsets project ,which include compliance and the additionality requirements.

SUB Methods: 

  • This methodology allows proponents to choose between two sub-methods for calculating abatement.
  • Some vehicle categories are ineligible to use one or other of the sub-methods, given lower confidence in crediting real and additional emissions reductions.

USING SUB METHOD 1. (group of vehicles)

  • The draft Determination provides that a project using sub-method 1 is conducted on a group of vehicles. The group must be made up of all vehicles in one or more vehicle categories in one or more operations or business units. Requiring all the vehicles in a given category reduces the risk of leakage of emissions to other parts of the operation. Each vehicle category within the group is treated as a single unit, which allows for more streamlined and simple calculations, monitoring and reporting.
  • Because each vehicle category within the group is treated as a single entity for the purposes of calculating the net abatement amount (including data requirements), individual vehicles may move in and out of the group over time for commercial reasons (for example seasonal scheduling or to replace another vehicle that is not operating for maintenance). However, a vehicle cannot be moved to or from a related group of vehicles that is outside the project for the dominant purpose of producing eligible abatement for the project. This is to reduce the risk of leakage and scope for intentionally shifting high emissions intensity vehicles from the project to another part of the operation, or intentionally shifting low emissions intensity vehicles into the project from another part of the operation.

USING SUB METHOD 2.

  • The draft Determination requires that a project using sub-method 2 involves monitoring and treatment at the individual vehicle level, with abatement from multiple individual vehicles aggregated.
  • Passenger vehicles, motorcycles and light commercial vehicles are excluded from using sub- method 2.

Overview of gases accounted for in abatement calculations

  • The emission sources which need to be taken into account when calculating abatement for the project are the carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) from fuel combustion for transport purposes, and scope 2 emissions from electricity when it is used as a transport fuel.
  • Section 10 requires that data used for the calculation of net abatement must be from domestic activities only, that is, does not include emissions from international aviation and international maritime activities, including from activities in preparation for or as part of an international trip or voyage. All movements between domestic ports are considered Australian, all movements from a domestic port to an international destination are considered international. Australia includes Australian external Territories, the exclusive economic zone (EEZ) and airspace above the EEZ. This ensures that emissions reductions achieved under the draft Determination are eligible carbon abatement, and count towards Australia’s 2020 emissions reductions target.

Projects must have data from previous years

  • Proponents must have the data from previous years that is required in the calculation of carbon dioxide equivalent net abatement amount.
  • For sub-method 1, historic data is required for the three years prior to project declaration. This ensures that data on which the baseline is derived reflects recent, actual performance of the group of vehicles.
  • For sub-method 2 historic data is required for each vehicle for the three years prior to the commencement of the reporting period in which the vehicle is first included in the project.. Similarly, this ensures that the baseline data reflects the recent actual performance of the vehicle, recognising that in sub-method 2, vehicles are likely to be added to the project over time.
  • There are requirements for record keeping.
  • There is a requirement for audit. 

Final Determination likely in New Year, but potential project can put in a NOI or notice of intent. 

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