Markets working to support sustainable development

New South Wales Greenhouse Gas Reduction Scheme (CLOSED)

The Greenhouse Gas Reduction scheme (GGAS) was a cap-and-trade mechanism designed to reduce the greenhouse gas emissions of electricity producers, retailers, high emitting industries and facilities. This included power generators, electricity retailers, large energy users (over 100GWh/year) and ‘market customers’ – facilities such as factories that take electricity supply directly from the national grid. 

Electricity retailers and certain other parties were obliged to mitigate the proportion of greenhouse gas emissions that could be attributed to the usage of electricity in New South Wales.  This was done through the purce of Greenhouse Abatement Certificates (NGACs) created by accredited Abatement Certificate Providers (ACPs). These providers offered these certificates through activities that  reduced emissions from existing generators, including generated electricity using low emission technology, improved energy efficiency, sequestered carbon in forest, and reduced emissions from industrial processes in large energy consuming industries. (IPART, 2013)

The level of compliance of participating providers and ACPs was reportedly very high. Over 144 million NGACS were created, representing a mitigation of roughly 144 M tonnes of carbon dioxide emissions.

Scheme Closure - 30/06/2012

The government stated that the decision to close the scheme was to avoid duplication with the incoming 'Commonwealth Carbon Tax'. 

Market coverage: 

New South Wales, Australia. 

Background information: 

The Greenhouse Gas Reduction Scheme was launched in 2003 as a result of ‘The Electricity Supply Amendment Act 2002’ that set a state wide benchmark in terms of CO2e/capita. Emissions trading was seen as a viable and flexible option for reducing greenhouse gas emissions in certain industries.

The NSW GHG Reduction Scheme was an interesting case as the world’s first mandatory cap-and-trade carbon emissions trading schemes. In addition, it took place in Australia, a country not required to reduce its emissions under the Kyoto Protocol. Of note also is the use of a per-capita calculation of emissions reductions target – this is unlike other emissions trading schemes such as the EU ETS.

Funding source: 

The scheme was funded and administered by the state of New South Wales.

Notable information: 

The IPART released a report on the GGAS in 2013 entitled 'NSW GGAS - Strengths, Weaknesses, and Lessons Learnt'