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Greenhouse Gas Reduction Scheme

Last updated: 8 September 2010

The NSW Greenhouse Gas Reduction Scheme was the world's first mandatory greenhouse emissions trading scheme and provides a market signal to reduce or offset greenhouse gas emissions from the NSW electricity sector.

In November 2005, the Premier confirmed the NSW Government's commitment to extend the NSW Greenhouse Gas Reduction Scheme to 2020 and beyond unless and until a national emissions trading scheme is implemented. The decision to extend the scheme recognised the need to provide certainty to investors in greenhouse gas reduction activities.

A policy paper outlining details of the extension of the scheme can be downloaded here:
Extending the NSW Greenhouse Gas Abatement Scheme Policy paper (PDF 215 KB)

However, while the current scheme has been extended a national emissions trading scheme is recognised as the preferred option. Accordingly the legislation has been amended to allow the Greenhouse Gas Reduction Scheme to end when a national emissions trading scheme is implemented.

Transitional arrangements

The Commonwealth Government has announced that it will commence a national emissions trading scheme, the Carbon Pollution Reduction Scheme (CPRS), in 2010. The Department has sought stakeholder views on transition arrangements when GGAS ends.

A Consultation Paper outlining issues for the transition of GGAS was released on 1 April 2008. The Consultation Paper can be downloaded here:
Transitional arrangements for the NSW Greenhouse Gas Reduction Scheme Consultation paper (PDF 186 KB)

The closing date for comments on the Consultation Paper was Monday 28 April 2008 and 28 submissions were received, including seven submissions which were designated by the submitters as confidential. The 21 non-confidential submissions can be downloaded here:

AFMA (PDF 56 KB)
AGL(PDF 119 KB)
ANZ (PDF 19 KB)
Delta Electricity (PDF 447 KB)
EDL (PDF 56 KB)
EnergyAustralia (PDF 838 KB)
ERAA (PDF 64 KB)
ESAA (PDF 75 KB)
Forests NSW (PDF 30 KB)
G Wilkenfeld (PDF 29 KB)
Hydro Aluminium(PDF 24 KB)
LMS Generation (PDF 556 KB)
Min Council NSW (PDF 87 KB)
NGF (PDF 191 KB)
Norske Skog (PDF 76 KB)
OneSteel (PDF 29 KB)
Snowy Hydro (PDF 773 KB)
Sydney Water (PDF 80 KB)
Tomago Aluminium (PDF 25 KB)
TRUenegy (PDF 42 KB)
Visy (PDF 547 KB)

Background information on the Greenhouse Gas Reduction Scheme

The Greenhouse Gas Reduction Scheme is administered by the Independent Pricing and Regulatory Tribunal (IPART). The Department was responsible for the development of this mandatory scheme and has an ongoing role in further policy development.

IPART is the Scheme Regulator and the Scheme Administrator. Copies of the legislation, regulation, Greenhouse Benchmark Rules and other information on the Scheme are available on the IPART Greenhouse Gas Reduction Scheme Website at http://www.greenhousegas.nsw.gov.au.

Some documents relevant to the scheme are:

Greenhouse Gas Emissions from Electricity Supplied in NSW: Emissions Workbook (October 2000) (PDF 151 KB)
Greenhouse-related licence conditions for electricity retailers - NSW Government Position Paper (December 2001) (PDF 613 KB)

All other documents regarding the scheme are available from http://www.greenhousegas.nsw.gov.au/.

Consultation on proposed amendments to the Greenhouse Gas Reduction Scheme (GGAS) Carbon Sequestration Rule

The Greenhouse Gas Reduction Scheme (GGAS) Carbon Sequestration Rule ('the Rule') allows for the creation of GGAS abatement certificates where carbon is sequestered through forestry projects.

The Rule has not been reviewed since the commencement of GGAS in 2003 and there are three aspects of the Rule which the NSW Government proposes to amend to streamline the Rule's administration, as well as assist with transition to the proposed Commonwealth Carbon Pollution Reduction Scheme (CPRS).

To streamline administrative arrangements and assist transition to the CPRS as well as provide greater operational flexibility for participants, whilst maintaining the Scheme's integrity, the following amendments are proposed:

where there is insufficient carbon created, the forestry operator can choose to either cease creating certificates until the shortfall is eliminated or if directed by the Scheme Administrator purchase NGACs (of any type) to eliminate the shortfall;
where there is a catastrophic event, the forestry operator will now be required to discharge their shortfall by surrendering NGACs (of any type); and
forestry operators can 'buy out' their 100 year obligation by purchasing and surrendering NGACs (of any type) to an amount that is equivalent to their obligation.

The option to 'buy out' obligations is purely voluntary and requires GGAS carbon sequestration participants to opt in within the first two years of the CPRS. In the event that the GGAS carbon sequestration participants do not opt in, the ongoing responsibility for monitoring the continuing carbon maintenance obligation would be left with IPART.

Download a copy of the Rule with the proposed amendments (119kb PDF).

Stakeholder consultation

The stakeholder consultation period ended on 26 February 2010.

Submissions

CO2 Australia 32.5 KB
Forests NSW 209.1 KB

Amendments to the Greenhouse Gas Reduction Scheme (GGAS) Carbon Sequestration Rule

The NSW Government has been consulting with stakeholders on changes to the Carbon Sequestration Rule for some time. These changes are independent of any Commonwealth Government policy decisions about the timing of the introduction of the Carbon Pollution Reduction Scheme (CPRS).

The rule changes are to streamline administrative arrangements and assist transition to the CPRS as well as provide greater operational flexibility for participants.

The NSW Government has long stated that it prefers a national emissions trading scheme as this reduces red tape and keeps costs down.

GGAS is legislated to remain in place until 2020 and beyond or until the commencement of a national emissions trading scheme.

The Minister for Energy has approved the amendments to the rule, effective on the date of publication of the approval notice in the NSW Government Gazette, Friday 21 May 2010.

Download the final amended sequestration rule (79kb PDF).

Amendments to the Greenhouse Gas Reduction Scheme (GGAS) Generation Rule

The NSW Government has amended the Greenhouse Gas Benchmark Rule (Generation) No. 2 of 2003.

The rule changes are to clarify the treatment of loss factors in creating certificates, improve consistency of descriptions, update the rule for name changes and make minor typographical corrections.

The changes take effect on Friday, 3 September 2010.

Download the amended Greenhouse Gas Benchmark Rule (Generation) No. 2 of 2003 (398kb PDF)