Australia launches new carbon emissions reduction transparency system (CERT)

By | 3 minute read | March 7, 2022

grocery store

The Australian Clean Energy Regulator (CER) has taken another market-leading move with the recent release of a new carbon emissions report for some of Australia’s largest companies. The Corporate Emissions Reduction Transparency Report (CERT) is a voluntary report that sits alongside and builds upon the National Greenhouse and Energy Reporting Scheme (NGERS) established in 2007.

About the CERT system

The CERT system allows eligible organizations to voluntarily highlight the carbon reduction targets, commitments and progress made towards their decarbonization goals. The system also supports an organization’s declarations of their carbon reduction activities.

The CERT report is in the form of a dashboard for each company detailing the absolute emissions under both Scope 1 (for emissions arising from burning fossil fuels at the facilities under the organization’s operational control) and Scope 2 (emissions that are typically associated with purchased electricity consumption).

CERT differs from the NGERS report by allowing organizations to demonstrate the actions they’ve taken to eliminate emissions through energy efficiency, fuel switching or technology upgrades, as well as when renewable energy or a form of emissions offsets has been purchased.

For energy and sustainability professionals involved in carbon reporting, it’s helpful to think of the NGERS report as “location-based accounting” and the CERT as “market-based report” as described in the GHG Protocol. The location-based account provides information on how carbon-intensive an organization is within the sector it operates in, while the market-based account allows an organization to show what they have done about it.

The Australian Clean Energy Regulator manages several important certificate systems and certificate registries that allow organizations to claim ownership of renewable electricity or emissions offsets, as outlined below.

Australian Carbon Credit Units (ACCUs)

An ACCU is a unit issued to a person by the Clean Energy Regulator by making an entry for the unit in an account kept by the person in the electronic Australian National Registry of Emissions Units. Each ACCU issued represents one ton of carbon dioxide equivalent (tCO2-e) stored or avoided by a project.

An ACCU can only be issued to a person if the person has a registry account which can only be opened by a person after the regulator has considered whether they are a “fit and proper person.”

Renewable Energy Certificates (RECs)

“Renewable Energy Certificate” is a generic term describing a certificate that can be created when a unit of renewable energy (usually electricity) has been generated and sent to a consumer.

In Australia, the commonly traded certificate is the large-scale generation certificates (LGCs), which were originally designed as the mechanism to demonstrate achievement of the Renewable Energy Target.

Now, these certificates can be purchased and retired by any consumer to ensure that for each megawatt of electricity consumed, an equivalent megawatt of electricity has been dispatched to the grid from a registered renewable energy generator.

Benefits of the CERT system for organizations

The organizations that have volunteered to participate in the CERT are likely to already report their targets and progress in annual reports to investors and stakeholders. The value add of the CERT is the ability of the Clean Energy Regulator to validate the application and retirement of the certificate schemes.

If an organization purchases renewable energy certificates along with their electricity purchases, they have a unique claim over this renewable electricity. Using the serial numbers of the certificates that have been purchased and retired in the registry, the Clean Energy Regulator joins the dots and validates the action. This government validation is the highest quality confirmation that these actions are real. This is important in a world where claims and counterclaims of greenwashing are made every day.

Not every company that reports emissions through NGERS is also reporting through the CERT, but over time it will become increasingly obvious which companies are taking determined action to reduce emissions and to be transparent to stakeholders.