EXPLANATORY STATEMENT

Carbon Credits (Carbon Farming Initiative) Act 2011

Carbon Credits (Carbon Farming Initiative—Commercial and Public Lighting) Methodology Determination 2015

EXPOSURE DRAFT

Background: Emissions Reduction Fund

The Carbon Credits (Carbon Farming Initiative) Act 2011 (the Act) enables the crediting of greenhouse gas abatement from emissions reduction activities across the economy. Greenhouse gas abatement is achieved either by reducing or avoiding emissions or by removing carbon from the atmosphere and storing it in soil or trees.

In 2014, the Australian Parliament passed the Carbon Farming Initiative Amendment Act 2014, which establishes the Emissions Reduction Fund (ERF). The ERF has three elements: crediting emissions reductions, purchasing emissions reductions, and safeguarding emissions reductions.

Emissions reduction activities are undertaken as offsets projects. The process involved in establishing an offsets project is set out in Part 3 of the Act. An offsets project must be covered by, and undertaken in accordance with, a methodology determination.

Subsection 106(1) of the Act empowers the Minister to make, by legislative instrument, a methodology determination. The purpose of a methodology determination is to establish procedures for estimating abatement (emissions reduction and sequestration) from eligible projects and rules for monitoring, record keeping and reporting. These methodologies will help ensure that emissions reductions are genuine—that they are both real and additional to business as usual.

In deciding to make a methodology determination the Minister must have regard to the advice of the Emissions Reduction Assurance Committee (ERAC), an independent expert panel established to advise the Minister on proposals for methodology determinations. The Minister must not make or vary a methodology if the ERAC considers it inconsistent with the offsets integrity standards, which are set out in section 133 of the Act. The Minister will also consider any adverse environmental, economic or social impacts likely to arise as a result of projects to which the determination applies.

Offsets projects that are undertaken in accordance with the methodology determination and approved by the Clean Energy Regulator (the Regulator) can generate Australian Carbon Credit Units (ACCUs), representing emissions reductions from the project.

Project proponents can receive funding from the ERF by submitting their projects into a competitive auction run by the Regulator. The Government will enter into contracts with successful proponents, which will guarantee the price and payment for the future delivery of emissions reductions.

Further information on the ERF is available on the Department of the Environment website at: www.environment.gov.au/emissions-reduction-fund.

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Background: Commercial and Public Lighting

Improving the energy performance of commercial and public lighting systems by upgrading existing lighting systems can reduce emissions associated with the generation of electricity consumed in buildings and public spaces. The draft Determination is intended to apply to lighting upgrades undertaken in commercial and industrial buildings, as well as lighting upgrades to public areas, such as pedestrian, street and traffic lighting.

Most greenhouse gas emissions generated by lighting systems are indirect, primarily emissions from electricity that is consumed by the lighting systems (scope 2 emissions). Lighting systems that generate direct (scope 1) emissions, through the provision of lighting using direct fuel combustion (for example, gas lighting), are not considered under this draft Determination.

For this draft Determination, the upgrading of a lighting system involves the modification, installation, removal or replacement of lighting equipment within an existing lighting system for the purpose of decreasing energy usage of that system as a whole. Examples of activities that may contribute to emissions reductions under the draft Determination include modifying, installing, removing or replacing:

illumination equipment (such as lamps and ballasts);

lighting control systems (such as motion sensors, sensor lights, programmable and manual dimmers), which affect the way lighting systems consume energy; and

equipment that generates electricity for direct use by the lighting systems (such as integrated photovoltaic luminaire units).

The draft Determination would provide for lighting upgrades in multiple buildings or public spaces to be included in a single lighting upgrade project. The draft Determination does not specify the particular activities that would need to be undertaken or products to be installed, providing flexibility for project proponents to determine what activities or technologies are most appropriate for each upgrade.

The energy consumption of commercial lighting systems can be estimated using the nominal lamp power (NLP) of each lamp or luminaire and taking into account deemed values or adjustment factors for lamp type, control gear, hours of operation for the lighting space type, lighting control devices and air conditioning where applicable. The draft Determination makes use of NLP and these deemed values/adjustment factors to establish baseline emissions for the lighting system. The baseline emissions are then compared to project emissions to quantify emissions reductions and energy savings from activities undertaken as part of the lighting upgrade project.

An additional option is included to allow a public lighting project, should the proponent choose to do so, to use information and data contained in the public lighting inventory and the National Electricity Market Load Tables for Unmetered Connection Points published by the Australian Energy Market Operator in calculating the baseline and project emissions. This option has been provided to align with current reporting and record keeping practices in the public lighting sector.

Project proponents could include owners, operators or tenants of commercial and industrial buildings, local and state governments, electricity companies, lighting manufacturers/suppliers and other lighting project aggregators.

The draft Determination is based on a similar method under the New South Wales Energy Savings Scheme (ESS). In line with advice from stakeholders, the Department has sought to

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maintain consistency with the New South Wales method. There remain however some differences between the New South Wales method and the draft method due to differences in overall scheme design and coverage.

Application of the draft Determination

The draft Determination sets out the detailed rules for implementing and monitoring offsets projects that reduce greenhouse gas emissions associated with lighting upgrades to existing commercial and public lighting systems. These rules have been designed to help ensure that emissions reductions are real and additional to business as usual.

Project proponents wishing to implement projects under the draft Determination, once it is made, must make an application to the Regulator under section 22 of the Act. They must also meet the general eligibility requirements for an offsets project set out in subsection 27(4) of the Act, which include compliance with the requirements set out in the draft Determination, and the additionality requirements in subsection 27(4A) of the Act. The additionality requirements are:

the newness requirement;

the regulatory additionality requirement; and

the government program requirement.

Subsection 27(4A) of the Act provides that a methodology determination may specify requirements in lieu of the newness requirement or the regulatory additionality requirement. The draft Determination does not specify any requirements in lieu, and so the general requirements apply to high efficiency commercial appliances projects.

Public consultation

The draft Determination has been developed by the Department of the Environment and has been reviewed by a stakeholder group which met on 3 February 2015. The stakeholder group comprised representatives from industry, experts from the energy efficiency sector and the Regulator.

The exposure draft of the Determination has been published on the Department’s website for public consultation from 17 March 2015 to 14 April 2015. Details for how to make a submission are provided on the Department of the Environment website, www.environment.gov.au.

Draft Determination details

The draft Determination will be a legislative instrument within the meaning of the Legislative Instruments Act 2003.

Details of the draft Determination are at Attachment A.

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Note on this explanatory statement

Numbered sections in this explanatory statement align with the relevant sections of the draft Determination.

Definitions for terms which are highlighted in bold italics can be found in the draft Determination.

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Attachment A

Details of the draft Methodology Determination

Part 1 Preliminary

1 Name

The full name of the draft Determination is the Carbon Credits (Carbon Farming Initiative—Commercial and Public Lighting) Methodology Determination 2015.

2 Commencement

Section 2 provides that the draft Determination would commence on the day after it is registered on the Federal Register of Legislative Instruments.

3 Authority

Section 3 provides that the draft Determination would be made under subsection 106(1) of the Act.

4 Duration

Under subparagraph 122(1)(b)(i) of the Act, a methodology determination remains in force for the period specified in the determination.

Section 4 provides that the draft Determination will be in force from its commencement (as provided for in section 2) until the day before it would otherwise be repealed under subsection 50(1) of the Legislative Instruments Act 2003.

Instruments are repealed under that provision on the first 1 April or 1 October following the tenth anniversary of registration of the draft Determination on the Federal Register of Legislative Instruments. In accordance with subparagraph 122(1)(b)(i) of the Act, paragraph 4(b) of the draft Determination sets out the time that the draft Determination would expire.

If the draft Determination expires in accordance with section 122 of the Act or is revoked under section 123 of the Act during a crediting period for a project to which the draft Determination applies, the draft Determination will continue to apply to the project during the remainder of the crediting period under subsections 125(2) and 127(2) of the Act. Project proponents may apply to the Regulator during a reporting period to have a different methodology determination apply to their projects from the start of that reporting period (see subsection 128(1) of the Act).

Under section 27A of the Act, the Emissions Reduction Assurance Committee may also suspend the processing of applications under a determination if there is reasonable evidence that the methodology determination does not comply with one or more of the offsets integrity standards. This does not impact applications for declaration already received by the Regulator before such a suspension or declared eligible offset projects which apply the draft Determination.

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5 Definitions

Section 5 defines a number of terms used in the draft Determination.

Generally, where terms are not defined in the draft Determination but are defined in section 5 of the Act, they have the meaning given by the Act.

Under section 23 of the Acts Interpretation Act 1901, words in the draft Determination in the singular number include the plural and words in the plural number include the singular.

Key definitions in section 5 of the draft Determination include those set out below.

baseline lighting equipment is defined for a lighting upgrade project to mean the lighting equipment in the serviced area immediately before the commencement of the lighting upgrade.

control gear is defined to mean equipment that converts electricity to a different voltage, current or waveform, for the purpose of powering a lamp.

integrated photovoltaic luminaire unit is defined in item 20 of Schedule 1.

lamp is defined to mean equipment that converts electricity to visible light.

lighting control device is defined to mean equipment that controls the amount of power delivered to a lamp or luminaire, in response to sensors or user input.

lighting equipment, which is defined in paragraph 8(2)(b), includes any control gear, lighting control device, lamp or luminaire.

lighting system, which is defined in paragraph 8(2)(a), means a system of equipment that delivers artificial light to a particular area.

lighting upgrade, which is defined in subsection 8(2), means the modification, removal or replacement of the lighting equipment of an existing lighting system, or the installation of lighting equipment, for the purpose of decreasing energy usage by increasing the energy efficiency of that system.

lighting upgrade project, which is defined in subsection 8(1), means an offsets project that involves one or more lighting upgrades, and can reasonably be expected to result in eligible carbon abatement.

luminaire is defined to mean a piece of equipment that affixes to lamps and may reflect, direct or diffuse the light output by those lamps to deliver illumination services in an area, together with the lamps.

nominal lamp power (NLP) means the electrical power drawn by a lamp or luminaire.

project abatement amount is defined by reference to a lighting upgrade project for a reporting period to mean the carbon dioxide equivalent net abatement amount for the project in the reporting period for the purposes of paragraph 106(1)(c) of the Act. The term is used throughout the draft Determination and has been included to assist with readability.

project control gear is defined to mean control gear included in a lighting system following the completion of a lighting upgrade.

project lighting equipment is defined to mean lighting equipment included in a lighting system on the completion of a lighting upgrade.

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public lighting inventory means the inventory of the lighting equipment of a public lighting system that:

is maintained by the provider of a lighting service (for example, an electricity company) or the client of that provider (for example, a local council) for billing, regulatory or management purposes; and

records the number and type of lamps and luminaires and their locations.

public lighting system means a lighting system for a road or public space of a classification specified in AS/NZS 1158 Lighting for roads and public spaces.

serviced area is defined to mean the physical area serviced by a lighting system.

type, of a serviced area, is defined to mean: if the serviced area fits a description in an item of Schedule 4—that description; and otherwise—the description that it fits in an item of Schedule 5.

6 Factors and parameters from external sources

The calculation of the net abatement amount in the draft Determination includes factors and parameters determined from other sources, such as the NGA Factors document.

Section 6 specifies that such factors or parameters should be determined by using the version of the external source that is current at the end of the reporting period, unless the draft Determination specifies otherwise (see paragraph 6(2)(a)) or it is not possible to define or calculate the factor or parameter by reference to the instrument or writing as in force at the end of the reporting period (see paragraph 6(2)(b)).

It is not expected that paragraph 6(2)(b) will apply under this draft Determination. However, if paragraph 6(2)(b) does apply, it is expected that project proponents will use the version of legislative instruments in force at the time at which monitoring or other actions were conducted (see section 10 of the Acts Interpretation Act 1901 and section 13 of the Legislative Instruments Act 2003 which operate such that references to external documents which are legislative instruments are to versions of those instruments as in force from time to time).

Subsection 23(6) sets out reporting requirements to be followed when paragraph 6(2)(b) applies.

7 Definitions in other instruments relating to lighting equipment

This section provides that the definitions of EEI and ELV in section 5, lamp and luminaire in Schedule 1, and control gear types in Schedule 2, are determined by reference to definitions in an Australian or international standard that applied at a particular time. That time is the time the lighting system is verified as meeting its design specifications, following testing undertaken after the lighting upgrade. This is intended to ensure that, if any of these standards change over the life of the project, whether the project meets a project requirements is assessed by reference to the definitions in standards that applied at the time the lighting upgrade was first in commission.

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Part 2 Lighting upgrade projects

8 Lighting upgrade projects

The effect of paragraphs 27(4)(b) and 106(1)(a) of the Act is that a project must be covered by a methodology determination, and that the methodology determination must specify the kind of offsets project to which it applies.

Section 8 provides that the draft Determination applies to an offsets project with the following characteristics:

it involves one or more lighting upgrades; and it can be reasonably expected to result in eligible carbon abatement.

A lighting upgrade is the modification, removal, replacement or supplementation of the lighting equipment of an existing lighting system, or installation of lighting equipment, for the purpose of decreasing energy usage by increasing the energy efficiency of that system.

A lighting system is defined to mean a system of equipment that delivers artificial light to a particular area.

The lighting equipment of the lighting system includes any control gear, lighting control device, lamp or luminaire.

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Part 3 Project requirements

9 Operation of this Part

The effect of paragraph 106(1)(b) of the Act is that a methodology determination must set out requirements that must be met for a project to be an eligible offsets project. Under paragraph 27(4)(c) of the Act, the Regulator must not declare that a project is an eligible offsets project unless the Regulator is satisfied that the project meets these requirements.

Part 3 of the draft Determination specifies a number of requirements that must be met in order for a project to be an eligible offsets project. These requirements are set out in sections 10 and 11.

10 Information to be included in application for declaration

Section 22 of the Act provides that a person may apply to the Regulator for the declaration of an offsets project as an eligible offsets project. Section 10 of the draft Determination requires information in relation to each lighting upgrade forming part of the project to be included in the application. This includes a description of what the lighting upgrade will involve (whether it will be a modification, replacement or supplementation of existing lighting); details of the systems already identified for upgrade at the time of the application (including location, type of serviced area, baseline equipment and proposed project equipment); where systems are yet to be identified, information about the class of the potential lighting system (including how systems will be identified, in what general areas, what potential types of lighting service area will be targeted; how project lighting equipment is proposed to improve the existing systems); and proposed methods for disposal of equipment removed as part of the project.

The concept of potential lighting system is intended to allow a project proponent to apply to have a lighting upgrade approved as part of an eligible offsets project in circumstances where the proponent is not able to provide all details about the lighting systems to be upgraded at the time of the making of the application. In these circumstances the proponent can identify a class of potential lighting systems that may be upgraded. A class of potential lighting systems is one that shares similar characteristics including the same or very similar baseline lighting equipment servicing the same type of serviced area which is proposed to be upgraded using similar new lighting equipment. For example, a class of potential lighting systems could involve the replacement of a particular type of luminaire commonly used in street lighting systems with a new more efficient type of luminaire where the location of those lighting systems is not yet known. Specific details about all lighting system that are upgraded will need to be provided later, in a future offsets report, if the potential lighting system is included in a calculation undertaken in accordance with Part 4 (see section 23).

11 System requirements

Section 11 of the draft Determination sets out the system requirements for a project to be an eligible offsets project. They include the following requirements:

a lighting system must be in working order immediately prior to commencement of the project (this requirement is included as it would be normal business practice and cost effective to upgrade a system that is not in working order, and therefore, the abatement from such an upgrade would be non-additional);

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baseline and project emissions are able to be calculated under the draft Determination including all lamps and luminaires must be of a type listed in Schedule 1 and control gear in Schedule 2;

the lighting upgrade is not part of associated construction or reconstruction work that requires development approval under State or Territory law, unless the development approval would not have been required were it not for the lighting upgrade (this is included on the basis that to trigger development approval, it is likely the construction or reconstruction works would have been significant enough to make the associated lighting upgrade project cost effective and accordingly the abatement would be non-additional); and

if project lighting equipment is of a type listed in AS/NZS 4417.2 as electrical equipment that is potentially high risk (classified as Level 3) then it must have a Certificate of Conformity issued in accordance with the Electrical Regulatory Authorities Council’s Equipment Safety Rules and be listed on the Electrical Regulatory Authorities Council’s Electrical Equipment Safety System National Database.

For discussion – business as usual lighting projects

Under the requirements set out in section 11, three types of lighting upgrade or installation activities are excluded:

Greenfield projects where there are no existing lighting systems; Existing lighting systems that are not in working order; and Lighting upgrades that are part of a major renovation or reconstruction project that

requires development approval from a government authority.

The rationale for these exclusions is that it would be normal business practice to install new lighting systems or change existing lighting systems in these circumstances. Furthermore, energy efficient lighting equipment is likely to be used in these circumstances as it is cost effective. Therefore, emissions reductions arising from these activities would be business as usual activities and not additional.

The Department is seeking views on whether there are other activities that need to be excluded to ensure the method only credits activities that are beyond business as usual.

For discussion – installation safety

The lighting method under the NSW ESS includes a requirement that the installation of a project system must be overseen by a certified electrician. The Department is seeking views on whether this draft Determination should adopt a similar approach, or whether other approaches for managing occupational health and safety issues should be considered.

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12 Disposal of equipment

Section 12 applies if, as part of the project activities, lighting equipment is removed from a place, for example, if existing less efficient lamps are replaced with more efficient lamps. The removed lighting equipment must be disposed of and not refurbished or re-used. This prevents leakage, whereby replaced, inefficient lighting equipment could remain in use with no overall reduction in emissions.

The requirement not to refurbish, re-use or sell replaced equipment does not prevent the lighting equipment being broken down into components and those components being recycled, other than for use in another lighting system.

For example, a project proponent may comply with section 12 by rendering the lighting equipment not usable or refurbishable before disposing of it, or selling the lighting equipment to a reputable scrap dealer or recycling business with an assurance that it will not be refurbished or re-used.

Under section 27 of the draft Determination, project proponents are required to keep a record of the disposal of lighting equipment, including evidence that the disposal was conducted in accordance with section 12 and any other applicable legislative requirements.

For discussion – quality of project lighting

Stakeholders have raised the issue of some lighting upgrades potentially resulting in poor lighting levels and hence poor outcomes for end users. While minimum lighting standards are called up under the National Construction Code (NCC), it is likely that the NCC will not be applicable to most lighting upgrade projects as generally it is only triggered in the case of new builds and major renovations.

The Department is seeking views on whether this issue needs to be explicitly addressed in the draft Determination, and if so, how it would best be addressed. The following options have been suggested:

Inclusion of requirements:- That project lighting in public lighting systems must meet relevant requirements in

AS/NZS 1158 Lighting for roads and public spaces series of standards- That project lighting in non-public lighting systems (i.e. project lighting systems not

classified in AS/NZS 1158 Lighting for roads and public spaces) must meet the higher of the following:

o Relevant requirements or recommendations contained in the NCC and AS/NZS 1680 Interior lighting series of standards, or

o The lighting levels of the baseline lighting system.

Require proponents to disclose information on lighting levels to the end users of the lighting system (e.g. building owner/tenant) or the relevant government bodies managing the public areas in which the lighting system in installed (e.g. local governments).

Proponents would be required to disclose lighting levels that existed prior to the upgrade, proposed project lighting levels following the upgrade, and make direct reference/comparison to relevant standards specified in the draft Determination (such as AS/NZS 1680 series for commercial lighting systems and AS/NZS 1158 series for public lighting systems). The intent of this disclosure requirement would be to ensure that lighting level information is available to the relevant parties to the upgrade to facilitate

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informed decision making about the lighting upgrade.

Allow lighting levels to be determined through normal contractual negotiations and for any complaints to be dealt with through existing consumer protection laws.

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Part 4 Project abatement amount

Division 1 Preliminary

13 Operation of this Part

Paragraph 106(1)(c) of the Act provides a methodology determination must specify how to calculate the carbon dioxide equivalent net abatement amount for a reporting period for a lighting upgrade project that is an eligible offsets project. This is called the project abatement amount in the draft Determination.

14 Overview of gases accounted for in abatement calculations

This section provides a summary of the emissions sources that are assessed in the draft Determination in order to determine the net abatement amount. The emissions sources which need to be taken into account when calculating abatement for the project are set out in the following table:

Greenhouse gases and emissions sourcesItem Relevant emissions

calculationEmissions source Greenhouse gas

1 Baseline emissionsProject emissions

Electricity consumption Carbon dioxide (CO2)Methane (CH4)Nitrous oxide (N2O)

15 Data to be used in calculations

This section specifies appropriate sources of data to be used in determining energy consumption in relation to a lighting upgrade project.

For establishing baseline and project NLP for a lamp or luminaire, data may be drawn from any of the following: product specifications publically released by the manufacturer (for example specifications published on the manufacturer’s website); standard test reports; a manufacturer’s declaration; or a power rating label affixed by the manufacturer on the lamp or luminaire.

For discussion – appropriate sources of data

Stakeholders have noted that within certain product types (for example LEDs), the stated NLP claimed by manufacturers may not always accurately reflect the actual performance of the lamp or luminaire. On this basis it has been suggested that more stringent data requirements may be necessary for these products.

The Department is seeking views on this issue, including any information or evidence on types of products for which the stated NLP claimed by manufacturers does not reflect the product’s performance. The Department is also seeking views on what alternative sources of technical data could be appropriate for these product types. Options proposed have included requiring certain product types to:

Provide a test report/certificate from a NATA accredited laboratory; Provide certification from a JASANZ conformity body (or equivalent under an MRA with

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JASANZ); Undertake LCP testing as required under the NSW ESS; Include a pre-qualification and registration process under the ERF (such as currently

exists under the NSW ESS); Refer directly to the pre-qualification register developed by the NSW ESS; or Refer to another existing quality scheme, such as the Lighting Council Australia Solid

State Lighting Quality Scheme.

16 Lighting systems to be used in calculations

This section requires the project proponent to only include the lighting systems that are in commission before the end of the reporting period in calculating the project abatement amount for a reporting period.

The project proponent is given the discretion to choose not to include a particular lighting system in the calculations for the period.

However, a project proponent must not include a lighting system in the calculations if, at any time during the reporting period, any of the following circumstances apply:

The type of serviced area of the lighting system changed; For a lighting system other than a public lighting system, the serviced area of the

lighting system is smaller than immediately before the commencement of the lighting upgrade. The serviced area is taken to be smaller if it is less than 95% of the previous service area;

Any lighting equipment is used in addition to project lighting equipment in the serviced area; or

Project lighting equipment is replaced resulting in the lighting system consuming more energy than it did with the project lighting equipment.

It is considered that if any of these four circumstances were to arise, the method for calculating the net abatement amount would not accurately account for emissions reductions actually achieved. For example, if the type of serviced area changed from health care to office, emissions could be reduced merely because of the change of the operating hours and not improvement of energy efficiency of the lighting system.

Division 2 Calculating project abatement amount

17 Summary

The project abatement amount (that is, the carbon dioxide equivalent net abatement amount for a project for a reporting period) is the sum of the abatement from all lighting systems in the project in the reporting period.

The carbon dioxide equivalent net abatement amount of each lighting system is the baseline emissions minus the project emissions for the lighting system.

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18 Equation 1— project abatement amount for the project (A)

Equation 1 provides that the project abatement amount for the project is worked out by adding together the carbon dioxide net abatement amount of each lighting system in the project (Ai) using equation 2.

19 Equation 2—net abatement amount for a lighting system (A i)

Equation 2 provides that the carbon dioxide equivalent net abatement amount for each lighting system (Ai) is worked out by:

taking away the project energy consumption for the lighting system (ECP,i) (worked out using equation 4) from the baseline energy consumption (ECB,i) (worked out using equation 3) for the lighting system; and

multiplying that result by the electricity emissions factor relevant to the lighting system (EFelec,i). The relevant factor depends on whether the system is connected to an electricity grid or some other source and is found in the NGA Factors document or determined in accordance with subparagraph 19(1)(b)(i) based on information provided by the supplier of the electricity.

20 Equation 3—baseline energy consumption for a lighting system ( EC B,i)

Equation 3 is used to estimate the amount of energy that would have been consumed by the lighting system (as it stood immediately before the commencement of the lighting upgrade) during the reporting period had there been no lighting upgrade (ECB,i) (the baseline energy consumption).

The baseline energy consumption of a lighting system (ECB,i) is worked out by adding together the baseline energy consumption of each lamp or luminaire forming part of the lighting system (LB,i,j). The baseline energy consumption of each lamp or luminaire is worked out using the formula in subsection (2).

Subsection (2) provides that the baseline energy consumption associated with each lamp or luminaire in a lighting system is worked out by:

Determining the lamp circuit power for the lamp or luminaire, o The lamp circuit power is taken to be the applicable value in Schedule 3. o For a public lighting system that has chosen to use a public lighting inventory,

device load value may be used instead, and drawn directly from the AEMO Unmetered Load Tables. Once a public lighting project has nominated to use a public lighting inventory as a basis for calculations, then the project must continue to use the inventory approach for the remainder of the project.

Multiplying that value by the number of hours that the lamp was operational in the reporting period.

o This is determined by first dividing the annual operating hours specified in Schedule 4 or 5 for the lamp or luminaire by 365 (to determine the operational hours in a day for the lamp or luminaire) and multiplying this result by the number of full days in the reporting period that the lighting system for the lamp or luminaire was upgraded and fully operational.

This result is then multiplied by the following:o the lighting control factor applicable to the device as set out in Schedule 6;

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o the air conditioning factor that applies to the climate zone of the location of the lighting system as set out in Schedule 7. Air conditioning factors will not apply to public lighting projects; and

o the factor 10-6 (conversion from Wh to MWh).

For discussion – assumed baseline scenario

The baseline scenario assumed for this draft Determination is that the existing lighting system would remain in place (or be replaced by like equipment) for the seven years of the ERF project. The Department is seeking views on whether this is an appropriate assumption in all circumstances. For example, is there evidence to suggest that particular types of lighting technologies or systems installed in particular types of buildings would be upgraded within a period shorter than the seven year crediting period in a business as usual scenario?.

For discussion – lighting control factors for public lighting

The control factors in the draft Determination were developed for commercial lighting systems under the NSW Energy Savings Scheme and may not adequately reflect the extent of saving that could be achieved by control gear technology used in public lighting systems.

The Department is seeking views on this issue, and information and data that could be used in developing more appropriate factors for public lighting systems.

For discussion – technologies in Schedule 3

The Department is seeking views on whether ‘Schedule 3 – Lamp circuit power’ covers all relevant technologies.

21 Equation 4—project energy consumption for a lighting system (EC P,i)

Equation 4 is used to estimate the amount of energy that was consumed by the upgraded lighting system during the reporting period (ECP,i) (the project energy consumption).

The project energy consumption of a lighting system (LP,i,j) is worked out by adding together the project energy consumption of each lamp or luminaire in the upgraded lighting system (LP,i,j). The project energy consumption of each lamp or luminaire is worked out using the equation in subsection (2).

Subsection (2) provides that the project energy consumption associated with each lamp or luminaire in a lighting system is worked out by:

Determining the lamp circuit power for the lamp or luminaire. o The lamp circuit power for an integrated photovoltaic luminaire unit is taken

to be 0; o For a public lighting system that has chosen to use a public lighting inventory,

device load value should be used instead, and drawn directly from the AEMO Unmetered Load Tables. Once a public lighting project has nominated to use a

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public lighting inventory as a basis for calculations, then the project must continue to use the inventory approach for the remainder of the project;

o For other lamps or luminaires, the applicable value in Schedule 3. Multiplying that value by the number of hours that the lamp was operational in the

reporting period. o This is determined by first dividing the annual operating hours specified in

Schedule 4 or 5 for the lamp or luminaire by 365 (to determine the operational hours in a day for the lamp or luminaire) and multiplying this result by the number of full days in the reporting period that the lighting system for the lamp or luminaire was upgraded and fully operational.

This result is then multiplied by:o the lighting control factor applicable to the device as set out in Schedule 6;o the air conditioning factor that applies to the climate zone of the location of

the lighting system as set out in Schedule 7. Air conditioning factors will not apply to public lighting projects; and

o the factor 10-6 (conversion from Wh to MWh).

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Part 5 Reporting, notification and record-keeping requirements

Subsection 106(3) of the Act provides that a methodology determination may subject the project proponent of an eligible offsets project to specified reporting, notification, record-keeping and monitoring requirements.

Under Parts 17 and 21 of the Act, a failure to comply with these requirements may constitute a breach of a civil penalty provision, and a financial penalty may be payable.

Reporting periods

The Act and subordinate legislation provide for flexible reporting periods generally between six months and two years in duration (with monthly reporting available if abatement in a reporting period meets or exceeds 2000 tonnes of carbon dioxide equivalent).

Audit requirements

The Act provides for a risk-based approach to auditing emissions reductions. Subsections 13(1) and 76(4) of the Act provide for legislative rules to be made by the Minister, specifying the level of assurance, and the frequency and scope of the audit report that must be provided with project reports for different types of projects. These can be found in the Carbon Credits (Carbon Farming Initiative) Rule 2015.

Reporting, notification and record-keeping requirements

In addition to the requirements in the draft Determination, the Act and the Carbon Credits (Carbon Farming Initiative) Rule 2015 specify other reporting, notification, record-keeping, and monitoring requirements that apply to all ERF projects.

Division 1 Offsets report requirements

22 Operation of this Division

Under paragraph 106(3)(a) of the Act, a methodology determination may set out requirements to include specified information in each offsets report. Division 1 sets out information that must be included in an offsets report about a lighting upgrade project.

23 Information that must be included in an offsets report

Further to requirements under the Act or subordinate legislation, section 23 sets out specific additional information that must be included in each offsets report for a lighting upgrade project for a reporting period.

Section 23 provides that each offsets report must identify each system included in the calculation of the project abatement amount. Information, such as location, type and size of serviced area, baseline and added equipment and date of commission is required to allow the Regulator to assess whether the factors and parameters used in the calculations were correctly determined, and whether only eligible lighting systems were included in the calculations. Please note that information about the size of a serviced area is not required for public lighting systems, as this could be difficult to accurately or meaningfully determine in applications such as street lighting or traffic lighting.

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Further information is required for a lighting system that was included in calculations for an earlier reporting period, but is not included in the reporting period covered by the offset report. This information allows for easy comparison of an offsets report, including the project abatement amount, with a previous or future report.

For a public lighting system, the requirement relating to information about lighting system location and baseline equipment could be satisfied by providing a record of the public lighting inventory as it stood immediately before the upgrade; and the requirement relating to information about new lighting equipment and lighting equipment, which was installed and was not covered in the application for declaration, could be satisfied by providing a record of the public lighting inventory for the reporting period.

Subsection 23(6) specifies additional reporting requirements that apply if it is not possible to define or calculate a factor or parameter by reference to external sources as in force at the end of the reporting period. This information allows the Regulator to assess whether the use of another version of the external sources by the proponent in calculating the abatement is appropriate and justified.

Division 2 Notification requirements

24 Operation of this Division

The effect of paragraph 106(3)(b) of the Act is that a methodology determination may set out notification requirements for an eligible offsets project. Division 2 sets out certain notification requirements.

25 Notification requirements

This section requires the project proponent to notify the Regulator of any safety or product performance issues that have been identified with lighting equipment installed or proposed to be installed in relation to the project. The notification must occur within 30 days after the proponent becomes aware of that issue.

Division 3 Record-keeping requirements

26 Operation of this Division

The effect of paragraph 106(3)(c) of the Act is that a methodology determination may set out record-keeping requirements for an eligible offsets project. Division 3 sets out certain record-keeping requirements.

27 Record-keeping requirements

Section 27 of the draft Determination requires the proponent to keep a record of matters listed in Schedule 8. These records, such as records of location, NCC climate zone, stamped photographs of sample baseline and added equipment, lighting system layout and source of nominal lamp power data, provide evidence to substantiate the accuracy of offsets reports and compliance with Part 3 of the draft Determination.

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Please note that some requirements for public lighting system upgrades that elect to use device load values in subsection 20(2) are different from that for other lighting system upgrades.

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Part 6 Dividing a lighting upgrade project

28 Operation of this Part

This section provides that for the purpose of submitting an offsets report to the Regulator pursuant to subsection 77A(2) of the Act, a project may be divided into parts, each of which includes one or more lighting upgardes.

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