National inventory by economic sector: data tables and methodology

About this inventory

The National Inventory by Economic Sector 2019 provides information on national emissions, disaggregated by the Australian and New Zealand Standard Industrial Classifications 2006 (ANZSIC; ABS cat. No. 1292.0).

The national emissions estimates are based on data published in the National Inventory Report 2019, submitted under the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol (KP). This framework classifies emissions according to Intergovernmental Panel on Climate Change (IPCC) process-based emission categories.

The National Inventory by Economic Sector 2019 are prepared consistently with how the Australian Government will acquit its emission reduction commitments under the Paris Agreement. From this issue, we apply the 100-year time horizon GWP values from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5) to estimate emissions. This is consistent with rules adopted under the UNFCCC Paris Agreement (Decision 18/CMA.1 Annex 2.D Paragraph 37).

The National Inventory by Economic Sector are part of Australia’s National Greenhouse Accounts. The accounts are comprised of the:

• Quarterly Update of Australia’s National Greenhouse Gas Inventory
• State and Territory Greenhouse Gas Inventories
• National Inventory by Economic Sector
• National Inventory Report prepared under the reporting provisions applicable to the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol (KP)

The emission estimates for these inventories are prepared in accordance with international guidelines and are subject to annual review by international experts. The methodologies for the estimation of emissions are in Australia’s National Inventory Report.

Applying economic classifications

The National Inventory by Economic Sector is prepared using standards and classifications maintained by the Australian Bureau of Statistics (ABS). This facilitates comparisons with other major sources of economic information in Australia.

Table 1: Mapping inventory economic sectors to ANZSIC

Inventory economic sector	ANZSIC
A Agriculture, Forestry and Fishing	A Agriculture, Forestry and Fishing
INV Agriculture, Forestry and Fishing - Changes in Inventories in Forest and Wood Product Stocks	Not applicable - further information below
B Mining	B Mining
C Manufacturing	C Manufacturing
D Electricity, Gas, Water and Waste Services	D Electricity, Gas, Water and Waste Services
E Construction	E Construction
F - H, J - S Commercial Services	F Wholesale Trade G Retail Trade H Accommodation and Food Services J Information Media and Telecommunication, K Financial and Insurance Services L Rental, Hiring and Real Estate Service M Professional, Scientific and Technical Services N Administrative and Support Services O Public Administration and Safety P Education and Training Q Health Care and Social Assistance R Arts and Recreation Services S Other Services
I Transport, Postal and Warehousing	I Transport, Postal and Warehousing
NA Residential	Not applicable - further information below

In accordance with the Standard Economic Sector Classifications of Australia 2008 (SESCA; ABS Cat. No. 1218.0), the residential sector is defined as being consistent with the concept of ‘Households’. Corporations, government units and non-profit institutions are further disaggregated by industry using ABS Input-Output Industry Groups, which concord with the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC; ABS Cat. No. 1292.0).

An emissions mapping methodology was developed in collaboration with the Department of the Treasury with technical advice from the Bureau of Infrastructure, Transport and Regional Economics and the Australian Bureau of Statistics.  Emissions are allocated wherever possible based on the primary activity of an emitting organisation. In most cases, an emissions activity under IPCC methods and classifications can be directly tied to an industry. For example, all agricultural emissions are allocated to the ‘Agriculture’ industry. Where this link is not apparent, for example for the use of transport fuels and refrigerants, an allocation is made to all industries and the residential sector using economic modelling.

There are a number of unique allocations of emissions from ‘Land Use, Land Use Change and Forestry’. While emissions from most land clearing activities will be allocated to the ‘Agriculture’ industry, those associated with settlements are allocated to the ‘Construction’ industry and those associated with flooded land are allocated to water supply organisations in the ‘Electricity, Gas, Water and Waste Services’ industry. Environmental plantings and wetland management emissions are allocated to park operations in the ‘Arts and Recreation Services’ industry. Temperate wildfire and hazard reduction burning emissions are allocated to emergency services organisations in the ‘Public Administration and Safety’ industry.

Changes in Inventories in ‘Forest and Wood Product Stocks’ are also separately identified for forestry-related emissions and sinks, where the change in that reporting year is not related to economic activity. Carbon stock changes in forestry operations and harvested wood products are allocated based on the nearest analogue under the Australian System of National Accounts (ABS Cat. No. 5216.0) for growing stock in plantations. This disaggregation from emissions directly related to economic activity in the year improves the utility of estimates in environmental-economic accounting. It also improves transparency for analysts seeking to separately identify the emission removals attributable to the forest estate that is or has been available to forestry activities.

International guidelines

The National Inventory by Economic Sector 2019 disaggregates national greenhouse gas emission estimates submitted to the UNFCCC in the National Inventory Report 2019 by the Australian and New Zealand Standard Industrial Classifications 2006 (ANZSIC; ABS cat. No. 1292.0).

The national emissions estimates have been prepared consistent with the Revision of the UNFCCC reporting guidelines on annual inventories for Parties included in Annex I to the Convention agreed by the Conference of Parties at its nineteenth session (decision 24/CP.19). This includes the Intergovernmental Panel on Climate Change (IPCC) 2006 Guidelines for National Greenhouse Gas Inventories (IPCC 2006).

The methodologies used to estimate national emissions have been improved over time. They will continue to be refined as new information emerges, and as international practice evolves. In that context, the national emission estimation methods were also informed by:

• 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (IPCC 2019)
• 2013 Supplement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories: Wetlands (IPCC 2013 Wetlands Supplement)

The aim is to ensure that the estimates of national emissions are accurate, transparent, complete, consistent through time and comparable with those produced in the inventories of other countries.

Categories in this inventory and the National Greenhouse Accounts are consistent with the UNFCCC and IPCC reporting guidelines.

Energy

The ‘Energy’ sector is made up of many different sources, including:

• ‘Stationary energy’ is mainly greenhouse gas emissions from the production of electricity and other direct combustion of fossil fuels in industries such as manufacturing and construction.
• ‘Transport’ comprises greenhouse gas emissions from air, road, rail and shipping transportation.
• ‘Fugitive emissions’ comprises the greenhouse gas emissions from the extraction and distribution of coal, oil and natural gas.

Agriculture

The ‘Agriculture’ sector comprises the emissions of methane and nitrous oxide only (that is, non-carbon dioxide gases) from livestock, crops, and agricultural and forest soils.

Industrial processes

The ‘Industrial processes and product use’ sector comprises the direct greenhouse gas emissions from:

• chemical and or physical transformation of materials
• consumption of synthetic greenhouse gases

Waste

The ‘Waste’ sector comprises the greenhouse gas emissions from:

• disposal of solid waste to land
• treatment of domestic and industrial wastewater
• incineration of municipal and clinical waste
• biological treatment of solid waste

Land use, land use change and forestry (LULUCF)

The LULUCF sector is made up of several sources, including:

• ‘Forest land’ includes all lands with a tree height of at least 2 metres and crown canopy cover of 20% or more and lands with systems with a woody biomass vegetation structure that currently fall below but which, in situ, could potentially reach the threshold values of the definition of forest land. Young natural stands and all plantations which have yet to reach a crown density of 20% or tree height of 2 metres are included under forest. So are areas normally forming part of the forest area which are temporarily unstocked as a result of either human intervention, such as harvesting, or natural causes, but which are expected to revert to forest. Forest land does not include woody horticulture which meets the forest threshold parameters; this land is classified as croplands. Australia has adopted a minimum forest area of 0.2 ha.
• ‘Cropland’ includes all land that is used for continuous cropping and those lands managed as crop-pasture (grassland) rotations. Non-CO2 emissions from ‘cropland remaining cropland’ are reported in the ‘Agriculture’ sector.
• The ‘grassland’ category represents a diverse range of climate, management and vegetation cover. The ‘grassland’ category also includes sub-forest forms of woody vegetation (shrubs).
• ‘Settlements’ include areas of residential and industrial infrastructure, including cities and towns, and transport networks. The area of the ‘settlements’ land use classification is based on information sourced from the ABARES catchments scale land use data. It includes additional land use classes such as manufacturing and industry, commercial services, transport and communications including airports etc. Land areas that meet the definition of forest land are reported under the ‘forest land’ category.
• ‘Wetlands’ include areas of perennial lakes, reservoirs, swamps and major water course areas derived from the Australian Hydrological Geospatial Fabric (AHGF) data published by the Australian Bureau of Meteorology. It also includes all existing wetlands as defined in the Directory of Important Wetlands in Australia (DIWA) dataset published by our department. Land areas that meet the definition of ‘forest land’, such as mangroves, are reported under the ‘forest land’ category.
• The ‘other land’ category includes bare soil, rock and other land areas that do not fall into any of the other five categories according to ABARES’ catchment scale land use map of Australia (version 5).

The allocation of forest conversion areas to ‘cropland’ or ‘grassland’ is designated by the relative frequency of the management practices within the particular ABS Statistical Local Areas and soil type in which it occurred.

Where there has been direct human-induced conversion from grass to forest, these lands are classified and reported as ‘land converted to forest’. This includes observed regrowth on previously cleared lands. The generation of woody vegetation on ‘grassland’ from natural seed sources is classified as ‘land converted to forest land’ or ‘grassland remaining grassland’, depending on whether the vegetation meets the criteria for ‘forest land’.

In cases where there is a temporary change in forest cover, due to a forest harvest or fire, the land remains in the ‘forest land’ category unless a subsequent land use change is identified.

The permanent conversion of ‘forest land’ to other land uses is distinguished from a temporary removal or loss of forest cover. Changes in forest cover due to natural events (e.g. fire, drought) or changes that occur within land tenures where it is expected that the land will revert to forest (e.g. harvested forest, national park) are monitored for a period of time, depending upon the type of forest land use. In the absence of land use change, areas without forest cover that have entered the monitoring system continue to be classified as ‘forest’ provided that the time since forest cover loss is shorter than the number of years within which tree establishment is expected. After that time period, lands that have lost forest cover due to direct human-induced actions, have undergone land use change, and failed to regenerate are classified as converted to the appropriate non-forest land use classification.

Gases reported in these estimates

This report covers sources of greenhouse gas emissions and removals by sinks resulting from human (anthropogenic) activities for the major greenhouse gases:

• carbon dioxide (CO₂)
• methane (CH₄)
• nitrous oxide (N₂O)
• perfluorocarbons (PFCs)
• hydrofluorocarbons (HFCs)
• sulphur hexafluoride (SF₆)

In accordance with IPCC guidelines, Australia’s emissions of the greenhouse gas nitrogen trifluoride (NF3) are considered negligible and are not estimated.

GWPs have been used for each of the major greenhouse gases to convert them to carbon dioxide equivalents (CO2-e). As greenhouse gases vary in their radiative activity and in their atmospheric residence time, converting emissions into CO2-e allows the integrated effect of emissions of the various gases to be compared.

From the National Inventory by Economic Sector 2019, estimates are developed applying the 100-year time horizon GWP values from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5) to estimate emissions. This is consistent with rules adopted under the UNFCCC Paris Agreement (Decision 18/CMA.1 Annex 2.D Paragraph 37).

Reporting on external territories

The geographical coverage of the National Inventory by Economic Sector also includes emissions from:

• Norfolk Island
• Christmas Island
• Cocos (Keeling) Islands
• Heard and McDonald Islands
• Australia’s Antarctic Program operations in the Antarctic

The following external territories are covered but are included in the respective state statistical territories by the Australian Bureau of Statistics:

• Coral Sea Islands (Queensland)
• Ashmore and Cartier Islands (Northern Territory)

Uncertainty analysis

Uncertainty is inherent within any kind of estimation. Uncertainty assessments at a sectoral level are reported in the National Inventory Report. Overall, at the national inventory level including LULUCF, the uncertainty of the emissions estimates level has been assessed at 4.2%. While no quantitative estimates have been produced, our department assesses that the uncertainties for emission estimates for these inventories, particularly the smaller states and territories, will be somewhat higher than for the national inventory.

Recalculations since last report

Recalculations in the 2019 report have occurred mainly as a result of a change to global warming potentials.

As outlined above, starting from this issue, estimates are developed applying the 100-year time horizon GWP values from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5) to estimate emissions. This is consistent with rules adopted under the UNFCCC Paris Agreement (Decision 18/CMA.1 Annex 2.D Paragraph 37).

Before this report, the GWPs used were the 100-year time-horizon GWPs contained in the 2007 IPCC Fourth Assessment Report of Climate Science (AR4), in accordance with previous UNFCCC decisions. Recalculations have been performed to the whole time-series of emissions estimates from 1990 to 2019 to adhere to the UNFCCC requirement of time-series consistency.

Other sources of recalculations relate to method improvements applied to the National Inventory Report 2019, on which the National Inventory by Economic Sector is based. See Chapter 10 of Volume 2 of the National Inventory Report 2019 (April 2021) for further information on method development.

The impact of the recalculations on emission levels for economic sectors was an increase in the estimate of total emissions for the year 2018 of 1.0 Mt CO2-e or 0.2%. An increase in ‘Agriculture, Forestry and Fishing’, attributed to updates to soil carbon management, was offset by a decrease in ‘Commercial Services and Construction’. These had a recalculation of 5.1 Mt CO2-e, or 20.9%, reflecting the change from AR4 to AR5.

Table 2: Estimated recalculations for this submission (compared with last year’s issue), 2018

Changes in inventories in forest and wood product stocks were first disaggregated from the Agriculture, Forestry and Fishing and Manufacturing industries in the 2018 NIBES.
Sector	2019 NIBES	2018 NIBES	Recalculation	% Recalculation
	Mt CO2-e
Total of all economic sectors	538.4	537.4	1.0	0.2%
Agriculture, Forestry and Fishing	113.9	106.2	7.7	6.7%
Agriculture, Forestry and Fishing - Changes in Inventories in Forest and Wood Product Stocks (a)	-42.8	-44.7	1.9	-4.4%
Mining	94.6	94.9	-0.3	-0.3%
Manufacturing	59.2	59.4	-0.2	-0.4%
Electricity, Gas, Water and Waste Services	190.5	189.8	0.7	0.4%
Commercial Services and Construction	24.4	29.5	-5.1	-20.9%
Transport, Postal and Warehousing	32.7	32.7	0.0	-0.1%
Residential	66.0	69.6	-3.7	-5.6%

Related publications and resources

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What the rest of the world is doing

Other developed countries are also required to produce annual greenhouse gas inventories.

Read about the reporting requirements and access international reports on the UNFCCC website

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