Industrial allocation data collection: Frequently asked questions

Sufficient records should be retained to demonstrate that the data supplied is reasonable. However, it is likely that some record retention systems may not be able to hold significant volumes of data, such as meter readings, over many years. Therefore, it is acceptable for firms to analyse available records, prepare summary schedules of these records and copy key data samples into these summary records. These new summary records should be representative of the measurement previously undertaken.

Records may be retained in hard or electronic copy. Some firms may wish to copy relevant supporting data into a new source document to be retained. This is particularly important if records automatically delete at certain times or when levels of historic data have accumulated to a particular size, such as metering records.

Firms should provide information of sufficient detail to satisfy the Ministry that the assumptions and methodologies used to calculate the emissions and revenue data provided are reasonable

Yes.

No. The completed Data Form, Basis of Preparation and Declaration must be received electronically by the Ministry by the submission due date. The signed hardcopy declaration, which must be identical to the electronic submission, will be accepted as long as it is postmarked as sent on or before the due date for submissions.

The Declaration Form sets out who should sign it. For incorporated bodies, a person who has executive decision making responsibilities, such as the entity’s chief executive officer or someone who is part of your organisation’s executive team, should sign the declaration form. 

The Climate Change Response Act 2002 requires that records be retained for 7 years.

The most up to date Data Forms are available on the website: www.climatechange.govt.nz/industrialallocation. The Ministry will introduce a version control sheet in the Data Form as future major changes occur. Firms should ensure that they are using the most up to date Data Form before they make their submission.

Information presented to and held by the Minister and Ministry could be released under the Official Information Act 1982, however, there may be grounds in the OIA for withholding information. For instance, if release of the information would disclose a trade secret, or be likely to unreasonably prejudice the commercial position of the person who supplied it or who is the subject of the information, then the information may be withheld. The grounds for withholding must always be balanced against public interest considerations that may justify release. Although the Ministry cannot give any guarantees as to whether information will be withheld if an OIA request it received, it would be helpful if firms could identify which information provided in their Data Form and Bases of Preparation they consider to be commercially sensitive. Further information on the OIA is available at www.ombudsmen.parliament.nz.

Detailed estimates of uncertainty in percentage terms are not required. Information provided on uncertainty should show, in qualitative terms, if some numbers are particularly uncertain compared with others. For example:

• If electricity or other fuel consumption is based on metered data, then this should be stated. It would be assumed that typical uncertainties associated with meters would apply and these do not need to be provided.
• If market price data are based on quoted prices and there is more than one source of data and a range of prices, the range of prices should be provided alongside an explanation of why the chosen value was used.
• If estimates of emissions are made by allocating total measured emissions between two uses of the heat output, then uncertainty could be presented by providing a “best guess” estimate and the range of estimates (highest and lowest) based on reasonable assumptions that might be used in this calculation.
• An estimate of uncertainty is not required for the emission factors as provided in the Data Form.

The financial years are those specified in the Climate Change Response Act 2002 and there are no plans to seek an amendment to the legislation by Parliament on this basis.

The Data Form can be submitted by either the parent company or separately by its subsidiaries. However, if the parent company provides the Data Form on behalf of its subsidiaries, then it should state that this is the case, and provide details of each subsidiary in the Bases of Preparation.

No. Each firm carrying out an activity must make its best endeavours to provide accurate data. Each firm may have differing records and bases for recording and retaining data which will be reflected in the Data Form and Bases of Preparation.

If a firm does not provide the information requested in the Gazette notice then it may not be eligible for an allocation.This is still the case if a firm provides some information, but not all that was requested.

In addition, under section 132 of the Climate Change Response Act 2002 the penalties for knowingly providing altered, false, incomplete or misleading information consist of a fine of up to $25,000 for an individual or $50,000 in the case of a body corporate. If such altered, false, incomplete or misleading information is provided with intent to deceive and for the purpose of obtaining any material benefit or avoiding any material detriment, section 133 of the Act provides for penalties of up to five years imprisonment and/or a fine of up to $50,000.

The Ministry will conduct checks on all data submissions received. These checks will ensure that the Data Form, Bases of Preparation and Declaration are complete and that the information contained within them is reasonable and consistent with the data collection rules. In addition, the Ministry may conduct more detailed verification of the information provided in the future. The Minister has powers under the Climate Change Response Act 2002 to require any further information considered necessary to enable the verification of the accuracy of the information provided. This may include source data or other records. The Climate Change Response Act 2002 requires that records be retained for 7 years.

16. What happens if different firms conducting the same activity make different assumptions in Bases of Preparation?

Revenue data

Revenue Rule 3 requires that an appropriate market price must be calculated from revenue received from all external activity output sales, or by using an observable market price. 

If actual sales data are used, only external sales of the output specified in the Gazette notice may be included in calculating an appropriate market price. Internal sales of output for subsequent further processing should not be included, nor should sales of further processed output be included. If actual sales data are used, revenue from external sales of the output specified in the Gazette Notice should be divided by the amount of output sold externally to calculate an appropriate market price. Alternatively, an observable market price for the output may be used. 

Once an appropriate market price has been derived, revenue should be calculated by multiplying the market price by the total quantity of all activity outputs (i.e. output sold externally and output sold internally for subsequent further processing).

All revenue from sales of activity outputs, together with associated production data, must be disclosed in the revenue and production information contained in the Data Form. If the intermediate product is a specified activity output, then the associated revenue and production must be included.

Revenue Rule 1 states that revenue must be calculated using an appropriate market price. As outlined in the Industrial Allocation Guide to Data Collection “an appropriate price is defined by its time period, location and product”. This means that the observable market price used by a firm must be appropriate for the particular product it is applied to. It is possible that an observable market price may need to be adjusted to ensure it is a ‘plant gate’ price, relevant to New Zealand market conditions.  Any adjustments to an observable market price used must be disclosed in the Bases of Preparation.

If your revenue from sales data includes the recovery of transport costs, e.g. if the sale is at some point distant from the plant, then all transport costs associated with the movement of activity outputs to that market should be included in Box 15. Box 15 would therefore contain transportation costs such as road and sea freighting and port costs. Internal transportation costs should not be included in Box 15 as these are prior to the actual ‘gate’ of the firm. If your revenue from sales data does not include transport costs, i.e. your sales are at the plant gate, then transport costs do not need to be included in Box 15.

Yes.

Rebates would generally be accrued on an ongoing basis during the financial year for financial accounting purposes. When the firm’s financial year does not align with the specified year and an accrual has not already been made, then an adjustment can be made to the revenue data to account for the customer rebates which may be outstanding.

Emissions Rule 12 applies only to emissions data. The revenue data provided must comply with the revenue rules set out in the Gazette Notices. In addition, and consistent with the data preparation rules, if revenue data have had to be estimated then the methods, assumptions and calculations used, and any uncertainties arising, must be disclosed in the Bases of Preparation.

Yes. The units sold externally can be greater than the units of activity output produced in a specified financial year, due to changes in stock.

Yes. An explanation of why different methods have been used for different financial years should be provided in the Bases of Preparation.

Where a firm is conducting the same activity at multiple sites, the data should be aggregated across all sites and entered into the Data Form. For most data categories this simply requires the data across all sites to be added together. For the specific case of transport costs and the calculation of a gate price, a different approach will be required.

The revenue rules require the calculation of prices and revenues on the basis of a gate price, but the gate price will differ, depending on where the gate is. Firms will need to estimate the transport costs to each plant and use these to estimate the gate price. The approach required differs, depending on whether sales revenues or an identified market price is being used.

Using Sales Revenue

For each site and for each activity output:

• record total revenue from external sales and total transport costs for these external sales
• divide each of these (revenues and transport costs) by the number of external sales, and
• multiply each by the total output from the plant.

This will result in a total revenue and a total transport cost estimate for each site. These should be aggregated across all sites. They should then be divided by total output from all sites and multiplied by total external sales from all sites. These should be entered into the Data Form.

Using an Observable Market Price

A single market price should be used that is representative of the output from all plants. Transport costs should be calculated by:

• estimating the transport costs for each plant
• multiplying these estimates by the output from each plant
• aggregating these total transport costs across all sites and dividing by the total output across all sites to produce a weighted average transport cost.

This weighted average should be used as the unit transport cost and entered into the Data Form.

In both cases, all these workings should be provided in the Bases of Preparation. Firms may choose to use a separate copy of the template for each individual plant and provide these in addition to the aggregated data provided in the Data Form

Emissions from activities such as head office, marketing and administration, are likely to be less than 5% of total emissions. Emission Rule 12 provides for simplified and reasonable emission calculation methods to be used in these situations. Such methods may be derived from sources such as a multiple of floor space, head count, or likely standard energy data including ratings for equipment and lighting used. Whatever method is used should be reasonable for the activity’s specific circumstances and be disclosed in the Bases of Preparation.

Yes. Emission Rule 13 requires all emissions associated with the activity to be included. Emission Rule 12 allows simplified and reasonable calculation methods to be used for small emissions sources.

This will depend on the description of the activity and the directions in the Gazette notice calling for information as to what are included emissions and what are excluded emissions.  Where the description of the activity and the included emissions encompass a part of the activity that is carried out off-site or by another person, the emissions from that part of the activity will need to be included in the information provided. For example, schedule 2(d) of the Gazette notice for protein meal includes certain operations for preparing material for processing (paunch cutting, etc).  A number of protein meal facilities in New Zealand receive material that has been prepared at other locations by other firms.  The emissions from these operations can be included in the emissions calculations for those facilities because they are considered an integral part of protein meal production. Emissions from the transport of prepared materials between sites are excluded however, as specified in schedule 3.

If the electricity turbine is being fed with heat from all three boilers, then it should be treated as a single CHP plant.  If one or more of the boilers is being used to produce steam that is used in the activity, but which does not go through the electricity turbine, then the emissions associated with that steam production must be treated as part of the activity (Emissions Rule 1) and not included as part of the CHP emissions (Emissions Rule 5).

The Data Form treats waste oil and used oil in the same way and therefore it is not necessary to distinguish between them. The terms are often used interchangeably.

The intention is to not differentiate between firms undertaking the same activity at different locations.  Transmission and distribution charges are the cost of transporting electricity to the geographic location of the activity. This approach is consistent with the approach adopted for gas distribution losses and the transportation of other inputs to the location where the activity takes place.

Many firms will periodically test the calorific value of the coal used in the activity. For others, suppliers will have tested the calorific value of the coal, and provided this information to their customer.  The Data Form requires only one calorific value to be entered for all of the specified financial years. Where there are a range of calorific values for coal used during the year, firms should apply a weighted average calorific value which most accurately portrays the calorific value of the coal consumed by the activity during those years. The basis for the calorific value used is required to be disclosed in the Bases of Preparation.

Emissions Rule 12 applies where small emissions sources are, in aggregate, estimated to be no more than 5% of total emissions from the activity. In this context, ‘in aggregate’ should be interpreted to mean all specified financial years.

The Industrial Allocation Guide to Data Collection states that where the contract to purchase natural gas specifies the field from which the natural gas is obtained, the emissions factor for that field must be used.  This matter has been reviewed and the following approach should be used.

A natural gas emissions factor from Table 10 in Schedule 2 of the Climate Change (Stationary Energy and Industrial Processes) Regulations 2009 must be used.  The particular natural gas emissions factor that must be used will depend on how gas is supplied. Information on the appropriate factor to use is given below.

Natural gas supplied through a dedicated supply line

Where natural gas is supplied through a dedicated supply line, the emissions factor for that field must be used.

Natural gas supplied from an unknown source

Where natural gas is not supplied through a dedicated supply line and the contract to purchase natural gas does not specify the field from which the natural gas is obtained, the 2008 national average emissions factor must be used.

Natural gas supplied from a specified field through an integrated network

Where the contract to purchase natural gas does specify the field(s) from which gas is obtained and the natural gas is supplied through an integrated network (that also transports gas from other fields), either of the following emissions factors must be used:

• the emissions factor for that field; or
• the 2008 national average emissions factor.

There are a number of ways data gaps could be estimated. One option would be to find a comparable month (or other period of time) to that for which data is missing – for example, it might be comparable in terms of the level of output produced or the level of other inputs used – and use that month’s consumption data as an estimate for the month for which the data is missing. Alternatively, if production is relatively constant over time, then an average over a 12 month period could be calculated and used as an estimate for the month that the data is missing. The approach should be disclosed in the Bases of Preparation.

Although the electricity consumed by functions outside of the activity may be immaterial in size, they are material in nature because they are specifically listed as excluded emissions in the Gazette Notice.  Therefore this electricity consumption must be excluded from the data provided.  Some of these adjustments may be immaterial in size, in which case a reasonable estimation would be acceptable, consistent with Emissions Rule 12, accompanied by disclosure of the basis of the estimation in the Bases of Preparation.

In Part 3 of Schedule 3, the Climate Change Response Act 2002 identifies which persons must be participants to the Emissions Trading Scheme on the basis of the activities which they undertake.  This list includes using geothermal fluid for the purpose of generating electricity or industrial heat, and combusting used oil, waste oil, used tyres, or waste for the purpose of generating electricity or industrial heat.  However, a person may be exempted from being a participant under the Climate Change (General Exemptions) Order 2009 when carrying out an activity covered by that Order.  This Order provides threshold levels for which exemptions may apply.  For using geothermal fluid the exemption threshold is the consumption of geothermal fluid per annum with less than 4,000 tonnes CO₂ equivalent emissions.  For combusting waste/used oil the exemption threshold is consumption less than 1,500 tonnes per annum.

If, due to exemption, there is no obligation to surrender NZUs for geothermal fluid and/or waste/used oil used then no transitional assistance will be provided for the emissions from these sources.  The emissions from the consumption of geothermal fluid or used/waste oil used for the purpose of generating heat and/or electricity will not be taken into account when determining the eligibility or allocative baseline for an activity and therefore are excluded from the Data Form.

It is possible that individual firms may use quantities of geothermal fluid below the thresholds above which another party has an obligation to surrender NZUs. In this situation, the quantity used can be included. Details of how the quantity used has been estimated should be provided in the Bases of Preparation.

No transitional assistance will be provided for the use of liquid fossil fuels as part of the activity.  For this reason, it is not necessary to collect data on the use of these fuels in the Data Form.  However, if liquid fossil fuels are used to generate electricity used as part of the activity, the MWh of electricity used should be entered into Box 55 of the Data Form.

All calorific values should be stated in gross terms, i.e. using the higher heating value.

The activity description is based on the weight of cucumbers, to remain consistent with both the other vegetables and industries. 

If you do not record your production by weight, you will need to make your best endeavours to estimate the weight of cucumbers produced.  This can be done by weighing a crate of cucumbers that is representative of your crop (less the crate weight) and dividing by the number of cucumbers.  You can use this as an average weight to apply to the total number of cucumbers produced. 

For example, for one grower with a 5,000m² greenhouse, an average weight of a telegraph cucumber of is around 420 grams, and average production is 95 cucumbers per square metre. This grower would work out their tonnes as follows:

                       475,000           Number of cucumbers = (95 x 5000)
Multiplied by    420                  Average weight of cucumbers in grams
Divided by       1,000,000        to convert into tonnes

            =          200                  tonnes of cucumbers

Please explain the method that you used to convert numbers of cucumbers to tonnes in your Basis of Preparation form.

To determine the emissions from coal you need to know the quantity of fuel combusted and the weighted average gross CV (calorific value) in TJ (terajoules) per tonne of coal.  The CV is entered into column K in the Data Form, alongside the type of coal you use.

Your coal supplier should be able to provide the calorific value for your coal. If your coal supplier is unable to provide this, the table below provides the average values between 2006 and 2008 published by MED.  If you know which mine your coal comes from, use the specific coal mine figures. If you do not have this information then you may use the average for the relevant type of coal.

The quantities included in Boxes 11 and 12 should be identical and should include the tonnes of fresh capsicums, cucumbers or fresh tomatoes or number of cut flowering rose stems of saleable quality produced from carrying out the activity.  The quantity included in box 13 will also be identical if all sales are to an unrelated party.

Box 13 is included to enable firms to adjust for any sales which are not conducted at a fair market price due to an ownership relationship between the firm carrying out the activity and the purchaser.  Any eligibility for transitional assistance needs to be determined using a fair value for the product.  If all sales are to an unrelated party (there is no ownership relationship between the parties), then the data included in Box 13 will be identical to that included in Boxes 11 and 12.

If sales have been made to a related entity, refer to pages 9 and 10 in the Industrial Allocation Guide to Data Collection.  It will be necessary to establish if the sales price has been reduced due to any relationship between the firm carrying out the activity and a purchaser of the product.  If the price paid has not been adjusted due to any relationship between the parties and is a fair market price, then the data included in Box 13 will be all of the units sold.  If sales have been made to a related party for less than fair market price, reduce the quantity of units in Box 13 by the number of related party sales to determine the quantity of units sold externally.

If all sales are to related parties and are not at a fair market price, then it will be necessary to use the observable market price to determine revenue.  This means Boxes 13 - 15 would be left blank and Boxes 16 and 17 completed.

Excess saleable stock that is dumped at market because there is no buyer should be included in Boxes 11, 12 and 13.  Stock that is dumped on site (i.e. never taken to market) should not be included in Boxes 11, 12 and 13, irrespective of quality.

In determining the revenue per unit in Box 14, the product dumped at market should be prescribed a nil unit price.  This is important when filling out the revenue data in Box 14, which requires input of the revenue from units sold externally. Failure to include stock which has been dumped at market in Boxes 11,12 and 13 will result in inflating the revenue from the activity and may adversely impact on eligibility. 

Box 14 of the data form requires the disclosure of revenue from external sales as defined in NZ IAS 18.  This should be the gross revenue from sales less any trade discounts and rebates.  Levies, commissions and other fees which are not included in the cost of goods sold cannot be deducted from revenue.

Box 15 requires disclosure of any costs of transport to market. This allows revenue to be adjusted to reflect a ‘plant gate’ price, which is the price that a firm would have received if the point of sale was at the plant gate. The transport costs included in Box 15 will be deducted from the gross revenue to determine the plant gate price.

Transport costs are any costs necessarily incurred in transporting the activity output from the plant gate to the point of sale.  This may include air/truck/van freight costs.  If you transport the product to market yourself then this will be your actual transport expenditure including depreciation loss. Other transport costs that can be included in Box 15 include packaging necessary for transportation (such as the cost of sleeves, crate hire, boxes) and cool storage. All adjustments for transport costs must be clearly disclosed in the Bases of Preparation form.

The quantity of natural gas used is most likely to be entered into Box 38.  It is very unlikely that you will have a direct supply line from one of the natural gas fields listed in Boxes 27 to 37.

The quantity of natural gas used must be entered as terajoules (TJ).  Your account is unlikely to be in TJ so you will need to convert your use into TJ. 

To convert GJ to TJ
Divide the number of GJ by 1,000 to work out the number of TJ
For example 20,000 GJ = 20 TJ; 1 TJ = 1,000 GJ

To convert kWh to TJ
Divide the number of kWh by 277,778 to work out the number of TJ
For example    2,000,000 kWh = 7.20 TJ

To convert MWh to TJ
Divide the number of MWh by 277.8 to work out the number of TJ
For example    2,000 MWh = 7.20 TJ

To convert m3 to TJ
If your account shows m3, based on a meter reading, it is most likely that the m3 have been converted into either kWh, MWh or GJ.  If they have been converted to kWh or MWh then use the conversions above.  If the only gas use figures that you have are in m3 then contact datasupport@mfe.govt.nz about how to convert these into TJ as the calculations depend on a number of factors.

In the horticulture and floriculture sectors only production of cucumbers, fresh capsicums, fresh tomatoes, and roses have been identified as potentially eligible emissions intensive activities. These activities were identified through the formal consultation period on the allocation of NZUs to industry, which ran from December 2009 to 12 February 2010.

A formal data collection process is now underway with respect to these activities. It is not possible to submit data on other horticultural or floricultural activities into this formal data collection process.

If you conduct a different horticultural or floricultural activity and think it may be eligible for an allocation of NZUs, the Government is still open to considering eligibility. You will need to provide some preliminary evidence of your revenue and emissions. Please complete the New activities form and send it to datasupport@mfe.govt.nz Please send a separate form for each type of crop.

No. The threshold for allocation is a ratio of 800 tonnes of emissions per $1 million of revenue. There is no requirement for your revenue to be over $1 million.  It is the same as 0.8 kgCO₂ equivalent per dollar of revenue.