Wednesday, November 09, 2011

Australian Carbon Pricing Legislation Approved by Senate

The Australian Senate approved the Clean Energy Legislative Package on 8 November 2011. A fixed price on carbon of $23 per tonne will commence from July 2012 for large emitters. Tax cuts, renewable energy subsidies and other compensation measures will be introduced at the same time. The price of carbon will increase each year for three years, at which point it is planned to introduce market based pricing.

Clean Energy Act 2011
This is the central Act 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 also contains rules for who is covered, the Opt-in Scheme for large fuel users and what sources of carbon pollution are included, the surrender of emissions units, caps on the amount of carbon pollution from 1 July 2015, international linking, monitoring, enforcement, appeal and review provisions.

Clean Energy (Consequential Amendments) Act 2011
This Act makes amendments to other laws to ensure that the mechanism is integrated with existing regulatory schemes and processes, including the National Greenhouse and Energy Reporting System, the Carbon Farming Initiative, the Australian National Registry of Emissions Units, the regulation of financial services and competition and consumer laws.

Climate Change Authority Act 2011
This Act sets up the Climate Change Authority, which will advise the Government on the setting of carbon pollution caps and periodic review of the carbon pricing mechanism and other climate change laws.
The Act also sets up the Land Sector Carbon and Biodiversity Board, which will advise on the implementation of land sector measures.

Clean Energy Regulator Act 2011
This Act sets up the Clean Energy Regulator, which will administer and enforce the carbon price mechanism, the National Greenhouse and Energy Reporting System, the Renewable Energy Target and the Carbon Farming Initiative.

These are procedural Acts, which deal with the way in which charges are paid under the mechanism. They comply with the requirements of section 55 of the Constitution.

These Acts coverimposing an equivalent carbon price on aviation and non-transport gaseous fuels through excise and customs tariffs; and, 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 equivalent carbon price on business through fuel tax.

On 10 July 2011, the Government announced household assistance measures to help Australians adjust to a low emissions economy on 10 July 2011. These Acts will make law the household assistance measures, including:

  • higher payments to pensioners, veterans, self-funded retirees and families and assistance to aged-care residents and 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

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