The Greenhouse Gas Reduction Scheme (GGAS) was created in 2002 through amendments to the Electricity Supply Act 1995 (the Act) and the Electricity Supply (General) Regulation 2001 (the Regulation). GGAS commenced operation on 1 January 2003.

Act

The Act establishes GGAS for the purpose of reducing greenhouse gas emissions from the consumption of electricity in NSW. The Act sets out the functions and responsibilities given to the Independent Pricing and Regulatory Tribunal (IPART) to ensure compliance by benchmark participants. It also sets out the functions of the Scheme Administrator, a role to which IPART has been appointed under the Act by the Minister.

Regulations

The Act is supported by the Regulation which makes provision for aspects of the operation of GGAS. Part 8A of the Regulation provides details of the eligibility requirements for elective benchmark participants, the CPI adjustment of the greenhouse penalty and the assessment of compliance of benchmark participants with their greenhouse gas benchmarks by the Compliance Regulator.

Part 8B of the Regulation provides the core eligibility requirements for accreditation as an abatement certificate provider, conditions of accreditations that are imposed by either the Regulation or the Scheme Administrator, the creation and transfer of abatement certificates and the conduct of audits of accredited abatement certificate providers.

Rules

GGAS is supported by five Greenhouse Gas Benchmark Rules issued by the Minister. The Rules provide the technical details required to apply GGAS in practice. Each Rule governs a specific area of GGAS:

• the Compliance Rule provides the calculation methodology for benchmark participants to measure their compliance with their annual Greenhouse Gas Benchmarks
• the Generation Rule provides additional eligibility requirements and the calculation methodology for people wishing to create NSW Greenhouse Abatement Certificates (NGACs) from supplying electricity to the NSW electricity network or an interconnected electricity network
• the Demand Side Abatement (DSA) Rule provides additional eligibility requirements and the calculation methodology for people wishing to create NGACs from reducing electricity demand on the NSW electricity network by electricity users in NSW
• the Large User Abatement Certificate (LUAC) Rule provides additional eligibility requirements and the calculation methodology for people wishing to create LUACs from reducing non-electricity related greenhouse gas emissions from industrial processes in NSW
• the Carbon Sequestration Rule provides additional eligibility requirements and the calculation methodology for people wishing to create NGACs from storing carbon in eligible forests in NSW.

Responsibility for developing the policy framework, drafting Rules and consulting on proposed changes to the Rules belongs to the Department of Water and Energy. IPART then administers GGAS through the application of these Rules in its roles as Scheme Administrator and Compliance Regulator.

The Greenhouse Gas Benchmark Rules detail the calculation methodology for benchmark participants to measure their compliance and for accredited abatement certificate providers to calculate the eligible number of abatement certificates they can create.

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