Climate change and the energy trilemma, affordability, security, and sustainability, have become central concerns across the economy. As governments tighten regulation to stay aligned with the Paris Agreement’s 1.5°C pathway, energy companies have increasingly had to focus on complying with environmental policy, including greenhouse gas emissions accounting and reporting.
In Australia, this work sits with the Clean Energy Regulator, which administers the National Greenhouse and Energy Reporting scheme, or NGER. NGER provides a single national framework for GHG emissions and energy reporting, feeding directly into the Australian Energy Statistics and Australia’s National Greenhouse Accounts, which in turn fulfil Australia’s reporting obligations under the UN Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement itself.
Traditionally, operators have built the tools for this compliance work in Microsoft Excel. Excel’s flexibility and accessibility make it the obvious starting point, but over time these tools tend to become large, unwieldy, poorly documented, and hard to maintain, and Excel provides no audit trail for changes made to the system. This paper sets out a different approach: performing GHG emission and energy calculations in the same space as the Production Allocation system, on a single, structured, auditable platform.
What the NGER scheme actually requires
Reported data has to comply with the Measurement Determination made under the NGER Act 2007, which sets out the methodology for calculating GHG emissions and energy and is updated annually to reflect improvements in estimation methods. It covers Scope 1 and Scope 2 emissions; Scope 3 emissions are not reported under NGER.
- Scope 1: emissions released directly as a result of an activity at a facility, sometimes called direct emissions.
- Scope 2: emissions released from the indirect consumption of an energy commodity.
- Scope 3: other indirect emissions generated in the wider economy as a consequence of a facility’s activities, from sources it doesn’t own or control. NGER doesn’t require these, but many operators track them anyway for investor or industry reporting.
The Measurement Determination sets out four methods for estimating emissions and energy, and operators need to pick the right one for each source:
- Method 1: the default method, based on national average estimates from the National Greenhouse Accounts.
- Method 2: a facility-specific method using industry sampling practices and Australian or equivalent analysis standards.
- Method 3: broadly the same as Method 2, but based on Australian or equivalent standards for both sampling and analysis.
- Method 4: direct measurement of emissions through continuous or periodic monitoring.
Different emission types need different equations; flaring is calculated differently to venting, and leaks from a wellhead are calculated differently to leaks from a pipeline, and for some emission types, the method can vary by gas as well as by source. Assigning the right calculation to the right source, consistently, across a whole facility, is genuinely complex.
Why the production allocation system is the right place to do this
A production allocation system, also called a hydrocarbon accounting system, is a centralised, structured data source covering an oil and gas company’s entire production process. Running GHG and energy calculations on the same platform has several concrete advantages.
- The input data overlaps. Many of the inputs GHG calculations need are already calculated as part of the allocation process, and validating that data once, as part of the full allocation workflow, gives both applications trusted data rather than two separately validated data sets.
- Emissions have to be reported by the facility operator, and when a facility is run on behalf of joint venture partners, the same commercial allocation logic that assigns production to each company can assign their share of emissions too.
- Storing all the validated production and emissions data together gives the whole company a single source of truth, rather than one for production and a separate one for emissions.
- It’s fully transparent and auditable without requiring coding knowledge: an audit trail shows every change, who made it, and when; the calculations, algorithms, and logic rules are configured using Microsoft Excel, not a proprietary language.
- Forecast and budget data can sit in the same system, so reporting production against plan and comparing forecast to actual emissions becomes a genuine insight into how well reduction plans and processes are actually working.
- The methodology is easy to maintain as it changes. The Regulator updates emission factors annually and revises calculation methods periodically, and because configuration changes can be applied with an effective date range, historical data can be recalculated retroactively using whichever rules applied at the time.
That last point isn’t theoretical. When the Regulator made significant changes to the Measurement Determination for the 2021/2022 compilation, an operator already running this kind of application on EnergySys was able to update the calculations and keep reporting without a major system overhaul, exactly the scenario a rigid, bespoke tool would have struggled with.
A real implementation: Elite Energy’s ePMF
This isn’t a hypothetical design. Elite Energy Consultants has built and deployed exactly this approach, a GHG application sitting alongside production allocation, as part of their Elite Production Management Framework (ePMF), on EnergySys, across multiple operators in Australia. Once production allocation and GHG calculations are complete, corporate reports and dashboards can be generated directly, giving the business visibility into where emissions are increasing and how facilities and sources compare, without a separate reporting exercise.
Elite Energy is also one half of CarbonOptics, a joint venture with Nexia Edwards Marshall that extends this same platform-based approach to multi-framework compliance, helping operators navigate NGER alongside the Safeguard Mechanism and other evolving frameworks from a single, auditable emissions application.
The approach itself has been validated beyond EnergySys’s own marketing too. Terzini and Hayes (2023), published in The APPEA Journal by CSIRO Publishing on behalf of the Australian Petroleum Production & Exploration Association, sets out the case in full, and it’s worth noting who wrote it: Dr Fabio Terzini, Lead Engineer at Elite Energy Consultants, and Dr Esther Hayes, who was Co-Founder and COO of EnergySys. That paper reflects EnergySys’s own leadership working with an implementation partner to make the case together, in a peer-reviewed industry journal, not just in a vendor whitepaper.
The Safeguard Mechanism raises the stakes further
NGER reporting feeds directly into a second scheme with real financial consequences: the Safeguard Mechanism, which requires Australia’s highest-emitting facilities to keep their net direct emissions within an annual limit, or baseline. It covers facilities emitting 100,000 tonnes of CO2 equivalent or more a year, around 219 of them as of the most recent review, together accounting for roughly a third of Australia’s reported emissions. Those baselines don’t stay flat either: they decline by 4.9% every year to 2030, so a facility that merely holds its emissions steady is, in practice, falling further behind its own limit each year.
Exceeding a baseline isn’t a paperwork problem. A facility that goes over must either purchase and surrender Australian Carbon Credit Units or Safeguard Mechanism Credits to cover the difference, or face a penalty of one penalty unit for every tonne of CO2 equivalent over the limit, on top of a possible civil penalty of 100 penalty units a day for up to two years if the excess isn’t resolved. Facilities that come in under their baseline, by contrast, can earn Safeguard Mechanism Credits themselves, a genuine incentive stacked on top of the compliance requirement.
None of that is calculable from a rough estimate. A facility’s baseline is set from its own production multiplied by an emissions-intensity value, and the emissions figure it’s judged against comes from exactly the same NGER calculations discussed above. Get the underlying GHG and energy numbers wrong, whether through a stale Excel macro, a missed update to an emission factor, or data that was never properly reconciled with production in the first place, and the consequence isn’t just an inaccurate report. It’s a baseline breach with a genuine financial and regulatory penalty attached.
This is also where the connection back to production allocation earns its keep in a different way: some facilities manage their Safeguard exposure in part through carbon capture and storage, reducing net emissions rather than simply reporting them. An Australian E&P operator configured exactly this kind of CCS data management directly on EnergySys, tracking captured carbon volumes and meeting strict regulatory reporting requirements without a heavy IT build, and adapting the system themselves as requirements have continued to evolve since. Whether the strategy is measuring accurately, capturing and storing, or both, the same underlying platform can support it.
NGER isn’t standing still, and neither is the regulatory environment around it. KPMG’s guidance on Australia’s climate disclosure requirements confirms that mandatory climate-related disclosure under the Australian Sustainability Reporting Standards has applied to large entities since financial years beginning on or after 1 January 2025, with assurance requirements phasing up to full, reasonable assurance of all climate disclosures by 2030. An emissions system that can only just keep up with today’s Measurement Determination is not a safe bet against that trajectory.
The platform choice matters as much as the compliance approach. Gartner projects the low-code development market to reach $44.5 billion by 2026, growing at a 19% compound annual rate, precisely because organisations want the ability to adapt systems themselves as requirements shift, rather than waiting on a vendor’s release schedule every time a regulator updates a factor or a method.
The bottom line
Running GHG and energy calculations on the same platform as production allocation isn’t just a convenience. It’s the recommendation this paper sets out to make, and it holds up because the production allocation system already stores the validated, calculated inputs the regulations require, and it provides the transparent, auditable source of truth that both the business and the Regulator need.
Explore how EnergySys supports emissions and CCUS data management, or get matched with an EnergySys partner who specialises in your reporting framework.
