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Simplified outline of the Australian Clean Energy Act 2011
Friday, 06 January 2012 14:12
 
 

Australia Cap-and-Trade Legislation
 
 

Australia cap and trade legislation consists in the first place of Clean Energy Act 2011 (besides many implementing acts).
 
 

The Objects of Clean Energy Act 2011
 
 

The objects of Clean Energy Act 2011 are as follows:

(a) to give effect to Australia’s obligations under:
(i) the Climate Change Convention; and
(ii) the Kyoto Protocol;

(b) to support the development of an effective global response to climate change, consistent with Australia’s national interest in ensuring that average global temperatures increase by not more than 2 degrees Celsius above pre-industrial levels;
 
 
(c) to:
(i) take action directed towards meeting Australia’s long-term target of reducing Australia’s net greenhouse gas emissions to 80% below 2000 levels by 2050; and
(ii) take that action in a flexible and cost-effective way;

(d) to put a price on greenhouse gas emissions in a way that:
(i) encourages investment in clean energy; and
(ii) supports jobs and competitiveness in the economy; and
(iii) supports Australia’s economic growth while reducing pollution.
 
 


The Main Fundamentals of the Program
 
 

Considering simplified outline of the Clean Energy Act 2011, it sets up a mechanism to deal with climate change by encouraging the use of clean energy. The main fundamentals supporting the approach taken in the said instrument are:

• The mechanism begins on 1 July 2012, and operates on a financial year basis.

• The mechanism is administered by the Clean Energy Regulator.

• If a person is responsible for covered emissions of greenhouse gas from the operation of a facility, the facility’s annual emissions are above a threshold, and the person does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the gas, the person is liable to pay unit shortfall charge.

• If a natural gas supplier supplies natural gas, and does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the potential greenhouse gas emissions embodied in the natural gas, the supplier is liable to pay unit shortfall charge.

• If a person opts in to the mechanism, the person acquires, manufactures or imports taxable fuel in specified circumstances, and does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the potential greenhouse gas emissions embodied in the fuel, the person is liable to pay unit shortfall charge.
 
 

Fixed and Flexible Charge Years
 
 

• The financial years beginning on 1 July 2012, 1 July 2013 and 1 July 2014 are fixed charge years.

• Later financial years are flexible charge years. • In a fixed charge year, carbon units will be issued for a fixed charge (the detailed levels of the flexible charge in each year of this phase see here).

• In a flexible charge year, carbon units will be issued under this Act as the result of an auction.

• However, in the flexible charge years beginning on 1 July 2015, 1 July 2016 and 1 July 2017, some carbon units may be issued for a fixed charge (to act as a cap).
 
 

Free Carbon Units
 
 

• Free carbon units will be issued under the Jobs and Competitiveness Program (which deals with emissions-intensive trade-exposed activities).

• Free carbon units will be issued to coal-fired electricity generators.
 
 

Carbon Pollution Cap
 
 

A carbon pollution cap limits the sum of:
 

(a) the total number of auctioned carbon units; and
 

(b) the total number of free carbon units issued in accordance with the Jobs and Competitiveness Program; and
 

(c) the total number of free carbon units issued to coal-fired electricity generators.
 
 

Units Transferability
 
 

If a carbon unit was not issued for a fixed charge, the unit is transferable.
 
 
 
Australian Climate Policies U-Turn in November 2013
 

In November 2013 the Australian Government has introduced a package of bills into Parliament to repeal the carbon tax. 

 

In the meantime, compliance requirements for liable entities remain the same until the legislation changes. Liable entities must surrender enough eligible emissions units to match the emissions number they reported to the Clean Energy Regulator by 3 February 2014 or they will incur a unit shortfall charge.


 

 

 

 

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Last Updated on Thursday, 14 November 2013 20:08
 

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