On 22 May 2024, the Australian Energy Regulator (AER) released final guidance on applying a value of emissions reduction.
Energy Ministers agreed to a method for deriving values of emissions reduction (the method). The purpose of our final guidance is to provide stakeholders with an opportunity to comment on specific issues before issuing our final guidance which will bind the AER and regulatory investment test (RIT) proponents to the method.
Our final guidance also includes a table of interim values of emissions reduction derived from the method that we propose to use in our carrying out our regulatory functions, and that network businesses should use in their proposals. Our final guidance maintains consistency with the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) methodology. This allows RIT proponents to comply with the ISP and our guidance.
Stakeholder submissions closed on 18 April 2024.
We have commenced consultation with stakeholders on the Cost Benefit Analysis and RIT application guidelines and the Expenditure Forecast Assessment Guidelines. This has provided stakeholders with an opportunity to engage deeply on how valuing emissions reduction is implemented.
Update
On 19 July 2024 Energy Ministers agreed to extend the effective date of the interim value of greenhouse gas emissions from 30 June 2025 to 30 June 2026 or until it is superseded, whichever is earlier. As the only change was to the dates of expiry and issuance, and our guidance does not rely on dates, the AER published the amended statement without updating our guidance.