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Determinations/Other as made
This determination will support ERF projects through incentivising projects which treat eligible domestic, commercial or industrial wastewater in an anaerobic digester. The resulting biogas is sent to a combustion device where a large proportion of the methane is destroyed.
Administered by: Climate Change, Energy, the Environment and Water
Registered 27 Mar 2015
Tabling HistoryDate
Tabled Senate11-May-2015
Tabled HR12-May-2015

EXPLANATORY STATEMENT

Carbon Credits (Carbon Farming Initiative) Act 2011

Carbon Credits (Carbon Farming InitiativeDomestic, Commercial and Industrial Wastewater) Methodology Determination 2015

Background

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 by reducing or avoiding emissions or by removing carbon from the atmosphere and storing it in soil or trees.

In 2014, the Parliament agreed to 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 reductions and sequestration) from eligible projects and rules for monitoring, record keeping and reporting. These methodologies will 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, an independent expert panel established to advise the Minister on proposals for methodology determinations. 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 at:

www.environment.gov.au/emissions-reduction-fund.

 

Application of the Determination

The Carbon Credits (Carbon Farming InitiativeDomestic, Commercial and Industrial Wastewater) Methodology Determination 2015 (the Determination) sets out the requirements for implementing and monitoring offsets projects that avoid emissions by capturing and combusting the methane generated by wastewater treatment. These requirements have been designed to reflect the offsets integrity standards of the Act and ensure that emissions reductions are real and additional to business as usual. The offsets integrity standards require that an eligible project should result in carbon abatement that is unlikely to occur in the ordinary course of events and is eligible carbon abatement under the Act. In summary, the offsets integrity standards also require that:

·         amounts are measurable and capable of being verified

·         the methods used are supported by clear and convincing evidence

·         material emissions which are a direct consequence of the project are deducted

·         estimates, assumptions or projections used in the Determination should be conservative.

The Carbon Farming Initiative (CFI), on which the ERF is built, developed four methodology determinations covering the capture and combustion of methane generated from treating agricultural waste and wastewater. These are:

·         Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology Determination 2013 (hereafter referred to as the CFI Engineered Biodigesters Determination)

·         Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Manure in Piggeries) Methodology Determination 2012

·         Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Manure in Piggeries 1.1) Methodology Determination 2013

·         Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Dairy Manure in Covered Anaerobic Ponds) Methodology Determination 2012.

The existing CFI determinations were assessed and endorsed by the Domestic Offsets Integrity Committee as meeting the additionality and offsets integrity requirements of the CFI. In general, the Determination applies an approach consistent with the existing CFI determinations, however, it should be noted that this Determination differs from the existing CFI methods in what is considered eligible wastewater. The above CFI determinations credit destruction of methane generated primarily from piggery or dairy manure, whereas this Determination credits destruction of methane generated from domestic, commercial or industrial wastewater. Industrial wastewater does not include wastewater generated during primary production (for example piggery or dairy manure), but instead covers wastewater generated during the processing of primary products (for example, processing of pork or milk). This Determination also updates the emissions reduction calculations, including streamlining the calculation of baseline emissions as well as offering flexibility in accounting for ineligible waste emissions.

The Determination provides an incentive for wastewater operators to replace deep open anaerobic lagoons with anaerobic digesters. Projects can earn credits in the form of ACCUs for the combustion of methane generated from treating eligible wastewater in the anaerobic digester.

 

Public consultation

The Determination has been developed by the Department of the Environment (the Department) in collaboration with a technical working group of experts from the waste industry and the Regulator. The waste sector technical working group held multiple meetings in 2013 and 2014 and reviewed several draft versions of this methodology.

The exposure draft of the Determination was published on the Department’s website for public consultation from 15 October 2014 to 12 November 2014. Six submissions were received. Details of the non-confidential submissions are provided on the Department of the Environment website: www.environment.gov.au.

Determination details

Details of the Determination are at Attachment A. Numbered sections in the Explanatory Statement align with the relevant sections of the Determination. The definition of terms highlighted in bold italics can be found in the Determination.

For the purpose of subsections 106(4), (4A) and (4B) of the Act, in making this Determination the Minister has had regard to, and agrees with, the advice of the Emissions Reduction Assurance Committee that the Determination complies with the offsets integrity standards and that the proposed Determination should be made. The Minister is satisfied that the carbon abatement used in ascertaining the carbon dioxide equivalent net abatement amount for a project is eligible carbon abatement from the project. The Minister also had regard to whether any adverse environmental, economic or social impacts are likely to arise from the carrying out of the kind of project to which the Determination applies and other relevant considerations.

Subitem 393A(2) of Schedule 1 of the Carbon Farming Initiative Amendment Act 2014 operated in relation to this Determination to deem the request to the Interim ERAC to be the relevant request to the statutory ERAC under subsection 106(10) of the Act. Subitem 393A(3) then allowed the ERAC to consider the consultation on the exposure draft which occurred before 13 December 2014 and not re-open consultation under section 123D of the Act.

 

A Statement of Compatibility with Human Rights prepared in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011 is at Attachment B.

Attachment A

 

Details of the Methodology Determination

Part 1              Preliminary

1          Name

Section 1 sets out the full name of the Determination, which is the Carbon Credits (Carbon Farming InitiativeDomestic, Commercial and Industrial Wastewater) Methodology Determination 2015.

 

2          Commencement

Section 2 sets out that the Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.

 

3          Authority

Section 3 sets out that the Determination is made under subsection 106(1) of the Act.

 

4          Duration

Paragraph 4(a) sets out that the Determination begins on commencement (as set out in section 2).

The Determination will remain in force for the duration set out in this section unless revoked in accordance with section 123 of the Act or section 42 of the Legislative Instruments Act 2003.

Paragraph 4(b) sets out that the Determination ends on 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 on the Federal Register of Legislative Instruments. In accordance with subparagraph 122(1)(b)(i) of the Act, paragraph 4(b) of the Determination sets out the time that the Determination will expire.

If the 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 Determination applies, the 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 Determination.

 

5          Definitions

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

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

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

Anaerobic digester refers to the system used to promote anaerobic digestion of wastewater and collect the biogas that is produced as a result. The anaerobic digester includes the transfer of biogas to a combustion device. An anaerobic digester may either be a covered lagoon or an engineered biodigester.

Chemical oxygen demand, or COD, means the total material available for chemical oxidation (both biodegradable and non‑biodegradable).

Combustion device refers to a flare, boiler, internal combustion engine or other device used to combust biogas. If the combustion device is not a flare, boiler or internal combustion engine then the device must be approved by the Regulator prior to its use. The Regulator will check that the device meets the requirements specified in the definition of combustion device in the Determination. These requirements include that the device combusts biogas with a destruction efficiency of at least 98 per cent and that the combustion process can be monitored on a minute-by-minute basis. A combustion device may be a new or existing device.

Covered lagoon means a closed unit for the biological treatment of organic matter through anaerobic digestion, achieved by installing a cover over an existing anaerobic lagoon. No additional heating or stirring features are present in the covered lagoon compared to the existing lagoon.

Deep open anaerobic lagoon refers to an anaerobic lagoon which has a depth greater than two metres. This is important to ensure that the baseline calculation accurately reflects the amount of methane generation that would have occurred in the absence of the project.

Domestic or commercial wastewater means liquid wastes and sludge from housing or commercial premises (including human waste). This definition is consistent with the definition used in the NGER (Measurement) Determination.

Eligible wastewater is any industrial, domestic or commercial wastewater from a source that is consistent with the historical source. The wastewater must be consistent with the historical source of wastewater to ensure that estimates of baseline emissions accurately reflect what would have occurred in the absence of the project.

Engineered biodigester means a purpose-built closed vessel for the biological treatment of organic matter through anaerobic digestion, that has heating and stirring features. A covered lagoon is not an engineered biodigester.

Historical source refers to the source of wastewater treated at the wastewater facility in the 12 months before an application is made for the declaration of a project as an eligible offsets project. These sources need to be documented and must represent either industrial, domestic or commercial wastewater.

Historical period of sampling means the period during which sampling was undertaken from the operation of a deep open anaerobic lagoon, before it is replaced with an anaerobic digester. This concept is relevant for the purposes of working out baseline emissions for a wastewater project using Subdivision B of Division 3 of Part 4. The historical period of sampling may be conducted over a one year period or over 10 consecutive days. The sampling must have commenced no earlier than 18 months before the day on which an application under section 22 of the Act is made in relation to the project. This is to ensure that the samples are representative of recent treatment in the deep open anaerobic lagoon.  

Industrial wastewater refers to liquid wastes or sludge resulting from the production of a commodity, by an industry. This definition is consistent with the definition used in the NGER (Measurement) Determination.

NGER (Measurement) Determination refers to the National Greenhouse and Energy Reporting (Measurement) Determination 2008, made under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007, as amended from time to time.

Source means the point at which wastewater is generated. This might be the physical location or a specific activity or facility that generates the wastewater.

 

6          References to factors and parameters from external sources

Section 6 refers to factors or parameters used in calculations that are derived from external sources. Most parameters are derived from the National Greenhouse and Energy Reporting Regulations 2008 (the NGER Regulations) or the NGER (Measurement) Determination.

The effect of subsection 6(1) is that if those legislative instruments are amended during a project’s reporting period, then the project proponent will be required to use the factor or parameter prescribed in the instrument that is in force at the end of the reporting period.

Paragraph 6(2)(a) sets out that subsection 6(1) does not apply if the Determination sets out other requirements.

Paragraph 6(2)(b) sets out that subsection 6(1) does not apply where it is not possible to retrospectively apply a factor or parameter in an instrument that is in force at the end of the reporting period. An example of circumstances where this may occur is where the monitoring approach defined in an external source is amended to require additional or different monitoring practices after the reporting period has commenced. In this circumstance it is not possible to retrospectively undertake monitoring activities in accordance with the new requirement.

As provided for by section 10 of the Acts Interpretation Act 1901 and section 13 of the Legislative Instruments Act 2003, references to external documents which are legislative instruments (such as the NGER (Measurement) Determination) are references to versions of those instruments as in force from time to time. In circumstances where paragraph 6(2)(b) applies, 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. Subsection 35(1) sets out reporting requirements to be followed when paragraph 6(2)(b) applies.

 

Part 2              Wastewater projects

7          Wastewater 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 7 specifies the high level features of a project under this Determination that distinguish it from other types of offset projects. A key feature for this kind of offsets project is that a deep open anaerobic lagoon (which is treating any combination of domestic, commercial or industrial wastewater, as specified in Part 3) is replaced with an anaerobic digester. Subsection 7(2) defines these kinds of projects as wastewater projects.

 

Part 3              Project requirements

8          Operation of this Part

The effect of paragraph 106(1)(b) of the Act is that a 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 Determination sets out requirements that must be met in order for a wastewater project to be an eligible offsets project.

Project proponents wishing to implement projects under the Determination 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), which include compliance with the requirements set out in the 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.

The government program requirement is provided for in the Carbon Credits (Carbon Farming Initiative) Rule 2015. Subsection 27(4A) of the Act provides that a methodology determination may specify requirements in lieu of the Act’s newness requirement or the regulatory additionality requirement. The draft Determination does not specify any requirements in lieu, and the newness and regulatory additionality requirements in the Act apply to wastewater projects.

 

9          Lagoons to be replaced

The lagoon to be replaced must be a deep open anaerobic lagoon that treats any combination of domestic, commercial or industrial wastewater.

A project application must include evidence of the historical sources of wastewater. Evidence of the historical sources will help assess the eligible wastewater treated by the project, which is necessary for the purposes of crediting emissions reductions.

The lagoon needs to have been in existence and treating domestic, commercial or industrial wastewater before 24 April 2014. This is to ensure that the Determination does not create an incentive for operators to construct and operate new deep open anaerobic lagoons in an emissions intensive manner, solely to qualify for ERF credits, as this would have the effect of increasing emissions for a year which otherwise would not have occurred. The date 24 April 2014 has been chosen since this is the date the ERF White Paper was released and intends to avoid any influence that government policy, as stated in the ERF White Paper, may have had on choices for management of wastewater. Due to the different eligibility criteria and baseline calculations required, ‘greenfield’ developments are better addressed in a separate determination.  

 

10        Anaerobic digesters

Section 10 sets out that in order to be an eligible offsets project the anaerobic digester that is installed must capture biogas that results from the treatment of wastewater in the digester.

 

11        Combustion devices

Section 11 sets out that in order to be an eligible offsets project, biogas produced by the anaerobic digester must be combusted by a combustion device, as defined in section 5.

 

Part 4              Net abatement amounts

Division 1       Operation of this Part

12        Operation of this Part

Part 4 of the Determination sets out the method for working out the net abatement amount for a reporting period as per paragraph 106(1)(c) of the Act.

 

13        Overview of gases accounted for in abatement calculations

This section sets out a summary of the greenhouse gases and emissions sources that are assessed in order to determine the net abatement amount. The emission sources which are taken into account when calculating abatement for the project are set out in Table 1.


 

Table 1: Overview of gases accounted for in abatement calculations

Greenhouse gases and emissions sources

Relevant calculation

Emissions source

Greenhouse gas

Baseline emissions

Treatment of eligible wastewater in a deep open anaerobic lagoon

Methane (CH4)

Project emissions

Fuel consumption

Carbon dioxide (CO2)

Methane (CH4)

Nitrous oxide (N2O)

Project emissions

Electricity consumption

Carbon dioxide (CO2)

Methane (CH4)

Nitrous oxide (N2O)

Project emissions

Emissions from anaerobic digester leakage or venting events

Methane (CH4)

Project emissions

Emissions from the combustion of biogas

Methane (CH4)

Nitrous oxide (N2O)

Project emissions

Emissions from the end management of digestate

Methane (CH4)

Nitrous oxide (N2O)

A number of emissions sources are excluded from the net abatement calculations for the following reasons:

         In the baseline scenario, nitrogen emissions from the treatment of eligible wastewater in a deep open anaerobic lagoon are excluded for reasons of both conservativeness and simplicity.

         Emissions from the transport of digestate are excluded as these emissions are considered immaterial to the overall emissions of the project. This exclusion is supported by analysis of data from existing CFI projects.

         Emissions from materials, the transport of materials, the demolition of the deep open anaerobic lagoon and emissions associated with construction of the anaerobic digester and combustion devices are excluded as they are scope 3 emissions. This is consistent with the National Inventory Report and the NGER (Measurement) Determination, and also prevents the potential for double counting of abatement from another project/facility for which these are scope 1 emissions.

         Carbon dioxide emissions emitted from the treatment of wastewater and the combustion of biogas are excluded, because these emissions have a biogenic origin (originate from organic material) and so are not counted towards Australia’s national greenhouse gas accounts.

 

Division 2       Method for calculating net abatement amount

14        Summary

Section 14 sets out a summary of the method for calculating the net abatement amount. The net abatement amount is determined by subtracting project emissions from baseline emissions.

 

15        Net abatement amount

The carbon dioxide equivalent net abatement amount for an eligible offsets project is set out in equation 1. For wastewater projects the net abatement amount is baseline emissions minus project emissions.

In cases where the carbon dioxide equivalent net abatement amount is less than zero, then the amount is taken to be zero for the reporting period.

 

Division 3       Baseline emissions

Subdivision A - Preliminary

16        Summary

Section 16 sets out a summary of Division 3. Baseline emissions are emissions that would have occurred if the eligible wastewater treated by the project was treated in a deep open anaerobic lagoon.

 

17        Baseline emissions

Project proponents may choose to estimate baseline emissions using one of two options, which are listed in subsection 17(1) and set out in Subdivisions B and C. The approach in Subdivision B requires proponents to monitor the quantity of COD in eligible wastewater treated in the anaerobic digester as well as use historical information collected during the operation of the deep open anaerobic lagoon.

Subdivision C requires proponents to monitor the amount of methane sent to the combustion devices that was generated from the treatment of eligible wastewater. For covered lagoons, the amount of methane generated in the project is assumed to be equivalent to the amount generated in the deep open anaerobic lagoon. In the case where the deep open anaerobic lagoon is replaced with an engineered biodigester, this assumption does not apply because engineered biodigesters may produce more methane for a given input of wastewater. This is due to additional features such as heating and stirring which increase methane generation. Therefore, an adjustment factor is applied to baseline emissions calculations for engineered biodigesters to account for this difference.

Whichever option proponents choose, subsection 17(2) sets out that the same option must be used for the remainder of the crediting period. An exception to this requirement is set out in subsection 24(2) for the case where a proponent has selected to calculate baseline emissions using Subdivision B, however the historical information that has been used does not meet the requirements specified in the Determination. In this situation, they are permitted to use Subdivision C.  

 

Subdivision B - Calculating baseline emissions using sampling from the operation of a deep open anaerobic lagoon

18        Calculating baseline emissions using sampling from a deep open anaerobic lagoon

Section 18 sets out how to calculate baseline methane emissions by determining the amount of organic material in the eligible wastewater that would have been treated in the deep open anaerobic lagoon. This is worked out by determining the amount of organic material in the influent and subtracting the amount of organic material in the effluent and sludge. The organic material in the effluent and sludge represent what was not treated in the deep open anaerobic lagoon. The amount of organic material is measured in units of tonnes of COD.

The calculation assumes that the amount of COD in the influent entering the anaerobic digester is the same as what would have entered the deep open anaerobic lagoon. Therefore, proponents are required to calculate the COD in the influent entering the anaerobic digester during each crediting period. However, this assumption cannot be made for the COD in the effluent and sludge, since the amounts produced in the anaerobic digester may differ from what would have been produced in the deep open anaerobic lagoon. Therefore the amount of COD in the effluent and sludge is calculated using proportions based on historical data from the deep open anaerobic lagoon (parameters FEff  and FSlu).

An uncertainty factor (UF) is applied to account for the uncertainty that is created by using proportions based on historical data to calculate the net abatement amount. An emissions factor for wastewater (EF) is then applied which calculates the maximum amount of emissions that could have been generated from the COD that is treated. A methane-correction factor (MCF) is then used to reflect the proportion of maximum emissions that actually occurred based on the type of technology used to treat the wastewater. In the case of estimating baseline emissions, the relevant technology is a deep open anaerobic lagoon.

The EF and MCF values are sourced from the NGER (Measurement) Determination, whilst the UF value has been sourced from the ‘United Nations Clean Development Mechanism AMS III.H.– Methane recovery in wastewater treatment’ (UN CDM III.H.)  Methodology. The UF value of 0.89 reflects the uncertainty involved in using proportions based on historical data to estimate emissions. It is based on default discount factors for uncertainty published in the UNFCCC’s ‘Report of the Subsidiary Body for Scientific and Technological Advice on its 18th Session, Bonn, 4-13 June 2003’.

 

19        Fraction of chemical oxygen demand in influent removed in effluent

Section 19 sets out how to calculate the fraction of COD in influent in the deep open anaerobic lagoon that would have been removed in effluent (FEff). Proponents need to take samples from the operation of the deep open anaerobic lagoon before it is replaced with the anaerobic digester to calculate F­Eff. F­Eff is calculated by dividing the amount of COD in the influent entering the deep open anaerobic lagoon by the amount of COD removed in effluent during the same historical period of sampling.

The historical period of sampling used for determining these quantities of COD is either 10 consecutive days or 1 year. In the case where a 10 consecutive day period is used, an adjustment factor (AF) is applied to reflect the fact that COD measurements from a 10 day measurement campaign are more uncertain than a one year campaign. This approach is consistent with the UN CDM III.H. Methodology and is based on default discount factors for uncertainty published in the UNFCCC’s ‘Report of the Subsidiary Body for Scientific and Technological Advice on its 18th Session, Bonn, 4-13 June 2003’.

 

20        Chemical oxygen demand in effluent leaving a deep open anaerobic lagoon

Section 20 sets out that the quantity of COD in effluent leaving the deep open anaerobic lagoon is determined in accordance with the NGER (Measurement) Determination. There are different approaches set out in the NGER (Measurement) Determination for domestic or commercial wastewater, or industrial wastewater. Subparagraphs 2 and 3 set out instructions that must be followed when applying the relevant NGER (Measurement) Determination approach. This includes that in cases where a 10 consecutive day measurement approach is used, the required frequency for sampling is daily over 10 consecutive days. Furthermore, for the purposes of determining COD levels in effluent, proponents must use one of the specified standards listed in the NGER (Measurement) Determination and not an equivalent Australian or international standard.

 

21        Chemical oxygen demand in influent entering a deep open anaerobic lagoon

Section 21 sets out that the COD in influent that enters the deep open anaerobic lagoon is determined in accordance with the NGER (Measurement) Determination. There are different approaches set out in the NGER (Measurement) Determination for domestic or commercial wastewater, or industrial wastewater. Subsections 21(2) and 21(3) set out instructions that must be followed when applying the relevant NGER (Measurement) Determination approach. This includes the requirement that in cases where a 10 consecutive day measurement approach is used, the frequency for sampling is daily over 10 consecutive days. Furthermore, for the purposes of determining COD levels in influent, proponents must use one of the specified standards listed in the NGER (Measurement) Determination and not an equivalent Australian or international standard.

 

22        Fraction of chemical oxygen demand in influent that would be in sludge

Section 22 sets out how to calculate the fraction of COD in influent in the deep open anaerobic lagoon that would have been removed in sludge (FEff). If the historical period of sampling is one year, then proponents may select from one of two options. The first is to use information on the quantity of COD that accumulates in sludge during one year of the  operation of the deep open anaerobic lagoon. The second option is to use the default values listed in subsection 22(2).

If the historical period of sampling is 10 days, then proponents must use the default values.

The default values listed in subsection 22(2) are distinguished for the case that the eligible wastewater treated by the anaerobic digester is domestic or commercial wastewater, or industrial wastewater. For the case that a mixture of both types is treated, then the default value is conservatively set to be equivalent to that for domestic or commercial wastewater. The default values are based on defaults used in the Australian National Greenhouse Gas Inventory and have been adjusted for conservativeness.

 

23        Chemical oxygen demand in sludge in a deep open anaerobic lagoon

Section 23 sets out that the COD in sludge is to be determined in accordance with the NGER (Measurement) Determination. There are different approaches set out in the NGER (Measurement) Determination for domestic or commercial wastewater, or industrial wastewater. Subsections 23(2) and 23(3) sets out instructions that must be followed when applying the relevant NGER (Measurement) Determination approach. The historical period of sampling must be one year.

 

24        Consequences if certain parameters are not determined correctly

Section 24 sets out the consequences for not determining either FSlu or FEff in accordance with the requirements set out in the Determination. In the case where proponents undertake a year-long measurement campaign to determine FSlu, then the relevant default value as set out in subsection 24(1) must be used in place of the value of FSlu determined using equation 4.

In the case where FEff has not been determined correctly, subsection 24(2) sets out that either proponents use the baseline calculation specified in Subdivision C or that the net abatement amount for the reporting period is zero.

 

Subdivision C            - Calculating baseline emissions using the amount of methane sent to a combustion device

25        Calculating baseline emissions using the amount of methane sent to a combustion device

Section 25 sets out the calculation of baseline emissions by summing the amount of methane sent to each combustion device h and multiplying by the factor for the proportion of methane generated by eligible wastewater. An adjustment factor is applied to this calculation to reflect the fact that an engineered biodigester will generate more methane for a given input of wastewater than a deep open anaerobic lagoon. Therefore the amount of methane that is considered generated in the project needs to be adjusted to account for the fact that for the same input of wastewater, less methane would have been produced in the deep open anaerobic lagoon. A conservative adjustment factor of 0.75 has been established for engineered biodigesters, based on a review of the literature available on the differences in methane generation compared to uncovered lagoons. 

An adjustment factor of one is to be used for covered lagoons. Whilst covered lagoons may produce more methane when compared to a deep open anaerobic lagoon, this difference is small and is considered immaterial. Therefore, using the amount of methane combusted from a covered lagoon is an appropriate proxy for calculating the amount of methane generated in the baseline scenario.   

 

26        Proportion of methane that is generated by eligible wastewater

Anaerobic digesters may be used to treat materials from a range of sources. Under this Determination, only the combustion of methane from eligible wastewater is credited. Section 26 sets out the calculation of the proportion of methane that is generated from eligible wastewater.

If during a reporting period, less than two per cent of the total volume of material treated is ineligible material and the volume of an individual type of ineligible material is not greater than 0.5 per cent, then the proportion is taken to be one (that is one hundred per cent of biogas generated is taken to be from eligible wastewater). This enables incidental amounts of ineligible wastewater to be treated by the project. These limits have been adopted from the CFI Engineered Biodigesters Determination.

If more than two per cent of the total volume of material treated is ineligible materials or more than 0.5 per cent is an individual type of ineligible material then equation 6 is used.

Equation 6 determines the ratio of methane generated by eligible wastewater compared to the total amount of methane generated.

 

27        Methane generated by eligible wastewater

Section 27 sets out how to calculate the methane generated by eligible wastewater. Equation 7 uses the quantity of volatile solids and the maximum methane-producing capacity of eligible wastewater type w. The quantity of volatile solids is used to measure the amount of eligible wastewater type w that is capable of producing methane when treated anaerobically. The maximum methane-producing capacity is a measure of how much methane an eligible wastewater type emits. By multiplying the amount of volatile solids of eligible wastewater type w with its maximum methane-producing capacity, the total amount of methane emitted from eligible wastewater type w can be determined. Maximum methane-producing capacities for eligible wastewater types are determined in accordance with section 29.

 

28        Methane generated by ineligible material

Section 28 sets out how to calculate the methane generated by ineligible materials. Equation 8 uses the quantity of volatile solids and the maximum methane-producing capacity of material type w. The quantity of volatile solids is used to measure the amount of waste type w that is capable of producing methane when treated anaerobically. The maximum methane-producing capacity is a measure of how much methane a material type w emits. By multiplying the amount of volatile solids of material type w with its maximum           methane-producing capacity, the total amount of methane emitted from material type w can be determined. Maximum methane-producing capacities for material types are determined in accordance with section 29.

In section 28 material type w is a type of ineligible material.

 

29        Maximum methane-producing capacities

The maximum methane-producing capacity for a material type may be determined either in accordance with the monitoring requirements (see Part 5) or by using default values for the material type (set out in the table in Schedule 1). If a proponent chooses to monitor the maximum methane-producing capacity for a material type rather than use an available default value, then the proponent is not permitted to subsequently use the default value for the material type. If a default value for a material type is not set out in the table in Schedule 1, then the maximum methane-producing capacity must be determined in accordance with the monitoring requirements (see Part 5). A proponent is able to select different options for different material types.

If a default value becomes available through an update to the Determination, then at that point in time the proponent is able to choose to use the default value. A proponent who selects to use the newly available default value may decide to revert to monitoring, however upon reverting, cannot change back to the default.

 

30        Methane sent to combustion device

Section 30 sets out two approaches to calculate the methane sent to combustion device h. The approaches are consistent with other CFI determinations which involve the use of anaerobic digesters such as the CFI Engineered Biodigesters Determination.

 

The approaches are:

·         If the device is not an internal combustion engine then the methane sent is calculated using equation 9;

 

·         If the device is an internal combustion engine then methane sent may be calculated using either equation 9 or equation 10.

 

Subsection 30(2) sets out equation 9, which uses the volume of biogas sent to the combustion device. This value is multiplied by the fraction of biogas that is methane to determine the volume of methane sent to the combustion device.

Subsection 30(3) sets out equation 10, which uses the electricity generated from combusting biogas in an internal combustion engine. This equation works out the volume of methane sent to the internal combustion engine based on the amount of electricity produced.

 

Division 4       Project emissions

31        Summary

Section 31 sets out a summary of the method for calculating project emissions. Project emissions sources include fuel use, electricity, leakage emissions from the anaerobic digester and emissions from the treatment of digestate. These sources are consistent with those in the CFI Engineered Biodigesters Determination.

 

32        Project emissions

Emissions from the project are calculated by taking into account emissions from fuel and electricity used in the operation of the facility, emissions from anaerobic digester leakage or venting events as well as from the treatment of digestate.

 

33        Emissions from fuel use

Emissions from fuel use are calculated using equation 12, based on monitoring the quantity of each fuel type used in the reporting period.

This quantity of fuel can be monitored on different bases (solid, liquid and gas), and must be converted to a common measure of energy (gigajoules) using an energy content factor that is unique to the fuel and the basis of how its quantity is measured (ECi). This amount of energy is then multiplied by an emissions factor (EFij) which calculates the emissions of each greenhouse gas type j (carbon dioxide, nitrous oxide and methane) resulting from the use of the fossil fuel. Proponents are required to repeat this calculation for each fossil fuel used and for each greenhouse gas j emitted. The emissions are then added together.

The energy content factors and emissions factor are default factors sourced from the NGER (Measurement) Determination.

 

34        Emissions from purchased electricity use

Emissions from using purchased electricity are calculated using equation 13 by multiplying the quantity of electricity used to operate the facility during the reporting period by the relevant Scope 2 grid-based electricity emissions factor for the source of the electricity used.

Electricity emission factors are set out in the NGA Factors document, as updated from time to time. Proponents will apply the relevant electricity emissions factor from the document as in force on the day the project is declared an eligible offsets project. This is intended to provide certainty to proponents that the emissions intensity of electricity imported will not deviate due to factors outside of their control once a project has commenced. 

If the electricity is from a source other than an electricity grid included in the NGA Factors document then the project proponent should apply the factor provided by the supplier of the electricity, or if that factor is not known, then the factor for off-grid electricity should be used.

Subsection 34(3) makes clear that section 6 (the use of factors current at the end of a reporting period) does not apply to the electricity emissions factor (EFEP).

 

35        Emissions from anaerobic digester leakage or venting events

Emissions from leakage or venting events (EAD) occur when some of the methane generated in the anaerobic digester is leaked or vented to the atmosphere before being combusted. These emissions occur in two circumstances:

·         The first results from the normal operation of the anaerobic digester, where a small amount of methane leaks from the anaerobic digester. This amount is taken to be two per cent of the total methane produced by the anaerobic digester. This value is consistent with the CFI Engineered Biodigesters Determination which accounts for this emission source with the assumption that an anaerobic biodigester has a 98 per cent collection efficiency.

·         The second circumstance occurs when there is a major venting event, causing biogas stored in the anaerobic digester to be released to the atmosphere.

The methane that is leaked and vented may be generated by both eligible wastewater and ineligible material, depending on the types of material that are treated in the anaerobic digester during the reporting period.

Proponents using Subdivision C in Division 3 to calculate baseline emissions only need to determine EAD based on the portion of methane that was generated from ineligible material (if ineligible materials were treated during the project). This is because any methane generated from eligible wastewater that is leaked or vented has already been deducted from the net abatement amount by virtue of the calculation method used in Subdivision C. This calculation method uses the methane that is sent to combustion devices as a proxy for baseline emissions and this amount already excludes any methane that has been leaked and vented before reaching the combustion devices. Subparagraph 35(b)(i) sets out that if the amount of ineligible material is less than 10 per cent of the total volume of material treated in the reporting period, then this emissions source is zero. This is because the emissions from ineligible material below this threshold are immaterial.

Proponents using Subdivision B in Division 3 to calculate baseline emissions need to account for leaked and vented methane that is generated from ineligible materials (if ineligible materials were treated during the project) as well as eligible wastewater.

Equation 14 sets out the calculation of EAD. The way the calculation distinguishes for how baseline emissions have been calculated is through the correction factor (CF). For the case that Subdivision C in Division 3 of Part 4 is used to calculate baseline emissions, CF is equal to one minus the proportion of methane that is generated by eligible wastewater (W­EW), worked out in section 26 of the Determination. Otherwise CF is one, meaning there is no discount for the proportion of EAD attributable to eligible wastewater.

 

36        Volume of methane vented due to a major venting event

The fugitive emissions from anaerobic digester major venting events, for example, when maintenance is required, must be calculated using equation 15. Venting emissions are calculated by adding the maximum biogas storage capacity of the storage system to the average daily flow of biogas multiplied by the number of days over which the venting occurs.

 

37        Emissions from combustion of biogas

Methane and nitrous oxide emissions released as a result of methane combustion are calculated using equation 16. In this calculation the approach to emissions from combustion devices is consistent with the NGER (Measurement) Determination. The emissions factor for “sludge biogas that is captured for combustion (methane only)” is found in Part 2 of Schedule 1 to the NGER (Measurement) Determination.

 

38        Emissions from the end management of digestate

Section 38 sets out how to calculate the emissions from the end management of digestate removed from the anaerobic digester. As there are several ways in which the digestate could be treated, this section is used to add together emissions from different digestate treatment types. Emissions from treatment types are calculated in accordance with sections 39, 40 and 41. If the digestate is not treated using a treatment type covered by sections 39, 40 or 41 then the digestate emissions are taken to be zero.

 

39        Digestate emissions – aerobic treatment

Section 39 is used to calculate emissions from the aerobic treatment of digestate. Emissions are estimated using default emissions factors multiplied by the amount of digestate treated. Default emissions factors are taken from the CFI Engineered Biodigesters Determination. 

 

40        Digestate emissions – disposed to landfill

Section 40 sets out the calculation of emissions from digestate when it is disposed of to landfill. The calculation is similar to equation 18 in section 39, however landfill gas capture and combustion is also taken into account as not all emissions generated in a landfill would be released to the atmosphere. The average rate of landfill gas captured in the state or territory in which the project operates represents a conservative estimate of the landfill gas capture that would have occurred if the digestate had been sent to landfill. This is a straightforward approach that simplifies project administration and complies with the offsets integrity standards. The average rate of landfill gas captured is determined using data from the Australian National Greenhouse Gas Inventory Report 2012. The average rate of landfill gas capture will be updated over time in line with data published in the Australian National Greenhouse Gas Inventory.

 

41        Digestate emissions – treated in open lagoon

Section 41 sets out how to calculate emissions from the treatment of digestate in open lagoons. This equation requires the quantity of digestate, the volatile solids content of the digestate and the maximum methane producing capacity of the digestate to be monitored (see Part 5 for monitoring requirements).

Part 5              Reporting, record-keeping and monitoring 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, 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.

Any monitoring, record-keeping and reporting requirements specified in Part 5 of the Determination are in addition to any requirements specified in the Act, Regulations or legislative rules.

 

Division 1       Offsets report requirements

42        Operation of this Division

The effect of paragraph 106(3)(a) of the Act is that a methodology determination may set out requirements to be included in each offsets report. Division 1 sets out offsets report requirements.

43        Determination of certain factors and parameters

Section 43 sets out what must be included in an offsets report.

Subsection 43(1) sets out that the offsets reporting requirements in this subsection apply where it is not possible to meet the requirements of subsection 6(1), as outlined in paragraph 6(2)(b). Further explanation of these circumstances is provided in section 6. The purpose of subsection 43(1) is to provide the Regulator with information on which version of the NGER (Measurement) Determination or other relevant external source has been used by a project proponent to meet the monitoring requirements set out in section 45. The proponent is required to detail in their offsets report the version of the NGER (Measurement) Determination or external source that was used when undertaking monitoring, the dates that the version was used and why it was not possible for the proponent to use the version that was in force at the end of the reporting period.

Subsection 43(2) sets out that the requirements in this subsection apply if a parameter is worked out using section 46, which is applied if a project proponent fails to meet requirements to monitor certain parameters. The information required to be reported is listed in paragraphs 43(2)(a) to 43(2)(d) and is to provide the Regulator with evidence that will allow them to determine the nature and frequency of the failure to meet the monitoring requirements of the Determination and determine what compliance action may be appropriate.

 

Division 2       Monitoring requirements

44        Operation of this Division

The effect of paragraph 106(3)(d) of the Act is that a methodology determination may provide specified requirements to monitor the project.

 

 

 

45        Requirement to monitor certain parameters

Section 45 lists parameters that require monitoring, including specifications for the procedure, frequency of monitoring and how to derive the parameter value based on the measurements and monitoring data.

The Determination requires that measurement procedures meet the specifications of the NGER (Measurement) Determination or other relevant standards and other requirements under the National Measurement Act 1960. This is implicit where a parameter must be measured in accordance with the NGER (Measurement) Determination, and otherwise a monitoring parameter must meet appropriate measuring requirements.

Any equipment or device used to monitor a parameter must be calibrated by an accredited third party technician at intervals, and using methods, that are in accordance with the manufacturer’s specifications.

Key monitoring parameters are:

·       the quantities of ineligible materials and eligible wastewater treated by the project

·       the volume of biogas sent to combustion devices and the methane content of that biogas

·       the volume of fuel and electricity used by the project

·       the wet weight of digestate treated.

Where the monitoring frequency of a parameter is specified as ‘continuous’, this means it should be monitored throughout the reporting period at intervals necessary to meet the specified standards.

As reiterated by subsection 46(2) below, failure to monitor parameters in accordance with this section is a breach to requirements of the Determination. In the case of certain parameters, where it has not been possible to monitor in accordance with the requirements projects should use one of the approaches provided in section 46.

 

46        Consequences of not meeting requirement to monitor certain parameters

Compliance with requirements for monitoring parameters is important to ensure that abatement credited by the project is calculated correctly. Monitoring requirements (section 45) include the process for monitoring and the standard to which monitoring must occur.

In some cases a proponent may be unable to monitor a parameter to the requirements specified. When this occurs, section 46 requires that adjustments be applied for the time intervals that the parameters are not being monitored in accordance with requirements (termed the non-monitored period). The adjustment is necessary to ensure that all estimates or assumptions used in the Determination are conservative and are in accordance with the offsets integrity standards outlined in section 133 of the Act.

For the parameter MMax,w, the consequence for not monitoring in accordance with the requirements is for the proponent to work out the parameter using either the default value for that parameter (if one is available), or where no default value exists, through a conservative estimate. Where a default value is available, MMax,w is worked out in accordance with item 1 of the table in subsection 46(1) of the Determination.

In the case where MMax,w is being calculated for an ineligible material the proponent must apply a 10 per cent increase to the default emissions factor (i.e. the factor is multiplied by 1.1) for a period of up to three months in any 12 month period. For any period in excess of this three months, the adjustment is 50 per cent (i.e. the factor is multiplied by 1.5).

In the case where MMax,w is being calculated for an ineligible material, then the proponent must apply a 10 per cent decrease to the default emissions factor (i.e. the factor is multiplied by 0.9) for a period of up to three months in any 12 month period. For any period in excess of this three months, the adjustment is 50 per cent (i.e. the factor is multiplied by 0.5).

For parameters listed in item 2 of the table, the consequence for not monitoring these parameters in accordance with the monitoring requirements is for the proponent to make a conservative estimate of the parameter for the duration of the non-monitored period.

The need for a proponent to apply section 46 arises from failure to meet monitoring requirements. In accordance with the Act, the Regulator may determine an appropriate response within its compliance and enforcement framework depending on the nature of the non-compliance, such as whether it is a one-off minor event or a more significant or repeated breach. This could include determining that no eligible net abatement has been achieved by the project for the period of the breach. A note to subsection 46(2) indicates other actions that the Regulator may choose to take in response to a proponent failing to meet monitoring requirements.

When section 46 is used, the proponent will be required to include information relating to the monitoring failure in the offsets report for the relevant reporting period (set out in section 43). This is to provide the Regulator with evidence that will allow them to determine the nature, and frequency, of the failure to meet the monitoring requirements of the Determination and determine what compliance action may be appropriate.

 

Schedule 1      Default maximum methane-producing capacities

1          Default maximum methane-producing capacities

The table in Schedule 1 sets out the default values for the maximum methane-producing capacities (MMax,w) of a range of materials, for the purposes of paragraph 29(1)(a). Proponents may use these default values where applicable, in accordance with the requirements of section 29.

The default values in the table were originally developed for use in the CFI Engineered Biodigesters Determination, endorsed by the former Domestic Offsets Integrity Committee in 2013. The values used in the table have been drawn from a number of sources including experimental testing and expert recommendation.

For clarity, further definition is provided on the following items:

Feeder cattle liquid manure (item 3) is cattle manure that has been has been mixed with some other substance (usually water). This typically happens when manure is washed into a central collection point (for example, as may happen in a feedlot).

Cow dung fresh (item 4) is cattle manure that has not been mixed with anything else.

 

 

Attachment B

Text Box: Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Carbon Credits (Carbon Farming Initiative—Domestic, Commercial and Industrial Wastewater) Methodology Determination 2015
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Carbon Credits (Carbon Farming Initiative—Domestic, Commercial and Industrial Wastewater) Methodology Determination 2015 (the Determination) sets out the detailed rules for implementing and monitoring offsets projects that avoid greenhouse gas emissions by collecting and combusting the methane component of wastewater biogas. 
Project proponents wishing to implement the Determination must make an application to the Clean Energy Regulator (the Regulator) and meet the eligibility requirements set out under the Determination. Offsets projects that are approved by the Regulator can generate Australian Carbon Credit Units, representing emissions reductions from the project.
Project proponents can receive funding from the Emissions Reduction Fund 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.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Greg Hunt, Minister for the Environment