Section 8: Other Relevant Information
Data Preparation Rule 1
The methods, assumptions and calculations used to produce the data must be disclosed in the Bases of Preparation along with the data in the specified template.
The specific principles, methodologies and policies used to prepare and present the financial, production and emissions data by financial year should be clearly disclosed by firms in the Bases of Preparation and submitted with the Data Form.
This guidance outlines the data required for each box of the Data Form. The Bases of Preparation must be completed to support the data provided in the Data Form.
Data Preparation Rule 2
Where uncertainties arise when determining emission and revenue data, these uncertainties must be declared in the Bases of Preparation.
The industrial allocation process depends on data to be supplied for prior years where data may not have been captured in the form or detail required and accordingly the estimation required may be greater.
Areas where uncertainty is anticipated include the extent of metering, calibration of meters, industrial standard calculations, default emission factors, key estimates and judgements, external invoicing and supplier data, and hedging transactions.
Firms must use accurate data where available. To the extent uncertainties arise, these must be disclosed in the Bases of Preparation.
Interpreting activity boundaries and apportioning emissions
Allocation of emission units will be provided on the basis of activities, not on the basis of firms or sites. The definition of the activity which is potentially eligible for industrial allocation is contained in the relevant Gazette Notice.
Only emissions included within the activity boundary as defined in the Notice can be included in the data provided to the Minister. The Notice provides a definition of the activity, including its inputs and outputs, and a list of the sources of emissions which are to be included or excluded from the activity.
The activity definition sets out the transformation of specific inputs into specific outputs. This determines the beginning and end of the activity and therefore the parameters of the data which must be captured. Generally, an activity begins after inputs have been transported to where the core activity is conducted, such as a storage facility on site. Activities generally end once the described output is produced by the transformation. Firms must carefully consider the activity definition contained in the Gazette Notice relevant to their activity, and in particular the included and excluded emissions. Only included emissions, as defined, should be entered into the Data Form to be submitted to the Minister.
Because allocation is made on the basis of activities, rather than firms, there will be processes undertaken by the same firm which may be considered important to the conduct of the business, such as packaging, head office costs, administration and marketing activities, yet are not integral to the activity as defined. A number of these exclusions are applied to all activities.
Similarly, emissions generated upstream or downstream of an activity will also be excluded. For example emissions associated with extraction activities upstream of the input to the activity are generally excluded from the activity boundary. This includes all processing, fugitive emissions and treatment of any input to the activity before it becomes the input to the activity. In the case of urea production for example, the emissions associated with extraction of carbon dioxide at the Kapuni gas treatment plant before becoming an input to the activity falls outside the activity boundary.
In several cases, specific additional exclusions have been identified in the activity definition for particular activities to aid clarity. For example, the production of ethanol specifically excludes the direct emissions associated with fermentation.
To apportion emissions between processes carried out by a firm, reasonable estimates and assumptions will need to be made. These estimates and assumptions must be clearly disclosed in the Bases of Preparation and may include information on which apportionment has been made.
In certain cases, inputs that are integral to and essential for the transformation that occurs during the particular activity are specifically identified in the list of included emissions for that activity. For example, the emissions from generating steam that is consumed as part of the activity is specifically included in the case of the production of caustic soda. These emissions may be generated by the person carrying out the activity or they may be generated by an independent supplier; in either case, these emissions are included. Similarly, emissions from the production of cryogenic gases used as an input to the activity may also be identified in the list of included emissions.
The Gazette Notice also defines the product (basis for allocation). In some instances, different products have been defined as activity outputs for eligibility purposes and as the product for allocative baselines. This is the case for aluminium where the activity output is saleable aluminium metal and the basis of allocation is primary aluminium with a purity equal to or greater than 98 per cent.
Declaration
The statement of declaration must be submitted together with the specified template (Data Form) and Bases of Preparation. The declaration expressly confirms that the data and information contained in both the Data Form and Bases of Preparation are true and correct and represent the firm’s assessment of the data and information required to be submitted in accordance with the relevant Gazette Notice issued pursuant to s 161D of the Climate Change Response Act 2002.
The declaration requires the date and the full name, position, contact details and signature of the person who is signing on behalf of the firm. For firms that are incorporated bodies (including companies, incorporated societies, incorporated trusts, or limited partnerships) the declaration must be signed by a director or an executive officer (or equivalent) of the incorporated body.
Penalties and verification
Information provided to the Minister during the implementation of the industrial allocation regime must be a correct representation of the actual situation. The rules governing the submission of data required under a Gazette Notice do not contain requirements for mandatory third-party audits or verifications. However, data submitted in response to a Gazette Notice will need to be accompanied by a signed declaration. The Minister also has the power under the Act to require any further information considered necessary to enable the verification of the accuracy of the information.
The allocation process relies on a self assessment regime, similar to that of the New Zealand income tax system. Accordingly a penalties regime is in place to prevent the provision of incorrect information. This includes penalties for knowingly providing altered, false, incomplete or misleading information. Also, where information required to determine eligibility of an activity and to develop allocative baselines is not provided, the firms who do not provide this information may not be eligible for allocation.
To help firms supply accurate and complete data in response to a Gazette Notice, the Ministry will engage contractors to help firms understand the data collection and collation requirements.
Those firms who supply information to the Minister (particularly under a Gazette Notice used to collect data) are encouraged to quality assure the information provided under the allocation processes. Firms may wish to engage third parties to conduct this quality assurance.
The Minister may also choose to verify applications for allocation that are made under regulations.
Record retention
The Act contains a general requirement for persons applying for allocation to keep sufficient records to enable the Ministry to verify that they are entitled to receive an allocation, the amount of production they reported and calculations of their allocation. The Ministry may issue guidance about the types of records that should be kept in due course.
While the Gazette Notice does not require firms to submit the source information or records on which the data in the specified template is based, it would be prudent to retain this information for a period of seven years. As already noted, the Minister has the power under the Act to require any further information considered necessary to enable the verification of the accuracy of the information.
Records may be retained in electronic form. However, the stored information should not be in an encrypted form, and should be able to withstand hardware/software changes. Records should be stored within New Zealand. Firms should provide ease of access to records, and provide assistance to officers of the administering agency.
