Each year, benchmark participants are required to reduce their emissions of greenhouse gases to the level of their greenhouse gas benchmark. Where a benchmark participant’s emissions are above the benchmark, it must offset its excess emissions through the surrender of abatement certificates. Excess emissions remaining after the surrender of abatement certificates is a greenhouse shortfall which is liable for a greenhouse penalty of $12.00 per tonne of carbon dioxide equivalent (tCO₂-e).

A greenhouse shortfall can be carried forward to the following compliance year but must be abated in that year or the greenhouse penalty applying to the shortfall must be paid. Benchmark participants can carry forward a shortfall of up to 10 per cent of their greenhouse gas benchmark in all years of the Greenhouse Gas Reduction Scheme (GGAS), except 2007.

GGAS allows benchmark participants to count Renewable Energy Certificates (RECs) towards meeting their greenhouse gas benchmark. Only RECs surrendered to the Office of the Renewable Energy Regulator (ORER) for that year, in respect of their electricity sales in NSW, may be counted.

All benchmark participants are required to lodge an Annual Greenhouse Gas Benchmark Statement (Benchmark Statement) with the Independent Pricing and Regulatory Tribunal (IPART) by 1 March of the year following the compliance year, or any later date permitted by IPART (section 97CB(1) of the Act). For the compliance year 2006, and subsequent years, this date has been extended to 18 March. The Benchmark Statement details the benchmark participant’s electricity sales or purchases, greenhouse gas benchmark and the abatement certificates surrendered.

Benchmark participants must have their completed Benchmark Statements audited before lodging them with IPART, to ensure accuracy of the data and the quality of the record-keeping systems that provide that data. Benchmark participants with no electricity sales or purchases complete a simplified nil return benchmark statement which does not need to be audited. IPART has granted exemptions from the audit requirement in a couple of instances where the benchmark participant has a very small load/number of customers and a very simple Benchmark Statement. Any request for an audit exemption should be made well before the due date for Benchmark Statements.

IPART, as Compliance Regulator, reports to the Minister on the level of compliance with GGAS by benchmark participants. The report includes information about those benchmark participants that have failed to comply with their greenhouse benchmark and are liable for the Greenhouse Penalty.

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