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The objectives of the Greenhouse Gas Reduction Scheme (GGAS) are to: reduce greenhouse gas emissions associated with the production and use of electricity; and to develop and encourage activities to offset the production of greenhouse gas emissions. GGAS requires NSW electricity retailers and certain other parties, collectively referred to as benchmark participants, to meet mandatory targets for reducing or offsetting the emission of greenhouse gases from the production of the electricity they supply or use.
The Electricity Supply Amendment (Greenhouse Gas Emission Reduction) Act 2002 sets a State greenhouse gas benchmark expressed in tonnes of carbon dioxide equivalent (CO2-e) per capita. The initial level was set at the commencement of GGAS in 2003 at 8.65 tonnes. The benchmark progressively drops to 7.27 tonnes in 2007 which represents a reduction of five per cent below the Kyoto Protocol baseline year of 1989- 90 . The per capita amount continues at this level until 2021.
Graphically, the State greenhouse gas benchmarks per capita are:
Benchmark participants can reduce the average emissions intensity of the electricity they supply or use by purchasing abatement certificates and surrendering these to the Independent Pricing and Regulatory Tribunal (IPART) in its capacity as Compliance Regulator. Benchmark participants can also claim credit for the surrender of Renewable Energy Certificates (RECs) under the Commonwealth’s Mandatory Renewable Energy Target (MRET).
Abatement certificate providers carry out activities that abate greenhouse gases. They can achieve this through reducing the greenhouse gas intensity of electricity generation; generating low emission intensity electricity; demand side abatement activities which involve reducing, or increasing the efficiency of the consumption of electricity; or through carbon sequestration activities - managing forests so as to capture and retain carbon from the atmosphere.
GGAS also allows some large electricity customers to claim credit for reducing on-site emissions of greenhouse gases from (non-electricity related) industrial processes at sites which they own and control.
Role of IPART
Administration of GGAS is carried out by IPART who performs two distinct roles under GGAS. These are:
- Compliance Regulator that oversees the annual compliance of mandatory benchmark participants with their greenhouse gas benchmarks, and the election of large customers and persons carrying out State significant developments to become elective benchmark participants.
- Scheme Administrator that oversees the accreditation of abatement certificate providers, the creation and transfer of greenhouse gas abatement certificates, monitors the performance and compliance of accredited parties, and maintains the GGAS registry.
In its role as Scheme Administrator, IPART accredits abatement certificate providers and allows them to create tradable abatement certificates (NGACs) after the payment of a registration fee of $0.15 per NGAC. An audit panel assists in ensuring the integrity and validity of the certificates registered within GGAS. The registry evidences the creation, payment for creation, transfer and ultimate surrender of the abatement certificates. Once surrendered, the certificates cannot be reused. The registry does not provide a trading function, as this is performed independently by the market.
GGAS is implemented through the following legislation:
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