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3.25 In
the August 2012 guidance, departmental assessors were also advised to
consider how the ‘competitiveness’ of the proposal could be improved through
the removal of project costs from the application, with acceptance by the
applicant, as follows: Where
the figure is in this order, [Customer Service Managers] CSMs should critically
review the project budget to see if the applicant has included costs that
are not linked directly to generating carbon or energy emissions savings. The
applicant should be advised to remove these costs and submit a revised budget,
otherwise the application is unlikely to be competitive. It is important that
the assessment includes your analysis of the various components of the application
and the interactions the CSM has had with the applicant in these circumstances.
Following discussion, if the estimated per tonne calculation still
exceeds 80 and the applicant wishes to proceed, the CSM should give careful
consideration as to whether the application should be recommended for
support. The assessment will need to document the rationale behind the decision.
3.26 Further
guidance was issued to assessors in December 2012 noting that for
‘uncompetitive applications’ departmental assessors should:
remove
activities that do not directly contribute to energy and carbon savings
or do not represent value for money;
if still uncompetitive, look to see how far it is away from similar
projects approved; and
include
in the assessment that the company would be prepared to accept
a reduced grant amount.
3.27 Eligible
activities could be an essential component of the project, but separable
in circumstances where grant funds per tonne of carbon abated was considered,
by the department, to be uncompetitive. This approach was reflected
in guidance to assessors in March 2013, which noted: Applicants
can improve the competitiveness of their project by removing any eligible
activities that do not directly contribute to significant carbon savings. For
example site preparation activities which are for the dominant purpose of supporting
implementation of the emissions reduction measure can be eligible activities.
However, such activities do not directly contribute to carbon and energy
savings.
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3.28 Specifically,
if an application was considered to be ‘uncompetitive’, the program
management area of the department advised assessors to remove project
costs in the first instance
98
and to then consider reducing the amount of grant
funding sought.
99
Further guidance on reducing the grant amount was provided
to assessors in March 2013 and noted that the IA committees considered
that: the
core of any project should have significant carbon and energy savings, and if
the project overall is good value for money then a lower grant ratio is acceptable.
However, if the project appears to be primarily about productivity gains
and energy and carbon savings are only marginal, then a reduced grant ratio
to achieve a good Merit Criterion 1 score is not likely to be acceptable.
100
3.29 In
this respect, there were:
34 applications that were reframed to improve the competitiveness of
the project and were approved by the program delegate; and
22
applications that were reframed to improve the competitiveness of the
project, but were not approved by the program delegate.
3.30 Of
the 34 applications that were approved, there were at least four cases
in which integral components, such as pre‐project activities, were excluded
from the project and two cases in which the grant amount was reduced
to an acceptable amount. However, there were also applications for
98 For example, the assessment records in respect to one application stated as follows: ‘
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