Emissions valuation

To support Victorian Government decision makers to consider the greenhouse gas (GHG) emissions impacts of policies and projects, the Victorian Government has published the Victorian Emissions Value series.

The Victorian Emissions Value series is intended for use in government decision-making processes including in economic evaluation for business cases, regulatory impact statements and legislative impact assessments.

Emissions valuation is the practice of applying a dollar value to GHG emissions for decision-making purposes only - for instance, when comparing two business case options.

Emissions valuation has become a common practice in decision-making processes in jurisdictions across Australia to better incorporate climate action into investment decisions.

An emissions value is a tool to support good decision making; it is not a financial charge that must be paid by one party to another based on their emissions.

Emissions valuation ensures the impacts of emissions are visible, comparable and factored into decisions - helping investments and policies consider lower emissions outcomes.

Guidance

To assist Victorian Government decision makers to apply the Victorian Emissions Value series, guidance materials have been developed.

The Victorian Government Emissions – Measurement guidelines provide step-by-step instructions for estimating the GHG emissions anticipated to be produced by a policy, project or proposal.

The Victorian Government Emissions – Valuation application guidelines provide step-by-step instructions for applying an emissions value to the emissions estimates for the policy, project or proposal.

These documents complement the information produced by the Department of Treasury and Finance (DTF) to support Victorian Government budget bid authors to apply the Victorian Emissions Values.

This includes resources to help the Victorian Government meet the new mandatory requirement for application of emissions values in financial analysis of asset infrastructure bids over $100 m.

Uses of emissions valuation

The Victorian emissions values are aligned with Victoria's emissions reduction targets, legislated in the Climate Action Act 2017.

For all Victorian Government projects that do not meet the $100m infrastructure threshold, emissions valuation can be voluntarily applied to its economic evaluation. This is strongly encouraged for any business cases that are emissions relevant.

The documents may also be applicable to decision-making outside of the Victorian Government, and have been made public so that Victorian organisations, businesses and community groups can factor GHG emissions into their decision-making.

How the Victorian Emissions Values were determined

The Victorian Emissions Values are based on the modelled lowest cost ‘decarbonisation solutions’ to meet Victoria’s GHG emissions targets through a marginal abatement cost, target-consistent approach. These terms are explained below.

Decarbonisation solutions are methods to reduce emissions, such as the transition to renewable energy generation and storage, uptake of zero emissions vehicles and active transport and methane inhibiting technologies in agriculture.

The marginal abatement cost is a commonly used policy tool for climate action in many jurisdictions in Australia and globally. It presents the costs or savings expected from different decarbonisation solutions and the potential volume of emissions that could be reduced if implemented.

A target-consistent approach refers to an approach that is aligned with a jurisdiction’s emissions reduction targets – in this case, Victoria’s legislated emissions reduction targets in the Climate Action Act 2017.

The Victorian Emissions Value series will be reviewed every 3 years to ensure it reflects up-to-date emissions data and emissions reduction targets.

Contact

For any queries, please contact climate.change@deeca.vic.gov.au.