Ecovantage Responds to the Independent Review of ACCUs

On 1 July 2022, the Minister for Climate Change and Energy announced the Terms of Reference for an Independent Review of ACCUs. This review will investigate the integrity of ACCUs created under the Emission Reduction Fund (ERF). Advice from the review will be provided to the government by December 2022.

Ecovantage’s submission to the Independent Review of ACCUs focused on our experience with energy efficiency projects as well as Climate Active Carbon Neutral Certification. As an active participant in the New South Wales Energy Savings Scheme, Victorian Energy Upgrades Scheme, and South Australia Retailer Energy Productivity Scheme, Ecovantage has significant experience with the development and implementation of M&V Projects.

Ecovantage recognises that the Emission Reduction Fund (ERF) scheme provides great opportunities for emission reduction projects in Australia. Our response was drawn from our own experience with the ERF and highlighted areas for improvement and consideration that we believe are key to improving accessibility and uptake of the scheme.

Emission Reduction Fund Considerations 

Our response was drawn from our own experiences with the ERF and highlighted aspects of energy efficiency methods that we believe will have the greatest impact on project uptake. Our experience is limited to the Industrial and Commercial Emissions Reduction (ICER) Method, with exploration for project viability having been pursued for the Land and Sea Transport Method (LST), Aggregated Small Energy Users Method (ASEU) and the High Efficiency Commercial Appliances Method (HECA). As a Carbon Service Provider to the scheme, Ecovantage has identified that there are complexities and challenges unique to the ERF Methods that must be managed by Ecovantage as the Carbon Service Provider, as well as by the Eligible Interest Holder and the EPC.  

Our experience with the ICER method has highlighted that there are opportunities for industry professionals to collaborate with policy makers to achieve clarity and consistency within the method process, with the aim to align with standard industry practices. A revision of energy efficiency method processes would lend to the accessibility and viability for projects of this nature. This view is echoed by our industry partners, who are eager to be involved with the Emissions Reduction Fund, though have faced barriers restricting viability to developing energy efficiency projects under the method. 

“Seeley International produces one of the world’s most energy efficient commercial air-conditioning systems. The system has been adopted by global corporations, with significant savings experienced for retrofit and new sites. However, the barriers to participation in the ERF were prohibitive to viability when compared with other state-based schemes. They believe that bringing the ERF’s methods into alignment with state-based measurement and verification schemes would vastly increase uptake. In addition, the update of these schemes increases and supports Australian Manufacturing” – Seeley International.

As a Carbon Service Provider, Ecovantage actively liaises with the CER to further gain both clarity and consistency across energy efficiency methods. In comparison to state based schemes, the ERF has variability surrounding future emission density, with 6-24 month creation windows that does not encompass the ability to forward creation units. This creates uncertainty from end-user participation, and fosters uncertainty around the commercial and financial basis of project creation. As such, Ecovantage further called for an ACCU creation period of beyond 7 years for technology based energy efficiency projects to align with the state-based schemes.

Climate Active Considerations 

Ecovantage is a strong supporter of Climate Active certification for organisations. This certification provides an opportunity for organisations to start on their climate journey towards decarbonising emissions. Climate Active has further become an established brand across Australia, and certification under the program is well recognised. 

Through our experience supporting clients on their certification journey, it has become apparent to us that the introduction of a minimum 20% ACCU retirement will hinder small and medium sized organisations from participation. This has been summarised into key points below: 

• Cost

For organisations looking to take climate action, many are already deterred by the high costs associated with becoming Climate Active certified. With the addition of the higher price point of ACCUs in comparison to other international credits, this may further dissuade organisations from participating in the Climate Active program.

• Availability of Credits 

Limited ACCUs supply poses a risk for organisations looking to meet Climate Active obligations.

• Minimum Carbon Offset Purchases 

In most cases, carbon offset suppliers have minimum purchase thresholds, time restrictions, additional fees, and other barriers which penalise ACCU volume purchases under 5,000 units. This means that for SMEs, there is a risk that they will not have the ability to purchase ACCUs in smaller quantities and will be unable to meet the Climate Active requirements. 

The requirement to purchase ACCUs will likely have negative consequences for small and medium organisations who want to attain certification but will be unable to do so. As such, Ecovantage advocated that this requirement should be reviewed and updated to consider challenges currently faced by these organisations. 

Ecovantage General Manager, Aaron Jenkins, notes that, “Costs for certification under Climate Active are already quite high, which acts as a barrier for many wanting to take credible action. Climate Active must balance the reduction of emissions with accessibility for small and medium organisations. This could be done by creating higher volumes of quality ACCUs, by changing methods such as ICER to suit small to medium C&I clients instead of only the very top of the market.”

Concluding Thoughts 

Overall, Ecovantage believes that the ERF scheme provides a great avenue and opportunity for organisations who are looking to reduce emissions, specifically through energy efficiency projects. With further immersion between policy and industry to form processes which are standardised, credible and achievable, the potential for other organisations to join the program will become evermore viable. ACCUs provide a great tool for Australian based emissions reductions and Ecovantage is of the opinion that this scheme is imperative to support the new federal emission reduction targets.

At Ecovantage, we consistently analyse market activity, policy changes, and consultation releases with the wider landscape activity. This allows us to keep our clients at the forefront of all relevant changes and to be able to leverage the value this presents. Please contact our team to learn more on the independent review of ACCUs and how this might impact your organisation.

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