Mandatory obligation schemes require liable entities (most commonly energy retailers) to meet certain targets in relation to energy efficiency or renewable energy use.
The schemes enable the trading of certificates for eligible activities which are bought by liable entities to enable them to reach their targets.
The schemes provide a financial incentive for energy users to invest in clean energy initiatives, on top of the ongoing benefits which accrue to the business through the energy savings or emission reductions generated by the project.
In this section
State Based Schemes
A number of state based schemes are open to industry participation. These are outlined below.
For more information on schemes to support residential households, see the LivingGreener website.
NSW Greenhouse Gas Reduction Scheme (GGAS)
GGAS requires NSW electricity retailers and certain other parties to meet mandatory targets for reducing or offsetting the emission of greenhouse gases from the production of the electricity they supply or use. Environmental credits are tradeable and are generated for projects that reduce GHG emission intensity. NSW Greenhouse Abatement Certificates (NGACs) are equal to 1 tonne of CO2 equivalent GHG abated.
The NSW Government has announced the scheme will close on June 30 2012. Companies accredited under GGAS to create abatement certificates from activities such as landfill gas capture and carbon sink forestry will be able to gain recognition under the Federal Carbon Farming Initiative (CFI) scheme. For more information, see the GGAS Scheme website.
NSW Energy Savings Scheme (ESS)
The Energy Savings Scheme has replaced GGAS in NSW for energy reduction processes. ESS provides financial incentives to to companies who undertake eligible projects that either reduce electricity consumption or improve the efficiency of energy use.
Electricity retailers and other liable parties must obtain and surrender Energy Savings Certificates (ESC’s or es-keys) to meet their energy efficiency targets , which are calculated in tonnes of carbon dioxide equivalent.
For more information, see the ESS website.
Victorian Energy Efficiency Target (VEET) Scheme
VEET is a ‘tradeable certificate’ scheme aimed at increasing consumer energy efficiency, reducing emissions, and promoting investment, employment and innovation in energy efficiency industries.
Accredited installers offer householders and businesses a range of prescribed energy efficiency activities designed to reduce their energy use. The installers can convert these to Victorian Energy Efficiency Certificates (VEEC). The VEECs are typically sold to large energy retailers in Victoria which are required by law to surrender a certain number each year.
For more information, see the VEET scheme website.
Large-scale Renewable Energy Target Scheme
Companies generating energy on site using renewable energy sources may be eligible to create large-scale generation certificates (LGC) through the Large-scale Renewable Energy Target Scheme. LGCs can be sold or traded to liable entities, in addition to the any sale of electricity to the grid.
To be eligible companies must generate their electricity from approved renewable sources and feed that into the electricity grid. Renewable sources include:
- solar energy
- wind
- ocean waves and the tide
- geothermal aquifers
- wood waste
- agricultural waste
- bagasse (sugar cane waste)
- black liquor (a by-product of the paper-making process)
- landfill gas.
The scheme was established to ensure that 20% of Australia’s electricity supply comes from renewable sources by 2020. It is divided into Large and Small-scale Renewable Energy schemes with a large-scale scheme target of 41,000 GWh by 2020. One LGC is equivalent to 1 MWh (megawatt hour) of eligible renewable electricity generated above the power station’s baseline. LGC’s are created in the online REC Registry. Liable entities have a legal obligation to buy LGCs and surrender them to ORER on an annual basis.
For more information, see the Office of the Renewable Energy Regulator website.
Energy Savings Initiative (ESI)
The Australian Government has agreed to investigate a national energy savings initiative, similar to the white certificate schemes currently operating in several Australian states.
As part of this investigation, comprehensive public and industry consultation, economic modelling and a regulatory impact analysis (RIS) will be developed. The government is expected to make a final decision on the adoptation of an ESI in 2013, conditional on the agreement of the Council of Australian Governments.
For more information, see the Department of Climate Change and Energy Efficiency website.