Hired Equipment and NGER Compliance: Who Owns the...

A 40-tonne excavator arrives on a Brisbane road-widening site on a Monday. It burns roughly 30 litres of diesel per hour under load. By Friday it has consumed 900 litres. That is about 2.43 tonnes of CO2-e in Scope 1 emissions from a single machine over five days.

Now the question that stalls half the NGER submissions we have seen in construction: whose Scope 1 is it? The head contractor's, or Coates Hire's?

The wrong answer creates two problems. Double-counting, if both parties book it. Or a gap, if neither party does. Under NGER the Clean Energy Regulator does not care about your contract wording. It cares about who had operational control at the point of combustion. That is a specific legal test, and hired equipment is where it gets tested hardest.

The wet hire vs dry hire distinction under NGER

Wet hire means the hire company supplies the equipment, the operator, and usually the fuel. You get an invoice with an hourly or daily rate and a fuel component bundled in. The operator is the hire company's employee.

Dry hire means the equipment turns up on a float and that is it. Your site team operates it. Your fuel account fills it. Your maintenance policy governs it.

The NGER (Measurement) Determination 2008 does not use the terms "wet hire" or "dry hire" anywhere. What it does is define a facility, define operational control of that facility, and require the entity with operational control to report the Scope 1 emissions from fuel combusted at that facility. Section 9 of the NGER Act sets the test: an entity has operational control of a facility if it has the authority to introduce and implement operating, health and safety, and environmental policies for the facility.

For a construction site, the head contractor almost always holds that authority. They run the site induction. They approve the SWMS. They call the EPA if there is a spill. That means the fuel burned on that site by mobile plant is generally the head contractor's Scope 1, whether the plant is owned or hired.

That is the starting point. Then wet hire complicates it.

Operational control test vs financial control test

NGER defaults to the operational control test. The financial control test exists as an alternative available under specific consolidation elections, but the vast majority of Australian corporate groups reporting under NGER use operational control. If you are reading this and you do not know which test your corporate group uses, ring your compliance lead before you finalise anything. AASB S2 disclosures use the same organisational boundary framing under paragraphs B26-B30 of the standard, so this decision carries downstream into your mandatory climate reporting too.

Operational control is not the same as legal ownership. Coates Hire owns the excavator. But if that excavator is sitting on your site, being directed by your project engineer, refuelling from your bulk diesel bowser, the emissions belong to whoever controls the site facility. And that is almost always the head contractor.

Where wet hire specifically diverges is when the hire company retains meaningful control over the operation of the equipment. A specialised drilling contractor turning up with their own crew, their own methodology, their own safety officer directing the drill program. That is a different situation. In practice the head contractor still owns site-level operational control, but the drilling sub is running its own mini-facility inside it. The NGER guidance material is honest that these boundary calls require judgement.

Who reports the emissions from a wet hire excavator

Take a typical mid-tier road project. The head contractor hires an excavator with operator from Kennards Hire for six weeks. The invoice line items are: hourly rate, fuel surcharge, transport in, transport out.

The fuel surcharge is the operational data. It is a dollar figure, not a litre figure. Kennards knows exactly how much diesel the machine burned because they refuelled it, but that data does not always appear on the invoice. It gets converted into a surcharge based on hire duration and current diesel price.

Under NGER, the head contractor with operational control of the site is on the hook to report the Scope 1 emissions from that fuel. So they need to convert the fuel surcharge back into litres. That means asking Kennards for the underlying litreage.

Most hire companies will provide this on request. It is one of the top three data requests our engineering team designed the hired equipment ingestion flow around (the other two being subcontractor fuel dockets and bulk diesel bowser records). If the hire company refuses or cannot provide it, you fall back to an estimation approach.

The estimation path uses manufacturer fuel consumption rates multiplied by engine hours. A Cat 320 excavator burns 18-24 litres per hour under load, closer to 8 litres per hour on idle. Applied across hire duration with an assumed utilisation factor, this gives a defensible litre estimate. Under the NGER Determination this is a Method 1 application (national default factors applied to an estimated activity quantity), and it needs documentation of the utilisation assumption to survive Clean Energy Regulator review.

The subcontractor emissions request workflow covers the letter-and-follow-up cadence for hire company data. The template is similar to the one used for tier-1 subcontractors, adjusted for the fact that hire companies deal with these requests more often and usually have a designated point of contact.

Who reports the emissions from a dry hire generator

Dry hire is cleaner. A 500 kVA diesel generator arrives on a float from Onsite Rental Group. Your site electrician commissions it. Your fuel supplier (Ampol, BP, whoever holds the site's bulk fuel contract) refuels it. Your operator runs it.

The fuel dockets are yours. The emissions are yours. This is textbook Scope 1 under NGER for the head contractor. No boundary argument.

The complication with dry hire is not attribution. It is data quality. A generator running 24 hours a day for eight weeks on a remote infrastructure job might get refuelled 40 times. Each refuel is a separate docket. Some are handwritten on paper the operator drops into the site office. Some are electronic from the tanker delivery. Some go missing.

This is where the per-supplier extraction template approach earns its keep. The AI document engine reads Ampol delivery dockets, Puma Energy tickets, and the handwritten docket the sub-contractor's driver scribbled at 6am. All into the same emission ledger with source-document traceability back to the original file. That is the audit trail requirement under Section 22XA of the NGER Act.

JV consolidation implications for hired equipment

Joint ventures make this worse. If your project is a 50/50 JV between two head contractors, the hired equipment fuel might get reported by the JV entity (if it has operational control of the site facility), or split between the two parents under equity share, or attributed to one parent under operational control depending on the JV agreement.

The JV emissions reporting guide covers the three consolidation methods (operational, financial, equity share). The critical thing for hired equipment is that whichever method the JV uses at parent level must be applied consistently to hired equipment emissions. You cannot report the excavator fuel under operational control and the generator fuel under equity share within the same JV project.

Carbonly's JV consolidation module supports all three methods and enforces the chosen method across all emission records within a JV project. It is one of the modules built specifically because Australian infrastructure runs on JVs and no international carbon platform handles the consolidation properly. The Melbourne Airport rail links, the Snowy 2.0 tunnels, the Western Sydney Airport packages, all JVs, all running hired plant, all needing consistent attribution.

How the platform handles per-equipment tracking

The hardest bit of hired equipment tracking is not the attribution rule. It is capturing per-equipment operational data from paperwork that was designed for invoicing, not emissions.

The AI document engine handles two source types for hired equipment:

Fuel dockets from the site fuel bowser or tanker delivery. The engine reads litres, date, delivery location, and equipment ID if the docket includes it. This is direct Scope 1 activity data.

Hire company invoices with fuel surcharges. The engine reads the surcharge dollar figure, then applies a spend-to-activity conversion using current diesel prices. This is the platform's spend_to_activity calculation type. It is a fallback, not a first-choice method, and we flag it in the audit trail as spend-derived so an assurance auditor can see immediately which records are direct-measured and which are estimated.

The most useful feature for hired equipment tracking is what our engineers built as the delta_from_previous calculation. When a piece of hired plant has an odometer or engine-hour meter, the AI captures start and end readings from hire-in and hire-out reports. The activity quantity is the difference. Combined with a manufacturer fuel consumption rate stored against the equipment in the material library, this produces a defensible litre estimate without needing the hire company to supply operational data.

The evaluator supports four fallback strategies (skip, use-last-good, use-mean, explicit-null) and validation rules (range checks, must-be-monotone for meter readings, max-delta-per-period). The must-be-monotone rule catches operator data entry errors: if the closing hour meter is lower than the opening reading, the record is flagged for review rather than silently miscalculated. These are the guardrails we built because the ANAO audit data (see below) shows how badly these calculations go wrong at scale.

The AI configuration is a five-step Sheet wizard at /settings/ai-configuration. You define what to extract, what calculation type applies, what to do when data is missing. The evaluator is deterministic. No AI in the calculation path, only in the extraction path. This matters for assurance because an auditor needs to see the same input produce the same output every time, and any AI in the calculation chain would fail that test.

Hired equipment supplier examples

The four dominant national hire companies operating across Australian construction and infrastructure are:

Coates Hire (owned by Seven Group Holdings) is the largest, at roughly 40% market share of general equipment hire in Australia. Wet and dry hire, national depot network, telematics data available on request for larger accounts.

Kennards Hire is second largest, family-owned, strong on smaller construction packages. Digital account portal with hire history and invoicing. Fuel surcharge itemised on invoices.

Onsite Rentals, formerly Onsite Rental Group, is now under Seven Group after the 2022 acquisition. Heavy plant focus, temporary power (generators, transformers), lighting towers. Runs a distinct wet-hire operator pool from Coates.

Cat Rental Store (through the Caterpillar dealer network of WesTrac, Cavpower, Hastings Deering by region) is the specialist for large earthmoving. Wet hire with operator, telematics-heavy fleet, most likely to be able to supply per-machine fuel and engine-hour data via VisionLink.

None of these hire companies provide NGER-ready emissions data as a default line item on invoices. Coates and Cat Rental Store can provide it on request for larger contracts. Kennards can supply engine hours via their portal but not fuel directly. Onsite Rentals varies by depot.

Scope 3 Category 8 vs Scope 1 direct

Here is where a lot of head contractors trip themselves up. They see hired equipment, and they reflexively think "we do not own it, so it must be Scope 3 upstream leased assets under Category 8 of the GHG Protocol Corporate Value Chain Standard."

That is wrong for NGER. NGER attribution follows operational control of the facility where the fuel is combusted, not legal ownership of the asset that combusts it. If the excavator is burning fuel under your operational control of your site, the emissions are Scope 1. Full stop.

Category 8 upstream leased assets applies where the reporting entity is the lessee, does not have operational control, and the leased asset's emissions are not already captured in Scope 1 or 2. In practice that means Category 8 is rarely material for construction head contractors under NGER, because operational control almost always brings hired equipment fuel into Scope 1.

Where Category 8 does apply cleanly: hired office space where the landlord retains operational control of the building (electricity is landlord's Scope 2, becomes tenant's Scope 3 Category 8), or specialised sub-contracted operations where the sub retains operational control of its own micro-facility inside your site.

The corollary matters for hire companies. Coates Hire's owned equipment fleet, when hired out under wet hire arrangements where they retain operational control, is Coates' Scope 1. When hired out dry to a head contractor who takes operational control, the same equipment becomes Coates' Scope 3 Category 13 (downstream leased assets). Same physical asset, different scope classification depending on the arrangement. This is why hire companies rarely want to publish per-machine emissions. The attribution rules make their own reporting complicated.

What the ANAO data suggests about hired equipment errors

The Australian National Audit Office's performance audit of NGER data quality found 72% of the 545 NGER reports examined contained errors, with 17% of reports containing errors classified as significant. The audit did not break out errors by source category, but the pattern reported by CER assessors is consistent: mobile plant fuel and hired equipment are two of the largest single sources of double-counting and gaps in construction sector submissions.

The two dominant failure modes we designed our validation rules against:

Double-counting from wet hire. The head contractor books the fuel surcharge as Scope 1. The hire company also books the fuel as Scope 1 because the operator refuelled from their bowser. The same litreage appears in both submissions. Under threshold-linked schemes this can push either entity above a reporting threshold that they should not have breached.

Gaps from dry hire. The head contractor assumes the hire company reports the equipment fuel (because Coates owns it). The hire company assumes the head contractor reports it (because Coates does not have operational control). Both submit without it. The site's diesel account tells a different story to any auditor who checks.

Neither failure mode is a spreadsheet formula error. Both are attribution errors that follow from misunderstanding NGER's operational control test. And both survive spreadsheet-based reporting because there is no cross-check against source documents.

Carbonly's approach: every emission record is tagged with a hire arrangement type (wet hire, dry hire, owned, subcontractor-supplied) and every source document links back to its origin. Anomaly detection scans for duplicated fuel litreage across records with different source documents but overlapping equipment IDs or overlapping site-and-date combinations. This does not catch everything, but it catches the pattern that the ANAO audit flagged as most common.

What we have not solved

Two things are worth being honest about. Wet-hire operational control judgements at the boundary (a specialised piling contractor with their own site set-up inside a head contractor's site) still require human judgement. The platform can enforce whichever answer you give it, but it cannot decide for you which entity has operational control of that micro-facility.

And for older equipment without telematics or reliable engine-hour meters, the manufacturer fuel consumption rate is the best you can do. On a 30-year-old grader with a broken hour meter, the estimate might be 20% off in either direction. The audit trail documents the assumption, but the emission number is inherently imprecise.

FAQ

Q: If I hire an excavator wet and the hire company supplies fuel, do I still report the emissions?

Usually yes. If you have operational control of the site facility where the excavator is working, the fuel combustion emissions are your Scope 1 under NGER regardless of who bought the fuel. The exception is where the hire company retains operational control of a micro-facility (specialised sub-contracted operations with their own site set-up and safety authority), which is rare on general construction hire.

Q: How do I get fuel data from Coates Hire or Kennards Hire?

Ask. Both have processes to supply engine hours and fuel data on request for accounts above a size threshold. Coates typically provides it through account managers. Kennards has a self-service portal for engine hours; fuel usually requires an email request. Cat Rental Store can pull machine-level telematics data via VisionLink for wet-hire jobs.

Q: What if the hire company will not provide any operational data?

Fall back to manufacturer fuel consumption rates multiplied by hire duration and a documented utilisation assumption. Under NGER this is a Method 1 estimation using national default emission factors applied to an estimated activity quantity. Document the assumption. The Clean Energy Regulator accepts this approach if the methodology is transparent.

Q: Does the same treatment apply for AASB S2 mandatory climate disclosure?

Broadly yes. AASB S2 uses the same organisational boundary framing as NGER (operational control or equity share, elected at the group level and applied consistently). Hired equipment fuel that is Scope 1 under NGER is Scope 1 under AASB S2. The AR6 GWP requirement for AASB S2 versus AR5 for NGER creates a minor factor difference for CH4 and N2O components, but for diesel-dominated hired equipment emissions this is a rounding issue not a categorisation issue.

Q: Does Carbonly integrate with hire company systems?

Not through direct API integration with individual hire company platforms. Those integrations do not exist at industry level. What is built: the AI document engine extracts data from hire company invoices, fuel dockets, and engine-hour reports in eight file formats (PDF, Excel, CSV, Word, PowerPoint, RTF, images, scanned documents). Add a project inbox address, forward invoices from the hire company, and the extraction runs automatically.

Getting started

Two practical steps if hired equipment is a material chunk of your Scope 1 and you are heading toward NGER or AASB S2 disclosure.

Audit your last quarter of hire company invoices. Are the fuel components documented as litres, dollars, or missing entirely? That tells you whether you need direct measurement, spend-to-activity conversion, or estimation via engine hours.

Then decide the operational control boundary explicitly. Write it down. Site-by-site if you run mixed portfolios. This is the document your auditor will ask for first when they get to hired equipment.

Carbonly runs on per-project pricing from $100/month per project. There is no seat licence and no consumption pricing surprise at end of month. Talk to us at hello@carbonly.ai or see the construction platform overview for the full module list.

Hired Equipment and NGER Compliance: Who Owns the Emissions From a Wet Hire Excavator?