Environmental products, such as certificates and carbon credits, provide market-based solutions to today’s environmental challenges. The market for environmental products is continually evolving as governments seek to reduce greenhouse gas emissions and incentivise cleaner sources of energy generation.
Shell Energy can help you find the right solution, or solutions, to benefit from the opportunities available.
Australia’s Federal and State governments have introduced schemes through legislation, with each employing a different mechanism and ascribing different eligibility criteria, to help achieve the goal of emissions reduction and deliver improvements to energy efficiency and energy productivity. Broadly, these schemes are:
Examples of the types of eligible activities include building renewable energy infrastructure, reducing direct emissions, installing energy efficient technology or carbon sequestration. Through these schemes, businesses and individuals can create certificates or credits for eligible activities. Scheme certificates or credits can then be surrendered to meet environmental obligations or sold on the secondary market to interested buyers.
The main buyers in the environmental products markets are liable entities (largely energy retailers) who purchase environmental products to meet specified obligations under State and Federal legislative schemes. Under the Federal scheme, buyers include those businesses or individuals seeking to purchase certificates to offset emissions on a voluntary basis.
Some common benefits of generating Australian certificates and credits include the ability to:
International carbon credits are also available to Australian businesses to help meet decarbonisation targets. These are typically used to offset those emissions that can’t be eliminated by other energy efficiency initiatives.
Shell Energy offers a range of solutions for businesses looking to generate, surrender or trade environmental products.
The following tables provide an overview of selected environmental products and the types of projects eligible under each scheme. We then take a closer look at the various schemes, how they work and the regulators that operate them.
The Renewable Energy Target (RET) is an Australian Government scheme designed to reduce greenhouse gas emissions in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources.
The Clean Energy Regulator administers the Renewable Energy Target’s two schemes[2]:
The Renewable Energy Target works by allowing both large-scale power systems and the owners of small-scale systems to create LGCs and STCs, respectively, for every MWh of power they generate. (Note: any business that installs a large-scale renewable energy system and wishes to claim LGCs must apply for their systems to be accredited as a power station).
Certificates are then purchased by electricity retailers, like Shell Energy, and submitted to the Clean Energy Regulator to meet the retailers’ legal obligations under the Renewable Energy Target. This creates a market which provides financial incentives to both large-scale renewable energy power systems and the owners of small-scale renewable energy systems.
Shell Energy generates LGCs and STCs on behalf of our customers.
New South Wales Energy Savings Scheme
The Energy Savings Scheme (ESS), administered by the Independent Pricing and Regulatory Tribunal of NSW (IPART), provides financial incentives to install, improve or replace energy savings equipment and appliances in NSW businesses.
Financial incentives are in the form of tradeable certificates, called Energy Savings Certificates (ESCs).
Each ESC represents a saving of one MWh and can only be created by Accredited Certificate Providers (ACPs).
Shell Energy is an ESS Accredited Certificate Provider, and we support customers with the generation of ESCs for certifiable energy efficiency projects. In addition, as Scheme Participants in the ESS, we acquire and surrender ESCs from ACPs to meet our mandatory legislative obligations.
Victorian Energy Upgrades program
The Victorian Energy Upgrades (VEU) program, administered by the Essential Services Commission, helps Victorians reduce their energy bills and greenhouse gas emissions by providing access to discounted energy efficient products and services.[3]
The greenhouse gas savings associated with the installation of an energy efficient product and/or decommissioning of an inefficient product determines the number of Victorian Energy Efficiency Certificates (VEECs) that can be created. The level of incentive or discount received by businesses varies depending on the market activity and certificate price. Each certificate represents one tonne of CO2-e reduction.
Energy efficiency activities that create VEECs under the VEU program can be found on the Essential Services Commission website.
Shell Energy is an Accredited Provider in the VEU program, and we support customers with the creation of VEECs via eligible energy upgrade projects. In addition, as an energy retailer operating in the Victorian market, we are considered a Relevant Entity in the VEU program, so we acquire and surrender VEECs to meet our mandatory legislative obligations.
Through the Emissions Reduction Fund (ERF), the Australian Government purchases lowest cost abatement in the form of Australian carbon credit units (ACCUs) from a wide range of sources, providing an incentive to businesses and landowners to proactively reduce their emissions.
A number of activities are eligible under the scheme and participants can earn ACCUs for emissions reductions. One ACCU is earned for each tonne of CO2-e stored or avoided by a project.
ACCUs can be sold to generate income, either to the government through a carbon abatement contract, or in the secondary market[4].
Shell Energy supports customers with the creation of ACCUs. The eligible projects you can choose to undertake as part of the Emissions Reduction Fund are called Methods. The Methods explain how to carry out a project and measure the resulting reductions in emissions. Methods can include activities such as commercial, industrial and aggregated energy efficiency, capture and combustion of landfill gas and agricultural waste, alternative treatment of organic waste capture and combustion of biogas from wastewater. Methods for the land sector include increasing soil carbon, reducing livestock emissions, expanding opportunities for environmental and carbon sink plantings, and reforestation[5].
We also supply additional carbon offsets to match customers’ broader organisational decarbonisation goals.
Shell Energy can access reputable, verified international carbon credits for our customers. These are typically generated under the leading independent certification standards for verifying the activities of voluntary carbon credits projects, such as The Gold Standard and the Verified Carbon Standard of Verra.
As with other carbon credit schemes, these generate one carbon credit per tonne of CO2 equivalent stored or avoided for eligible activities.
Choosing the right scheme (or schemes) depends on where your operation is located, the activities that are undertaken, and your commercial and decarbonisation goals. Speak with one of Shell Energy’s experts in environmental products to better understand how the products could work for you and help maximise the value of your energy projects.
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