The implications of NGERS and CPRS on information systems

Last week I was invited to present to the CPA Australia Carbon Pollution Reduction Scheme Discussion Group as part of the CitySmart Innovation Festival, along with Danny Powers, Michele Chelin, and Andrew Rogers.

It was an informative night and I think the audience appreciated what we did, as usual.  At any rate, I did promise I’d put up my slides; they’re attached below as Slideshare.  If you’d like the originals for your own purposes please feel free to email me.

Presentation

Points noted in the presentation

• Compliance with the reporting requirements (National Greenhouse and Energy Reporting Act 2007) means the development or implementation of major information systems.
• NGERS is independent of the CPRS – and captures more companies than the CPRS.
• The current proposed delay of one year has some impact on the carbon pricing models, but compliance efforts by NGER reporting entities will need to continue.
• Reporting entities (entities producing > 125KT in 2008/2009, through to > 50kt CO2 equivalents by 2010/2011) will need to report emissions by one of four methodologies:
  • Method 1: the National Greenhouse Accounts default method
  • Method 2: a facility-specific method using industry sampling and listed Australian or international standards or equivalent for analysing fuels and raw materials
  • Method 3: a facility-specific method using Australian or international standards or equivalent for sampling and analysing fuels and raw materials
  • Method 4: direct monitoring of emission systems, on either a continuous or periodic basis
• Methods 1-3 are estimates of emissions based upon increasingly accurate emissions factors. Method 4 monitors actual emissions.
• A single annual emissions report is required by 31 October each year under NGER Act.
• Information that should be kept – electronically or in paper-based form – includes:
  • a list of all sources monitored
  • the activity data used for calculation of greenhouse gas emissions for each source
  • categorised by process and fuel or material type
  • documentary evidence relating to calculations – e.g. receipts, invoices & payment methods
  • documentation of the methods used for greenhouse gas emissions and energy estimations
  • documents justifying selection of the monitoring methods chosen
  • documentation of the collection process for activity data for a facility and its sources
  • records supporting business decisions, especially for high-risk areas relating to reporting coverage and accuracy.
• AS ISO 15489 (the Australian and international standard for record management) provides guidance – but not all documents are records!
• Management of information over the lifecycle is a challenge due to potential changing definitions and criteria
• Under the CPRS, liable entities whose emissions exceed 125K tonnes per annum (‘Large Emitters’) must have their emissions independently audited. For all other entities under NGERS and the CPRS, they may be subject to audit on suspicion of non-compliance or on a risk-management basis.
• As report identifies actual CO2 equivalent emissions, and thus the number of permits surrendered, business must ensure its calculation is accurate, and that people understand the report and data they are producing.
• To support auditable systems, the information systems of liable entities will need to address asset safeguarding, data integrity, system effectiveness and system efficiency concerns.
• Systems will need to be reliable and timely (“95% confident”) having regard to:
  • Transparency
  • Comparability
  • Accuracy
  • Completeness
• Extensions or integrations to accounting information systems are likely.
• There are important factors for a business to address if it is going to create an auditable information system to support its emissions report.
• 50kt of CO2 emissions is the equivalent of, for example, the operation of 15 data centres with 1000 servers over one year – so, not a small business!
• As for SME’s, they are less affected from an information systems perspective.
• Similar concerns exist though for ensuring that the integrity of, for example, price estimation models is accurate (given, for example, electricity cost increases of 18% and gas cost increases of 12%).
• It is likely that you will need to estimate and select prices based upon a rigorous method, or potentially attract the attention of the ACCC.
• SME’s that supply liable entities and/or entities that have ‘green’ purchasing policies may especially need to understand the impact of the scheme on their future demand
• ‘Very Large’ SME’s and large corporations that are currently outside of the CPRS, but could be caught in potential future expansions of the definition, should consider implementing greenhouse gas emissions reporting information systems to inform future lobbying efforts and by way of advance preparation.