Entities applying for assessment under the Australian Government's emissions-intensive, trade-exposed (EITE) assistance program must submit three categories of data:
- greenhouse gas emissions data, relating to specific activities
- production data, including that which relates to the trade exposure of a specific activity
- financial data, relating to revenue associated with the production of outputs arising from specific activities. For those activities for which it has been requested that an eligibility assessment be made on the basis of the value added metric, cost data must also be provided, as agreed with the government for each activity
Greenhouse gas emissions data
The emissions data in relation to specified activities will be data from the 2006–07 and 2007–08 financial years.
In many cases, because they are emissions-intensive, entities submitting data will have been monitoring and reporting emissions for many years and will already have available data. Emissions data will include direct emissions arising from conducting a specified activity that are covered by the Carbon Pollution Reduction Scheme and electricity emissions per unit of production relating to a specified activity.
In general, emissions generated in the production of inputs used by an activity will not need to be reported for the purpose of EITE assessment.
Entities that have not previously collected or estimated emissions, or do not have emissions data readily available, can combine specific activity data with default emission factors (method 1) from the National Greenhouse Energy Reporting System (NGERS) measurement determination. An entity shall disclose the specific principles, methodologies and policies used to prepare and present direct emissions data attributed to each activity reported to the Department of Climate Change.
Where an entity does not use a default estimation methodology and applicable emission factors provided by the NGERS measurement determination, the entity must disclose: the rationale for its choice of method; commentary on the amount and causes of any material difference to its disclosed emissions likely to arise from it using its chosen method rather than an NGERS method; and data on the electricity intensity of production for the specified activity for the 2006–07 and 2007–08 years (in megawatt hours).
Financial and production data
Financial data will be prepared in accordance with financial data standards, except when the Department of Climate Change directs otherwise. When no financial data accounting standard exists the specific principles, methodologies and policies used to prepare and present that data must be disclosed. Production data for a specific activity will be calculated for the financial years 2004–05 through to the first half of 2008–09 (period ending 31 December 2008). It is expected that production will be calculated using one of the following methods:
- production = direct measurement of production for the defined activity (e.g. operational data)
- production = units sold externally or internally + closing inventory – opening inventory
The production = direct measurement method is preferred. The average Australian dollar market price of sales for a specific activity will be calculated for the financial years 2004–05 through to the first half of 2008–09 (period ending 31 December 2008). It is expected that the average market price be calculated using one of the following methods:
- average market price of sales = external product sales (AUD) / units sold externally
- average market price of sales = actual market price (where available)
The first of these two methods is preferred.
Requests to use the value-added metric rather than the default weighted emissions per unit of revenue must be approved by the Department of Climate Change. The value-added metric will be calculated as:
- value-added metric = total emissions / [revenue (production quantity x average sales price) – significant non-capital non-labour input costs]
The input costs to be adjusted will include only the cost of the major consumable inputs into the specific activity's production, such as the cost of feedstock, energy costs and other major raw material used. The input costs will not include any labour costs (wages, superannuation etc), capital associated costs (depreciation, amortisation, repairs, maintenance etc) and overhead costs. Entities will be required to report both the quantity and costs of inputs, as defined in the activity definition, used in the activity's production.
The cost of raw material used is expected to be calculated using one of the following calculations:
- cost of raw materials used = raw materials cost per unit of production x production
- cost of raw materials used = value of raw materials (closing inventory – opening inventory) + costs of purchases
The first method for calculating the cost of raw materials used is preferred.
Entities must disclose the specific principles, methodologies and policies used to prepare and present the financial data, including where appropriate the accounting standards used such as: AASB 102 paragraphs 6 and 11; AASB 118 paragraphs, 7, 9 and 14; and AASB 121 paragraphs 21 and 40.
Trade data
Trade exposure of activities will be assessed on either a trade share or a demonstrated lack of capacity to pass through costs due to the potential for international competition. A trade share is defined as the ratio of the value of imports and exports to the value of domestic production for the activity greater than 10 per cent in any one of the financial years 2004–05, 2005–06, 2006–07 or 2007–08.
Entities may also provide data on the annual value of exports related to a specific activity, if available, and on the annual value of imports into Australia related to the activity, if available. If an activity does not meet the 10 per cent trade share threshold in the first step, the entity or entities conducting the activity will need to submit additional information to the government to demonstrate a lack of capacity to pass through costs due to the potential for international competition.
If an activity appears unlikely to meet the 10 per cent trade share threshold, entities should submit information as early as possible to assist the government in assessing the application. Entities must disclose the specific principles, methodologies, policies and data sources used to prepare and present its annual production revenue, exports and imports attributed to each activity reported to the Department of Climate Change.
What do entities need to submit?
The government will release a data template to be used in submitting data. In addition, entities will be required to provide a supporting report containing concise disclosures of the bases of preparation, and any other information that the entity believes would aid the analysis of the submitted data.
The accompanying report should be in the form of a special purpose report as set out in the ASAE 3000 standard on assurance engagements.
Assurance
It is expected that the entity conducting the EITE activity will compile the necessary financial, production and emissions data, and prepare the response.
The entity must also engage an assurance provider that is registered on the Department of Climate Change?s EITE assurance provider register; and sign a statutory declaration confirming that they have carefully read and understood the guidance paper, and that the data they have provided is true and fairly presented.
Assurance providers will be auditors who are accredited as registered company auditors (RCA) and who have registered themselves on the Department of Climate Change's EITE assurance provider register. To place themselves on this register, they must be RCAs, have knowledge of the EITE assistance process and knowledge of, or access to, information on industrial greenhouse gas emissions.
Timing
Once an activity has been assessed as eligible, entities conducting an eligible activity will only be required to provide annual production data on an ongoing basis.