Net Traveller: Carbon Pricing Legislation for Comment

The Australian Government has released a "Clean Energy Legislative Package" for comment. This is intended to implement the "Clean Energy Future" carbon pricing policy, previously announced. Comments on the proposed legislation can be made until 22 August 2011.

Two overview documents are provided:

Clean Energy Legislative Package - Summary of legislation (PDF 181 KB)
Securing a clean energy future: Making it law (PDF 413 KB)

Provided are drafts of thirteen bills:

One omission from the list of draft legislation is the household assistance to be provided.

Here is an extract of Clean Energy Legislative Package - Summary of legislation:

2. Clean Energy Bill 2011: Carbon Pricing Mechanism

Establishes a carbon price which is expected to apply to around 500 of the nation’s biggest polluters with:

rules for who is covered and what sources of carbon pollution are included;
liable entities’ obligation to surrender emissions units corresponding to their carbon pollution;
caps on the amount of carbon pollution from 1 July 2015;
carbon units issued as personal property;
allocation of carbon units, including by auction and the issue of free units;
mechanisms to contain costs, including the fixed charge period and price floors and ceilings;
links to the Carbon Farming Initiative (CFI), by making carbon credits eligible for surrender;
linking to other credible emissions trading schemes;
assistance for emissions-intensive trade-exposed activities and coal-fired electricity generators; and
monitoring, enforcement, appeal and review provisions.

3. Clean Energy Regulator Bill 2011: Establishes Regulator

Sets up the Clean Energy Regulator as a statutory authority that will administer the mechanism and enforce the law.

The responsibilities of the Regulator include:

providing education on the mechanism and how it works;
assessing emissions data to determine each entity’s liability;
operating the Registry;
monitoring, facilitating and enforcing compliance with the mechanism;
allocating units including freely allocated units, fixed price units and auctioned units;
administering the National Greenhouse and Energy Reporting System (NGERS), the Renewable Energy Target and the CFI;
accrediting auditors for the CFI and NGERS; and
working with other national law enforcement and regulatory bodies, including ASIC, the ACCC, AUSTRAC, the Federal Police and the Director of Public Prosecutions.

4. Climate Change Authority Bill 2011: Establishes Independent Review Body

Sets up the Climate Change Authority, which will be an independent body that provides the Government expert advice on key aspects of the mechanism and the Government’s climate change mitigation initiatives.

Establishes the Land Sector Carbon and Biodiversity Advisory Board.

5. Clean Energy (Consequential Amendments) Bill 2011: Links mechanism, regulator and other functions

Makes consequential amendments to ensure :

NGERS supports the mechanism;
the Australian National Registry of Emissions Units covers the mechanism and the CFI;
the Regulator covers the mechanism, CFI, the Renewable Energy Target and NGERS;
public accountability and financial management rules for the Regulator and Authority;
that emissions units and their trading are covered by laws on financial services and regulated by ASIC;
that activities related to emissions trading are covered by laws on money laundering and fraud;
synthetic greenhouse gases are subject to an effective carbon price through existing synthetic greenhouse gas regulation of those substances;
a refundable tax offset is provided for eligible conservation tillage equipment; and
the taxation treatment of emissions units for the purposes of GST and income tax is clear.

6. Clean Energy (Unit Shortfall Charge—General) Bill 2011: Procedural Bills

7. Clean Energy (Unit Issue Charge—General) Bill 2011

8. Clean Energy (Charges—Excise) Bill 2011

9. Clean Energy (International Unit Surrender Charge) Bill 2011.

10. Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011

11. Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011

The elements of the mechanism which oblige a person to pay money are implemented through separate bills that comply with the requirements of section 55 of the Constitution.

12. Excise Tariff Legislation Amendment (Clean Energy) Bill 2011: Fuel Tax Arrangements

13. Customs Tariff Amendment (Clean Energy) Bill 2011

Impose an effective carbon price on aviation and non-transport gaseous fuels through excise and customs tariffs.

14. Fuel Tax Legislation Amendment (Clean Energy) Bill 2011

Reduce the business fuel tax credit entitlement of non-exempted industries for their use of liquid and gaseous transport fuels, in order to provide an effective carbon price on business through the fuel tax system.

15. Clean Energy Amendment (Household Assistance) Bill 2011: Household Assistance

Implements the household assistance measures announced by the Government on 10 July 2011. This bill will amend relevant legislation to increase pensions and allowances, income support allowances and family payments and provide income tax cuts for lower and middle income households. There is no exposure draft of this bill.

16. Clean Energy Finance Corporation (CEFC): Clean Energy Institutions

17. Australian Renewable Energy Agency

Legislation to establish these agencies will be introduced in 2012 following the consideration of advice from the Chair of the CEFC as to governance and investment mandate of the CEFC.

18. Steel Transformation Plan: Steel Assistance

Legislation to establish the Government’s Steel Transformation Plan will be introduced at the same time as the Clean Energy Legislation Package.

19. Other funding measures: Programs

Other funding measures, including the Clean Technology Programs, coal sector assistance, household and community sector energy efficiency programs and land sector programs, will be implemented through the budget process.

20. Implementing Regulations: Legislative instruments

Subordinate rules for the implementation of the plan and decision making by the Regulator. These include :

Pollution caps
Jobs and Competitiveness Program details
Application requirements for generator assistance
Procedural details
Auction rules

Here is the text of "Securing a clean energy future: Making it law":

On 10 July 2011, the Australian Government announced the details of a carbon pricing mechanism to reduce our carbon pollution and move Australia to a clean energy future.

The mechanism will be made law by the Clean Energy Legislative Package (the Package). The Government released drafts of the key bills in the Package on Thursday 28 July 2011.

The Government will receive submissions and meet key stakeholders and legal experts about the Package.

The carbon pricing mechanism is one part of the Government’s overall Clean Energy Plan. Other key aspects include support for renewables, support for energy efficiency and support for our land sector.

The Clean Energy Legislative Package

The Package:

implements the carbon pricing mechanism, as outlined in Securing a clean energy future: The Australian Government’s climate change plan, for Australia to reduce carbon pollution and move to a clean energy future;
sets out how the carbon price will be run, and what businesses will have to do;
links the carbon price to the Carbon Farming Initiative and to credible schemes overseas;
provides for assistance to emissions intensive and trade exposed industries through the Jobs and Competitiveness Program and to electricity generators to ensure energy security;
excludes agriculture from the mechanism;
sets up a Clean Energy Regulator to run the mechanism;
sets up an independent Climate Change Authority to advise on key aspects of the carbon price mechanism and the Government’s climate change mitigation initiatives;
applies an effective carbon price to transport fuels (except for fuel used by households and in light commercial vehicles) through excise and customs tariffs;
provides a refundable tax offset for conservation tillage equipment; and
gives assistance to Australian households that need it most, including pensioners and low and middle income earners.

The bill incorporating these household assistance measures will be part of the package of clean energy bills that will be introduced into Parliament later this year.

More information about the Package and related climate change initiatives is in the attached tables.

The development of the Package

The Package will set out in law the way that Australia will introduce a carbon price to reduce Australia’s carbon pollution and move to a clean energy future.

It takes into account a wide range of public discussion, debate and consultation over the past decade on how Australia should tackle the challenge of reducing carbon pollution.

The Government will introduce the Package into the Parliament, which must pass both Houses for it to become law. Before introducing the Package, the Government is seeking comments from stakeholders and other interested parties on the drafting of the Bills.

Links to other climate change initiatives

The carbon pricing mechanism will be linked through the legislation to the Government’s Carbon Farming Initiative.

The Carbon Farming Initiative will cut carbon pollution in the agricultural sector through reducing or avoiding emissions or by removing carbon from the atmosphere and storing it in soil or trees. For example, carbon can be stored by growing a forest or reducing tillage on a farm in a way that increases soil carbon and emissions can be avoided through capture and destruction of methane emissions from landfill or livestock manure.Bills to set up the Carbon Farming Initiative and the Australian National Registry of Emissions Units were introduced into Parliament in March 2011, and are expected to be passed in 2011.

Public engagement on the Package

The Government published drafts of key bills in the Package on Thursday, 28 July 2011, along with commentaries to explain them. These bills implement the detailed policy announced on 10 July 2011.

Submissions on the Package can be sent to the Department of Climate Change and Energy Efficiency until 5pm on Monday, 22 August 2011. Before then, the Department will meet with stakeholders and legal experts to discuss the draft bills.

The Government will consider the views it receives on the drafting of the bills before they are introduced into the Parliament.

The Parliamentary Process

The Government intends to introduce the Package in the Spring 2011 sittings of the Parliament. It will then work to have the Parliament pass the Package by the end of 2011.

The Government announced that the carbon price mechanism will start on 1 July 2012. By working to have the Package passed before the end of 2011, the Government wants to ensure that arrangements required for the carbon price are in place before 1 July 2012, and to ensure that liable businesses have as much time as possible to prepare for carbon pricing.

What happens after the Package is passed?

Once the Package is passed, the Government will prioritise the setting up of the Clean Energy Regulator so that it can ensure the smooth implementation of the mechanism.

The Government will also complete the regulations that are needed to ensure that the mechanism can start on 1 July 2012.

Regulations and legislative instruments

Some practical aspects of the carbon pricing mechanism will be implemented through legislative instruments, including regulations.

Regulations are made by the Governor-General on the recommendation of the Government, and provide flexibility in applying laws to businesses and individuals. Regulations can be necessary to give effect to a law or allow for future changes in circumstances to be taken into account, without the need to go back to Parliament and amend the law every time a change needs to be made.

The Parliament has the power to disallow regulations after they are made. This way, regulations remain subject to Parliamentary scrutiny over time.

The Package includes different regulation-making powers:

regulations about the Jobs and Competitiveness Program and the Energy Security Fund: the detailed design of the Program and the Fund require engagement with affected industries and, later, expert advice from the Climate Change Authority.
regulations setting pollution caps, price ceilings and floors: before the commencement of the flexible price period, regulations will need to be made to set pollution caps, price ceilings and price floors, taking account of circumstances at the time these decisions are made.
regulations that clarify issues covered by the law: while the law may apply generally, it may also allow the Government to specifically define concepts or identify situations covered to make it more certain. This means the law can factor in economic changes and changes to business activity over time.
regulations spelling out what the Regulator may take into account when making routine decisions: the Government may want to ensure that regulatory bodies consider specific issues when making routine decisions. The relevance of particular things may change over time.
regulations dealing with administrative issues: these typically cover things like the way in which a Regulator may undertake its work, the information a person has to give the Regulator and the way in which they do so. These things will change over time with changes to administrative and business practices and technology.

Roadmap for making the carbon price mechanism law

	Note: this timeline is based on a 1 July 2012 start for the carbon pricing mechanism
10 July 2011	Securing a clean energy future: The Australian Government’s climate change plan
28 July – 22 August 2011	Public submissions invited on the Clean Energy Legislation Package and discussions with key stakeholders and legal experts
August – September 2011	The Government considers stakeholder views and decides the final form of the Clean Energy Legislation Package
September – November 2011	Clean Energy Legislation Package is considered by the Parliament and the Government works to have it passed. Drafts of key regulations will be available at that time.
Before 1 July 2012	The Government prepares, seeks views on and finalises regulations to be made under the Clean Energy Legislation Package which are needed for it to start on 1 July 2012 The Government puts the draft regulations before the Federal Executive Council for consideration by the Governor-General The Government sets up the Clean Energy Regulator and the Land Sector Carbon and Biodiversity Board The Clean Energy Regulator and the Land Sector Carbon and Biodiversity Board start work before the start of the carbon pricing mechanism
1 July 2012	Start of the carbon pricing mechanism Start of the first fixed charge year (the charge is set at $23.00) Start of the Jobs and Competitiveness Program (which requires regulations to be made by 1 March 2011) The Climate Change Authority is established Commencement of the Energy Security Fund
From 1 July 2012 onwards	Ongoing implementation, awareness raising and education about the carbon price mechanism and the Carbon Farming Initiative
1 July 2013	Start of the second fixed charge year (the charge is set at $24.15)
By 31 May 2014	The Government must table in Parliament regulations specifying the pollution cap numbers for the first five flexible charge years of the carbon pricing mechanism (eligible financial years beginning on 1 July 2015, 1 July 2016, 1 July 2017, 1 July 2018 and 1 July 2019)
1 July 2014	Start of the third fixed charge year (the charge is set at $25.40)
By 1 July 2015	Start of the flexible price period The Government must table regulations specifying the pollution cap numbers for eligible financial years beginning on 1 July 2020; if these do not take effect a default cap will apply
By 1 July each year thereafter	The Government must table regulations specifying the pollution cap numbers for the eligible financial year beginning five years later; if these do not take effect a default cap will apply

The Clean Energy Legislative Package and related legislation

Which Bill?	What does it cover?	When will it be law?
	*The bills marked with have been released in draft**
Clean Energy Bill 2011*	This is the central bill of the Package. It sets up the carbon pricing mechanism and deals with assistance for emissions intensive trade exposed industries (the Jobs and Competitiveness Program) and the coal-fired electricity generation sector. It contains rules for who is covered and what sources of carbon pollution are included, the obligation to surrender emissions units, caps on the amount of carbon pollution from 1 July 2015, international linking, monitoring, enforcement, appeal and review provisions.	Passed by Parliament by December 2011 with commencement before 1 July 2012
Clean Energy Regulator Bill 2011*	This bill sets up the Clean Energy Regulator, which will administer and enforce the mechanism	Passed by Parliament by December 2011 with commencement before 1 July 2012
Climate Change Authority Bill 2011*	This bill sets up the Climate Change Authority, which will advise the Government on key aspects of the carbon price mechanism and the Government’s climate change mitigation initiatives, and the Land Sector Carbon and Biodiversity Board, which will advise on the implementation of land sector measures.	Passed by Parliament by December 2011 The Board will be set up before 1 July 2012 The Authority will be set up on 1 July 2012
Clean Energy (Consequential Amendments) Bill 2011*	This bill makes amendments to other laws to ensure that the mechanism is integrated with existing laws, regulatory schemes and processes. It includes changes that ensure: the National Greenhouse and Energy Reporting System (NGERS) supports the mechanism; the Australian National Registry of Emissions Units covers the mechanism, as well as the Carbon Farming Initiative (CFI); the Regulator covers the mechanism, CFI, the Renewable Energy Target and NGERS; the Regulator and Authority are set up as statutory agencies and regulated by public accountability and financial management rules; that carbon units and their trading are covered by laws on financial services and regulated by ASIC; that activities related to emissions trading are covered by laws on money laundering and fraud; synthetic greenhouse gases are covered by the carbon price through extending existing regulation of those substances; the taxation treatment of emissions units for the purposes of GST and income tax is clear; and the Regulator can work with other regulatory bodies, including ASIC, the ACCC and Austrac.	Passed by Parliament by December 2011 Different parts of this bill will start at different times, depending on the element of the mechanism to which they relate
Clean Energy (Unit Shortfall Charge—General) Bill 2011* Clean Energy (Unit Issue Charge—General) Bill 2011* Clean Energy (Charges—Excise) Bill 2011* Clean Energy (International Unit Surrender Charge) Bill 2011* Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011* Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011*	These are procedural bills, which deal with the way in which charges are paid under the mechanism. They comply with the requirements of section 55 of the Constitution.	Passed by Parliament by December 2011 with commencement before 1 July 2012
Fuel Tax Legislation Amendment (Clean Energy) Bill 2011* Excise Tariff Legislation Amendment (Clean Energy) Bill 2011* Customs Tariff Amendment (Clean Energy) Bill 2011*	Separate bills will implement other reforms linked to the introduction of the mechanism. These cover: imposing an effective carbon price on aviation and non-transport gaseous fuels through excise and customs tariffs reducing the business fuel tax credit entitlement of non-exempted industries for their use of liquid and gaseous transport fuels, in order to provide an effective carbon price on business through the fuel tax system.	Passed by Parliament by December 2011 with commencement before 1 July 2012
Clean Energy Amendment (Household Assistance) Bill	The Government will introduce a bill to deliver household assistance measures to help Australians adjust to a low emissions economy. The Government announced the detail of these changes on 10 July 2011. This bill will make law the household assistance measures, including: higher payments to pensioners, veterans, self-funded retirees and families and assistance to aged-care residents, Essential Medical Equipment Payments recipients; tax cuts to assist low and middle income families, by tripling the tax free threshold from $6,000 to $18,200 in 2012-13 and adjusting the first two marginal tax rates; and a further increase in the tax-free threshold from $18,200 to $19,400 in 2015-16.	Passed by Parliament by December 2011 with commencement before 1 July 2012 where assistance commences on 1 July 2012. Most of the funding initiatives will be delivered as part of the 2012 Budget process.

Measures being delivered administratively or through other legislation

What is the initiative?	What does it cover?	When will it be law?
Support for innovation	The Government will introduce legislation to deliver assistance to promote the development and adoption of new low emissions and energy efficient technologies. The Government announced the detail of these changes on 10 July 2011. These bills will make law these measures, including: the Clean Energy Finance Corporation (CEFC), which will invest in the development new renewable energy, energy efficiency and low emissions technologies and the transformation of existing manufacturing businesses to help them meet demand for these new activities; and the Australian Renewable Energy Agency (ARENA), which will be a new independent statutory agency responsible for funding new renewable energy projects. It will take over existing national renewable energy initiatives.	The legislation implementing these changes will be passed before 1 July 2012 and take into account the report of the Chair on the investment mandate and detailed governance arrangements for the CEFC. Most of the funding initiatives will be delivered as part of the Budget process.
Industry and business assistance	The Government will deliver assistance to help businesses adjust to a low emissions economy and take advantage of the opportunities that this will create for them. The Government announced the detail of these changes on 10 July 2011. Specific Bills will make law: the Steel Transformation Plan to assist Australia’s steelmakers adjust to a low emissions economy; the small business instant asset write-off threshold will increase from $5,000 to $6,500 for depreciating assets; The Government will also administratively implement: grants to industry associations and non-government organisations to deliver information about energy efficiency to small and medium businesses and community organisations; the Clean Technology Investment Program to deliver grants for manufacturing businesses to investing energy efficiency capital equipment and low emissions technologies, processes and products; the Clean Technology Food and Foundries Investment Program to deliver grants for metal forging, foundry and food businesses to invest in energy efficiency capital equipment and low emissions technologies, processes and products; the Clean Technology Innovation Program to deliver grants for research into innovation in low emissions technologies, processes and products; the Clean Energy Skills Program to deliver funding to education providers on new workplace skills to deliver low emissions technologies, processes and products; and the Clean Technology Focus for Supply Chains Program to deliver funding to promote and assist businesses to reduce the emissions intensity of supply chain logistics; and the Coal Sector Jobs Package to assist the most emissions-intensive coal mines and Coal Mining Abatement Technology Support Package to assist the coal industry implement abatement technologies	The legislation implementing these changes will start before 1 July 2012 where the relevant body or program starts on 1 July 2012. Most of the funding initiatives will be delivered as part of the Budget process.
Household and community assistance	The Government will assist people and communities adjust to a low emissions economy and take advantage of the opportunities that this will create for them. an expansion of the Low Carbon Communities Program to assist low-income households increase energy efficiency, reduce energy costs and support local government and community organisations to assist them; improved advice to households on energy efficiency and clearer information on government assistance; and the Remote Indigenous Energy Program to deliver financial support to build renewable energy generation in around 55 remote indigenous communities.	Funding initiatives will be delivered as part of the Budget process.
Transport measures	Mandatory vehicle emissions standards will be introduced to significantly reduce the average CO₂ emissions for light vehicles in Australia.	Regulations to introduce the new standard are being developed
Regional structural adjustment assistance	The Government will set up a Regional Structural Adjustment Assistance program to make funding available to assist regions strongly affected by the introduction of a carbon price.	Funding initiatives will be delivered as part of the Budget process.
Land sector measures	The Government will deliver a wide range of measures to reduce greenhouse gas in the land sector. These measures include: the CFI non-Kyoto Fund to purchase non-Kyoto compliant CFI carbon credits, which cannot be purchased under the mechanism; the Carbon Farming Futures Fund to deliver funding, with the advice of the Land Sector Carbon and Biodiversity Board, to help landholders benefit from carbon farming practices by encouraging research, developing better estimation methods, funding on-farm abatement, fostering greater awareness of carbon farming and the conservation tillage tax offset; the Biodiversity Fund to deliver funding, with the advice of the Land Sector Carbon and Biodiversity Board, to restore and protect biodiverse carbon stores; the Regional Natural Resources Management Planning and Climate Fund to help regional communities plan for the impacts of climate change and maximise the benefits of carbon farming projects; the Indigenous Carbon Farming Fund to support indigenous communities implement carbon farming projects; the Carbon Farming Skills Initiative to ensure that landholders can access credible, high quality advice and carbon services; the removal by regulation of native forest wood waste from eligible renewable energy sources under the Renewable Energy Target with transitional arrangements for existing accredited power stations.	Most of the funding initiatives will be delivered as part of the Budget process.

Net Traveller

Thursday, July 28, 2011

Carbon Pricing Legislation for Comment