The Greenhouse Gas Reduction Scheme (GGAS) recognises a range of different generation activities (in NSW and interstate) including small and large scale fossil fuel fired systems as well as renewable generation and cogeneration applications. Eligibility is defined in the Greenhouse Gas Benchmark Rule (Generation) No. 2 of 2003.

Essentially, the Generation Rule allows for electricity generators to create abatement certificates for:

• electricity generated at an emissions intensity lower than that of the designated NSW pool coefficient, referred to as the “Relative Intensity Approach”, and/or
• efficiency improvements to a generating system (that is generally operating at an emissions intensity above that of the NSW pool coefficient), referred to as the “Efficiency Improvement Approach”.

The extent to which abatement certificates are created under either, or both, of these approaches is dictated by the generating system’s assigned Category (A, B, C or D) of generation and its accordant designated NSW Production Baseline.

For example, Category D generating systems (broadly, those commissioned after GGAS was first announced by the NSW Government in January 2002) are generally representative of newer and ‘cleaner’ technologies and have a designated NSW Production Baseline of zero MWh. This effectively means that using the Relative Intensity Approach, a generator for this category of power station may create abatement certificates for each MWh (of lower emissions intensity generation) above its 0 MWh baseline.

A Category C generating system on the other hand, is generally one that commenced operations prior to the announcement of GGAS and in the case of fossil fuel fired generating systems, has a NSW Production Baseline equal to its average annual output during the years 1997-2001. Under the Relative Intensity Approach, this category of generation creates abatement certificates on the basis of each MWh (of lower emissions intensity generation) above its respective NSW Production Baseline figure.

A Category B generating system is essentially an existing and prescribed NSW ‘base-load’ generating system, which in the case of a coal fired power station, effectively operates at an emissions intensity equal to, or greater than, the NSW pool coefficient. As such, it is unable to use the Relative Intensity Approach to create certificates, but may instead undertake efficiency improvements such as turbine upgrades or fuel switching, to improve the emissions intensity at which it operates. The extent to which the efficiency improvement is demonstrated (confirmed via testing) determines the eventual numbers of abatement certificates created.

Category A generating systems are those which pro-actively entered into power purchase agreements (PPAs) with electricity retailers under the previous NSW voluntary benchmarks scheme, and have a respective NSW Production Baseline as determined by the Generation Rule. In the case of Category A generating systems, the Deemed Retailer to the PPA is eligible for abatement for generation below the resultant baseline figure, whilst the generator (counter-signatory to the PPA) is eligible for abatement associated with generation above this baseline figure.

In addition to creating abatement certificates for lower emissions intensity generation, or for improved efficiency of generation, the use of landfill gas, sewage gas, manufactured methane gas (biogas), and other eligible waste methane as fuel for generation also attracts an added benefit in terms of abatement certificate creation. This is because GGAS recognises the avoidance of methane emissions via combustion of these fuels as an additional greenhouse benefit (methane having a global warming potential 21 times that of carbon dioxide).

The use of waste heat from cogeneration is also recognised within GGAS, with the total greenhouse gas emissions of a generating system (which impacts its emissions intensity) being able to be adjusted downwards in recognition of the notional greenhouse gas emissions avoided through the beneficial capture and use of the waste heat.

For further information on different baselines and categories of generators see the When can generators create NGACs Fact Sheet.

For further information on frequently asked questions pertaining to the Generation Rule see the Power Generation Activities – FAQ page.

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